5 ms·

And yet GDP per head continues to grow. Funny that isn't it. It's almost like the Japanese have invested in robotic automation, high quality public infrastruct

And yet GDP per head continues to grow. Funny that isn't it. It's almost like the Japanese have invested in robotic automation, high quality public infrastructure and using older people to best advantage.

burkaman 9y ago
Wouldn't you expect GDP per capita to grow as population shrinks? Why do you say "and yet"? The top 10 countries by GDP per capita are all small or tiny.
- jdmichal 9y ago
  You would only expect that if the shrinkage is entirely in non-productive members of the population -- unemployed, retired, etc. If population is shrinking at random, you would expect the GDP to also drop at a similar rate as productive members are removed.
  - koolba 9y ago
    Who said it's random? Productive people earn more and earning more is correlated with longer life.
    - jdmichal 9y ago
      I certainly didn't, if that's your implication. Population decline due to low birth rate is mostly going to be on the tailing end of population age. You would expect tailing-end losses should generally skew towards retired non-productive members. However, that's not the only way to get population losses. Epidemics would be probably be skewed on economic indicators -- Lower class -> higher density -> higher infection rate. War would be skewed towards younger ages -- recruited soldiers in that 18-25 bracket that are on the front lines. Different causes will have differing effects on the population and different expected effects on GDP. You can't just generalize it to, "Wouldn't you expect GDP per capita to grow as population shrinks?" Which is what the original comment I replied to did.
      - thaumasiotes 9y ago
        > Population decline due to low birth rate is mostly going to be on the tailing end of population age. You would expect tailing-end losses should generally skew towards retired non-productive members. I don't follow. Population decline among old people is due to death. Population decline due to low birth rate occurs at the opposite end of the age spectrum, among babies. Those losses start among unproductive children and mature over time into losses among productive young workers.
        deleted 9y ago
        [deleted]
        jdmichal 9y ago
        The population curve will eventually skew, but that's not indicative of where productivity losses are happening. You don't count people that weren't born in productivity, then call it a loss. You lose productivity when a real person loses the ability to produce.
        thaumasiotes 9y ago
        "Productivity loss" or "population decline"? Population decline from low birth rates occurs in people that weren't born. If you segment the population by age, this will be obvious -- compare the population figures to the same figures for the hypothetical situation where birth rates are higher, and you'll see that the numbers that are lower in reality than in hypotheticality are those for the young segments. Old age groups won't decline from low birth rates until all younger age groups already have. And from the perspective of losses to GDP, this is what's relevant. If birth rates decline starting in 1960, that has no effect on the population of people who were born in 1930. Their contribution to GDP will be just as it was always going to be. But the cohort born in 1980 will be much less productive, because it is smaller than it should have been, and that shows up in 2000 as a loss of young workers (compared to predictions), not old workers. > You don't count people that weren't born in productivity, then call it a loss. You do if you're arguing that losses to GDP are explained by lower birth rates.
  - danmaz74 9y ago
    Not if the fewer productive members have more capital / more productive jobs to do on average
    - jdmichal 9y ago
      Then that's no longer random...
      - danmaz74 9y ago
        The population may shrink randomly, but the survivors will move from less productive (and less paid) jobs to more productive (and more paid) jobs.
        jdmichal 9y ago
        Ah, yes I misread your comment. It's true; the picture is never static.
- MR4D 9y ago
  That a natural thought, but there are several complexities that make it unusual (possibly even unlikely): For instance, infrastructure is a fixed cost. All the investment into roads, power grid, rail, airports, waterways, etc is now spread over fewer people. Since public projects are usually debt funded, that usually means that fewer people have to shoulder the same debt burden. When more of a person's income goes to servicing debt, then by definition, there is less for savings and investment. Less investment usually leads to less growth. And here is where Japan is unique - they have managed to adjust to the debt servicing, and get better at allocating their investments to provide for a growing GDP per capita. Even more interesting is that their growth per capita in the first part of this century outstripped both the US & Germany (http://www.economist.com/node/10852462 http://www.economist.com/node/10852462) - and the US was in a Fed-induced bubble at the time!
  - teslabox 9y ago
    > And here is where Japan is unique - they have managed to adjust to the debt servicing, Japan has recently been using its bank to capture more of the interest payments on its debt: "Japan has found a way to write off nearly half its national debt without creating inflation. We could do that too." Sovereign Debt Jubilee, Japanese-Style - https://ellenbrown.com/2017/06/27/sovereign-debt-jubilee-japanese-style/ https://ellenbrown.com/2017/06/27/sovereign-debt-jubilee-jap...
  - vivekd 9y ago
    but fewer people also means less of a burden on infrastructure and hence less infrastructure spending thus evening things out.
Analemma_ 9y ago
"GDP per head" is just another name for "productivity". And while they can scour the corners looking for untapped sources of productivity, that can't last forever. Japan is staring down the wrong end of a simple equation: GDP = Population * Productivity and then take the derivative: d(GDP)/dt ~ d(Population)/dt + d(Productivity)/dt Meaning you can still have growth in periods of population decline, but it's really hard, especially in this era where we've plucked all the low-hanging fruit as far as increasing productivity. And the greater the rate of decline, the harder it gets. Japan's population decline is still very slow, all things considered, but will accelerate as it hits the middle of the logistic curve.
- smnrchrds 9y ago
  I hate to be that guy, but the derivative should be d(GDP)/dt = d(Population)/dt * Productivity + d(Productivity)/dt * Population
  - Analemma_ 9y ago
    I'll be that guy too: that's why I used ~ and not = ;)
    - thaumasiotes 9y ago
      But ~ is wrong, unless you're assuming that productivity is necessarily equal to population. It's not really right even then, because the ratio between GDP' and 2(Population') is not constant but rather equal to (Population).
  - yufeng66 9y ago
    I will be that guy too then :) People tend to use relative change: d(GDP)/dt / GDP = d(Population)/dt / Population + d(Productivity)/dt / Productivity So the relative change of GDP is still neatly separated into population growth component and productivity component.
- danmaz74 9y ago
  You forgot one very important factor, Active Population Ratio GDP = Population * Active Population Ratio * Productivity If the population ages too quickly, the active population rate can go down very fast...
smnrchrds 9y ago
I am curious to know how the trend of GDP per capita in Japan compares to other developed countries. When comparing US and Soviet Union, it is often said that the economy of USSR was expanding, much faster than any time in its history, but not quite as fast as US; and that is the reason US far surpassed USSR in terms of economy. If Japan's GDP per capita is not increasing as fast as or faster than the other developed countries, they may lag behind, just like USSR did.
- nwah1 9y ago
  GDP is a terrible measure of anything, except for monetary policy... which is almost entirely irrelevant to any kind of sociological considerations. And your history is inaccurate. The primary consideration is simply that they were starting from a much lower base. They were an agricultural peasant society, with a fertility rate of over 5 children per mother. The USSR was growing at breakneck pace during the first half of their existence, but just in very particular sorts of ways, as a result of forced collectivization, forced urbanization, and forced industrialization. However, they levelled off quickly during the postwar years, even though they had a strong focus on nuclear research, space exploration, etc. They had no one-child policy, they simply underwent a sped up version of the normal Demographic Transition, and ended up with below-replacement fertility rates just like Japan and many others have. This, in combination with poor central planning, and no more low-hanging fruit, led to their stagnation. With war, and a glorious leader, uniting the people to undergo a complete transformation of their entire lifestyle, the rate of growth can be astounding. But in the postwar years with absolutely none of that, and an already-industrialized economy, you run into a sort of nihilism, and all your lies become less likely to believed, and production targets less likely to be strived for. (see: optimum tautness) Also the complexity of modern life, aside from the basics that they achieved early, is just very hard to plan for. Think of all the millions of niche products that you can buy, and then imagine trying to dictate to an entire economy how to produce all of that.

burkaman 9y ago

Wouldn't you expect GDP per capita to grow as population shrinks? Why do you say "and yet"? The top 10 countries by GDP per capita are all small or tiny.

jdmichal 9y ago
You would only expect that if the shrinkage is entirely in non-productive members of the population -- unemployed, retired, etc. If population is shrinking at random, you would expect the GDP to also drop at a similar rate as productive members are removed.
- koolba 9y ago
  Who said it's random? Productive people earn more and earning more is correlated with longer life.
  - jdmichal 9y ago
    I certainly didn't, if that's your implication. Population decline due to low birth rate is mostly going to be on the tailing end of population age. You would expect tailing-end losses should generally skew towards retired non-productive members. However, that's not the only way to get population losses. Epidemics would be probably be skewed on economic indicators -- Lower class -> higher density -> higher infection rate. War would be skewed towards younger ages -- recruited soldiers in that 18-25 bracket that are on the front lines. Different causes will have differing effects on the population and different expected effects on GDP. You can't just generalize it to, "Wouldn't you expect GDP per capita to grow as population shrinks?" Which is what the original comment I replied to did.
    - thaumasiotes 9y ago
      > Population decline due to low birth rate is mostly going to be on the tailing end of population age. You would expect tailing-end losses should generally skew towards retired non-productive members. I don't follow. Population decline among old people is due to death. Population decline due to low birth rate occurs at the opposite end of the age spectrum, among babies. Those losses start among unproductive children and mature over time into losses among productive young workers.
      - deleted 9y ago
        [deleted]
      - jdmichal 9y ago
        The population curve will eventually skew, but that's not indicative of where productivity losses are happening. You don't count people that weren't born in productivity, then call it a loss. You lose productivity when a real person loses the ability to produce.
        thaumasiotes 9y ago
        "Productivity loss" or "population decline"? Population decline from low birth rates occurs in people that weren't born. If you segment the population by age, this will be obvious -- compare the population figures to the same figures for the hypothetical situation where birth rates are higher, and you'll see that the numbers that are lower in reality than in hypotheticality are those for the young segments. Old age groups won't decline from low birth rates until all younger age groups already have. And from the perspective of losses to GDP, this is what's relevant. If birth rates decline starting in 1960, that has no effect on the population of people who were born in 1930. Their contribution to GDP will be just as it was always going to be. But the cohort born in 1980 will be much less productive, because it is smaller than it should have been, and that shows up in 2000 as a loss of young workers (compared to predictions), not old workers. > You don't count people that weren't born in productivity, then call it a loss. You do if you're arguing that losses to GDP are explained by lower birth rates.
- danmaz74 9y ago
  Not if the fewer productive members have more capital / more productive jobs to do on average
  - jdmichal 9y ago
    Then that's no longer random...
    - danmaz74 9y ago
      The population may shrink randomly, but the survivors will move from less productive (and less paid) jobs to more productive (and more paid) jobs.
      - jdmichal 9y ago
        Ah, yes I misread your comment. It's true; the picture is never static.
MR4D 9y ago
That a natural thought, but there are several complexities that make it unusual (possibly even unlikely): For instance, infrastructure is a fixed cost. All the investment into roads, power grid, rail, airports, waterways, etc is now spread over fewer people. Since public projects are usually debt funded, that usually means that fewer people have to shoulder the same debt burden. When more of a person's income goes to servicing debt, then by definition, there is less for savings and investment. Less investment usually leads to less growth. And here is where Japan is unique - they have managed to adjust to the debt servicing, and get better at allocating their investments to provide for a growing GDP per capita. Even more interesting is that their growth per capita in the first part of this century outstripped both the US & Germany (http://www.economist.com/node/10852462 http://www.economist.com/node/10852462) - and the US was in a Fed-induced bubble at the time!
- teslabox 9y ago
  > And here is where Japan is unique - they have managed to adjust to the debt servicing, Japan has recently been using its bank to capture more of the interest payments on its debt: "Japan has found a way to write off nearly half its national debt without creating inflation. We could do that too." Sovereign Debt Jubilee, Japanese-Style - https://ellenbrown.com/2017/06/27/sovereign-debt-jubilee-japanese-style/ https://ellenbrown.com/2017/06/27/sovereign-debt-jubilee-jap...
- vivekd 9y ago
  but fewer people also means less of a burden on infrastructure and hence less infrastructure spending thus evening things out.

Analemma_ 9y ago

"GDP per head" is just another name for "productivity". And while they can scour the corners looking for untapped sources of productivity, that can't last forever. Japan is staring down the wrong end of a simple equation: GDP = Population * Productivity and then take the derivative: d(GDP)/dt ~ d(Population)/dt + d(Productivity)/dt Meaning you can still have growth in periods of population decline, but it's really hard, especially in this era where we've plucked all the low-hanging fruit as far as increasing productivity. And the greater the rate of decline, the harder it gets. Japan's population decline is still very slow, all things considered, but will accelerate as it hits the middle of the logistic curve.

smnrchrds 9y ago
I hate to be that guy, but the derivative should be d(GDP)/dt = d(Population)/dt * Productivity + d(Productivity)/dt * Population
- Analemma_ 9y ago
  I'll be that guy too: that's why I used ~ and not = ;)
  - thaumasiotes 9y ago
    But ~ is wrong, unless you're assuming that productivity is necessarily equal to population. It's not really right even then, because the ratio between GDP' and 2(Population') is not constant but rather equal to (Population).
- yufeng66 9y ago
  I will be that guy too then :) People tend to use relative change: d(GDP)/dt / GDP = d(Population)/dt / Population + d(Productivity)/dt / Productivity So the relative change of GDP is still neatly separated into population growth component and productivity component.
danmaz74 9y ago
You forgot one very important factor, Active Population Ratio GDP = Population * Active Population Ratio * Productivity If the population ages too quickly, the active population rate can go down very fast...

smnrchrds 9y ago

I am curious to know how the trend of GDP per capita in Japan compares to other developed countries. When comparing US and Soviet Union, it is often said that the economy of USSR was expanding, much faster than any time in its history, but not quite as fast as US; and that is the reason US far surpassed USSR in terms of economy. If Japan's GDP per capita is not increasing as fast as or faster than the other developed countries, they may lag behind, just like USSR did.

nwah1 9y ago
GDP is a terrible measure of anything, except for monetary policy... which is almost entirely irrelevant to any kind of sociological considerations. And your history is inaccurate. The primary consideration is simply that they were starting from a much lower base. They were an agricultural peasant society, with a fertility rate of over 5 children per mother. The USSR was growing at breakneck pace during the first half of their existence, but just in very particular sorts of ways, as a result of forced collectivization, forced urbanization, and forced industrialization. However, they levelled off quickly during the postwar years, even though they had a strong focus on nuclear research, space exploration, etc. They had no one-child policy, they simply underwent a sped up version of the normal Demographic Transition, and ended up with below-replacement fertility rates just like Japan and many others have. This, in combination with poor central planning, and no more low-hanging fruit, led to their stagnation. With war, and a glorious leader, uniting the people to undergo a complete transformation of their entire lifestyle, the rate of growth can be astounding. But in the postwar years with absolutely none of that, and an already-industrialized economy, you run into a sort of nihilism, and all your lies become less likely to believed, and production targets less likely to be strived for. (see: optimum tautness) Also the complexity of modern life, aside from the basics that they achieved early, is just very hard to plan for. Think of all the millions of niche products that you can buy, and then imagine trying to dictate to an entire economy how to produce all of that.