ABC and the Independent Are Terrified by the Prospect of Japan Getting Less Crowded

Japan is a densely populated country. As a result, housing is extremely expensive in its major cities. Its subway system is so crowded that Tokyo has people who push people into the subway cars to ensure that no space is wasted.

Given this situation, it was striking to see that the Independent report on Japan's "demographic crisis" and ABC News tell us about Japan's "dire picture." Their concern is that Japan's population is projected to shrink by about a third over the next 50 years.

While these news outlets might be terrified by the prospect that the Japanese will pay less for housing, it is not clear why the Japanese should have such concerns. The implication is that the increase in the ratio of retirees to workers will impose a devastating burden on the working population.

Those who know arithmetic don't share such concerns. Productivity growth in Japan has averaged almost 2.0 percent annually over the last two decades. At this rate, output per worker hour will be nearly 170 percent higher in 50 years.

This means that if retirees consume 80 percent as much as active workers, and the ratio of workers to retirees fall from 2.5 today to 1.8 in 50 years, then consumption per worker and per retiree can increase by 120 percent over this period, assuming no reduction in hours worked.

In fact, this would understate the actual gain in living standards since there will be fewer children to support and there will also be gains in living standards associated with less crowding. (Tokyo won't need to pay workers to push people into subway cars.)

In short, worrying about demographics might be a good way to create jobs in the current economic environment, it need not be a concern for serious people.

Hard to Agree With This One
written by Timothy, January 31, 2012 6:02 AM

Doesn't this critique require the assumption that an aged Japan can keep up the productivity gains of its younger self?

Furthermore, the Japanese have been "enjoying" lower housing costs since 1991. Coincidentally, the overall standard of living (if measured by the poverty rate) has deteriorated significantly; almost doubling in the last 15 years while the productivity gains cited were taking place.

Less Contraception Please - Grow the Work Force Now for Retirees
written by izzatzo, January 31, 2012 7:00 AM

... it is not clear why the Japanese should have such concerns. The implication is that the increase in the ratio of retirees to workers will impose a devastating burden on the working population.

Nor is it clear for America. Rick Santorum is working hard to get the truth out that contraceptive birth control not only creates a moral hazard for excess sex but may end up suppressing the birth of so many would-be younger workers that retirees won't have anyone to subsidize them and end up with premature deaths to their sharply lagged productivity.

Stupid liberals.

-2

Wrong, Wrong, Wrong Izzy
written by PAUL, January 31, 2012 8:19 AM

Everyone knows that married couples don't have sex so contraception for them is a moot point. Santorum is against contraception because it takes the fear of God out of sex, as in, OMG what have I done? Just ask poor (literally) T.O. who used to have $80 million.

...
written by skeptonomist, January 31, 2012 8:49 AM

Productivity gains over the last 250 years or so have largely been a result of exploitation of fossil fuels. The faster the population grows the faster those fuels are depleted, not to mention the greater the pollution by CO2 and other things. Eventually economics will have to face these facts and get beyond the assumption that populations can grow indefinitely.

The Japanese are well aware of the importance of fossil fuels; they went to war with the US in 1941 over oil supply.

demographic analysis realism
written by Doyle Saylor, January 31, 2012 9:48 AM

Good essay. Most of the news 'analysis' that posits a 'strain' from aging, is ideological spin. Hiding from view their using austerity measures to pressure the working population into giving away more. This was a swell piece of positive analysis!

aging demogrphics in Japan
written by Doyle Saylor, January 31, 2012 9:52 AM

Nice piece of understanding about aging in Japan. Mainstream press analysis of Japan's aging population reflects an ideological spin using austerity based distortions of future social outcomes. Nice to see a more positive view of how aging is not an evil befalling a people.

oddly
written by jwkelley, February 01, 2012 9:46 PM

Oddly I do not see the Japanese jumping in excitement, especially in Rural areas. Many areas devastate by the tsunami will likely not be rebuilt because 90% of the people were killed the the remaining 10% are not enough to justify rebuilding.

There is an odd depression that comes with the fact your country is shrinking, just like their is an excitement when its on the way up.

ABC and the Independent Are Terrified by the Prospect of Japan Getting Less Crowded

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