Japan’s zero growth nightmare
It’s the rare economic tale that involves suicides, robots and arms
dealers. Welcome to Japan, where science fiction may begin to trump economic
fact in ways the global audience has yet to realize.
That’s not what the financial headlines suggest. As the press put 2016 to
bed, the narrative was of fresh vigor: a weaker yen boosting exports, the
Bank of Japan upgrading growth prospects, Nikkei stocks on a tear, Prime
Minister Shinzo Abe friending Donald Trump. There’s one problem with this
plot and it’s called a calculator.
From his perch in New York, Richard Katz finds something isn’t computing:
how a shrinking, aging, baby-starved and highly indebted nation generates
0.5 percent growth on a sustainable basis. Japan surely can if, and only if,
it drastically raises productivity. If it can’t, Katz argues, the No. 3
economy will have zero per capita gross domestic product growth for another
45 years, or so.
That’s not a typo. Current trends suggest that between now and the early
2060s, Japan’s 126 million population will shrink 31 percent, while
working-age ranks drop 42 percent. Each worker will share the fruits of his
or her labor with the ever-increasing ranks of retirees. Without strong
, and soon, Katz estimates GDP will fall 28 percent by around 2060.
“Zero per capita growth is bad enough, but it’s just an average, and for
millions of people, life will get much worse,” says Katz, publisher of The
Oriental Economist. That could fuel the kinds of social strains Japan has
long struggled to avoid. “If the total pie isn’t growing,” Katz says,
“there’s no way to give one group of people a bigger slice without taking
it away from another group.” That, he adds, means epic “intergenerational
rivalry: social security vs. education” that necessitates increased public
borrowing.
https://www.japantimes.co.jp/opinion/2017/01/09/commentary/japan-commentary/japans-zero-growth-nightmare/#.WbUjF8hJbb0