4 ms·

You can't just ignore all the people who aren't working though? One of Japan's specific problems (which will also hit much of the West in a decade or two) is t

You can't just ignore all the people who aren't working though? One of Japan's specific problems (which will also hit much of the West in a decade or two) is that society is aging fast and the ratio of retirees to working people is increasingly unsustainable.

spurgu 6y ago
Exactly. Just reading those quotes (haven't read the linked article) leads me to think that you can't ignore the huge liabilities comprised of education, medical care and pensions.
throw0101a 6y ago
> ratio of retirees to working people is increasingly unsustainable. I'd like to see the economic models that were used to calculate at what (estimated) point this becomes "unsustainable". Do you have a citation? What percentage of the population has to be "elderly" or taking their pension? What is the minimum percentage of the population that needs to be in 'working age' years before it becomes a problem? Unless there are models people are just throwing darts in making these statements. Show me that the math exists (even though I may not understand it as a layman). Pontificating is cheap. Krugman in 1998: > The purpose of this paper is to show that the liquidity trap is a real issue-that in a model that dots its microeconomic i's and crosses its intertemporal t's something that is very much like the Hicksian liquidity trap can indeed arise. Moreover, the conditions under which that trap emerges correspond, in at least a rough way, to some features of the real Japanese economy. To preview the conclusions briefly: in a country with poor long-run growth prospects—for example, because of unfavorable demographic trends […] > In the model of sections 1-3, a liquidity trap will arise only if future productive capacity is actually lower than current capacity. Before loosening that constraint, we can ask why one might expect Japan's future capacity to be relatively low compared with today's. And the obvious answer is demography: Japan's combination of declining birth rate and lack of immigration apparently means a shrinking rather than growing labor force over the next several decades. […] > Moving outside the formal model, the prospects for a liquidity trap also depend on investment demand. Here demography again comes into play: the prospective decline in the labor force reduces the expected return on investments. * https://www.princeton.edu/~pkrugman/japans_trap.pdf https://www.princeton.edu/~pkrugman/japans_trap.pdf
- Clewza313 6y ago
  Do you really think a rich country of 100M hasn't done its homework on this? I'm personally partial to Matsutani's Shrinking-Population Economics: https://www.amazon.com/Shrinking-population-Economics-Lessons-Akihiko-Matsutani/dp/4924971189 https://www.amazon.com/Shrinking-population-Economics-Lesson... From a review: " The parlous state of Japan's pension system is well known, but Matsutani reviews the projections: by 2030, contributions will cover only 44% of expenditure, leaving a projected yearly deficit of ¥‎57 trillion by 2030 and a cumulative debt load of ¥‎1,240 trillion, roughly equal to the sum of all household wealth in Japan today. Getting back to balance would entail either more than doubling contributions from 15% to 34%, or cutting benefits by 56%."
  - throw0101a 6y ago
    > Do you really think a rich country of 100M hasn't done its homework on this? I'm sure they have. But we're all a bunch of randos on the Internet to each other, which is why I'm asking for citations: I'd like to hear the sources which people's thoughts come from so I can better assess them. Otherwise the person on the other end of the screen is just another crazy from /r/wallstreetbets. :)
    - deleted 6y ago
      [deleted]
imtringued 6y ago
An aging society would suffer from inflation because there is a lot of wealth but not enough workers to service all the demand.

spurgu 6y ago

Exactly. Just reading those quotes (haven't read the linked article) leads me to think that you can't ignore the huge liabilities comprised of education, medical care and pensions.

throw0101a 6y ago

> ratio of retirees to working people is increasingly unsustainable. I'd like to see the economic models that were used to calculate at what (estimated) point this becomes "unsustainable". Do you have a citation? What percentage of the population has to be "elderly" or taking their pension? What is the minimum percentage of the population that needs to be in 'working age' years before it becomes a problem? Unless there are models people are just throwing darts in making these statements. Show me that the math exists (even though I may not understand it as a layman). Pontificating is cheap. Krugman in 1998: > The purpose of this paper is to show that the liquidity trap is a real issue-that in a model that dots its microeconomic i's and crosses its intertemporal t's something that is very much like the Hicksian liquidity trap can indeed arise. Moreover, the conditions under which that trap emerges correspond, in at least a rough way, to some features of the real Japanese economy. To preview the conclusions briefly: in a country with poor long-run growth prospects—for example, because of unfavorable demographic trends […] > In the model of sections 1-3, a liquidity trap will arise only if future productive capacity is actually lower than current capacity. Before loosening that constraint, we can ask why one might expect Japan's future capacity to be relatively low compared with today's. And the obvious answer is demography: Japan's combination of declining birth rate and lack of immigration apparently means a shrinking rather than growing labor force over the next several decades. […] > Moving outside the formal model, the prospects for a liquidity trap also depend on investment demand. Here demography again comes into play: the prospective decline in the labor force reduces the expected return on investments. * https://www.princeton.edu/~pkrugman/japans_trap.pdf https://www.princeton.edu/~pkrugman/japans_trap.pdf

Clewza313 6y ago
Do you really think a rich country of 100M hasn't done its homework on this? I'm personally partial to Matsutani's Shrinking-Population Economics: https://www.amazon.com/Shrinking-population-Economics-Lessons-Akihiko-Matsutani/dp/4924971189 https://www.amazon.com/Shrinking-population-Economics-Lesson... From a review: " The parlous state of Japan's pension system is well known, but Matsutani reviews the projections: by 2030, contributions will cover only 44% of expenditure, leaving a projected yearly deficit of ¥‎57 trillion by 2030 and a cumulative debt load of ¥‎1,240 trillion, roughly equal to the sum of all household wealth in Japan today. Getting back to balance would entail either more than doubling contributions from 15% to 34%, or cutting benefits by 56%."
- throw0101a 6y ago
  > Do you really think a rich country of 100M hasn't done its homework on this? I'm sure they have. But we're all a bunch of randos on the Internet to each other, which is why I'm asking for citations: I'd like to hear the sources which people's thoughts come from so I can better assess them. Otherwise the person on the other end of the screen is just another crazy from /r/wallstreetbets. :)
  - deleted 6y ago
    [deleted]

imtringued 6y ago

An aging society would suffer from inflation because there is a lot of wealth but not enough workers to service all the demand.