A scarier strategic problem - no people

[a_majoor]

I wonder what the ratio of pensioners/retirees will be to the working force in the coming years.

From CBC Newsonline:

http://www.cbc.ca/news/work/workvslife/247.html

According to Canada's Urban Futures Institute, some 9.8 million Canadian baby boomers are approaching retirement. About 225,000 Canadians will retire this year and the number will increase to 265,000 by 2005. By 2020, the number of Canadians retiring each year will be 425,000.

Today there are six workers in Canada for every retired person. By 2020, there will be three workers for every retired person. The ratio will sink further without a dramatic increase in immigration, preferably people with lots of money and excellent job prospects.

This demographic shift is already making an impact in the United States, where the retirement age has been raised to 67 and is expected to be raised again, probably until it reaches 70 (which more accurately reflects the demographics and life expectancies of the near future).

We are an aging society and our aging population is accelerating rapidly. In 1973, only seven per cent of Canadians were 65 or older. By 2003, about 13 per cent will be over 65. By 2023, 20 per cent of Canadians will be over 65. Increasingly, the worry is a shrinking work force.

 

[UnwiseCritic]

These old people better save up!

 

[mariomike]

These old people better save up!

Young people, especially those new on the job, better save up. Because, they may be forced to work years longer for the same, or less, pension.

"OMERS considering proposal to reduce pension payouts":
http://business.financialpost.com/2013/05/23/omers-considering-proposal-to-reduce-pension-payouts/

"There are legal impediments to reducing any benefits that have already been accrued by workers under a plan, but benefits based on future work — including by newly hired employees — are fair game."

The proposal, for now at least, was recently defeated.

"OMERS is an umbrella organization for more than 900 employers and their workers in the province ( Ontario - mm ), including paramedics, transit workers, firefighters, police and city workers. It represents almost 429,000 active and retired members."

 

[a_majoor]

That is just the tip of the iceberg.

With millions fo people retiring and starting to sell off assets in their RRSP's, unloading houses they can no longer take care of, vacation properties etc. etc. you might see an unstoppable wave of deflation as asset prices drop (massive increase in supply but limited demand as young people burdened with debt or trying to raise families have no money or inclination to buy, and there are far fewer potential buyers anyway).

OTOH there will an inflationary effect as well since the economy will be awash in cash from the unwinding of assets and sell offs, although the inflation will probably be directed in fairly narrow areas like health care and personal services.

No person or political party seems to have thought this through or made any real policy or plans on how to deal with this (including me; I can see an outline of the problems but not the full extent or what the solutions might be).

 

[UnwiseCritic]

No person or political party seems to have thought this through or made any real policy or plans on how to deal with this (including me; I can see an outline of the problems but not the full extent or what the solutions might be).

IMO, politicians rarely look to the future, few visionaries exist because of the likelihood of remaining in power with long term objectives isn't probable. Not because they're ideas are bad. But because the voters want it now. Which could be why all these people are slapping "Change" into their party slogans.

I did not think of inflation, means my RRSP's are going to be worthless by the time I can retire.

The only solutions I can think of is increased immigration from younger wealthy immigrants with more potential and increased retirement age. Which makes bad for the younger generation as jobs will be more sparse and thus saving even more difficult. Hmmm now my mind is spinning. One thing leads to another, who knows what the full extent of the problems will be.

Maybe I should go be an entrepreneur and invest in retirement homes, coffins, graves, etc.

 

[GAP]

Maybe I should go be an entrepreneur and invest in retirement homes, coffins, graves, etc.

It's a booming business opportunity....people are dying to get in it.....

 

[UnwiseCritic]

It's a booming business opportunity....people are dying to get in it.....

You just had too. I can see the temptation.

 

[a_majoor]

Having fewer children is an economic and cultural choice. This article is City Journal tries to summarize the changing cultural values and effects of childlessness has on cities. Having the city core "hollowed out" certainly changes the character of the city (my wife and I used to talk about how we inhabited the downtown of London when we were dating and newly married, now when we go downtown it is like visiting a ghost town; nothing in the city center is remotely attractive or meaningful in any way that would encourage us (or our suburban neighbours) to go there very often:

http://www.city-journal.org/2013/23_3_childless-cities.html

JOEL KOTKIN AND ALI MODARRES
The Childless City
It’s hip, it’s entertaining—but where are the families?

SPLASH NEWS/CORBIS
The modern city: the casts of The Real World and Jersey Shore party it up at a New York nightclub.
What is a city for? Ever since cities first emerged thousands of years ago, they have been places where families could congregate and flourish. The family hearth formed the core of the ancient Greek and Roman city, observed the nineteenth-century French historian Fustel de Coulanges. Family was likewise the foundation of the great ancient cities of China and the Middle East. As for modern European cities, the historian Philippe Ariès argued that the contemporary “concept of the family” itself originated in the urbanizing northern Europe shown in Rembrandt’s paintings of bourgeois life. Another historian, Simon Schama, described the seventeenth-century Dutch city as “the Republic of Children.” European immigrants carried the institution of the family-oriented city across the Atlantic to America. In the American city until the 1950s, urbanist Sam Bass Warner observed, the “basic custom” was “commitment to familialism.”

But more recently, we have embarked on an experiment to rid our cities of children. In the 1960s, sociologist Herbert Gans identified a growing chasm between family-oriented suburbanites and people who favored city life—“the rich, the poor, the non-white as well as the unmarried and childless middle class.” Families abandoned cities for the suburbs, driven away by policies that failed to keep streets safe, allowed decent schools to decline, and made living spaces unaffordable. Even the partial rebirth of American cities since then hasn’t been enough to lure families back. The much-ballyhooed and self-celebrating “creative class”—a demographic group that includes not only single professionals but also well-heeled childless couples, empty nesters, and college students—occupies much of the urban space once filled by families. Increasingly, our great American cities, from New York and Chicago to Los Angeles and Seattle, are evolving into playgrounds for the rich, traps for the poor, and way stations for the ambitious young en route eventually to less congested places. The middle-class family has been pushed to the margins, breaking dramatically with urban history. The development raises at least two important questions: Are cities without children sustainable? And are they desirable?

Best-selling urban booster Richard Florida, a pied piper for today’s city developers and planners, barely mentions families in his books, which focus instead on younger, primarily single populations. Eric Klinenberg, a New York University professor and author of the widely touted Going Solo, celebrates the fact that “cities create the conditions that make living alone a more social experience.” But perhaps the most cogent formulation of the post-family city comes from the sociologists Richard Lloyd and Terry Nichols Clark, who see the city, and particularly the urban core, as an “entertainment machine.” In their view, city residents “can experience their own urban location as if tourists, emphasizing aesthetic concerns.” Schools, churches, and neighborhood associations no longer form the city’s foundation. Instead, the city revolves around recreation, arts, culture, and restaurants—a system built for the newly liberated individual.

Demographic trends seem to bear out this vision. Over the past two decades, the percentage of families that have children has fallen in most of the country, but nowhere more dramatically than in our largest, densest urban areas. In cities with populations greater than 500,000, the population of children aged 14 and younger actually declined between 2000 and 2010, according to U.S. Census data, with New York, Chicago, Los Angeles, and Detroit experiencing the largest numerical drop. Many urban school districts—such as Chicago, which has 145,000 fewer school-age children than it had a decade ago—have seen enrollments plummet and are busily closing schools. The 14-and-younger population increased in only about one-third of all census-designated places, with the greatest rate of growth occurring in smaller urban areas with fewer than 250,000 residents.

Consider, too, the generation of Americans between the ages of 25 and 34 in 2000. By 2010, the core cities of the country’s 51 most populous metropolitan areas had lost, on average, 15 percent of that cohort, many of whom surely married and started having children during that period. While it’s not possible to determine where they went, note that suburbs saw an average 14 percent gain in that population during the same period.

Of course, not all sections of our largest cities are equally bereft of children. Of Los Angeles County census tracts where less than 10 percent of the population was 14 and younger in 2010, a significant number were located downtown and along the coast. These are mostly high-density areas where housing is expensive. You’ll find a considerably higher proportion of children under 14 in low-income parts of South and East Los Angeles, and also in middle-class neighborhoods in the heart of the San Gabriel and San Fernando Valleys.

Opinion polls confirm the impulse behind the child exodus. For example, in a recent survey for the Manhattan Institute by Zogby Analytics, 58 percent of people with children under 17 said that they would consider leaving New York City for better opportunities elsewhere; only 38 percent of those without children agreed. Part of the reason is surely the city’s density and cost, which make family life difficult. In Manhattan, where the average rent approaches $4,000 a month, it’s no surprise that families are waning.

A more family-friendly city remains possible. The Brooklyn community of Flatbush—like Staten Island, Queens, and eastern portions of Brooklyn—was built in the first half of the twentieth century to appeal to families fleeing the congestion of New York’s core. Just as the suburbs do now, these new settlements revolted many urbanists, such as Lewis Mumford, who complained in 1921 that the “dissolute landscape” was “a no-man’s land which was neither town nor country.” But Flatbush’s tree-lined neighborhoods, such as Kensington and Ditmas Park, may be the city’s best hope for retaining middle-class families. These areas still have many single-family homes and low-rise apartments. And Cortelyou Road, a main drag in Ditmas Park, brims with family-friendly restaurants and shops, though it was fairly desolate just a decade ago. Young families are enthusiastic about the neighborhood. “It’s an amazing place,” says Kari Browne, co-owner of the Lark café on nearby Church Avenue. “But the key concern is: Can you afford to stay?”

For many young families living in New York’s outer boroughs, the availability of space, particularly backyards, is deeply important. “The cost of space is the biggest issue in Brooklyn,” says resident Michael Milch, whose wife attends dental school at NYU. “The issue becomes: Can you get some personal green space?” Obviously, people who settle here are willing to make do with less space than those who, say, move to a far-flung exurb in Putnam County. But all are seeking space in communities more amenable to family life than are the contemporary city cores. Heightened family demand may be helping send housing prices steadily upward in New York’s boroughs, as young couples move from Manhattan to less dense neighborhoods. Jason Walker, a 45-year-old father of two, left Washington, D.C. (which may have the highest percentage of childless households in the nation), for Ditmas Park to escape “a culture dominated by childless people leery of the existence of kids.” The Walkers live in a two-bedroom apartment but are looking for a house in the area.

Such opportunities exist elsewhere in America, too, in places where detached single-family homes—the preferred housing of 80 percent of American adults, according to a National Association of Realtors survey in 2011—are often just a short walk or ride from the urban core. With its broad streets and massive shopping centers, the California city of Irvine may lack the inner-ring charms of Flatbush. But families are drawn to Irvine’s amenities—especially its schools. “You really have to worry about the schools in New York,” says Walker, whose children are six and eight. “If you have to go to private schools, this makes it a struggle to stay here.” In Irvine, by contrast, “everything stems from education,” says resident Eveleen Liu. “The city draws people who are impassioned about their kids and their school. Everyone volunteers. It’s the glue that holds this place together.” Schools are particularly crucial in attracting Asians, now the country’s fastest-growing immigrant group. Safety is another big draw: Irvine consistently rates among the safest American cities with more than 100,000 residents.

Families are also deeply attracted to open space. The great Frederick Law Olmsted–designed New York parks, including Prospect Park in Flatbush, are enormous assets for families without backyards. Irvine may lack stunning urban architecture and glorious cathedrals, but it has a magnificent park system that gives residents ideal settings for recreation, exercise, and family gatherings. “It’s an environment that is clean and nice and open to everyone,” says Veronika Kim, a mother of three and an apartment tenant in Woodbury, an Irvine neighborhood. “You can walk there with the kids and let them play. Even if you rent, you don’t feel like an outsider.” The parks are good not only for kids but for adults—for example, the members of the Woodbury Woodies, who play softball every week against teams from other neighborhoods. “There’s a deep sense of community here,” says Woody regular Julian Forniss. “Softball is part of that.” On the site of a former Marine Corps base, Irvine and Orange County are developing a “Great Park” that will be twice the size of New York’s 840-acre Central Park.

Other family-friendly cities have embarked on ambitious park and open-space projects as well. In Raleigh, North Carolina, the nearly completed $30 million Neuse River Greenway Trail cuts through 28 miles of forest. Houston’s $480 million Bayou Greenways project will eventually add some 4,000 acres of green space across the city, from the downtown to the outer suburbs, including 300 miles of continuous hiking and bike trails. Houston’s rival, Dallas, is planning a vast 6,000-acre park.

What families need is more affordable urban neighborhoods with decent schools, safe streets, adequate parks—and more housing space. As New York University’s Shlomo Angel points out, virtually all major cities worldwide are growing outward more than inward—and becoming less dense in the process—because density drives families away from urban cores and toward less dense peripheries. The lesson is clear: if cities want families, they should promote a mixture of density options.

The solution is not to wage war on suburbia, as urbanists have been doing for years. Following the notions that Jane Jacobs advanced a half-century ago, contemporary urbanists argue that high density creates a stronger sense of community. (Jacobs once opined that raising children in the suburbs had to be difficult, somehow overlooking how families were flocking to those suburbs.) But that contention isn’t self-evident. The University of California’s Jan Breuckner and Ann Largey conducted 15,000 interviews across the country and found that for every 10 percent drop in population density, the likelihood of someone’s talking to his neighbor once a week went up 10 percent, regardless of race, income, education, marital status, or age.

In California, particularly, state and local officials push policies that favor the development of apartments over single-family houses and town houses. But by trying to cram people into higher-density space, planners inadvertently help push up prices for the existing stock of family-friendly homes. Such policies have already been practiced for decades in the United Kingdom, making even provincial cities increasingly unaffordable, as British social commentator James Heartfield notes. London itself is among the least affordable cities in the world. Even middle-class residents have been known to live in garages, converted bathrooms, and garden sheds.

A city that continues to be high-density and high-cost hasn’t necessarily signed its own death warrant. Manhattan, parts of Brooklyn, and much of San Francisco, Seattle, Boston, and other amenity-rich cities—what Tulane University geographer Richard Campanella calls “kiddie deserts”—continue to flourish. But other cities, such as Detroit, Cleveland, and Buffalo, can’t attract the same interest from young hipsters and the rich and are consequently less capable of withstanding the effects of family flight to the suburbs. Even in the most affluent cities, the dearth of families reinforces public policies incompatible with children, argues the Austrian demographer Wolfgang Lutz. For example, fewer middle-class families means less political pressure to reform education or support for tougher law enforcement.

Ultimately, everything boils down to what purpose a city should serve. History has shown that rapid declines in childbearing—whether in ancient Rome, seventeenth-century Venice, or modern-day Tokyo—correlate with an erosion of cultural and economic vitality. The post-family city appeals only to a certain segment of the population, one that, however affluent, cannot ensure a prosperous future on its own. If cities want to nurture the next generation of urbanites and keep more of their younger adults, they will have to find a way to welcome back families, which have sustained cities for millennia and given the urban experience much of its humanity.

Joel Kotkin is a City Journal contributing editor and the Distinguished Presidential Fellow in Urban Futures at Chapman University. Ali Modarres is a professor of urban geography at California State University, Los Angeles.

 

[Colin Parkinson]

Urban planners need the density to maintain their fantasy of efficient transit. Only with high density can transit be sustainable. The problem arises when transit move out from the core areas to provide service to less dense areas, the economics are not there to support such and the viable runs must support more and more non-viable routes. Politicians are bad at saying no to these demands. 

 

[Nemo888]

Eventually distance will matter again. Oil will inevitably cost many times what we pay now. Cities are for centuries,  something North Americans easily forget. Density will matter again. Then the suburbs will be abandoned first to the poor and then most likely torn down.

 

[Colin Parkinson]

If transport gets that expensive, then expect the cities to suffer as well, all that food costs to get it to market. Likely you will see a return to smaller urban centres serving a ruralish area. I suspect Detroit will break up into smaller more manageable nodes.

 

[Kirkhill]

Cities are for centuries, 

Which is why archaeologists have such fun in the Middle East digging up layer after abandoned layer of city.  Coalesce. Agglomerate. Thrive. Poison. Exhaust. Die. Relocate.  Repeat ad infinitum ad nauseam.

Cities die.  Pin-prick colonies thrive in unexpected places and generate new cities which in turn die.  In the meantime mother nature has rehabilitated old city sites which, in turn, are reoccupied when the upstarts die.

Its not nomad, pastoralist, farmer or urbanite (and suburbanites are just a subset of urbanites).  It is all of the above.  Depending on circumstances.

 

[a_majoor]

Urban planners and city politicans seem to be like Generals plannint to refight the last war.

Moving North American cities back to high density and mass transit were first conceived of as solutions to the oil/energy crisis of the 1970's, and have resurfaced in various guises and for various rationals since then. Oil, in the mean time, is being discovered and recovered in record amounts, while "creative cities" and other planning nostrums to attract people to the urban core continue to crater under the overwhelming power of high cost and competition with other liabilities (like civic worker pension plans) for a shrinking pool of tax dollars.

No one who promotes these plans has ever (to my knowledge) ever looked at the true economic rational for European cities to have been built and rebuilt as high density centers and to make efficeint use of rapid or public transit. The reasons have very little to do with "creative cities" or other planing nostrums and everything to do with market prices for land and the average European income being too low to support car ownership in the post war period.

 

[CougarKing]

With the ending of Canada's investor immigrant program, as mentioned in the China superthread, and now the closing of this immigration loophole that help foreign students' on their path to citizenship, will Canada be getting the kind of immigrants Canada would prefer, as mentioned earlier in this thread?

This article highlights some key points about this change, such as the possibility that Canada would see potential foreign talent poached by the US, Australia, etc.

From the Canadian Press via Yahoo News

Changing citizenship rule could hurt Canada's efforts to woo foreign students: observers

By Diana Mehta, The Canadian Press

TORONTO - As more countries compete for the world's top talent, some worry that planned changes to the Citizenship Act could hamper Canada's efforts to woo international students, a group that contributes billions of dollars to the Canadian economy.

The changes, which are expected to become law later this year, do away with a provision that eased the path to citizenship for those who live in the country before becoming permanent residents — a rule that benefited foreign students.

"We're taking away one of our major selling points," said Debbie Douglas, executive director of the Ontario Council of Agencies Serving Immigrants.

"We're continuing to compete internationally with countries like the U.K., U.S. and Australia increasingly for talent and it makes no sense for us to take away incentives that we knew would bear fruit."

The move seems to run counter to the government's pledge to double the number of international students in Canada by 2022.

The impact of the change could be significant, considering the government estimates international students currently contribute more than $8 billion to the economy and support 86,000 jobs.

"We usually have laws to address a problem. I don't know what the problem was," Douglas said. "It was a win for Canada, it was a win for people coming here."

Under current laws, for individuals like international students, foreign workers or live-in caregivers, every day spent in Canada as a non-permanent resident counts as a half day of residence needed for their citizenship application, up to a maximum of two years.

In addition to taking away that provision, the government is simultaneously increasing residency requirements for citizenship from three out of four years to four out of six years.


The change is raising some eyebrows as it creates a potential hurdle for those who typically make well-integrated, sought-after immigrants.

"Increasingly international students are seen as a fabulous talent pool for Canada, they're golden immigrants," said Jennifer Humphries, a vice-president at the Canadian Bureau for International Education.

"They can be huge contributors to the Canadian society, Canadian economy. If we create roadblocks to them, what will happen could mean that they could get their education in Canada and end up going to work in the U.S."

In 2012 Canada welcomed a record number of over 100,000 international students. And over the last three years, more than 23,000 transitioned to permanent residency in Canada.


(...)-EDITED

 

[Edward Campbell]

I think what we are seeing is an ill considered but quite comprehensible political response to a perceived ~ but almost nonexistent ~ social problem: immigrants are taking jobs away from native born Canadians.

It's not true, there are NO useful or persuasive data to suggest that it is true. But e.g. the Canadian Labour Congress and their allies want it to be true because it, rather than two or three generations of destructive labour laws and policies, explain why unemployment is stubbornly high for a few segments of the population ~ it's those dirty foreigners' faults! And many (most?) Canadians, who are, broadly and generally economic illiterates, believe it's true.

The Conservative government is making bad policy decisions in order to get out in front of M. Trudeau's Liberals who, one can be about 99% sure, will make worse ones in order to appease the same ill-informed constituency.

 

[a_majoor]

A short piece about changing US demographics. While it is short on analysis, there is a fair bit of detail in a series of graphs in the article; follow the link to look at them:

http://www.theatlantic.com/business/archive/2014/03/the-us-economys-big-baby-problem/284237/

The U.S. Economy's Big Baby Problem
Where did all the infants go?
DEREK THOMPSONMAR 5 2014, 12:20 PM ET

Last September, the U.S. government announced that our birthrate fell to "another record low" in 2012, following a long, steady slide since the Baby Boom after World War II.

It goes without saying that, morally speaking, there's nothing wrong with this. It's natural, in a way. All over the world, birthrates tend to fall along with economic development, for numerous reasons including (a) the move away from a labor-intensive small-farm economy and (b) women's ascendance in the workforce, which uses time that used to be devoted to child-rearing. Families in richer countries tend to have fewer kids. In places like Japan and Western Europe, national populations are actually peaking.

The thing about an increasingly childless economy is that it has major implications for consumption. Just look at this new data from a Gallup survey released today on the average daily spending of families. Even after you control for income, age, education, and marital status, families with young kids spend more every day. These are the sort of spenders you want in a weak economy following a great deleveraging.



What are parents spending on? Not just books, toys, and games. The Department of Agriculture (weirdly enough) annually surveys the many ways we lavish our kids with spending, to the tune of about $14,000 a year. The overwhelming majority of money goes to the basics: housing, food, transportation, and education. Housing is kinda funny, because young children tend not to have their own housing units, unless the parents are extremely well-off and the children are terribly misbehaved. The survey estimates the housing portion of spending by trying to account for a few factors: the cost of an extra bedroom, the cost of moving into safer communities with better schools, and the cost of buying homes with larger yards. It's rough, but there it is.



And, for a bit of trivia, here's a look at how the cost of raising kids has changed of the last 50 years. The major action here is that food and clothes got really cheap relative to child care and education (more of that here).



The upshot is that when we think about economic growth, some of the most discussed variables on editorial pages and cable news include policy choices like Obamacare and tapering and tax rates, or international events like China's shadow banking system and the Crimean invasion. And that's fine: policies and global events do shape lending and spending behavior.

But buried underneath these headlines is the glacier of demographics, the steady and unyielding force of human numbers to shape the economy. The drop in U.S. fertility rates in recent years has almost certainly had a negative effect on consumer spending (and, in turn, lower birthrates are probably an outcome of the recession). In particular, childless couples don't need space for more kids so they're less likely to buy homes in the suburbs, depressing demand for housing in an economy that badly needs to sell more homes.

Once again, couples and families can do whatever they want, it's their lives. But writ large, smaller families and less household formation deprives the U.S. economy of housing and transportation spending, which has historically accounted for half of family expenditures. You can't legislate demographics. But it doesn't mean you shouldn't worry about it.

For my children, they will be living and working in a time of increasing labour shortages, so real wages can be expected to go up. The unfortunate counterpoint to this is they will also be living during the transition period when increasing numbers of Boomers will be selling houses and cashing in RRSP's and other savings, depressing the markets for housing and financial products, and also fuelling an inflationary spike as hordes of cash are unlocked to pay for their retirement lifestyles and healthcare.

The only actual "cure" for this condition would be to make the Canadian (and world) economy vastly more productive in order to soak up all the excess cash and keep inflationary pressures low. Clearing our regulatory roadblocks and streamlining the tax system to reduce the perverse incentive to invest on the basis of "tax efficiency" rather than productivity or ROI would help, bus as the perques and powers of so many people and institutions depend on the ability to control resources through taxes and regulation, you can expect a fight to the last taxpayer to protect the current system.

 

[a_majoor]

Japan slowly evaporates:

http://nextbigfuture.com/2015/07/japans-aging-population-has-already.html

Japan's aging population has already abandoned 8 million houses and could abandon 21 million by 2033

Population decline in Japan is so serious that parts of the country may be ghost towns in less than 20 years.

More than 8 million homes are already empty, and that number may reach 21.5 million by 2033, or about one-third of the nation's housing stock, Nomura Research Institute forecasts.

Wooden houses account for more than 50 percent of the market and are worthless after 22 years, according to the National Tax Administration Agency. Concrete apartments depreciate to nothing after 47 years.

1.05 million of the abandoned houses are damaged or rotting

Tokyo is still growing but the countryside and smaller towns and cities are getting abandoned. There are efforts to force renovation or removal. About 10$ are being bought cheaply and renovated and resold. But the fundamental bad demographics (population dropping and getting very old) is locked in for the 20-30 years and likely beyond.

 

[a_majoor]

More on Japan's demographics and the ecnomic consequences of this will be:

http://spectrum.ieee.org/energy/policy/japan-has-aged-out-of-its-economic-miracle

Japan Has Aged Out of its Economic Miracle

Demography is destiny, and Japan’s population is getting too old for the country’s economic health
By Vaclav Smil
Posted 26 Aug 2015 | 19:00 GMT

Source: IPSS (National Institute of Population and Social Security Research)Decline and Fall: Japan’s population is aging faster than that of any other major economic power, even as its numbers decline. Few young people will be left to care for the millions of older ones.

On 2 September 1945, representatives of the Japanese government signed the instrument of surrender on the deck of the USS Missouri, anchored in Tokyo Bay. So ended perhaps the most reckless of all modern wars, the outcome of which was decided by U.S. technical superiority even before it started. Japan lost in material terms even before it attacked Pearl Harbor: In 1940 the United States produced roughly 10 times as much steel as Japan did, and during the war the difference grew further.

The devastated Japanese economy did not surpass its prewar peak until 1953. But by then the foundations had been laid for the country’s spectacular rise. Soon its fast-selling exports ranged from the first transistor radios (Sony) to the first giant crude-oil tankers (Sumitomo). The first Honda Civic arrived in the United States in 1973, and by 1980, Japanese cars claimed 30 percent of the U.S. market. Japan, totally dependent on crude-oil imports, was hit hard by the OPEC oil price rises of the 1970s, but it adjusted rapidly by pursuing energy efficiency, and in 1978 it became the world’s second largest economy. By 1985 the yen was so strong that the United States, feeling threatened by Japanese imports, forced its devaluation through the Plaza Accord. But even afterward the economy soared: In the five years following January 1985 the Nikkei index rose more than threefold.

It was too good to be true; indeed, the success reflected the working of an enormous bubble economy driven by inflated stock and real estate prices. In January 2000, ten years after its peak, the Nikkei was still at only half its 1990 value, and only recently has it risen above even that low mark.

Once-iconic consumer electronics manufacturers like Sony, Toshiba, and Hitachi now struggle to be profitable. Toyota and Honda, global automotive brands once known for their unmatched reliability, are recalling millions of vehicles. Takata’s defective air bags recently resulted in the biggest recall of a manufactured part ever. And Yuasa made unreliable lithium-ion batteries for the Boeing 787. Add to this the rapidly changing governments, the March 2011 tsunami followed by the Fukushima disaster, and worsening relations with China and South Korea, and you get a worrisome picture indeed.

But in the long run the fortunes of nations are determined by population trends. Japan is not only the world’s fastest-aging major economy (already every fourth person is older than 65, and by 2050 that share will be nearly 40 percent), its population is also declining. Today’s 127 million will shrink to 97 million by 2050, and forecasts show shortages of the young labor force needed in construction and health care. Who will maintain Japan’s extensive and admirably efficient transportation infrastructures? Who will take care of millions of old people? By 2050 people above the age of 80 will outnumber the children.

Fortunes of all major nations have followed specific trajectories of rise and retreat, but perhaps the greatest difference in their paths has been the time they spent at the top of their performance: Some had a relatively prolonged plateau followed by steady decline (both the British Empire and the 20th-century United States fit that pattern); others had a swift rise to a brief peak followed by more or less rapid decline. Japan is clearly in the latter category. Its swift post–World War II ascent peaked in the late 1980s, and it’s been downhill ever since: in a single lifetime from misery to an admired—and feared—economic superpower, then on to the stagnation and retreat of an aging society.

This article originally appeared in print as “ ‘New Japan’ at 70.”

 

[FSTO]

A short piece about changing US demographics. While it is short on analysis, there is a fair bit of detail in a series of graphs in the article; follow the link to look at them:

http://www.theatlantic.com/business/archive/2014/03/the-us-economys-big-baby-problem/284237/

For my children, they will be living and working in a time of increasing labour shortages, so real wages can be expected to go up. The unfortunate counterpoint to this is they will also be living during the transition period when increasing numbers of Boomers will be selling houses and cashing in RRSP's and other savings, depressing the markets for housing and financial products, and also fuelling an inflationary spike as hordes of cash are unlocked to pay for their retirement lifestyles and healthcare.

The only actual "cure" for this condition would be to make the Canadian (and world) economy vastly more productive in order to soak up all the excess cash and keep inflationary pressures low. Clearing our regulatory roadblocks and streamlining the tax system to reduce the perverse incentive to invest on the basis of "tax efficiency" rather than productivity or ROI would help, bus as the perques and powers of so many people and institutions depend on the ability to control resources through taxes and regulation, you can expect a fight to the last taxpayer to protect the current system.

As long as you keep your health you should be able to be a productive taxpayer until well into your 70's. I plan on working (not a 40hr week mind you) until I'm in my 70's.

 

[a_majoor]

I think the real difference is being able to work into your 70's and having to work into your 70's.