Washington Post Invents a Japanese "Demographic Calamity"

[Hannah Bell]

The Washington Post is very unhappy with Japan's government, which it complains (in a "news" story) "has all but ignored an impending demographic calamity." The calamity is a rising ratio of retirees to working age people.

The "calamity" in this story should be an intense labor shortage. That is not consistent with the relatively high (for Japan) unemployment rate that the country has experienced in recent years. Furthermore, it is not clear that a labor shortage is a "calamity" for the bulk of the country. Typically, a labor shortage would lead to a bidding up of wages. The least productive jobs, for example, the late shifts in convenience stores or parking valets, would go unfilled.

The Post however assures us that Japan faces a calamity because of "a growing clamor from business groups that predict ruinous decline because of a lack of workers. " Post reporters have apparently not be told about corporate lobbyists who sometimes exaggerate to advance their employers' interests.

--Dean Baker





http://prospect.org/csnc/blogs/beat_the_press_archive?month=07&year=2009&base_name=washington_post_invents_a_japa

[JonQ]

1. I think the main concern

is that at some point they are going to have more retirees than workers, or a comparable number. Retirees tend to be old, aren't working (so no tax income) and require the same or greater infrastructure as workers, while providing a much greater burden on health and human services.

Social security, for instance, works because more people are paying in to it than are taking out at any given moment. It kind of falls apart when you flip those numbers around. We're already starting to worry about that here in the US, and we still have a growing, albeit slowly, population.

I don't know if this will be as terrible as predicted (often time predictions are exaggerated) but it is definitely a concern that someone should be keeping their eyes on.

[hedgehog]

3. Social security works as long as the people working generate

enough excess goods and services to take care of themselves and the people not working. Social security is a means to equitably redistribute these goods and services. People need to think of money as a marker for the transfer of goods and services.

[JonQ]

8. Ok, so if there are as many people working

as retired that means on average every worker has to generate enough for himself and one other person, in addition to the taxes paid for other items (a countries budget is never just social security) and providing for any children he may have, as well as random expenses that may come up.

Some people are making enough for this, most are not. That is where the problem comes from. When the expenses outweigh the revenues you have a deficit, and a deficit with no end in sight is a problem.

[Hannah Bell]

9. you're thinking in terms of money. people don't eat money. like the other poster said,

today's worker, on average, can generate dozens of times the volume of goods & services the worker of the 1950s could.

China, for example, with a miniscule fraction of its workers, produces the overwhelming majority of shoes sold in the world.

It's called "the miracle of productivity".

Money is the sleight of hand via which most of the value of increased productivity is siphoned off to the ruling class.

[JonQ]

11. So the government is going to start collecting taxes in tangible goods now?

You sir owe use 14 chickens and a bushel of wheat for the year!

No, they collect taxes (and redistribute them) in dollars, yuan, pesos, etc. So the only things that matter are 1) how much money is coming in from taxes, 2) how much needs to be sent out to retirees, and 3) how much it costs to live.

2 and 3 are going to increase at a certain rate every year (2 is about to have a huge, sudden increase). 1 would then have to increase to match that, and so far it isn't.

[Hannah Bell]

12. irrelevant to the point, which is that only a small fraction of the workforce is needed to produce

the goods & services people require.

The rest is froth to channel wealth to the top & control & spy on the bottom.

[JonQ]

13. A larger fraction than you might think

especially since most people now expect a higher standard of living than they would have 50 years ago. So comparing the rates of productions is meaningless, not to mention the increase in costs associated with that progress.

If we're talking about providing everyone with some shack that will technically keep them from dying from exposure and enough of some staple grain to not starve, then yes, it is easy enough. But somehow I doubt most retirees will be content with that. Most want medical care (much of which did not exist 50 years ago), cable television, air conditioning, internet and so on. If you cut it down to the bare minimum, soup line style handouts then perhaps this wouldn't be an issue, but since they can vote that won't happen.

Simple fact is that retired people don't produce goods, workers do. And when you have too great an imbalance then you have a problem.

How is a massive increase in the number of dependents, with no increase in workers, *not* going to be an issue?

[Hannah Bell]

15. It's certainly an issue for the ownership class, but there's no issue

of shortage of productive capacity to support retirees' medical care or TVs.

"when you have too great an imbalance"

US productivity has approximately tripled over the last 50 years (since ~1969). That means today's worker produces 3 times the goods & services (300% increase) the worker of fifty years ago did.

US population growth in the same period = about 50%.

Dependency ratio (# of workers v. non-workers in population) 1970 v. present: ~60% v. ~50%.

http://books.google.com/books?id=6pNkt3-8JoQC&pg=PA109&lpg=PA107&ots=lkl2zMeAgc&dq=us+dependency+ratio+1970+2000

I.e., in 1979 a smaller % of the population was in the paid workforce than today.

Estimated dependency ratio 2040: 60-65%, still lower than in 1970.


Wage growth 1970-present: flat
Value of goods & services produced 1970 v. present: 300% increase

Which means the ownership class took the gains.

Your post is full of BS.

[JonQ]

31. And in that time

how much has the cost of living and standard of living gone up?

Relevant facts.

[Art_from_Ark]

38. Did you mean "since 1959"

or that US productivity has tripled over the last 40 years (i.e., since ~1969)

:shrug:

[anigbrowl]

26. That depends on the industry

If there are electronics involved (eg the walkman vs the iPod) then productivity gains can be massive. An iPod can hold literally thousands of times more music than a walkman plus a cassette could back in the day, and the manufacturing is very likely vastly easier too.

On the other hand, if you're in the business of making tatami mats (what the Japanese use instead of carpet, and a fixture in every home: basically a mat woven out of dried rushes) technology doesn't have as much impact on your productivity.

There is no single rate of productivity increase that applies to all economic activity. One also needs to consider that while the capability of products and their rate of output can increase, the profit may drop accordingly. Over 25 years, the computer I use every day has increased in power about a million times (literally). However, I am not paying a million times as much for all this increased functionality; in real terms, the computer I'm using now is cheaper than the first one I owned.

If your general thesis were true and Japanese companies (but not consumers) were enjoying all the economic benefit of technologically-increased productivity while denying it to workers, then the GDP of Japan. In fact, GDP per capita has more or less stabilized since the mid 90s, which correlates loosely with the leveling off of population growth:

http://www4d.wolframalpha.com/Calculate/MSP/MSP112196e7h0chc6b2d7b000046g5i3gc48hheh06?MSPStoreType=image/gif&s=60

http://www40.wolframalpha.com/input/?i=population+japan+/+japan+gdp+

http://www40.wolframalpha.com/input/?i=population+japan

http://www40.wolframalpha.com/input/?i=gdp+japan

[Hannah Bell]

28. Tatami mats aren't, last time i checked, driving the japanese economy.

and there are combined productivity measures, e.g. for manufacturing as a whole.


oh, & ps: some of the value of increased production combined with flat or declining wages is siphoned off to support people who do nothing for a living but play the stock market.

[anigbrowl]

30. Nor am I suggesting they are.

Perhaps you'd care to furnish some statistics to back up your arguments. You seem oblivious to the fact that Japan is unique among developed countries in having a population that is already in decline, not to mention a relatively high median age (~43).

Wages in Japan, adjusted for inflation, have netted out relatively flat since the 1990s, but so has GDP over the same period.

[Hannah Bell]

37. which facts do you want stats for? tatami production?

[hedgehog]

14. Think of it more like this: In 1830, 90% of the people in this country were

directly involved in farming. Today only 2% are. Each farmer feeds himself and 49 other people. Effectively, each worker today produces enough shoes, cloth, television, whatever, for himself and X other people. The problem we are facing today is the same as the problem in the 20's: on one hand we have a lot of goods. On the other hand we have a lot of people who can use the goods, but have no money. In addition, we have a very few people with a lot of money who can only consume so much, hard as they try. These people have a lot of money, but typically they haven't produced good in proportion to the amount of money they have. The problem is to move the money from their hands into the hands of the producers who don't have a lot of money.

There's plenty to go around, but we have to have the will to distribute it. One major step would be to take the cap off social security deductions. If it's 3% of my income and 3% of yours, it should be at least 3% of Paris Hilton's or Warren Buffet's.

[Kid Dynamite]

34. hedgehog you're onto something

but the same disparity -- the same inability of the many to consume that which is produced because they do not have access or can't afford it -- has existed for much of human history. And yet it has not in prior times produced periodic crises that represent a near total collapse of commerece and industry?

What is different?

[hedgehog]

35. has not in prior times produced periodic crises that represent

a near total collapse of commerce and industry?"

You're sure about that?

Dutch Tulip Craze

South Sea Bubble

French Revolution

About a dozen panics in the 19th Century

Russian Revolution

The Collapse of Wiemar Germany

I think a case can be made that many modern day financial crises are exactly that - financial crises that are not due to a physical shortage of goods but rather the means of exchanging those goods. When too few have too much money, the entire system comes crashing down. It is in the best interests of the richest among us to ensure some redistribution of wealth.

[Kid Dynamite]

36. To be explicit "prior times" = precapitalism

although I think I could claim that as patently obvious with at LEAST as much sincerity as you are putting into your examples since my usage of "prior times" includes at give or take 5000 years of history whereas you throw the kitchen sink at me in response with

a. a speculative bubble that wasn't
b. a speculative bubble that was (ok)
c. The French Revolution? Huh?
d. the 1800s (which is what I was driving at so not sure it is a counterexample)
e. The Russian Revolution (double huh?)
f. Weimar Republic (you know the answer to this one)

Note the e and f revolve around much greater capitalist crises as I'm sure you're aware (or one big Crisis might be a better way of putting it)

So from the years 3000 BC - 1599 AD whaddya got? And periodic does mean "periodic" as in having a *period* in which it recurs..perhaps cyclical is a better term? I think you know the distinction I am making and wish to evade the question.

[abumbyanyothername]

20. Look at it this way Jon . . .

Once upon a time all those retirees were working and providing for non-productive, little human beings.

I read somewhere that the demographic panics are overstated because if you look at the total ratio of non-productive people being supported by the productive people it is and has been dropping for quite a while now, and the trend is projected to continue into the future.

[Hannah Bell]

22. The ratio of non-workers to workers peaked in the 60s, dropped precipitously by the 80s,

& will rise through the retirement of the boomers to something under the level of the 60s.

The "crisis" is invented by capital to "explain" why they're cutting your wages & benefits, & thus your consumption & living standards.

"There's not enough money!"

[JonQ]

40. Are you saying a drop in children to care for would compensate for this?

That's an interesting thought, they are substantial burdens as well, that don't really contribute much. Good catch.

But that, I think would at best be a temporary solution, because you need them to grow up and produce more adult workers. A drop in children to care for would cut down on the dependent population for a bit. But then it would make a huge cut in the productive population down the road, which is whats causing the whole problem. Both children and retirees are non-productive, but one is an investment in the future, the other has already put in all they are going to.

[abumbyanyothername]

42. In the 60s you had people working

to support children. In the teens, the children are now working to support retirees.

This demographic nightmare is not even a problem with "official" unemployment over 10% and unemployment measured as it was in the Depression over 25%.

[JonQ]

43. But teenagers don't tend to produce that much

of course there are always exceptions, but the average teenager is working at somewhere around minimum wage.

So put a teenager in to the workforce to replace someone who had been working for 40 years at the same job and had a great deal of experience and promotions under his belt is not a good trade. Eventually the younger worker will catch up, but in the mean time you have a substantial decrease in productivity and taxable income.

[Hannah Bell]

46. bs.

[JonQ]

56. No, true

older workers on average make more than younger ones in most jobs.

I'm sure there are exceptions, like professional sports and stripping, but those aren't very common and don't generally sustain the economy (maybe Vegas).

An 18 year old starting out at a company is unlikely to be making more than a 60 year old who had been working at that same company in the same position for the last 42 years.

[Hannah Bell]

58. i'm saying each worker in the 60s supported more dependents than today & more than they will

in 2040.

the dependency ratio is the ratio of workers to non-workers.

[RaleighNCDUer]

5. Should we ever reach a point of virtually 0 unemployment, THEN

I will worry about the worker/retiree ratio. As long as there are unemployed workers, there is room for growth.

The REAL problem is not worker/retiree ratio, but the outsourced jobs that are supporting other countries' retirees. If the jobs stayed here there would be no worry at all about the viability of SS and medicare.

Outsourcing is the corporations undercutting OUR safety net in the name of corporate profits, on which they pay no taxes.

[JonQ]

7. But you can't expect people to work when they're 90

yeah some can, but most cannot, nor do they particularly want to.

So saying there's no issue with people retiring because there are still jobs available doesn't make much sense.

[Hannah Bell]

19. only to the disingenuous.

[JonQ]

41. You honestly believe

that all unfilled job positions can be occupied by the elderly?

Great, we need 100 year old truck drivers, surgeons, farm workers and computer programmers. That will certainly work out flawlessly with no repercussions.

They may be a bit annoyed that they have to work until they die, rather than get the pensions promised to them. But it's not like they can vote or anything, so what are they going to do about it?

[Hannah Bell]

45. "all unfilled job positions can be occupied by the elderly?" - didn't say anything like that.

[JonQ]

47. But you're making the argument that:

there is no issue with a large retiring population, because there is still unemployment. What else could that possibly mean?

There are job positions not being filled, unless you deem that to be a good thing in and of itself that could only mean you expect the elderly to fill those roles.

[Hannah Bell]

50. i made no such argument & have no clue what you're talking about.

[JonQ]

51. Yeah, you kinda are

Read back at what I wrote, and how you responded to it.


But are you now saying that unemployment can not be used as an argument against worrying about massive, synchronized, retirement?

[Hannah Bell]

55. read back yourself. i made no such argument; either you didn't understand or you're being

disingenuous.

"saying that unemployment can not be used as an argument against worrying about massive, synchronized, retirement?"

i have no clue what you're talking about.

[JonQ]

57. Ok, so are you just going to respond with

"I don't know what you're talking about" and "disingenuous" every time I post a response?

Because that gets very boring.

[Art_from_Ark]

39. The situation in Japan is a little different than in the US

Typically, Japanese office workers "retire" when they reach 60 (or occasionally 62), but they often just go on to find other work. Some find work as consultants. Some go into a different line of work. Some retirees go back to their rural hometowns and work the family farm. And it's not uncommon here in Japan to see people well into their 70s doing such things as trimming roadside shrubbery.

And Japanese retirees are generally healthier than their American peers, so they aren't such a drain on the medical system

But the Japanese government is also examining the issues associated with the "aging society". It is, in fact, a very hot topic at some Japanese research institutes.

[hunter]

2. It usually masks some sort of racism.

Quick, make some babies, or we'll have to hire immigrants!!!

Oh No!

[Occam Bandage]

17. Actually, the difficulty of emigration to Japan is one of the driving factors of the crisis.

Immigrants tend to be young and physically sound. If Japan were to loosen its borders and import young foreign workers, it would go a long way towards fixing the demographic disparity.

Besides, setting aside the backassward nature of your post, claiming that WaPo is making up a Japanese demographic crisis in order to further Japanese xenophobia is kind of strange. Why would WaPo want to reinforce Japanese racism?

[Hannah Bell]

21. There is no crisis of labor shortage. 1/3 of the Japanese labor force is already "casual,"

& unemployment has been rising since the 90s.

The WaPo is crying "crisis" to support the same scam (theft & impoverishment of pensioners) here.

[Occam Bandage]

23. The problem is not a shortage of labor per se. Nobody claimed it was.

The problem is a demographic disparity between increased pension costs and fewer productive members of society. Labor demand is not fixed at a certain level; it's not as if there are X number of jobs for the taking, and there isn't a problem until we have X-1 workers.

Edited to change title slightly for clarity.

[Hannah Bell]

25. The pension cost factor isn't unless the ownership class refuses to raise wages

(as standard economic theory predicts wage rises with reduced labor pool) or to share the value of productivity increases.

In short, the "problem" is a phony problem invented by capital to cloud the reality: capital is taking an ever-increasing percent of the value of production to increase its power & wealth.

You talk about immigration being the solution to the "problem" in the same breath as you wave away increasing unemployment, rising productivity, & there being "no fixed number of jobs".

It's nonsense.

[Kid Dynamite]

32. The way David Ricardo (and your avatar) defined wages

In short, the "problem" is a phony problem invented by capital to cloud the reality: capital is taking an ever-increasing percent of the value of production to increase its power & wealth.

This was the DEFINITION of a decline in wages

[depakid]

4. The Post inventing things? and using spiin to further some agenda or another?

Never.

:sarcasm:

[timeforpeace]

6. Haven't they had a negative growth rate for a while?

[Hannah Bell]

10. for some years, yes.

[Occam Bandage]

16. A labor shortage would be a nice thing for laborers, but

that isn't what the "calamity" in question is. Rather, the "calamity" is that since today's retirees have their pensions and benefits paid by today's workers, as the number of retirees rises and the number of workers declines, the per-worker cost of maintaining social programs risks becoming unsupportably high.

[Hannah Bell]

18. which in theory shoul be covered by the rising wages resulting from the smaller

supply of labor.

but of course, the "supply & demand" thingee is only operational when it benefits capital.

& if there's "not enough money" to support the pensions & ss of retirees, there's no *more* money if those are unavailable.

people who say there's "not enough money" are essentially saying retirees must reduce their living standards: rather a big hit when 1/3 already rely on SS for 100% of their income & 2/3 rely on it for 50% or more of their income.


There's "not enough money" because workers' wages have been flat since the 70s & most of the value of increased productivity during that period has gone to capital.

They're telling you there's "no money" because they have no intention of giving any of it up. In fact, the plan is to further impoverish both workers & retirees.

[Occam Bandage]

24. Except with fewer employed people, less is produced and less is purchased,

slowing economic growth even though retiree numbers increase at ever-increasing rates.

People who say "there's not enough money" are saying "we need to institute major changes to prevent retirees from having to reduce their living standards." People who stick their heads in the sands and say "supply and demand will save us all" are dooming retirees to cat-food dinners.

[Hannah Bell]

27. BS. The US produces more manufactured goods absolutely & in dollar terms

than it did in the 60s with half the manufacturing workforce.

People who say "There's not enough money" are the scammers with the cat food.

[Kid Dynamite]

33. And yet you do not speak to the out of control unemployment

if it is merely a ratio out of whack, and there is a large part of the population that can rectify that skewed relationship, why does 2+2 != 4 in this case?

[Kid Dynamite]

29. By the logic used in the US

how could Japan possibly afford to meet the medical care needs of its retirees and elderly in the face of such a calamity. They have longer lifespans even, so that only exacerbates the problem. Perhaps Japanese need to get the memo: die earlier, plese, its cost effective

[JonQ]

44. They could promote smoking.

Highly addictive, tends to kill people later on in life after they've passed their peak productivity, and because you can say smoking is bad you can pass hefty taxes on all tobacco products.

Good for the US economy too, as we produce quite a bit of a the worlds tobacco.

Just a thought.

[Kid Dynamite]

48. Forward this idea to Lawrence Summers

post haste!

[Hannah Bell]

49. japanese men smoke like chimneys. they still live longer than americans.

[JonQ]

53. Dupe/deleted

[JonQ]

54. Could take the filters off

and get the women started. Also, they need to start younger, and exercise less.

Also I'm pretty sure they could fry sushi and dip it in ranch dressing. That would help alot.

[izzybeans]

52. This is a concern of many nations. Japan happens to be one of the oldest

In a service economy a labor shortage is not a good thing. Lack of nurses, lineman at the power company, road crews, etc; when those industries are understaffed you'll have trouble keeping the power on long enough to tell the patient that the nurse will only be a few more minutes.

Sure it will be good for wages, but for the actual quality of work being done, its not a good thing at all. Ask anyone dealing with high nursing staff turnover, especially in rural areas of even our country.

[Kid Dynamite]

59. Wither the shortage?

Is it because there are not workers available or because employing them would be bad for the bottom line of the boss? If its the latter, then there is a completely different dynamic in play then what you address here.

[izzybeans]

60. Not available.

That's the fear anyway.

for some it could be cover for "not want to pay".

[Kid Dynamite]

62. What is the unemployment rate in Japan?

That most certainly IS available, and germane to the discussion

[Lydia Leftcoast]

61. Most of the commentators here aren't even reading what you have to say

As an Old Japan Hand, I get it.

They keep talking about a demographic disaster, and indeed, the population is noticeably gray, particularly in the traditional neighborhoods, such as Tokyo's Sugamo.

However,

1. There are, as Hannah noted, millions of unemployed and under-employed people under the age of 35. This is a new phenomenon in Japanese society, caused, I believe, by the adoption of the American "lean and mean" model of corporatism.

In the old days, not everyone had lifetime employment, but businesses took the attitude "How can we best serve the customers?" rather than "How can we maximize returns to shareholders and executive bonuses?" In general, good customer service required having a lot of employees available, so you could, as I experienced one day, send an employee out of the shop to carry a heavy purchase several blocks to the apartment of the American who had just moved into the neighborhood.

Even without lifetime employment, everyone hired lots of what conventional wisdom considers superfluous employees, so it was easy to find a new job.

Something closer to the old system, an emphasis on customer service as opposed to single-minded obsession with profits, would help ease the youth unemployment problem.

2. Japan is already overcrowded. The government is trying to encourage young women to have more babies, but for various reasons that the government is too traditional-minded to see, they're not. Yet Japan could actually afford to shrink its population through attrition (not replacing all the old people who die off), which would leave it only sort of crowded as opposed to really crowded.

3. Art is right in that Japanese old people, despite sometimes looking like hell as a result of starving during World War II and doing backbreaking labor in their youth, tend to be healthy and involved in their communities. Second careers for retirees are not uncommon. I know a couple who are now in their mid sixties. The husband was a medical school professor at the University of Tokyo, teaching ENT to prospective doctors and doing lots of research. When he reached the official retirement age, he felt that he still had a lot of work left in him, so he took a new job at a rural college that trains all the health professions except doctors. He currently has a low-key job teaching ear-nose-throat to prospective speech therapists.

You don't even have to get into those high-powered ranks. Officially retired people do all sorts of jobs, since their retirement is often the result of rigid rules rather than a desire to stop working.

I think that Hannah is saying that if supporting all those old people is going to be a problem, why not do something to ensure that all those under-employed under-35s who are living with their parents or in all-night Internet cafes because they can't find anything but part-time or temporary jobs are hired full time?