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May 19, 2015

Comments

I don't know much about Japan. What was Oscar Wilde on about? That's at least as interesting to me as the current problem is.

Oscar Wilde was probably just yanking chains, as usual for him.

But the Japanese rural "problem" is just Japan having it's turn at the usual 1st world demographic change.

There was a lot larger proportion of the population farming, and living near farms, a hundred years ago. Today, the proportion of rural population is much smaller, small midwest farm towns are disappearing, and farming is mostly done on a larger scale.

Japanese traditional farming is much less amenable to "scale up to industrial size" than US traditional farming.

Oscar Wilde was probably just yanking chains, as usual for him.

I'll take your word for it, but still, there had to be something that made him yank that particular chain in that particular way.

If it was random, then I'm offering this:

"Russia is made of plastic, and has the scent of sweet berries. It has always been thus."

Surely Wilde's remark was an adumbration of this sort of thing.Things Japanese were extremely fashionable in Europe in the late 19th century, cf. "The Mikado".

Pretty clearly, the Japanese are going to have to make some choices.

First, they might decide to simply accept at least some limited immigration. A cultural change to fully accept the folks whose ancestors immigrated from Korea (not always voluntarily) in the 20th century would be a good start on that. After all, the people involved are already acculturated (often a concern with immigrants -- see the US hysteria on the subject). And then they could consider opening up a little further.

Two, they could make some changes so that young Japanese women become willing to have more children. Especially in the rural areas -- you can sometimes get kids to stay, if there are economic opportunities there, but getting urban kids to move to the boonies is a challenge. So you need to get rural birth-rates up above 2.1 per woman to have a chance.

Three, they could just accept that the country will get depopulated over time. And since the rural areas are leadingthe way, the earliest sign that is happening will be that they are having to import more and more food, as agricultural areas become depopulated. (The good news is, none of their neighbors are experiencing the kind of population pressure which would lead them to conquest for lebensraum.)

Most likely, the Japanese will remain in denial for some while longer. But eventually one of those three paths will get taken, whether deliberately or by default.

what Chris said. Japonism was the rage in Europe.

As for getting young Japanese women to have more children, I have this sinking suspicion that women are, in essence, expressing a form of resistance to the persistent sexism of Japanese society

http://www.nippon.com/en/currents/d00171/

My thoughts are not totally clear, but having kids locks you into a lot of things, and you certainly are not going to be able to do an interesting job (a quirk in the tax law exempts the spouse's income up to 1 million yen, but over that, you get taxed at a much higher rate, so the only way it is really worth it is if both spouses have jobs that would give them the equivalent of a full family income) The Tokyo-Osaka crescent basically is a magnet for any young person, and given the conditions there, the likelihood of having children drop precipitiously (the cost of pre-school tuition in Tokyo averages 2 million yen for a 2 year old)

I agonize over this a bit, wondering if the country is the best place to raise kids, especially two daughters. However, it's not like I can easily move someplace else.

896 cities, towns and villages throughout Japan were facing extinction by 2040

I'll bet that Iowa has already lost 100 towns, and that another hundred will be gone by 2040 (not enough farmers left, and those that remain don't need a small town within 20 miles as they did in the age of horse transport, when these small towns were founded.) The Dakotas ditto, and probably western Kansas and Nebraska.

This should be cause for rejoicing, not for alarm. There's too damned many people on this planet; negative population growth is what we should seek.

@joel: yeah, a lot of the nostalgia for the "farm life" comes from those who never had to deal with it, day in and day out.

it must be tough to keep kids out in the Japanese countryside when the Tokyo is just a few hours away by train.

"The Tokyo"... it's how we say things here in the NC.

i'm going to the Raleigh to pick up Bob, and then we're going to the Chapel Hill to catch a show at Cat's Cradle.

our rules about dealing with that there definite article are a bit different than what you fancy folk are used to.

Pretty clearly, the Japanese are going to have to make some choices.

I'll take door number 3, Monty. The future Japan will most likely not be the economic dystopia you appear to have in mind, wj....

See here, for example.

Or here.

Or here.

Oops. 2nd link fixed I hope.

What Snarki said at 3:46.

The only thing that Apericans generally are more delusional about than the joys of rural life is what the reality of "subsistance farming" is elsewhere in the world. Which is why they get so exercised about conditions in the "sweat shop factories".

It's not that the conditions in those factories are not bad. But they simply have no clue at how much worse the only alternative these people have actually is. It's just utterly beyond their comprehension.

I don't know that opposition to the conditions in sweatshops is fueled by some romantic notion of what fun it would be on a farm. I think the objection is to the idea that the free market is God and if factory work is the lesser of two evils, nothing should be done to improve it.

I used to follow all this back in the days when Krugman was despised on the left.

If there were arguments for improving conditions (and paying more to make that viable), that would be fine. Nothing wrong with making things better.

But most of the ranting, that I hear at least, shows a complete lack of understanding of just how brutal the available alternatives actually are. It's not that they want to make things better. It's that they cannot imagine any reason, besides evil akin to slavery, why anyone would be willing to work in such a place.

Which, logically, must mean that everyone involved (except the workers, of course) is simply evil. Nothing less. Just becasue they cannot imagine that people actually queue up for those jobs, because they are a step forward for them.

It's just utterly beyond their comprehension.

Agree with this. Most Americans have no idea how bad it is for a very, very, large part of the world's population. And pictures of urban slums or poverty stricken rurals in National Geographic don't even begin to do it justice, or injustice as it were.

I haven't heard those rants--what I've heard are people justifying the conditions in the factories by pointing out that people prefer that to the alternative. That.s not an argument for poor factory conditions. The argument would have to be that competition in the industry is so cutthroat the factory owners have no choice but to pay very low wages and not give bathroom breaks and employ children and it's all justifiable because the workers realize life back in the village was worse and there is nothing to be done and they just have to go through the same things the West went through back in the 19th century. Though as I recall, one thing that happened then was the development of workere's movements and also ideologies like Marxism.

Anyway, people protesting today would argue that conditions could be improved and Western consumers would be willing to pay a bit more for clothes that were manufactured in places where workers were treated better.

Actually, I have heard that sort of argument, but as a straw man, followed by the justification that things simply can't be any better because of the free market. And I understand the logic, if we presuppose that we should never do anything that interferes with the market. But being a lefty, I find that hard to swallow. It's just irritating to be told things which I already know. We've all seen photos of children scrounging through massive junk piles and while I haven't seen actual famine, even my not very well traveled self spent a few weeks in Bolivia once and yeah, I saw poverty out in the rural areas. I suspect most people do have some sense that a wretched job in a factory is better than starving.

That sounded more angry than I intended--sorry wj. I'm reliving the arguments of the late 90's.

ooohhh...flashbacks.

No worries. At least you are capable of noticing. I encounter too many who don't even realize they might have made a point somewhere before....

bobbyp, I'm a fan of those kinds of observations, but what I'm seeing is that it is really really hard for students to get jobs, and I have a hard time seeing how the social support network, including infrastructure, stays supported when your demographic structure is an inverted triangle. Looking at it as a question of less lettuce kind of misses the bigger question, I feel.

By all projections, productivity in Japan will be vastly higher in 2060 than it is today, which means that both workers and retirees will be able to enjoy higher living standards even though there will be a lower ratio of workers to retirees.

As labor markets tighten in Japan, workers will go from less productive to more productive jobs. This will mean that people who want workers for menial jobs such as cleaning their house or tending their garden will have to pay more money. This is bad news for them, but it does not amount to a time bomb for the country.

But if improving productivity doesn't really mean much if you don't have a market. I'm definitely not an economist, but there does seem to be a forest tree problem here.

Why do you think they won't have a market, lj (by which I assume you mean demand for the output of the more productive workers)? I thought the supposed problem was the inability to provide for the needs of retirees with a smaller workforce.

lj,

I think you're confused about the benefits of "productivity". Being able to produce more goods and services per labor hour is always better, no matter how small a market you're serving. For one thing, higher productivity means you can produce more for export if you feel like it. Or you can, as a nation, enjoy more leisure and still produce everything you need domestically.

The only potential problem is a pig-headed devotion to The Free Market, in a nation whose workers are "too" productive. The pig-headedness I mean is a religious opposition to "redistribution". If, 50 years from now, 10% of Japan's population is able to produce everything that 100% of the population would consume if it had the income to buy that output, Japan would be either hell or heaven -- depending on whether it's governed by Randians or Marxists. It could have a 90% unemployment rate, or it could have VERY early retirement and VERY generous pensions for EVERYBODY. But note that the absolute size of the population doesn't enter into the calculation.

--TP

Just want to point out that moving to the city is not a choice for many people. Multi-nationals secure contracts to land that has been farmed for centuries, but in places where there's no such thing as a "title" to the land. They kick the farmers off, and put in palm trees for oil, or cattle ranches, or whatever.
The poor trek to the cities, or more marginal land. So yeah, sweat shops look good when you're starving. But a lot of them would rather be back home.

bobbyp, I'm a fan of those kinds of observations, but what I'm seeing is that it is really really hard for students to get jobs

With many old and few young would you not think there would be a market to tend to the old? Looks like a demand problem to me.

If the old are somehow unable to pay for these services would it not be a distributional problem and not a demographic one?

The people who make these kinds of arguments about Japan (Washington Post's Robert Samuelson, who see) tend to also be of the same ilk who try to scare people about some future crisis in Social Security and "entitlements".

They are simply trying to push their economic preferences and their support for the current distribution of economic resources into the future, scaremongers for the status quo.

They want to make sure their kids have inexpensive household help.

Isn't Australia preview of Japan future ?

90% of Australian lives near its big four Metropolitan Area. local depopulation in Japan would have same effect. young Japanese moving from Fukui to Tokyo is not decline, so does moving from Hokkaido outskirt to Sapporo. This also isn't "japan only" problem, population of fly-over state decline, so does rural population in Mecklenburg and Badenburg. Metropolitan city living is simply the future.

All good points, but I'm not sure that you want the majority of your smaller and smaller population of young people taking care of their elders. I'm not sure if this observation is captured by anyone, but having a demand that is focussed on a narrow sector seems like asking for trouble.

As far as distributional questions, perhaps any demographic problem is a distributional one. I remember when some 66 year old woman succeeded in being artificially inseminated, someone wondered how much she would be willing to pay to support the school system. And as more and more elderly are unable to pay for these things, you get into really tricky distributional problems, rather than using money collected from the younger generation to support the older generation.

This article is a bit glib at the end, but points to some interesting trends

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=as80aWlHdA1M

As far as productivity, do productivity gains always help support pensions, national health and infrastructure repair? I can see how they _could_, but I don't think it is a simple task to have a smaller and smaller group of more productive people being able to support the kind of infrastructure that we have in Japan.

The Japan-Oz comparison is interesting, but (with no disrespect to Austraiia), there have always been few people in the outback, so in terms of cultural continuity and preservation, it's not as big a disappearance as the notion of village life disappearing from Japanese culture.

90% of Australian lives near its big four Metropolitan Area.

Except that, in Australia's case, it isn't a matter of people from rural areas moving to the cities. The rural areas aren't "has-beens", population-wise; they're more like "never-was". All that empty land is no emptier than it has always been.

What I found amusing about Oz (when I lived there 30 years ago) was the extent to which, in spite of the extremely urbanized population, the cultural *imaginary* was all about the bush, the outback, the settler and the swagman and the billabong . . . treasured by folk who had never lived there (nor, in many cases, had their ancestors).

And then I reminded myself of the time we were leaving our infant son for the evening with a farmer's daughter in Manchester, Michigan, and we pulled into their yard with the red barn and the silo and the white painted porch and the tractor and all and I thought to myself "Home at last!" even though I've never in my life lived in a city of less than 50,000 people . . . Powerful thing, the zeitgeist.

With many old and few young would you not think there would be a market to tend to the old? Looks like a demand problem to me.

If the old are somehow unable to pay for these services would it not be a distributional problem and not a demographic one?

And this:

As far as productivity, do productivity gains always help support pensions, national health and infrastructure repair? I can see how they _could_, but I don't think it is a simple task to have a smaller and smaller group of more productive people being able to support the kind of infrastructure that we have in Japan.

So how does a smaller, youthful population pay the freight on a larger, elderly population while also uplifting those of their own generation born into single parent homes (see recent threads)? Looks like fewer people doing a lot more lifting and netting a lot less for their efforts. Will the fewer supporting the more and the less well off be able, in addition to that load, to be able to afford their own children on whom they can foist their own senior years?

Because, for the life of me, you can only expect so much from people.

I vote that BobbyP be given a guest spot to fully explicate the economics of this "do more with less" program.

I don't think it is a simple task to have a smaller and smaller group of more productive people being able to support the kind of infrastructure that we have in Japan.

Perhaps not simple, but surely doable ?

Does this fall into the category of 'first world problems', which, while uncomfortable, aren't that big of a deal in the scheme of things (apologies if that sounds more dismissive than it's intended to be).

In any event, won't the Japanese countryside be tended by robot farmers within a decade or so ?

Looks like fewer people doing a lot more lifting and netting a lot less for their efforts.

That may well be, but the arguments were in response to the notion that there won't be enough demand to receive the ouput gained from greater productivity.

Either they can't keep up and become big importers, running both large trade deficits and large(r) government deficits, or they can keep up by being more productive.

If (IF!) it's a matter of productivity increasing, there is less lifting to be done to produce what is needed for everyone - workers and their families as well as retirees. So you can say that the workers are only getting a small fraction of what they're producing, but if they don't have to work all that hard to produce it, they're no worse off.

I don't know if there will be sufficient gains in productivity for it all to work out in Japan, but you can't have it both ways as far as the demand problem goes. It can't be too little and too much at the same time.

Lj's point about the market being overly focused on whatever sectors will serve the elderly is an interesting one, though. That's a different matter, and more complicated, as far as I can tell.

Maybe it doesn't matter, given the timeframes for the economy to adjust to demographic changes and demand shifts from one sector to another. Or maybe it does. I couldn't say either way.

So you can say that the workers are only getting a small fraction of what they're producing, but if they don't have to work all that hard to produce it, they're no worse off.

So, leaving aside the huge assumption that somehow future workers will produce more with less effort (because some really benevolent person is going to invent an awesomely efficient way of doing everything but won't care about getting paid for doing that), what if our don't want to work for less?

What if the workers go on strike?

How will you feed the old people?

There is a demographic train wreck on the horizon. Here, in Japan, China and Europe. How do we do more with less?

Dammit.

What if our *workers* don't want to work for less?

How Machines Destroy (And Create!) Jobs, In 4 Graphs

@Nigel:"In any event, won't the Japanese countryside be tended by robot farmers within a decade or so ?"

That was related to the point I was trying to make earlier: US (and Russian) style agriculture is far more amenable to mechanization (and therefore having robots do most of the work). Japanese agriculture, much less so, (but if there's anywhere on Earth where robots take over, it'll be Japan, but it's hard to see how that's a winning
strategy when you put it in terms of cost/hectare)

Interesting item on NPR yesterday: 2 years to teach a robot to pick a towel out of laundry and fold it, which the robot required 20 minutes to do. Compared to a youtube of an 1.5yo kid doing the same in about 7 seconds.

So, perhaps a race between improved robotics and looming demographic catastrophe.

I don't know if the productivity increases are simply an assumption or if there's something more behind it. I'm not saying that's going to happen. I'm simply addressing the specific argument that productivity doesn't help if there's no demand, when the problem in Japan is supposed to be that there won't be enough supply because of lack of workers.

Maybe there is a train wreck on the way. Or maybe it will do something like World War II did for the economy, only the effort will be taking care of old people instead of making machines and devices for blowing stuff up.

What it all boils down to is whether or not there are sufficient real resources, including workers, to provide for everyone. What if the biggest effect was that (gasp!) wages went up, correcting for the historical failure of wages to rise with productivity, and less money flowed to capital investment? What on earth would we all do then?

The demographic catastrophe will be mitigated by the other one we are working on, i.e. climate change. The (soon to be permanent/standard) heat waves in summer and the occasional still occurring extreme cold spells in winter will take care of the old people, in particular those too poor to pay for proper insulation, air conditioning and heating (a majority, if the current trends continue). And with the overturning of child labor laws (still on the agenda) and the final abolition of the public school system (even more so), the other end of the age spectrum will be covered too.
Ask the Shouty Man about the new Victorian Child(TM).

McTx: What if the workers go on strike?

They will get higher wages. They will force The Government to cut their taxes. They will have more money, and the retirees will have less.

So the retirees will be able to buy less of the workers' output. The workers will have to consume more of their own output, or lose some of their jobs.

If workers can expand their own consumption as fast as they increase their productivity, all's well for the workers and the retirees can pound sand. If they can't -- if they can't learn to drive three cars at a time, watch four televisions at once, eat five meals a day, have six major surgeries a year, or keep up seven houses apiece -- then those things will not be worth producing and some workers will become involuntary retirees. Which worsens the problem.

The one indisputable fact of life is that everybody gets old. The super-productive workers of today will become the non-productive retirees of tomorrow. The I've-Got-Mine-Jack attitude seems to be based on ignorance or denial of that fact.

--TP

"I vote that BobbyP be given a guest spot to fully explicate the economics of this "do more with less" program."

Sorry, I can't help it, but we could have Arthur Laffer co-guest that spot with his own presentation of his "do less with more" program.

Dueling napkins at ten paces. We'll use paper rather than cloth to save on laundering expenses.

It seems to me that every single employee, private and governmental, on the face of the Earth has been fully marinating in the "do less with more" program for roughly the past 35-40 years since inflation was licked and productivity and austerity have become the mantras of boardrooms, consultants, efficiency and productivity experts, CFOs, CEOs and SOBs like Larry Kudlow, Stephen Moore, and Grover Norquist (his program is a variation: do anything and we might have to shoot you, which I heard him say on C-Span once, in so many words) everywhere, who when asked what THEY want, intone "MUCH MORE of LESS ALL AROUND!, because "ENOUGH!" just isn't in the vocabulary of the one percent.

Now pour me a daiquiri and drive!

And that includes Bill and Hillary Clinton, by the way, though at least they aren't demanding the full-scale murder and penury (in that order) of 10 million folks by revoking their medical insurance.

Other thoughts on the Japanese demographic:

Blue-fin tuna and the world's whale population must be thrilled.

Also, why can't the Japanese elderly be gradually retrofitted robotically as their biological parts wear out, a process that might take a couple of decades to complete, and then sent to the countryside to tend the crops and, I don't know, clean up devastated nuclear utility plants.

That way, the younger generations wouldn't have to spend their lives emptying their elders' bedpans. Instead, the new robotic elderly would just leave little batteries around for other robots to pick up, like the robotic dog in "Sleeper".

But, more seriously, this: "What if our *workers* don't want to work for less?"

In the American elderly home care industry, I can attest from personal experience, this is already happening as the economy improves. Home care workers, nearly all women with kids AND parents of their own who require care, are in very short supply as they find jobs making $11.50/hour instead of $9.50 an hour with MAYBE a shot of having healthcare insurance of their own, unless they are on Medicaid, which many are.

There is nothing so pleasant as a home care worker without insurance throwing out their back while lifting an elderly patient.

By the way, my mother can afford, for now, to give her caregivers hefty bonuses, but it has to be done under the table as it is against company rules, and further it is against the rules to hire them directly away from the company, as they can be judicially harassed by the company if that happens and it is found out.

There's a fresh hell coming soon for all, as we consider moving my Mom into a facility, as
caring for the demented and sick elderly at home is a killing job.

Snarki wrote:

"Compared to a youtube of an 1.5yo kid doing the same in about 7 seconds."

And for free!

Well, that cat's out of the bag now. The House Subcommittee on Immigration and Toddler Malingering just cleared legislation closing the borders and freeing up states to revoke all child labor protections so that wages can be further depressed.

See the beauty of that is that the toddler demands nothing but a cookie.

Do Everything For a Cookie and While You're Up, Bring Me A Beer --- the new paradigm.

I had a recent incident with my robotic home servant. Quaze, I call him, short for Quasar, had among his household chores the task of turning up the thermostat before I arrive home on chilly days, the toddler (not mine, he's a live in, pays rent with saved-ip cookies, so to speak) being too short to accomplish this.

Well, now that I can do this task remotely myself via my smartphone and/or wrist-mounted thermostat-turner-downer-thingy, he's gone into a sulk and now it's taking him 28 minutes to fold a towel, if he does it at all, which is how I used to do it, before the culture orgizmoed on really pointless productivity-enhancing razz-ma-tazz.

Yesterday, I arrive home and he was wearing my bathrobe and his breath smelled of WD-40.
I caught him, against all productivity protocols, lifting the toddler and letting him turn down the thermostat, after I had already turned it up remotely from the limo.

Just to mess with me.

"What on earth would WE ALL do then?"

What we're doing right now, blogging about productivity while at work, before calling our employees together to harangue them on the virtues of doing more with less.

So the retirees will be able to buy less of the workers' output. The workers will have to consume more of their own output, or lose some of their jobs.

So, X gives Y money to buy X's ouput, thereby keeping X employed. Can X make enough to give to Y who then spends enough to keep X going? What happens when its X = Y(2.5)?

The one indisputable fact of life is that everybody gets old.

Actually, that is one of many.

Here's another one: people have to eat everyday.

Here's one more: food doesn't grow itself.

Ditto clothing and shelter.

Before you ever get to health care or social security or food stamps, there is food, shelter and clothing.

That's a big load for the ever-shrinking demographic of a trained and educated work force.

How do Progressives propose to make all of that happen?

Fourth paragraph, fourth line should read 'Marinating in the "do more with less" program' in my nonsense above.

Looks like fewer people doing a lot more lifting and netting a lot less for their efforts.

The other possible problem (besides the current workers going on strike), is this. The best of them, in terms of productivity and innovation, may decide to just up and leave for somewhere that doesn't impose such a large burden.

Yes, most people dislike moving to someplace new -- even within the same country, once they have settled down. Moreso when that place has a different culture. But the ones who are willing to do so tend to be the ones that you can least afford to lose.

For more on that thesis, see the book The Hypomanic Edge -- the examples are OK, but the introductory section makes the point adequately by itself.

One other possibility, of course, is that we simply start retiring later. Or, at least, retire as now and then start another paying job.

For a very long time, people kept working until perhaps the last year or two of their life. Indeed, that was part of how Social Security's eligibility age was set originally. But people still kept working long past that.

I am minded, for example, of my uncle. He was a lawyer, who no longer practiced in old age. But had a job as the county law librarian into his 90s.

Or, take an example of someone you all might have heard of. In the 1920s there was a night watchman working in San Francisco who was in his 80s: Wyatt Earp. And nobody thought it odd.

As we are living longer, we need to give over the idea that you can retire and just live off your (and others') savings for decades. With the changing age demographics, that's becoming ever more of a fantasy.

How do Progressives propose to make all of that happen?

They'll take the conservative proposal and tweak it, once it's been revealed.

So, X gives Y money to buy X's ouput, thereby keeping X employed. Can X make enough to give to Y who then spends enough to keep X going? What happens when its X = Y(2.5)?

Since X has output, I'm assuming X represents workers. Is Y retirees? Why is X giving Y money, and why is X two-and-a-half times Y? I thought the retirees were supposed to be outnumbering the workers and not the other way around?

"How do Progressives propose to make all of that happen?"

http://www.balloon-juice.com/2015/05/20/rejuvenation-through-vampirism-the-medical-ethics-are-not-getting-easier/

Count, we're already on with that...
http://www.popularmechanics.com/science/health/a13114/the-power-loader-from-aliens-is-here-17452147/

(& many similar iterations.)

Along the something-for-nothing lines energy is going to get, if not free, then very cheap indeed over the next decade and a half.

We have almost cracked solar power - in some niches it's already more than competitive with conventional power generation - and we're well on the way to having affordable energy storage (& the affordability will improve incrementally for the foreseeable future).

Making things is getting easier, not harder.

There are many many more engineers than when most of us here were kids.

The problem is not going to be generating wealth, but sharing it.

That, and not going to war over stupid stuff... or at all.

One other possibility, of course, is that we simply start retiring later.

I'm not sure your argument here is completely founded in fact.

First, average life expectancy in the US is currently about 78. The age for receiving full SS retirement benefits is 65 to 67, depending on your year of birth.

So, on average, you can look forward to 11 to 13 years on somebody else's dime. Not decades.

Second, if you factor out infant mortality, we don't live all that much longer than folks did Back In The Day. The actuarial analysis used to develop the SS program did not assume that most people would not be collecting for any length of time.

Lastly, it's great that your uncle worked until his 90's, and it's great that colorful old Wyatt Earp did so into his 80's. I'm sure we all know folks who are vigorous and capable well into old age.

We also no doubt also know folks - at least I know that I do - who bodies and minds are freaking worn out after 40 or 50 years of working life, and/or who are spending their golden years dealing with any of a variety of debilitating physical or mental illnesses, and who are surely not going to be able to be productive enough to pay their own way.

We already have established 67 as the minimum age for full SS benefits, for anyone born after 1960, which means anyone turning 55 this year or younger.

How high should it be?

We already have established 67 as the minimum age for full SS benefits, for anyone born after 1960, which means anyone turning 55 this year or younger.

How high should it be?

A good question. Another one is: How much money is available and for how many retiree's?

And then there is Medicare. And welfare, and tuition aid, and infrastructure and a bunch of other stuff.

Who gets what slice of the pie and how do we not eat the pie all at one sitting?

Before you ever get to health care or social security or food stamps, there is food, shelter and clothing.

That's a big load for the ever-shrinking demographic of a trained and educated work force.

Amnesty!

Another one is: How much money is available and for how many retiree's?

US GDP is currently about %17.5 trillion, which works out to about $45K per capita.

From the same source, per capita GDP was about $15K, one third of what it is now, in 1960. It was about $20K in 1967.

Per capita personal income in 2013 was not quite $29K (Table P-1, the "all races" spreadsheet).

About 2/3 of per capita GDP.

From the same source, per capita income in 1967 was about $15K in 2013 dollars, or about 3/4 of per capita GDP in the same year.

From the SS link in my previous comment, the number of folks 65 and older back in (for example) 1960 was 17.2 million, just less than 10% of the population.

We're now at about 40+ million folks over 65, about 14% of the population in 2013.

So, yes, the percentage of the population who are older is somewhat larger, and we slice the pie overall differently than we used to, all relative to (for example) 50 years ago.

If the ratio of per-capita personal income to per-capita GDP was closer to what it was 50 years ago, we might not have quite so much to worry about regarding the alleged tsunami of olds. That last is my editorial comment, other folks are welcome to make whatever sense they like out of the numbers.

Here's another one: people have to eat everyday.

Here's one more: food doesn't grow itself.

Ditto clothing and shelter.

All of these 'facts' would get contested by anyone still living the hunter-gatherer lifestyle. And at least the first one by many poor people even in the 1st world.

Russell, I also know people who, once they stopped working, basically sat around "waiting to die." (Which, such things beng somewhat self-fulfilling, they generally did fairly soon.) They stopped working, in their mid-60s, mostly because they felt that they were expected to stop -- but they really didn't have anything else to keep life going for.

Which may be part of why women still live to higher ages than men overall: housework doesn't go away just because the husband retired. So there is still structure and function to life. Hmmm....

So, yes, the percentage of the population who are older is somewhat larger, and we slice the pie overall differently than we used to, all relative to (for example) 50 years ago.

A more useful number may be the dependency ratio. We have somewhat more elderly now. But we also have somewhat less children. Granted that the later constitute an investment in the future. But when looking at per capita personal income, they have the same impact: nil personal income generated per capita.

"Just want to point out that moving to the city is not a choice for many people. Multi-nationals secure contracts to land that has been farmed for centuries, but in places where there's no such thing as a "title" to the land. They kick the farmers off, and put in palm trees for oil, or cattle ranches, or whatever.
The poor trek to the cities, or more marginal land. So yeah, sweat shops look good when you're starving. But a lot of them would rather be back home."

Posted by: geographylady


In addition, time and time again 'the free market' seems to need lots of thugs with clubs to beat the sh*t out of people. The invisible hand has a quite visible stick.

Russell, I also know people who, once they stopped working, basically sat around "waiting to die."

I have no problem with people working as long as they want to and are able to. That's my own plan, less for financial reasons than for reasons of just wanting to continue to be engaged in the world.

What I disagree with is the idea of *requiring* people to retire at an older age.

Depending on what your particular skill or trade or craft is, 40 or 50 years behind the mule might be about all that you're going to be able to do.

A more useful number may be the dependency ratio. We have somewhat more elderly now. But we also have somewhat less children.

The folks whose retirement is making everyone worry right now are the boomers. There are about 65 million of them still around.

The cohort after the boomers are the Gen-X folks, who are now basically middle-aged. They'll be working for another 15-30 years. There are about 65 million of them.

Next after them are the Millenials. They are either not quite yet in the workforce, or are at fairly early career stages. They'll be working for another 30-50 years. There are about 83 million of them.

It may turn out that the cohort after the Millenials will be dramatically smaller than them, in which case, 30 to 50 years from now, there may be a problem with sustaining the pay-as-you-go model for funding retirement.

wj: "One other possibility, of course, is that we simply start retiring later. Or, at least, retire as now and then start another paying job.

For a very long time, people kept working until perhaps the last year or two of their life. Indeed, that was part of how Social Security's eligibility age was set originally. But people still kept working long past that."

I keep seeing people saying this, and I tell you that I'd love to move to your world where age discrimination didn't start at 40.

In the world I live in, these people would spend 20 years at minimum wage jobs, at best.

But the ones who are willing to do so tend to be the ones that you can least afford to lose.

Well, first, please be so kind as to inform us as to who the "most productive" workers are? If you propose they are doctors and lawyers, well, we basically bar them from immigrating here. So where would they go?


One other possibility, of course, is that we simply start retiring later. Or, at least, retire as now and then start another paying job.

Tell that to somebody who has been landscaping or laying bricks for 40 years.

Or maybe blacks.

After all, they die earlier than whites...just tell them and all manual workers, "Well, we had to make some really really tough decisions, and you poor schmucks most likely won't get to enjoy much, if any, retirement. I know. I know. Spare us the accolades. Somebody had to do it."

Apparently some here just absolutely insist that the future contain a whole bunch of poor people.

I don't get it.

McKinney,

The idea is that there will be greater output for each man-hour of labor input, i.e., more is produced with less! Amazing, no? If you can work today for 1 hour and produce "X" and in the future that same amount of labor will produce "2X" then it will take fewer hours to make each unit of stuff, freeing up labor to do other things.

Like f*cking relax for a change.

On the other hand, if the trends we have observed regarding productivity increasing over the last 200 years suddenly stop, then we will have a really BIG economic problem. Because then output will be governed solely by population demographics, i.e., fewer people means less output.

But that is not the problem you seem to be concerned with.

And then there is Medicare. And welfare, and tuition aid, and infrastructure and a bunch of other stuff.

"Bunch of other stuff" is carrying a lot of weight there, Tex. Are you referring to attorneys knocking down $500/hr.? You know, if labor productivity really took off, that would free up a lot of labor that could be directed to the law and bring attorney fees down to something more affordable.

You're all in favor of that, are you not?

Tex: Who gets what slice of the pie and how do we not eat the pie all at one sitting?

Nigel: The problem is not going to be generating wealth, but sharing it.

You two need to talk.

The turn of discussing about the situation in the US is interesting, but not really one I can speak to. Japan, because of history and geography, has doesn't have the possibility of lots of immigrants, so while it has several problems that can be termed '1st world', I think that the country provides almost a lab like condition for economists, though I'll freely admit that I may be biased.

In labeling them as 1st world problems, I get an impression (though I'm sure Nigel is not trying to be provocative, it's just my impression) is that well, kinda silly to worry about these kinds of problems cause there are a lot bigger fish to fry. However, all the 1st world problems are problems that the rest of the world seems eager to embrace. In addition, first world problems like consumption, colonialism and imperialism have the tendency to shape the word. If Japan can get out from under this, it will certainly be something that can be adopted by everyone.

Well, first, please be so kind as to inform us as to who the "most productive" workers are?

Bobby, these are the folks who are willing to take a risk and start doing something new. Witness their willingness to pick up and move. In short, the people who make innovations and start new businesses.

For example, take a look some time at the number of founders of big Silicon Valley businesses who are immigrants. And they're not making those fortunes for the countries they move away from. And I suspect we are seeing something similar as biotech is taking off.

"...these are the folks who are willing to take a risk and start doing something new."

I think you are using the term "productive" in the Horatio Alger sense, not the economic sense. But let's go a bit further. Fact: Most business startups fail within 5 years. Are they then, as a group, being productive?

Interesting question.

It is all well and good to extol the virtues of the successful, but they seem to be the ones who need least the praise.

If Japan can get out from under this..

The article indicates:
1. There will be fewer Japanese in the future.
2. Housing prices should go down due to excess supply.
3. Fewer people will live in the countryside engaging in inefficient agriculture.
4. Construction wages (and labor wages in general) should rise, leading to a shift of workers from low paying work to higher paying work.
5. There will be less pollution and crowding.
6. Some small and remote island habitats may rebound to their natural state.

So tell me what's not to like?

Fact: Most business startups fail within 5 years.** Are they then, as a group, being productive?

If new businesses overall don't make a net contribution, the economy shuts down. And it follows that, the more starts you try, the more successes you end up with.

Consider, you try three times to start a company (which is probably on the low side for the entrepreneurs I know). The first two fail; the third one turns into a $25 million a year company. Sure, you lost money initially. But the economy has grown overall.

** I wonder how much those stats on new businesses failing are skewed by restaurants, which are very very likely to fail. Anybody know?

"If new businesses overall don't make a net contribution, the economy shuts down."

Prove it.

WJ: So, in your example, every attempt to start a new business results in an average profit of $8.3 million (a year).

What's not to like?

What planet is this on? Because a lot of people, not just Japanese, would like to move there.

1. There will be fewer Japanese in the future.
Tax base is going to be a lot smaller

2. Housing prices should go down due to excess supply.
Perhaps, and prices have gone down since the bubble, but since a lot of Japanese collected savings is in the form of the place they live, Japanese will generally have less savings to make sure they live out their post retirement lives

3. Fewer people will live in the countryside engaging in inefficient agriculture.
Efficiency can be problematic. Encouragement of pesticides, mono-cultures, and loss of the village culture.

4. Construction wages (and labor wages in general) should rise, leading to a shift of workers from low paying work to higher paying work.
The construction industry in Japan is pretty problematic.
http://www.eastasiaforum.org/2013/02/26/from-people-to-concrete-reviving-japans-construction-state-politics/

http://www.japantimes.co.jp/news/2006/12/27/national/aneha-seen-as-just-part-of-problem/#.VV13SZOqqko

5. There will be less pollution and crowding.
More and more, pollution is a regional problem rather than just a national problem.
http://www.ecology.com/2013/11/22/transboundary-air-pollution-china/

Also see the last point.

6. Some small and remote island habitats may rebound to their natural state.

Will a Japan, with a reduced population, be able to hold on to those outlying areas?

This isn't to catch you out, but the good points you raise could be things that really cause Japan problems.

wj: Sure, you lost money initially.

You "lose" money by buying things and hiring people. The GDP includes spending by failed businesses as well as successful ones. See how confusing it gets when you think about economics in terms of "money"?

--TP

I wonder how much those stats on new businesses failing are skewed by restaurants, which are very very likely to fail. Anybody know?

I think that's a common misconception.

http://www.bloomberg.com/bw/stories/2007-04-16/the-restaurant-failure-mythbusinessweek-business-news-stock-market-and-financial-advice

If new businesses overall don't make a net contribution, the economy shuts down.

That's probably overstating it, but startups are a key contributor to net job growth:

http://www.kauffman.org/what-we-do/resources/entrepreneurship-policy-digest/the-importance-of-young-firms-for-economic-growth

See how confusing it gets when you think about economics in terms of "money"?

Everyone should save their money in case the economy slows down.

these are the folks who are willing to take a risk and start doing something new. Witness their willingness to pick up and move. In short, the people who make innovations and start new businesses.

I'm contributing to the drift of the thread away from LJ's original topic, so apologies.

Briefly, IMO the value of risk-taking and doing "something new" is overstated. In particular, equating risk-taking and newness with being productive is not accurate.

Again, IMO, too many productive resources are spent chasing the "next new thing". You used to be able to sell the suckers anything as long as its name began with "e". Now, it's anything that is going to be "disruptive".

What gets lost in the fixation on newness / innovation / what have you is the creation of value.

The newness of something in and of itself is not necessarily that valuable. Devoting resources to things that are new and risky, but which don't actually create a whole lot of value, is not particularly productive.

hsh: Everyone should save their money in case the economy slows down.

I am definitely stealing that.

--TP


WJ: So, in your example, every attempt to start a new business results in an average profit of $8.3 million (a year).

Dr Ngo, my example was addressing the issue of whether GDP, or income, per capita (an average) is a good measure of how well a society's economy is doing. Nothing more. Sorry I was not clear.

And what's not to like is obvious if you are one of the guys whose income took a 20% cut. Would you be happy with that? No matter how well the GDP was doing....

HSH: Everyone should save their money in case the economy slows down.

Of course, unless you are stashing cash under your mattress, that money you "save" is actually getting invested in something. Directly by you, or indirectly by the bank you are saving it in.

Directly by you, or indirectly by the bank you are saving it in.

Therein lies the rub. It only works that way for a given "you," but not for "everybody." If everybody saves their money, the economy slows down, investment drops, and money sits as excess reserves at the Fed (i.e. the national mattress).

People and firms stop borrowing, and banks stop lending. People lose their jobs, housing prices fall, blah, blah, blah. (Have you been on another planet for the last 9 years? ;^})

wj: google "paradox of saving".

A.K.A. "paradox of thrift." A fine example of a fallacy of composition, it is.

ya mean, those credit card companies offering big savings if I go into debt with everyone of them aren't what they seem? I thought it was like one of them passbook savings accounts.

ya mean, those signs and mailers for BIG SAVINGS on Black Monday, Tuesday, Wednesday, Thursday, Friday, Saturday and Sunday aren't just like buying a Savings Bond?

ya mean, those economist guys and gals who decry the low savings rate in this great country of ours one day and then wax blue and apocalyptic over what a decline in consumer spending might mean for the stock market and employment the next are two faced horsesh*t peddlers.

ya mean, college students whom society insists MUST hurry to establish credit and shouldn't worry yet about saving money are the recipients of fork-tongued crapola from traveling salesman types?

Ya mean, when I borrow from a bank, they write that down in the ledger as an asset THEY own, but when I put my money in their vault for safekeeping, they run right out and lend it to every indebted Tom, Dick, and Harry?

Shazzam!

Gorsh, Anj, I don't believe people are being straight with one another. Wait till I tell Barney. He'll have one of his fits.

You said it, Gom! Shazzam. It's what's you call high finance, is what it is, I'm right sure.

I don't know, Anj, it sounds more like PURE INVENTION to me. Let's ask Opie and see what he thinks. Hey, Ope?

This isn't to catch you out, but the good points you raise could be things that really cause Japan problems.

Appreciated. But my take is these problems are political and not necessarily driven so much by demographics as the perception of them: "JFC! There are going to be a lot of old people, WTF are we going to doooooooooooooooo?" hysterics.

1. A decline to a population of 100 million does not strike me as a catastrophe. That's still a lot of people. If per capita incomes (standard of living) continue to increase there will be higher incomes to tax.

2. Lower house prices mean those entering the work force can actually afford a decent place to live.

3. Preserving the "village culture" is a political issue, not a "demographic issue". Preserving that culture is very costly, but somehow that fact is not mentioned.

4. I will have to read those citations.

5. Surely you are not arguing that reducing pollution and environmental degradation is simply not worth it because "somebody else" is causing it? I didn't think so.

6. So a huge population is essential to maintaining national sovereignty? I'm not really seeing the connection here.

The basic facts appear to be these:
1. The Japanese are not willing to encourage any meaningful numbers of immigrants.
2. They, like just about every other first world society, don't want to make their living struggling to get by running small farms.
3. Their women don't see much value in raising large numbers of children, and who can blame them for that?
4. They most likely will experience a much older (on average)population age going forward.

Asserting these trends somehow constitute a crisis strikes me as simply misplaced.

We get the same line of reasoning here:

1. The ratio of old to young will increase in the future.
2. This will mean trillions in "unfunded liabilities", and a terrible burden on the young workers of tomorrow, what few we will have. What can be done?
3. We could encourage more immigration of young healthy workers to do crap jobs and pay taxes to close this gap?....ayeiiiii!!! They are brown and speak Spanish. Noooooo!
4. We could pay higher taxes? Nope. The tax burden is sooooooo crushing. That is off the table. Find another solution.
5. We could cut benefits and raise the retirement age so fewer people actually get to experience "retirement" and if they do, they certainly will not have enough money to enjoy it.
6. Well, see, isn't the solution obvious?

Of course, those able to do some simple arithmetic and employ reasonable assumptions will see through this con job. For it is simply a political agenda employing scaremongering tactics to get its agenda in place.

And then there are those of us who think that the current retirement age is not particularly reasonable (dispite, or perhaps because of, being right on top of it). But who
a) don't have a problem with immigrants who happen to be Hispanic or brown or anything else. As long as they are willing and able to work (or part of the family of someone who is), and that describes pretty much all immigrants in my experience, I'm fine with it.
b) have memories which stretch back to the 1950s, when tax rates actually were high. Not the piddling ones we have today. I don't love paying taxes any more than anyone else. But I know better than to think they are "crushing" or anything close to it.

Just sayin', the explanation ("con job") you offer may apply to some. But it sure isn't anything like complete.

Thanks for the reply Bobby. I'm wondering if your observation that this (and perhaps almost any?) demographic problem is a political problem is related to Nigel's observation that it is just a 1st world problem. One one level, it is, on another level, it sounds like the 4 Yorkshiremen sketch.

In terms of point 6, there is this
http://www.theguardian.com/world/2015/apr/27/chinese-island-building-in-south-china-sea-may-undermine-peace-says-asean

and one remembers that lebensraum was one of the key points that got us going on WWII.

Hi LJ,

It strikes me that future "1st world" demographic trends indicate we may have some associated distributional issues that do not bode well for the current distribution of claims on future economic output (as measured by who has the money). But this is not an economic or demographic "problem" it is the age old political one: Who gets what?

At least that is how I tend to see it. Now if you assume the current distribution of these claims is just honky dory, well, you may be concerned. Thus the need to promote "crisis" and the striking absence of proposals from the crisis mongers of the well off giving up anything. Instead you see admonitions to "tighten our (i.e., your) belts, raise the retirement age, have more children, yadda, yadda....

You see no similar admonitions for the rich to do anything.

Certainly Chinese territorial claims may be a problem for its neighbors. Can't disagree with that. I just do not see how that relates in a core essential way to Japanese demographics, or China's for that matter.

And then there are those of us who think that the current retirement age is not particularly reasonable

Reading that, it is not clear if you think the retirement age is too low or too high. To me, raising the retirement age would be an unnecessarily cruel and near criminal public policy, because it discriminates against the poor, manual laborers, and black Americans who tend to have shorter life spans. It is essentially a policy that tells them, "Thanks for taking the hit on this one" and offers nothing in return.

It is an obscenity.

As for a) good on you. But you identify with a political party that is, for all intents and purposes, xenophobic on this issue.

and for B)Good on you again (but if you are like me in your mid 60's, I dare say you did not pay those marginal rates). And again, you identify with a party that has made redistributing income upward a core part of its political belief system.

As for "con jobs" I dare to you show that the material put out by the Peterson Institute is in any way an honest attempt to deal with the "issue" of the obligations of future "entitlements". They are propagandists with a pretty straightforward political agenda-roll back the New Deal, Social Security, and Medicare so the rich won't have to have their taxes raised.

Bobby, it is true that my party has become zenophobic. Not to mention that has become the party of the rich (and those they can cozen into supporting them, thanks to that xenophobia among other things).

But its roots aren't there. I still think of it as the party of Abraham Lincoln and Theodore Roosevelt. And harbor the (no doubt delusional) hope that it may return to its roots there.

There is probably a case to be made for just giving up the fight. On the other hand, I observe that our system of government doesn't work well without two major parties. That generating a new major party is extremely difficult. And thus that there isn't an obvious alternative route in sight. (Perhaps LJ can toss out some observations on one-party rule in a democracy from Japan's experience. Thus deftly returning to the origins of this thread. ;-)

To your other point, I think the retirement age is generally too low. But I think what it ought to be is something like "current life expectancy minus 10 years." Or 5 years. Or whatever.

Which would remove your complaint (that some groups get the short end of the later retirement stick). We know it is possible to generate those kinds of numbers -- life/annuity insurance companies do so all the time, and their business depends on being able to do it right.

The only argument would be over which ways to divvy up the population, so as to give everybody a reasonably fair shake. Some categories, as you list, are pretty obvious ones. But do we, for example, give an earlier retirement to those who have trashed their own health, via tobacco or other drugs? Or does that just reward bad behavior by removing the consequences, the entirely foreseeable and avoidable consequences, of their decisions about how to live their life?

The idea of social insurance is to "smooth out" the knocks and bumps of life, not divvy it up and hand out benefits based on arbitrary moral criteria.

But do we, for example, give an earlier retirement to those who have trashed their own health, via tobacco or other drugs? Or does that just reward bad behavior by removing the consequences, the entirely foreseeable and avoidable consequences, of their decisions about how to live their life?

Well, no. But why go there in the first place? This strikes me as means testing benefits, but just using different yardsticks. And if somebody is truly in need....well, we should meet it.

Because it is better to give than to receive.

I don't see people trashing their health, or not, because of the retirement age. No one wants to trash their health (whether or not they can retire when that takes its toll), but they still do so for whatever reasons. And you can't remove all the consequences. Being in ill health sucks, even if it sucks less if you have some money.

It's no secret that cigarettes can cause cancer, that alcohol can cause liver disease, that over-eating can cause diabetes and heart disease, that meth and heroin will totally fnck you up in almost every way, but that doesn't stop people. If none of that stops people, the retirement age, of all things, sure as hell isn't.

wj,

Where did those Bull Moosers go? Anybody know? They seemed to have vanished by 1920 and Harding's election victory. So what did they do from 1912 to 1920?

If not done already, the topic might be a good PhD thesis topic for some future miserably paid history adjunct.

Per Wikipedia, they grudgingly went back to the Republican party.

The thing that I find most striking in the article that LJ cites is that 80% of Japanese farms are really small. A "large" Japanese farm is one that is 20 hectares or more.

A hectare is about 2 1/2 acres. A 50 acre farm is a large farm in Japan.

There are a surprisingly large number of farms in the US that are that small, but the overwhelming majority of food production comes from farms that are much larger - 500 acres or more, often thousands of acres. If I'm not mistaken, virtually all of the major cash crops in the US - corn, soy, alfalfa - are grown on large farms.

Depopulation of agricultural areas will not just result in a decline in "quaint" village lifestyles, it will likely result in a re-organization of the food industry in Japan. And, as LJ notes, efficiency is problematic.

I think what it ought to be is something like "current life expectancy minus 10 years."

Why?

or, to put it another way...

US average life expectancy is a bit over 78 years.

Full retirement age for anyone born after 1960 is 67.

so, we'really already at average life expectancy minus 11 years and a couple of months.

you want to go higher than that?

The Texas Senate just retired Wyatt Earp and the Governor has signaled he'll sign the legislation.

This after Earp was winged in the latest shootout among whites and Hispanics whose fathers are apparently in absentia, given the gunfire and the killing.

But he enjoys a smoke now and again.

I hope the f*cker enjoys the consequences of HIS behavior as much as sadistic America enjoys putting it to him.

Maybe he should take up currency trading or mortgage brokerage if he wants to avoid consequences.

Remarkably, FOXNews sums up my opinion of the completely fake crapola called "generational warfare" ginned up those with "interests" on either side.

http://talkingpointsmemo.com/livewire/fox-gasparino-women-journalists-millennials-morons

It's the arrogant fnuking blonde morons versus the dyspeptic, cranky, patronizing, old c*cksnookers.

Maybe a link to the news regarding Marshall Wyatt Earp:

http://www.usatoday.com/story/news/politics/2015/03/17/texas-senate-gun-open-carry/24892513/

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