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May 19, 2015

Comments

Hello all,

For any of you who may remember me, I posted on ObWi several years ago for some time, but stopped for a number of reasons at that time – a master’s dissertation, work, plus the fact that I hadn’t felt I could contribute truly well-thought-out posts, with some research backing them – otherwise I was a troll, and I didn’t want to be one. Yet I’ve followed ObWi ever since, and the community that’s emerged here is solid.

Knowing LJ and still living in Japan, I can weigh in a little more here on his original post. One aspect of the debate that’s emerged is the conundrum over whether Japan’s future prospects are a demographic or political issue; to muddy the waters, my sense is they’re both, as political power here is largely in the hands of the elderly; it’s not too much of a stretch to call it a gerontocracy. So LJ’s concerns over the shrinking population and tax base are legitimate, as the young are faced, as the most productive workers with increasingly diminishing returns, with propping up the the elderly as the least productive, yet with the greatest largesse the pension system here is likely to yield.

So one aspect of the constant economic stagnation that Japan has been plagued with is that those with the most have tended to spend the least. Another is that the country has never seen the startup culture emerge to the degree it has in the U.S. – starting a business here is still prohibitively expensive for most. A number of years ago the Koizumi government reformed the business law here to allow limited companies to be started up for one yen; all good and fine, yet when the fees for the required documentation and licensure are figured in, and perhaps even employed a paralegal to husband the paperwork, a person has spent the equivalent of US$2-3,000 before they can get going – and then they have to hire the accountant to do the books right if they don’t have the nous or time to do them on their own.

In other words, there are bureaucratic hurdles in addition to the ageism that’s preventing the emergence of a young, robust, new enterpreneurial culture even with the legal reforms.

One question I have would be what the scene is in the EU on such an issue and whether governments have responded to liberalize such regulations as a hedge for younger businesspeople (particularly in Germany – here’s looking at you, Hartmut).

One other upshot? The fake generational warfare histrionics the Count cites in the U.S. may more likely emerge here.

Here's some consequences:

http://www.washingtonmonthly.com/political-animal-a/2015_05/kansas_wants_the_very_poor_to055674.php

I hereby endorse the open carrying and open shooting of weapons by welfare recipients in the great state of Sadistikistan, which is not Kansas anymore, Toto.

I wonder if these people are also required to hop on one foot as they withdraw their $25 (before the fee is deducted) increments from the ATM.

Maybe we can rig the machines to administer an electrical shock to the recipients too, just to keep them hopping.

How about each time they insert their debit card, the machine squirts them in their good eye with a diluted solution of hydrochloric acid, just enough to keep them miserable for the rest of the day while not impairing their talents for minimum wage labor.

Maybe a little door could open and a boxing glove could spring out and punch them senseless. Or maybe just a hand springs out and pokes them in the eye or gives their testicles a good hard crushing.

You could have an additional boxing glove situated a little lower to punch out their kids standing by.

Park benches with automatic catapults installed if they dare to take a load off.

We're ruled by sadistic, subhuman pig vermin and studies show there is only one thing they understand.

"you want to go higher than that?"

Posted by: russell

fck 'life expectancy'. You provide a decent economy, rather than quite deliberately depressing wages for the overwhelming majority of Americans, and then we can talk.

So, full disclosure, I know very little about Japan. But this caught my eye:

In other words, there are bureaucratic hurdles in addition to the ageism that’s preventing the emergence of a young, robust, new enterpreneurial culture even with the legal reforms.

I think altering that will be an aspect of the solution. I think the problem with depressed regions is once the downward spiral starts its hard to pull out of it. Poor economics leads to migration, leads to a depressed tax base, leads to crumbling infrastructure, leads to migrations, etc.

There are advantages to this...some people prefer to live in sparsely populated areas (although it sounds like the Japanese are migrating mostly to cities? So perhaps wanting to live among a sparse population isn't commonly culturally? I don't know, I'm asking.). Additionally, it can drive down property prices, cost of living, etc. A lot of things to pull people back.

I think encouraging and enabling economic dynamism is necessary for that to happen, however. You want to encourage people to start new businesses, encourage traffic to the depressed area, have enough jobs in the region to encourage migration, etc.

Otherwise, if old businesses are closing and if its a struggle to start new businesses, I imagine its difficult to convince people to migrate where they have no economic prospects.

Also, I'd like to point to something in the article:

Large farms (those that have at least 20 hectares under cultivation) are expected to grow in number, benefiting major corporations with the resources to invest in and develop the land.

Others have pointed out some of the problems with high-efficiency (generally monoculture) farming. But I think there is a additional concern with encouraging larger corporate interests, which tend to concentrate wealth rather than distribute it. And in the case of multinationals...the wealth can be offshored. Far better, imo, to foster and encourage the smaller players.

...with propping up the the elderly as the least productive, yet with the greatest largesse the pension system here is likely to yield.

So one aspect of the constant economic stagnation that Japan has been plagued with is that those with the most have tended to spend the least.

This aspect of the situation is one that confuses me a bit. Won't the older Japanese have to spend their money at some point on services, provided by younger people, or leave it to younger people when they die?

It seems to me that all this money that's been bottled up has to be released one way or another, and that it's going to go to the younger generation when that happens. It should be fairly well distributed, too, with labor in relatively short supply.

But, again, the money won't matter if the real resources are insuffient to support the mix of productive and non-productive people in Japan, with productive people being among the real resources. That's one thing money can't fix. (And overwrought, shortsighted concerns over money can prevent even plentiful real resources from being used in obviously beneficial ways. That seems to be the current problem in much of the world.)

But I think there is a additional concern with encouraging larger corporate interests, which tend to concentrate wealth rather than distribute it.

I would include that as among the problems with efficiency, if not chief among them.

Not just in Japan, but here as well. And, not just in agriculture.

Won't the older Japanese have to spend their money at some point on services, provided by younger people, or leave it to younger people when they die?

Possibly true, but the problem is that the money won't go directly to said young people unless they're independent contractors or freelancing around as home help for the elderly, though even there they would then be obligated under law to declare such status on their taxes, which also means paying directly into the pension and national health insurance schemes, which given their status in business will be at higher rates than as employees working for a service.

So it's being faced with what likely aren't going to be high wages working for someone else, or wages eaten up in large chunks with taxes, national health insurance, and, well, the pension system itself, that the most productive will be up against. Without further reform to the business law that's keeping a considerable layer of administrative nomenklatura in work themselves, along with tax relief, money is going to be bottled up in that part of the nexus that won't go to economic activity that will move money around more freely - in other words, services for the elderly will tend to monetarily stay within the circles of the elderly, rather than around the economy.

It helps tremendously when those who benefit from such services might be able, in turn, to actively do something in addition to simply spending money for more of the services, so that the money moves.

That's my strong impression. My apologies in advance for any ignorance of basic economics.


The Shadow Economy in Industrial Countries: Reducing the size of the shadow economy requires reducing its attractiveness while improving official institutions (.pdf)

I think the problem with depressed regions is once the downward spiral starts its hard to pull out of it. Poor economics leads to migration, leads to a depressed tax base, leads to crumbling infrastructure, leads to migrations, etc.

I wonder how much of that spiral, at least in Japan, is bad economics. Versus how much is simply a matter of land which is extremely marginal for human habitation in any significant numbers. I mean, the US is big enough that we never much felt driven to settle marginal land. When we have an area like southern Utah (to take an obvious example), almost nobody tried to make a living there. Which means that it hasn't depopulated recently simply because never was populated.

My impression (lots of geography; no personal experience) is that lots of rural Japan is sufficiently mountainous that it got populated, as much as anything, only because there wasn't much other land available.

So if all these old people who "run things" have all this money, but are not spending it then where will it go when they die?

Thanks sekaijin for the insights to we who know little about how the gears mesh in Japanese society. Looks like we have a couple of lines of causation here:

A. An identified demographic time bomb will cause huge economic problems for Japan in the not too distant future.

B. Current Japanese political power relations and political outcomes will exacerbate economic problems in the future due to the impact of clearly identifiable demographic trends.

I'm still leaning toward B. The politics are making the problem difficult, not the other way around.

(Corrected link)
The Shadow Economy in Industrial Countries: Reducing the size of the shadow economy requires reducing its attractiveness while improving official institutions (.pdf)

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?

Russell, I think with that figure of 78 you are looking at life expectancy at birth. I was looking at something more like life expectancy at retirement. Or, if you prefer, life expectancy at 65. Either way, obviously a rather larger number. And perhaps more so, in many cases, if you control for various other risk factors the way insurance companies do.

As for why? Because the system can only support so many years per capita of current benefits without needing higher funding. You can talk about cutting benefits (politically impossible), raising the retirement age (which we are already dabbling with), or raising the amount contributed either by workers or by the General Fund. But the numbers don't work otherwise.

(And overwrought, shortsighted concerns over money can prevent even plentiful real resources from being used in obviously beneficial ways. That seems to be the current problem in much of the world.)

That's almost as good as the crack about everybody saving money ....(but somebody already stole that one!)

"But the numbers don't work otherwise."

That depends on the assumptions you make regarding the future. Because even small tweaks to critical variables yield large changes in outcomes when you project out 40 years, you are essentially wasting your time.

Those in the future will be the ones meeting this challenge, if and when it occurs. What is so hard about letting them handle it?

Furthermore, cutting benefits and/or raising the retirement age today does not provide any more fiscal "room" to help meet this so-called challenge decades from now.

Because the Defense Department can only be supported for so many years at 5% real growth without the general fund needing higher funding.

There are those who advocate this as policy for future defense spending going forward. The claim is identical to yours about SS.

But it is never characterized as a "crisis".

sekaijin, I fear I am pretty ignorant about the situation over here even in my own country. I'd even guess that I am better informed about the US mess.
Retirement age has beeen increased to 67 and it is expected that one day it will go up to 71 (i.e. about a decade below the current life expectancy). To retire earlier (unless for valid cause iirc) means cuts in benefits.
Wealth distribution inequality (according to very recent studies) is high compared to other OECD states but unlike in other countries the big crash under Bush the Lesser did not exacerbate it. It's still far better than in the US or other 3rd world countries.
Personally, I am pessimistic. If it was just our problem, it could imo be solved in a reasonable way. But it's just a matter of time before Big Finance will blow up the system once again and even worse than last time. I hope in this case there WILL be lanternizing, of the literal kind! We are still civilized, so no Sir Robin or Osmin treatment except in the most extreme cases (fossil fuel executives).

The difference is that the Defense Department budget doesn't have 5% growth locked in by demographics. We could have the defense budget stop growing entirely tomorrow. There would be political flack, of course. But nothing like what would appear if we said that total Social Security spending would stop increasing -- simply because the latter would mean that a lot of people would suddenly be seeing less money that they have been promised.

russell:

Not just in Japan, but here as well. And, not just in agriculture.

Agreed. Strongly.

But nothing like what would appear if we said that total Social Security spending would stop increasing..

There are some very good reasons why that is true.

Social Security is adequately financed in the short term but faces a modest long-term financial shortfall amounting to 1.0 percent of gross domestic product (GDP) over the next 75 years.

Dean Baker

The adjustment to the program, even assuming the dismal economic growth numbers used to artificially make the numbers look worse, are minor.

There is no crisis.

Current Japanese political power relations and political outcomes will exacerbate economic problems in the future due to the impact of clearly identifiable demographic trends.

In a nutshell bobbyp captures my sense of what's happening far better than what I have, all the more so that the political elite themselves are the elderly, or nascent elderly, who are standing to benefit the most from the system as is and have no incentive to reform it.

As for what happens to the money when the mandarins die off, that's a big question that also gets us back to LJ's original post - since a fair amount of it is bottled up in unmovable assets such as homes and real estate, then we have the unique spectacle of personal and familial wealth evaporating into some sort of public ether as there is a) nobody to pass it on to who have the income levels and wherewithall necessary to maintain it or b) no-one to pass it on to at all.

Property rights here are determined by what will appear to outsiders as a byzantine and again, bureaucratized maze of family registration and archaic property laws. In the case of the home I'm living in, it was my wife's grandfather's house, which he built. He died during WWII but by some quirk in the law, couldn't pass on the deed automatically to his son (my FIL). It took my FIL forever legally to obtain the title to the property and have it changed in his name, allowing him to more readily pass it on.

So adding to the problems bob's perception holds is also a bureaucratized layer of, for lack of a better term, familial administration that, makes certain procedures smooth (continued registration in the health insurance and pension schemes when changing addresses, for one) while clogging up others (long-standing titles, deeds and such).

I too have weighed all this, especially lately. I do not wish to be pessimistic but in a similar vein to Hartmut, I do not trust the decision-making apparatus of the political elite and feel strongly that until we put a halt to the capriciousness of the high financial sector there is no redoubt against future meltdowns.

Thanks to everyone who commented. I don't mind the thread drift and I figure that any discussion of foreign things is going to raise discussion for USaian stuff. That said, I think there is a danger of conflating the debate made around particular demographic claims in the US and in Japan. In the US, you have a culture that supposedly values the diversity that immigration brings accompanied by a reaction to that diversity while in Japan, you have a culture that has great problems with immigration but is being challenged to reexamine that by current trends. I read a lot more in English about problems in Japan, but it isn't altogether clear who is writing because they have an opinion on Japan and who is writing because they are using Japan as a stalking horse for whatever hobby horse they have with their own country.

One way to look at government is that it manages intergenerational exchanges of wealth. The creation of the US university system in particular and education in general is a way to transfer the wealth of the older generation to something that can be used by younger generation. Social security works in the other direction. In so far as it is a political problem, if you had a benevolent dictator who could determine who gets what, you are set, so we just need to set out to find that person...

More information about the situation in Japan
https://youtu.be/1FS11dn-jTU

I would second what LJ's said. I am not an expert even with living here, though it too is easy to read the problems of one country into the problems of another and project what fears and uncertainties one may have onto that another.

Having said that, there is no question that many countries (and governments) do watch what happens in the U.S., and whether America realizes it or not, and whether the leading countries outside the U.S. acknowledge it or not, what America does (and doesn't do) still tends to set a tone for the rest of the developed world.

What dismays me is a sense that if something is wretched enough to gain circulation in American political and high financial circles, then it seems to be good enough for the outside. I'm seeing a lot of this in various places - the climate change denial-ism of the Abbott government in Australia, the voting divisiveness of the recent election in the UK, and the second Bush-era stridency with which Abe is pushing the Article 9 revisions in the Japan constitution. In each of these cases public opinion is irrelevant - it's about winning at all costs, or winning for its own sake. The real problems get papered over and the fake ones pushed because the political will favors it.

It's more a complaint than an offer of solution or even a direction, so that's all I'll say for now.

Hey, never let it be denied that we are a beacon unto the world.

While some of us make a big steaming deal about having had enough of the wretched refuse from yon teeming shores, that doesn't mean we don't want to share our very own home grown wretched refuse wit da rest of yous.

We lead by example.

Like King Richard III in his opening soliloquy, Newt Gingrich and his fellows declared war and enlisted the world in making exceptional the small, mean, low malignancies of uncivil discourse, and lo, many do follow.

Thus, in their image and ours now, the world is rudely stamped, not shaped for sportive tricks, deformed, and unfinished. Dogs do bark at them as they do halt. They are determined to prove a villain, and hate the idle pleasures of these days. Plots they do lay, inductions dangerous by drunken prophecies, libels, and dreams, to set brother against brother in deadly hate the one against the other.

Dive, thoughts, down to Newt's soul-less bottom, for good Clarence comes, who shall be upended in a barrel of black bile of conservative making when it is time.

And now, America, via the bitter tongue of our lowest, meanest denominators, shall gather our hump, and our withered, grasping claw, and limp to our destiny and bid you follow in our malevolent steps.

Walk this way, please.

Count,
every nation, every culture, has some "good ideas" and some "bad ideas".

What American excels at is marketing its ideas to the rest of the world.

Some ('democracy') seem to be overall good. Others (hyper-capitalism, climate denialism) not so much.

What is fascinating is this: America may be a beacon to the world, and have everybody else's actions informed to some extent by what we do. Certainly we take the position that everybody else ought, to some degree, to be following our shining example.

But at home, we spend an inordinant amount of time worrying that we might somehow be following someone else's approach to something. Or denouncing each other for trying to do so -- as a straight slur, reality not required. Even if that approach used elsewhere is demonstrably superior to the one we have been trying.

Oh yes, and worrying that we will fail at persuading the rest of the world to adopt our way of doing things. It's like we somehow missed the fact that American culture spent the last half century overwhelming everybody else's across numerous areas and around the world.

It's not that nobody else retains their own culture; they do. But for example, watch a music video from anywhere else in the world (with the sound off) and see if you can tell that it wasn't made here. Good luck with that.

Guess insecurity is somehow built into our culture as well....

I think it is the missionary impulse rather than insecurity. A lot of writing you see about Japan's demographic problems (I won't use the word crisis, though most of the writing does) seizes on the fact that Japan as a nation is not comfortable with immigration, with the implicit point that gee, iff the Japanese were just like us, they wouldn't have the problems they are having. It's not just Japan, discussion of France and the hijab ban,
http://articles.latimes.com/2011/apr/07/opinion/la-oe-gartonash-burka-20110407
http://www.prospectmagazine.co.uk/magazine/why-france-is-banning-the-veil

(I realize that the first is by Timothy Garton Ash, a brit, but I think that missionary Puritan streak is a result of that 'special relationship' between Great Britain and the US and he's as Pax Americana as his colleagues at the Hoover Institute)

Germany and gastarbeiter

http://www.wsj.com/articles/SB119983381483476031

Just for fun, I took a graph from the WSJ op-ed and filled in the nouns to make it applicable for the US

At the same time, _America_ have long deluded themselves that the _illegal immigrants_, would one day return to their homelands -- including _American_-born second and third generations of "foreigners." A strict citizenship law based on _nationality_ was only recently loosened under the _Obama_ government, making naturalization easier. _Republicans_, in the upper house of Parliament in 1999, helped block government plans to ease the citizenship rules even further.

Germans do it, it is deluded, Americans do it, it is rational.

Well, France did have some worries about demographics a decade or two ago, but their response was to provide tax incentives for having more kids, free high-quality child care and preschool, and generally making it much easier for women to have kids without dropping out of the economy.

From what I've seen, it's worked fairly well. They also get plenty of immigration, but the "family support" is something that Japan (or other countries) could emulate even without immigration.

France also had a pro-natalist policy back in the 1920s and 1930s, as I recall, in the face of growing Germany. Plus ca change, etc.

During WW1 priests ranted against too low birth rates on both sides of the Western front. Some sank so low as to viciously attack mourning women that had lost five or six sons in the trenches for not having produced enough, so they should not mourn but blame themselves for not having any left (daughters as usual did not count obviously). In WW2 some Nazi functionaries preached a 'one son per year' gospel to female students (in essence: you should not be here at the university but at home pregnant and preparing your already born kids for being fed to the bloodmill).
Religions (and their competition) still play a great role in keeping birth rates up (clerics calling their sheep to outperform the opposition). Especially strong where the population is mixed (prime examples are the Philippines and parts of Black Africa). And in the US there is the quiverfull movement that hopes to win the culture wars by outbreeding the godless (blissfully ignoring that the most rabid atheists tend to come from hyperreligious families).

We should find a peaceful way to get back to a human population of less than 2 billion. With the current trends our (non-negotiable!!!!!) lifestyle is simply not sustainable. But that's one thing we are definitely not good at (especially the peaceful part).

The demographic timebombologists have now turned their attention to China. How can the human race avoid the oncoming shitstorm tsunami of useless old people?

It would help if they could do simple arithmetic.

why are links so hard?

Fixed, Bobby (html is a whole language in itself. Personally, I always have to consult my book for anything beyond the few bits that I use regularly.)

Religions (and their competition) still play a great role in keeping birth rates up (clerics calling their sheep to outperform the opposition).

This is incorrect.

http://www.ted.com/talks/hans_rosling_religions_and_babies/transcript?language=en

" Religion has very little to do with the number of babies per woman. All the religions in the world are fully capable to maintain their values and adapt to this new world."

Perhaps it should be rather that religions (and their clerics) play a great role in to keep birth rates up.

The Catholic Church found out some decades ago, such efforts are not very successful. Islamic clerics, if they make the same drive, will likely see the same lack of success. (See the TED talk Thompson links to on the experience of, for example, Qatar.)

I suppose the good news for the various religions is that none of the other religions are going to be any more successful. So their fears of being out-bred into obscurity are misplaced. ;-)

I have some quibbles with the claims made there, thompson. It completely leaves out the different power of organized religion depending on the country and the difference within countries between the nominal adherents of a faith and the ardent ones.
Plus, it does not look at the alternate scenario of the absence of religious influence. Religions may fight a rearguard action on this but it is very doubtful that they did not delay the natural downward trend.
What can be seen is that in Europe the RCC overwound the screw leading to a backlash, i.e. by getting too extreme to stem the tide, it lost the faith in the most catholic countries (Italy, Ireland, Poland) that by now have the lowest birthrates. From the polls I read there is a connection, i.e. especially the young woman have stopped listening due to an overdose of preaching. In Poland it took a perverse side turn first. Under John Paul II. the abortion/contraception balance tipped heavily towards the former as a result of the constant refrain of 'using a condom = abortion = murder' (or even 'condom > murder'). It's better to abort a few times than contracepting every time if the church considers them equal.
If we want to measure the (imposed) religious influence vs. natutal trends, we would have too look at cases of rapid transition (in either direction), like the Iranian revolution or the takeover by the Taliban (I can't come up currently with an example of the overthrow of a restrictive religious regime by a secular one*), and see, whether it led to an at least temporary shift in the birthrates compared to the local trend before.

*the Soviet occcupation of Afghanistan would not serve well there, obviously.

My take on the problem with China is that when they decide they like something, you really need to get out of the way. I don't know if that is a crisis, but it does mean that your values and what you like don't really mean diddly, which can be a hard lesson to learn.

To choose as obscure an example as possible, take snooker, a British game that is now hugely popular in China. The world championship takes place is a theatre in Sheffield called the Crucible.

http://www.telegraph.co.uk/sport/othersports/snooker/10773853/China-builds-its-own-Crucible-Theatre-in-bid-to-host-the-World-Championship.html

The 2015 World Cup will be held in Wuxi
http://www.worldsnooker.com/china-to-host-snooker-world-cup/

It's going to be hilarious when the logic of the marketplace is applied with the weight of a billion Chinese behind it.

Napoleon Bonaparte once said of China, "China is a sleeping giant, Let her sleep, for when she wakes, she will shake the world."

Or something like that.

Hartmut:

From the polls I read there is a connection, i.e. especially the young woman have stopped listening due to an overdose of preaching.

Unless that polling is backed up with fairly compelling demographic data that undermines Rosling's conclusions, it really doesn't reach the question.

You stated: Religions still play a great role in keeping birth rates up.

Rosling has collected and analyzed a large amount of data which is at odds with that assertion, and which supports an alternate hypothesis.

If you have data which supports your view, I'd be curious to see it. Because bluntly, a poll showing (and I haven't seen the poll, so I'm guessing) that young women are unmoved by religious arguments to have more babies, seems to argue against the influence of religion on birthrate.

My quibble with your quibble, in short, is that there are many, many things that people 'just know'. From the important to the mundane, there are things that just make sense, and that are accepted uncritically. That doesn't make them correct.

A million years ago, in a college freshman Speech class, I did an extended riff on the "what if?" concept (I think I stole it from a spoof in TIME Magazine) of a hundred million Chinese people cannon-balling simultaneously into the China Sea and the expected gigantic tidal wave that would hit the West Coast of the U.S.

Maybe still possible:

https://www.youtube.com/watch?v=aPbtHqJQTq8

and, a wave swimming pool, for practice:

https://www.youtube.com/watch?v=LNGvDQafrlQ


A metaphor.


Regarding sex, procreation, gender roles, birth control, and the attendant issues of rape and molestation inside and outside the various religions, the general religious message is so fraught with cross-purposes and contradictions that I wish clerics across the board would just shaddup already.

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