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> Consumption is fixed since the population is, and as the portion of citizens producing goods and services goes down there's a shortfall of those goods and ser
by rcme 4y ago
> Consumption is fixed since the population is, and as the portion of citizens producing goods and services goes down there's a shortfall of those goods and services.
This ignores productivity gains, which allows for cheaper goods and services (i.e. more consumption per person) and for each person to produce more, thus making up the shortfall with the shrinking population.
- everforward 4y agoSure, I don't mean to imply those are the only economic forces in play. I don't think it's likely to entirely make up the shortfall, but I could be wrong. Just doing some napkin math, ~60% of the US is employed. They need to produce ~1.3x what they consume in order for everyone to have enough. Currently, about 50% of Japan works. They need to produce ~2x what they consume for everyone to have enough. If that number drops to 40%, they need to produce 2.5x what they consume. If it hits 30%, they need to produce 3.3x what they consume. A 10% drop in the employment rate would require a ~25% productivity increase. Even if that happens, their relative quality of life still falls because their productivity gains are cannibalized to maintain their quality of life while other nations use theirs to improve quality of life. Japan would need a substantial increase in productivity exclusive to them to maintain parity with the rest of the world in the medium-term. It's not impossible, but it does seem unlikely in the modern global economy. Especially given that a lot of productivity gains come from economies of scale, which they're losing with a shrinking population. Edit: dropped a word, had to re-add