A highly insightful book on Japanese culture on what makes people reluctant to be part of society (getting married, having children etc) is "Shutting Out the Sun: How Japan Created Its Own Lost Generation"
In 80 years, societies are going from 2 children supporting each adult, to each child supporting 2 adults. That's a 4x elderly burden that I don't think is significantly ameliorated by lack of kids. Socialized medical care for the elderly around the developed world is already barely able to manage. Elderly countries like Japan, Greece, Italy, and Portgual are already at debt-to-GDP burdens of 261%, 177%, 145%, and 116%, respectively. Correct me if I'm wrong, but I believe every 100% debt-to-GDP at current 5% rates is like an extra indefinite 5%/year tax taken from everyone, with no benefit (you already got the benefit in the past).
> Correct me if I'm wrong, but I believe every 100% debt-to-GDP at current 5% rates is like an extra indefinite 5%/year tax taken from everyone
You're wrong.
You need to consider the real returns on that debt, its real burden, and interagency holdings (e.g. the Treasury paying the Fed interest). Also, that debt is serviced with taxes. Adding it to the tax burden is double counting.
The debt is analogous to taxation. But not so much that you can numerically equate them.
It's real GDP, and it's not being inflated away. It theoretically attempts to, (2% inflation), but because more real debt is taken out, GDP still goes from 100% -> 105% the next year.
The real returns on this debt is hardly investments and infrastructure that will make more things in the future, it's mostly social spending like healthcare.
> that debt is serviced with taxes. Adding it to the tax burden is double counting.
If I would normally pay 35% taxes for the country's defense and social spending, but there's also servicing interest, I now have to pay 40% taxes. So it's an extra indefinite 5%/yr tax like I said, but I only got 35% of defense and social benefits.
> If I would normally pay 35% taxes for the country's defense and social spending, but there's also servicing interest, I now have to pay 40% taxes
This is where interagency holdings and real debt burdens kick in. (Also, again, that 35% already includes interest payments already.)
Let's assume a rule that says no new borrowing and no spending cuts. There would need to be tax raises. But if we know one thing, we know it would be less than 5%. Even if we remove the 20% held by agencies [1], which is absolutely not a clean procedure, we know the number would still be less than 4%. Because that debt is nominally denominated, and you're making interest payments in the future with less-valuable money, and, of course, the double counting.
This is before we even touch monetising the debt. Taxation is a bad mental model for thinking about our federal debt. It's in some ways more benign, and other ways much nastier, than a simple tax increase.
> (Also, again, that 35% already includes interest payments already.)
Again, no, because if the 35% included interest payments, then if hypothetically there were no interest payments, my tax burden would be 30% now (no 5% taxes to interest).
I understand that if nominal debt remained the same, then 2% inflation would eventually whittle it away (or whichever inflation/monetizing rate), but effectively whether by monetary inflation or taxes, taxpayers still pays the same amount, just a matter of when and in what way.
> no, because if the 35% included interest payments, then if hypothetically there were no interest payments, my tax burden would be 30% now (no 5% taxes to interest)
No. To illustrate one element of the complexity, imagine we just defaulted on our debt and ignore the credit (but not asset) consequences. No more government debt. Let's now assume that no new spending is allowed, and the surplus must be returned in the form of tax cuts.
You would expect the surplus to vastly exceed the amount of interest being paid. Because now we're talking about principal, too. You'd also expect tax receipts to fall as everyone who expected those interest payments pulls back spending. That money paid to Americans supports the economy--and through it, taxation--in a complicatedly circular way.
(You're also conflating personal income and GDP, but we'll let that slip and count any taxes you incur directly or indirectly, as taxes you pay.)
> effectively whether by monetary inflation or taxes, taxpayers still pays the same amount, just a matter of when and in what way
No, that's the point. Inflation is heterogenous in a way taxation is not. You could erode the purchasing power of a Treasury by $1 without causing a commensurate amount of inflation. It might be more or less depending on a number of factors.
Your mental model works for a small country with a pegged currency, e.g. Panama. It doesn't when we consider monetary effects.
Our bad, we should not have built a society based on debt and now we are going to take the brunt of it, there needs to be an inflection point to turn things around, though.
I wonder when people will make the connection between monetary inflation and birth rates. You can also see the crash in birth rates even in rural provinces of Turkey.
> wonder when people will make the connection between monetary inflation and birth rates
It's been studied. The connections are as non-obvious as they are fascinating.
In the Pacific Islands, a "1% increase in CPI (inflation) will decrease total fertility rate by 0.41%" [1]. (This effect was much stronger than female education and real GDP changes.) This supports your hypothesis.
When we look at rich countries, however, we find that "an increase in annual inflation of 1 percentage point would bring an increase of 0.06 percentage point in the annual growth of the total population" [2]. Inflation increases fertility!
A clue as to why might be found in the U.K., where among "home owners" they found "evidence of positive but temporary effects of house prices on fertility," with "a 10% increase in the average house price in a given month increases the fertility of home owners by 2.4% in the following year" [3]. Among renters, on the other hand, "fertility rates are lower by the order of 2 to 4%. Fertility rates for this group remain lower three years later, suggesting house price increases affect completed fertility as well as the timing of births."
Japanese inflation is only a recent phenomenon. Prior to the pandemic, they were experiencing deflation and the BoJ was doing everything in its power to get some inflation. The falling birth rate, on the other hand, has been going on for far longer than monetary inflation.
Falling birth rates are often correlated with discretionary income levels and women's education.
What's most interesting to me about this trend around the developed world is that nobody has put together a truly compelling theory as to the root cause. There's lots of obviously politically motivated theories, like liberals saying it's because of soul crushing capitalism run amok or conservatives saying it's because women aren't kept barefoot and pregnant in the kitchen, but for as consequential as the whole thing is it seems very light on legitimate analysis (at least that I've seen).
There have been scientific studies done by anthropologists, but they're a different clique to economists and they basically "don't talk to each other".
Essentially, there's a sort-of phase diagram for the optimal human reproduction strategy where the axes are things like "income inequality" and "environmental stress". You can then color in patches of the diagram with what strategy members of a society will settle on.
For example, high-stress, high-inequality societies practice polygamy. The game-theoretic logic is that women need a partner that can provide consistent excess calories. If you can't feed your kids in just one year out of twenty, they die. It doesn't matter what the average income is, just how steady the income is. In societies like that, only the richest 10% of men can provide this, so they all have 10 wives. The other 90% of men remain bachelors and often participate in tribal warfare, exacerbating the problem. Saudi Arabia used to be like this, and parts of Africa still is.
Similarly, in "one corner" of this graph is super rich men in stable societies, where their optimal reproduction strategy is serial monogamy to young wives. Look at Hollywood A-listers or billionaries to see this play out in real life.
Japan got stuck in a part of the phase diagram where the optimal reproduction strategy is "don't."
im always kinda skeptical of these evolutionary game theory type theories when applying them to modern developed societies. Maybe they were true in the past, but we have largely removed ourselves from natural selection in any of the traditional ways. It doesn't mean there arent other game selection mechanisms, but they're likely very different to 1000s of years ago. Like, for example broadly no-one is having their kids all starve to death in modern japan.
This is all post-facto rationalization to avoid a more glaring truth.
Women aren’t having kids - because they can avoid having kids. While still having sex and having societal benefits, including retirement. That is a very, very new and unusual situation when looking at the span of human history.
Birth control is a pretty new invention (mid 60’s approximately), and societies globally have been steadily rolling it out/making it available more easily.
Childbirth is dangerous (especially the first time), usually ruins one’s figure (and hence ‘market value’), and is economically very expensive.
At a minimum 4-6 months of ‘non productive’ work time per pregnancy, not counting the several years of near constant caretaking for a newborn. Which kills normal careers, where taking ‘time off’ pretty much guarantees you’ll be surpassed by all your competition - and 2-2.5 years pretty much guarantees it. And that is for an office job, not labor.
Before birth control, the only way to do that would have required celibacy or constant abortions - and good luck suppressing that drive for most people!
It’s like wondering why almost everyone is fat and out of shape when there is no public transit, everyone has to drive everywhere (and gets stuck in traffic), food is terrible and junky, jobs are mostly sedentary, etc.
Of course that’s how folks will be on average when that’s the environment! And birth rates are by definition based on the average behavior.
Coupled with the fact it’s relatively easy to survive/live in society without kids now, and it’s a double whammy. At least until the consequences of having no kids for a long time come home to roost - then everyone is going to be fucked. Figuratively.
I think social safety nets are an under-reported cause of this. 80 years ago, children were your retirement plan. Long term stable value pensions and 401ks, along with government ensured healthcare and social security, weren't a thing. If you got to 70 without kids, you would eventually not be able to work and probably die poor.
Now, almost everyone thinks not having kids could be an option, because of course they'll have some savings (the rest of society's labor), and government healthcare, and the government won't let them become destitute.
The issue of course being that when there is a population crunch, there is no ‘rest of societies labor’ free, like there would be with a normal population age curve.
If the crunch is big enough, anyway.
Same with the tax base used to fund gov’t healthcare and similar programs.
That said, Japan has… problems. But they aren’t apocalyptic. At least not yet.
> The issue of course being that when there is a population crunch, there is no ‘rest of societies labor’ free, like there would be with a normal population age curve.
Yeah. For that reason, old age pensions should be tied to how many kids you've had, not how much money you paid into the system during your working years. If you have no kids, you get no pension. If you want to support in old age, you need to contribute to the next generation's labor pool to provide that support. Otherwise, you need to work to support yourself.
Yep. This is the problem I've been zeroing in on as well.
Socialized retirement destroys most of the incentive to sacrifice your youth to grow and raise new people. Why sacrifice your youth and money being a parent when you can leech off the labor of other people's kids in retirement?
I think we'll need to eventually experiment with things that try to give some disproportionate benefit to people who have kids. e.g. everyone gets some minimal socialized retirement and healthcare, but your benefits increase above that baseline in proportion to how many children you raised. Maybe your benefits increase at 3+ kids and decrease with 0-1 kids.
In theory those benefits are already there in the form of social (and potentially economic) support from the kids.
The challenge comes if the kids hate you and refuse to acknowledge you - something which has been being encouraged more and more by western society, BTW.
Historically, people would secretly understand (yeah, they are an abusive alcoholic!) but call you a bad kid and tell you to suck it up and deal with it. Since otherwise they’d have to deal with it. Going no contact is increasingly normalized.
Probably why many societies, especially conservative ones, lean so heavily on filial piety type concepts and frown on people cutting off their parents. especially when those parents are a burden or huge pain in the ass to those around them. Like Chinese mother-in-laws.
I can’t imagine that proposal going over well with the LGBTQ contingent either - which near as I can tell gets a lot of the angst from conservatives precisely because they’re ’having fun’ by opting out of the system and doing what they want instead of ‘comply or die’ like the rest.
We're in a situation where even discussing or proposing any realistic solution to this is considered too radical (how dare you propose controlling other peoples' lives). Yet societies will collapse because of it, or come close to collapse.
The only "allowed" solution is importing people from poor countries into richer ones, but disguised as something humanitarian, taking in refugees of war or whatnot.
If your realistic solution is some form of forced natalism, then yeah, we shouldn’t be talking about that. It’s ethically wrong and unpalatable to the vast majority of people in developed societies, it’s not a thing that we should be entertaining.
One way or another, most likely ideological, things will change. Probably in the ‘over correct once it’s too late, in some terribly traumatic fashion’ as is the norm.
Eventually, likely in the direction of gun control - birth control being licensed or the like. Or being religious being a requirement again to be a ‘respected member of society’.
Unlikely to be popular of course, but eventually society will change to protect its interests - or die.
Exactly. Either you opt for a timely, balanced, thought-out solution, or you have the traumatic over-correction forced upon you.
I wish we could have real conversations about how to solve this issue, and not bury our heads in the sand. I'm not proposing any particular solution, just for our collective attention to the problem and liberty to discuss solutions.
Not really forced, but nudged towards. The trivial approach would be something like significantly higher taxes and social contributions for each subsequent adult year of childlessness. Wouldn't be unwarranted since you're a greater burden overall to society over your lifetime and you're not contributing to the next generation. Countries could then use that money to either subsidize other people having kids (optimistic solution) or compete on attracting young people from other countries (more realistic solution).
People seem to think "oh, I'm paying my social contributions, that should be enough for my retirement", but the whole formula really doesn't factor in a sharp drop in workforce we're about to experience. We're papering over the monetary deficit with credit all over the world, but that's not feasible long-term, and the "who's actually gonna do it" aspect will become much more important. Writing a check doesn't change the senior's diaper, nor anything else.
As for practical solutions, first you have to make it possible for young people to obtain real estate again somehow (crucial), then to subsidize kindergartens / child care of all kinds heavily, and only then go more radical.
Another radical angle could be some sort of education reform where people are somehow incentivized to do all the post-BSc education in their 30s instead of 20s. How to achieve that without horrible side effects is up to debate. Subsidies for parents on every corner and every aspect of life (including education) would probably work, but how much is the optimum and how to implement it is a serious question.
You're looking at the trees but missing the forest.
Birth control is available in countries where women are having over 5 kids on average each despite that. Similarly, legalisation or the illegality of abortion has no significant effect on child birth rates. Availability of birth control (or abortion) alone doesn't explain the "big picture", it just alters it a little bit. These are Catholic and conservative talking points, not scientific theories with evidence, charts, graphs, and equations.
Similarly, childbirth has always been dangerous, but is less dangerous now, so that has no explanatory power either.
Etc...
You're also confusing something else: Women's careers being interrupted by childbirth is the much closer to the truth. Women didn't work previously on anything but raising a family! In the economy/stress phase diagram, this is a different place, where a single income is no longer sufficient. THAT is the problem. If women are forced to enter the general workforce, then that alters the game-theoretic optimum for family planning.
Similarly, the mere existence of a social safety net such as a government pension substantially alters the equation. Individual families are no longer incentivised to "invest" in their future by having kids themselves, because they expect "society to take care of it" with unemployment benefits and retirement funds. In the past, people had individual incentives to have kids, because that was their retirement plan.
Not confused at all - both have to work because both can work. Supply increases, so ‘price’ decreases per person. Forest wise.
Previously, women (unless celibate or okay having abortions a lot) had no choice but to spend time at home, which forced the market in that direction.
And I’m also not confused about birth control availability. You’re confusing ‘theoretically available’ vs ‘socially acceptable available’, which those societies haven’t hit yet. Ideologically, they’re very resistant - but changing.
Just like the changes in the US (starting to be possible in the 60’s) didn’t become the norm until the 80’s to 90’s or later. American Catholics have been okay with birth control since then (roughly), where South American Catholics are still against it.
Which, notably, is when the US started to become more heavily two-income household dependent. And when wages stopped keeping up with growth.
Without birth control being possible, none of it matters - which is why it being possible is actually important. And why we’ve been seeing steady change in societies since it has become possible.
Social security is going to go bankrupt, while cash savings get inflated away due to monetisation of the debt. So these expectations of government funded retirement may disappear quite quickly.
It's a bit of both, though the former to a larger extent. Pretty logical and inevitable that if people don't have enough time or are too tired (physically or mentally) to make babies, then they won't be made. Women choosing career over housemaking only exacerbates the issue, but also this choice is forced by still-immature social expectations combined with a brutal economic model. End of the day, Capitalism drives extinction.
Genuine question, why instead of going down this evidently ineffective route of trying to dial back family structures and social relations we don't just go in the opposite direction? Fire up a Manhattan project for longevity and age related disease.
Not even talking about reversing aging, but if we could give the average person 100 healthy and productive years and minimize the cost of aging we've at the very least gotten rid of the single biggest pressing issue of the demographic changes.
I think this will backfire sooner than later, Imagine a dictator living "100 healthy and productive years" or a billionaire amazing more and more wealth for longer whereas poor people are kept working for longer with poorer and poorer conditions.
The Mexicans who lived in Texas in the early 19th century saw a relentless stream of Anglo settlers from the USA and beyond. Within a couple of decades, Texas demographics changed radically, and society changed along with it. The previous (Mexican) inhabitants' children went on to grow up in a society with a radically different culture with a different language.
Imagine a Mexican child coming home from a visit to a white-majority, English-language town. Imagine them complaining about the feeling of otherness in their own country, and asking their parents why they allowed themselves to be replaced by the Anglos.
Imagine their parent bending over, looking that child in the eye, and saying: "ackshually, they didn't "replace" us, chico. They merely replaced births that never took place."
Considering that Japan and Korea do just fine is proof that youre arguing with a straw man. Same with European nations that didn't just invite everyone and their grandma to immigrate such as Switzerland.
The technological advances / robots will outpace the need for immigration, and has for the last decades too.
Its just profitable for the capital as immigrants are a source of cheap labor which can be used to surpress wages.
> Considering that Japan and Korea do just fine is proof that youre arguing with a straw man.
Not sure about Japan, but anybody who thinks Korea is doing "just fine" has not been following Korean news. Daycares are closing left and right because there aren't enough kids. Now it's moving up to secondary schools. Soon it will be cafes and restaurants as there aren't enough customers. Then the whole economy will crumble down.
Technology doesn't help when there aren't enough people buying your product and services.
You're projecting current developments into the future, ignoring that things change on the way there.
If your expectation is that everything has to stay the same: then yes, alarm bells should be going of. For 40+ years already considering pollution, climate change etc.
But labor has gotten less important with every step since the industrial revolution, objectively speaking the shrinking nations will have a lot less issues medium/long term then the ones "restocking" via immigration
Citation needed. If they were doing "just fine", then this wouldn't have happened (from TFA):
Chief Cabinet Secretary Yoshimasa Hayashi told reporters that it's "a critical situation.” The next six years, until the 2030s, will be “the last chance for us to possibly reverse the trend,” he said.
> The technological advances / robots will outpace the need for immigration
I will believe it when I see it. Or to refer to GP's point - where is the robot that will change bed pan?
You might notice that these quotes talk about the future. That's literally the point. They see a development and realize that they'll have a problem if the status quo is kept the same.
It won't, which is why the actual issue mostly fails to realize as projected.
That’s the core disagreement. It’s like when a car is driving with 200mph toward a brick wall and you say “I don’t understand why they panic, the car will stop doing that before hitting the wall”.
Sure, that’s a possibility. But I understand projecting a current trajectory in trying to prepare for the future.
> It’s like when a car is driving with 200mph toward a brick wall and you say “I don’t understand why they panic, the car will stop doing that before hitting the wall”.
I disagree, it's more like you're in a tank and have been running over every obstacle in the way, with someone on the side constantly shouting "new next one is going to destroy your tank". It's obviously possible, but considering how little we're already valuing labor and have been in a phase of adding even more entirely pointless jobs because the labor is cheap and available - I honestly do believe that I'd be a very healthy thing for our societies to downsize (numerically) again. At least to pre world war 1 levels.
It's obviously not going to be easy, but this whole system is going to go bust anyway once the millennials get too old to work, immigration at best postpones this issue for a few years while introducing a shitton of new ones to the equation.
There is no perfect solution, but immigration is one of the worst for this particular problem
I was specifically and only talking about what amounts to a labor shortage. This whole discussion is centered around the issue that our societies are getting older, which is why we supposedly need immigration to offset the low birth rate. this issue in particular has been raised and solved through automation repeatedly since the industrial revolution.
When the ratio of "workers" / "dependents" shrink dramatically as those 2 graphs attest, we cannot have "prudent" updates. There will either be "painful" updates, or need to sacrifice something else (like getting immigrants).
No cut is so painful as to make cultural suicide a preferable alternative.
BTW, needing more workers doesn't necessitate immigration--it necessitates more workers. Why do you guys always jump straight to permanent immigration? What's wrong with a temporary work visa?
It's good that we all prepare for this trend which has been ongoing all over the place for decades: wealth drops birthrates.
Recall that in the 1970s, it was assumed that growth rates would continue unabated - this is why the 70s had so much apocalypse pop media about overpop like Soylent Green etc. The green revolution that was going on at the time hadn't yet registered with demographers.
This apparently inexorable process of growth leading to lower birthrate means that mankind's impact on the planet has at least a partial limit (number of humans screwing the pooch will peak and recede, even if the impact per human may keep growing), so we can take some degree of consolation in that.
But that leaves the remaining question of how we deal with the fact that the number of economic participants peaks and then recedes (negative growth ain't a pretty process). We can look at recessions as a starting guide to this process, but it does still give one a shiver to envision what we'll have to master to navigate this process down to the projected population equilibrium.
It's all the above that explains the nods that countries like the U.S. get from economists: when there is a global trend of dropping birthrates which can impact econ growth, countries that specialize in immigration can buck that trend for a bit.
> but it does still give one a shiver to envision what we'll have to master to navigate this process down to the projected population equilibrium.
Easier said than done. This is where I see the most of hand waving. Robots haven't materialized yet, neither any political will to shrink the safety net.
>Robots haven't materialized yet, neither any political will to shrink the safety net.
Human-like general-purpose robots - yes. Except, by definition, a robot, essentially a programmable mechanism, not something human-like.
Stuff like warehouses is getting increasingly automated, planes basically can fly and land themselves without human in the loop, autonomous cars are not here, but are coming in the next decade probably.
Personally, I haven't bought a cup of coffe a human made in at least a decade. That's some poor barista's salary not getting paid.
Not that I would know the difference between a 5/10 coffe from a machine and a theoretically 10/10 coffe a professional would make. And a machine makes one for a whole lot cheaper.
I read on HN a pretty convincing essay that if a car-seat was only required while under a year, and a booster while under 2, there would be something like 10% more births in the U.S. every year.
There are always those families (especially among the religious) that would have larger families, with not obvious things that limit them. Knowing nothing about Japan, but living in the U.S. where birthrates are also falling, I would think state effort should be put into this.
But guess what, the Nation Population Institution said birth rate is going to rise and keep steady afterwards in 2023 without explanation. And everyone inside the gov believe this bs.
>The next six years, until the 2030s, will be “the last chance for us to possibly reverse the trend,” he said.
I feel like this is set in stone at this point. Virtually no chance these will change in the next 6 years.
>“Simple economic measures such as increase of subsidies are not going to resolve the serious problem of declining births,”
This is going to be shockingly bad for Japan. They are about 15 years too late to do anything about this anymore. Though at the same time they have no choice but to do something regardless. Else become much worse off later.
>adding that a conservative mindset espousing traditional gender roles at home and at the workplace also needs to change.
That's a very bad decision on their part that will exacerbate their crisis.
>Surveys show that younger Japanese are increasingly reluctant to marry or have children, discouraged by bleak job prospects, the high cost of living
Easy enough to understand the root cause here. Extreme taxation for their growing 260% public debt to gdp.
You might say, "default on the debt" but that isn't going to fix anything neither, probably make things worse.
Maybe I’m under thinking it, but this problem seems relatively simple to solve. Just make raising kids free. You get free childcare, and get paid a wage to raise your kids.
>Maybe I’m under thinking it, but this problem seems relatively simple to solve. Just make raising kids free. You get free childcare, and get paid a wage to raise your kids.
Way too simple. This is the case already. Here in Canada you literally get paid ~$2000/kid/year. straight up cash. This is true elsewhere as well, and each place has the same aging population and low fertility.
This isn't a matter of what can fix the problem. The actual cause of the problem is government essentially legislated this to be the case. This problem largely speaking is the root cause of political polarization.
$2k/year is nowhere near even the direct costs of raising a child. Think about how much an extra bedroom and food would cost even before you get to things like childcare, education, increased travel costs, etc.
$2k would hardly cover anything. I'm talking about free schooling and supplies, free childcare, free gear for raising kids, and a payment to cover the rest.
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You're wrong.
You need to consider the real returns on that debt, its real burden, and interagency holdings (e.g. the Treasury paying the Fed interest). Also, that debt is serviced with taxes. Adding it to the tax burden is double counting.
The debt is analogous to taxation. But not so much that you can numerically equate them.
It's real GDP, and it's not being inflated away. It theoretically attempts to, (2% inflation), but because more real debt is taken out, GDP still goes from 100% -> 105% the next year.
The real returns on this debt is hardly investments and infrastructure that will make more things in the future, it's mostly social spending like healthcare.
> that debt is serviced with taxes. Adding it to the tax burden is double counting.
If I would normally pay 35% taxes for the country's defense and social spending, but there's also servicing interest, I now have to pay 40% taxes. So it's an extra indefinite 5%/yr tax like I said, but I only got 35% of defense and social benefits.
This is where interagency holdings and real debt burdens kick in. (Also, again, that 35% already includes interest payments already.)
Let's assume a rule that says no new borrowing and no spending cuts. There would need to be tax raises. But if we know one thing, we know it would be less than 5%. Even if we remove the 20% held by agencies [1], which is absolutely not a clean procedure, we know the number would still be less than 4%. Because that debt is nominally denominated, and you're making interest payments in the future with less-valuable money, and, of course, the double counting.
This is before we even touch monetising the debt. Taxation is a bad mental model for thinking about our federal debt. It's in some ways more benign, and other ways much nastier, than a simple tax increase.
[1] https://en.wikipedia.org/wiki/National_debt_of_the_United_St...
Again, no, because if the 35% included interest payments, then if hypothetically there were no interest payments, my tax burden would be 30% now (no 5% taxes to interest).
I understand that if nominal debt remained the same, then 2% inflation would eventually whittle it away (or whichever inflation/monetizing rate), but effectively whether by monetary inflation or taxes, taxpayers still pays the same amount, just a matter of when and in what way.
No. To illustrate one element of the complexity, imagine we just defaulted on our debt and ignore the credit (but not asset) consequences. No more government debt. Let's now assume that no new spending is allowed, and the surplus must be returned in the form of tax cuts.
You would expect the surplus to vastly exceed the amount of interest being paid. Because now we're talking about principal, too. You'd also expect tax receipts to fall as everyone who expected those interest payments pulls back spending. That money paid to Americans supports the economy--and through it, taxation--in a complicatedly circular way.
(You're also conflating personal income and GDP, but we'll let that slip and count any taxes you incur directly or indirectly, as taxes you pay.)
> effectively whether by monetary inflation or taxes, taxpayers still pays the same amount, just a matter of when and in what way
No, that's the point. Inflation is heterogenous in a way taxation is not. You could erode the purchasing power of a Treasury by $1 without causing a commensurate amount of inflation. It might be more or less depending on a number of factors.
Your mental model works for a small country with a pegged currency, e.g. Panama. It doesn't when we consider monetary effects.
It's been studied. The connections are as non-obvious as they are fascinating.
In the Pacific Islands, a "1% increase in CPI (inflation) will decrease total fertility rate by 0.41%" [1]. (This effect was much stronger than female education and real GDP changes.) This supports your hypothesis.
When we look at rich countries, however, we find that "an increase in annual inflation of 1 percentage point would bring an increase of 0.06 percentage point in the annual growth of the total population" [2]. Inflation increases fertility!
A clue as to why might be found in the U.K., where among "home owners" they found "evidence of positive but temporary effects of house prices on fertility," with "a 10% increase in the average house price in a given month increases the fertility of home owners by 2.4% in the following year" [3]. Among renters, on the other hand, "fertility rates are lower by the order of 2 to 4%. Fertility rates for this group remain lower three years later, suggesting house price increases affect completed fertility as well as the timing of births."
[1] https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8457485/ Table 8
[2] https://www.sciencedirect.com/science/article/abs/pii/S10590...
[3] https://www.bristol.ac.uk/cmm/research/housing/publications/...
Falling birth rates are often correlated with discretionary income levels and women's education.
Essentially, there's a sort-of phase diagram for the optimal human reproduction strategy where the axes are things like "income inequality" and "environmental stress". You can then color in patches of the diagram with what strategy members of a society will settle on.
For example, high-stress, high-inequality societies practice polygamy. The game-theoretic logic is that women need a partner that can provide consistent excess calories. If you can't feed your kids in just one year out of twenty, they die. It doesn't matter what the average income is, just how steady the income is. In societies like that, only the richest 10% of men can provide this, so they all have 10 wives. The other 90% of men remain bachelors and often participate in tribal warfare, exacerbating the problem. Saudi Arabia used to be like this, and parts of Africa still is.
Similarly, in "one corner" of this graph is super rich men in stable societies, where their optimal reproduction strategy is serial monogamy to young wives. Look at Hollywood A-listers or billionaries to see this play out in real life.
Japan got stuck in a part of the phase diagram where the optimal reproduction strategy is "don't."
Women aren’t having kids - because they can avoid having kids. While still having sex and having societal benefits, including retirement. That is a very, very new and unusual situation when looking at the span of human history.
Birth control is a pretty new invention (mid 60’s approximately), and societies globally have been steadily rolling it out/making it available more easily.
Childbirth is dangerous (especially the first time), usually ruins one’s figure (and hence ‘market value’), and is economically very expensive.
At a minimum 4-6 months of ‘non productive’ work time per pregnancy, not counting the several years of near constant caretaking for a newborn. Which kills normal careers, where taking ‘time off’ pretty much guarantees you’ll be surpassed by all your competition - and 2-2.5 years pretty much guarantees it. And that is for an office job, not labor.
Before birth control, the only way to do that would have required celibacy or constant abortions - and good luck suppressing that drive for most people!
It’s like wondering why almost everyone is fat and out of shape when there is no public transit, everyone has to drive everywhere (and gets stuck in traffic), food is terrible and junky, jobs are mostly sedentary, etc.
Of course that’s how folks will be on average when that’s the environment! And birth rates are by definition based on the average behavior.
Coupled with the fact it’s relatively easy to survive/live in society without kids now, and it’s a double whammy. At least until the consequences of having no kids for a long time come home to roost - then everyone is going to be fucked. Figuratively.
I think social safety nets are an under-reported cause of this. 80 years ago, children were your retirement plan. Long term stable value pensions and 401ks, along with government ensured healthcare and social security, weren't a thing. If you got to 70 without kids, you would eventually not be able to work and probably die poor.
Now, almost everyone thinks not having kids could be an option, because of course they'll have some savings (the rest of society's labor), and government healthcare, and the government won't let them become destitute.
If the crunch is big enough, anyway.
Same with the tax base used to fund gov’t healthcare and similar programs.
That said, Japan has… problems. But they aren’t apocalyptic. At least not yet.
Yeah. For that reason, old age pensions should be tied to how many kids you've had, not how much money you paid into the system during your working years. If you have no kids, you get no pension. If you want to support in old age, you need to contribute to the next generation's labor pool to provide that support. Otherwise, you need to work to support yourself.
Or, the more subtle approach - inflation. Hmm, wait a minute….
Socialized retirement destroys most of the incentive to sacrifice your youth to grow and raise new people. Why sacrifice your youth and money being a parent when you can leech off the labor of other people's kids in retirement?
I think we'll need to eventually experiment with things that try to give some disproportionate benefit to people who have kids. e.g. everyone gets some minimal socialized retirement and healthcare, but your benefits increase above that baseline in proportion to how many children you raised. Maybe your benefits increase at 3+ kids and decrease with 0-1 kids.
The challenge comes if the kids hate you and refuse to acknowledge you - something which has been being encouraged more and more by western society, BTW.
Historically, people would secretly understand (yeah, they are an abusive alcoholic!) but call you a bad kid and tell you to suck it up and deal with it. Since otherwise they’d have to deal with it. Going no contact is increasingly normalized.
Probably why many societies, especially conservative ones, lean so heavily on filial piety type concepts and frown on people cutting off their parents. especially when those parents are a burden or huge pain in the ass to those around them. Like Chinese mother-in-laws.
I can’t imagine that proposal going over well with the LGBTQ contingent either - which near as I can tell gets a lot of the angst from conservatives precisely because they’re ’having fun’ by opting out of the system and doing what they want instead of ‘comply or die’ like the rest.
The only "allowed" solution is importing people from poor countries into richer ones, but disguised as something humanitarian, taking in refugees of war or whatnot.
Eventually, likely in the direction of gun control - birth control being licensed or the like. Or being religious being a requirement again to be a ‘respected member of society’.
Unlikely to be popular of course, but eventually society will change to protect its interests - or die.
I wish we could have real conversations about how to solve this issue, and not bury our heads in the sand. I'm not proposing any particular solution, just for our collective attention to the problem and liberty to discuss solutions.
People seem to think "oh, I'm paying my social contributions, that should be enough for my retirement", but the whole formula really doesn't factor in a sharp drop in workforce we're about to experience. We're papering over the monetary deficit with credit all over the world, but that's not feasible long-term, and the "who's actually gonna do it" aspect will become much more important. Writing a check doesn't change the senior's diaper, nor anything else.
As for practical solutions, first you have to make it possible for young people to obtain real estate again somehow (crucial), then to subsidize kindergartens / child care of all kinds heavily, and only then go more radical.
Another radical angle could be some sort of education reform where people are somehow incentivized to do all the post-BSc education in their 30s instead of 20s. How to achieve that without horrible side effects is up to debate. Subsidies for parents on every corner and every aspect of life (including education) would probably work, but how much is the optimum and how to implement it is a serious question.
Birth control is available in countries where women are having over 5 kids on average each despite that. Similarly, legalisation or the illegality of abortion has no significant effect on child birth rates. Availability of birth control (or abortion) alone doesn't explain the "big picture", it just alters it a little bit. These are Catholic and conservative talking points, not scientific theories with evidence, charts, graphs, and equations.
Similarly, childbirth has always been dangerous, but is less dangerous now, so that has no explanatory power either.
Etc...
You're also confusing something else: Women's careers being interrupted by childbirth is the much closer to the truth. Women didn't work previously on anything but raising a family! In the economy/stress phase diagram, this is a different place, where a single income is no longer sufficient. THAT is the problem. If women are forced to enter the general workforce, then that alters the game-theoretic optimum for family planning.
Similarly, the mere existence of a social safety net such as a government pension substantially alters the equation. Individual families are no longer incentivised to "invest" in their future by having kids themselves, because they expect "society to take care of it" with unemployment benefits and retirement funds. In the past, people had individual incentives to have kids, because that was their retirement plan.
Previously, women (unless celibate or okay having abortions a lot) had no choice but to spend time at home, which forced the market in that direction.
And I’m also not confused about birth control availability. You’re confusing ‘theoretically available’ vs ‘socially acceptable available’, which those societies haven’t hit yet. Ideologically, they’re very resistant - but changing.
Just like the changes in the US (starting to be possible in the 60’s) didn’t become the norm until the 80’s to 90’s or later. American Catholics have been okay with birth control since then (roughly), where South American Catholics are still against it.
Which, notably, is when the US started to become more heavily two-income household dependent. And when wages stopped keeping up with growth.
Without birth control being possible, none of it matters - which is why it being possible is actually important. And why we’ve been seeing steady change in societies since it has become possible.
https://en.m.wikipedia.org/wiki/Barefoot_and_pregnant
Not even talking about reversing aging, but if we could give the average person 100 healthy and productive years and minimize the cost of aging we've at the very least gotten rid of the single biggest pressing issue of the demographic changes.
https://www.un.org/development/desa/pd/sites/www.un.org.deve...
Imagine a Mexican child coming home from a visit to a white-majority, English-language town. Imagine them complaining about the feeling of otherness in their own country, and asking their parents why they allowed themselves to be replaced by the Anglos.
Imagine their parent bending over, looking that child in the eye, and saying: "ackshually, they didn't "replace" us, chico. They merely replaced births that never took place."
The technological advances / robots will outpace the need for immigration, and has for the last decades too.
Its just profitable for the capital as immigrants are a source of cheap labor which can be used to surpress wages.
Not sure about Japan, but anybody who thinks Korea is doing "just fine" has not been following Korean news. Daycares are closing left and right because there aren't enough kids. Now it's moving up to secondary schools. Soon it will be cafes and restaurants as there aren't enough customers. Then the whole economy will crumble down.
Technology doesn't help when there aren't enough people buying your product and services.
If your expectation is that everything has to stay the same: then yes, alarm bells should be going of. For 40+ years already considering pollution, climate change etc.
But labor has gotten less important with every step since the industrial revolution, objectively speaking the shrinking nations will have a lot less issues medium/long term then the ones "restocking" via immigration
Citation needed. If they were doing "just fine", then this wouldn't have happened (from TFA):
Chief Cabinet Secretary Yoshimasa Hayashi told reporters that it's "a critical situation.” The next six years, until the 2030s, will be “the last chance for us to possibly reverse the trend,” he said.
> The technological advances / robots will outpace the need for immigration
I will believe it when I see it. Or to refer to GP's point - where is the robot that will change bed pan?
It won't, which is why the actual issue mostly fails to realize as projected.
That’s the core disagreement. It’s like when a car is driving with 200mph toward a brick wall and you say “I don’t understand why they panic, the car will stop doing that before hitting the wall”.
Sure, that’s a possibility. But I understand projecting a current trajectory in trying to prepare for the future.
I disagree, it's more like you're in a tank and have been running over every obstacle in the way, with someone on the side constantly shouting "new next one is going to destroy your tank". It's obviously possible, but considering how little we're already valuing labor and have been in a phase of adding even more entirely pointless jobs because the labor is cheap and available - I honestly do believe that I'd be a very healthy thing for our societies to downsize (numerically) again. At least to pre world war 1 levels.
It's obviously not going to be easy, but this whole system is going to go bust anyway once the millennials get too old to work, immigration at best postpones this issue for a few years while introducing a shitton of new ones to the equation.
There is no perfect solution, but immigration is one of the worst for this particular problem
The asteroid impact 60M years ago could be compared but there wasn’t any society at the time.
What past “obstacle” has humanity overcome would compare to what’s coming in your view?
The distain you people have for culture would make a Conoco executive blush.
Japan's population pyramid in 1980: https://www.populationpyramid.net/japan/1980/
In 2024: https://www.populationpyramid.net/japan/2022/
When the ratio of "workers" / "dependents" shrink dramatically as those 2 graphs attest, we cannot have "prudent" updates. There will either be "painful" updates, or need to sacrifice something else (like getting immigrants).
BTW, needing more workers doesn't necessitate immigration--it necessitates more workers. Why do you guys always jump straight to permanent immigration? What's wrong with a temporary work visa?
Recall that in the 1970s, it was assumed that growth rates would continue unabated - this is why the 70s had so much apocalypse pop media about overpop like Soylent Green etc. The green revolution that was going on at the time hadn't yet registered with demographers.
This apparently inexorable process of growth leading to lower birthrate means that mankind's impact on the planet has at least a partial limit (number of humans screwing the pooch will peak and recede, even if the impact per human may keep growing), so we can take some degree of consolation in that.
But that leaves the remaining question of how we deal with the fact that the number of economic participants peaks and then recedes (negative growth ain't a pretty process). We can look at recessions as a starting guide to this process, but it does still give one a shiver to envision what we'll have to master to navigate this process down to the projected population equilibrium.
It's all the above that explains the nods that countries like the U.S. get from economists: when there is a global trend of dropping birthrates which can impact econ growth, countries that specialize in immigration can buck that trend for a bit.
Easier said than done. This is where I see the most of hand waving. Robots haven't materialized yet, neither any political will to shrink the safety net.
Human-like general-purpose robots - yes. Except, by definition, a robot, essentially a programmable mechanism, not something human-like.
Stuff like warehouses is getting increasingly automated, planes basically can fly and land themselves without human in the loop, autonomous cars are not here, but are coming in the next decade probably.
Personally, I haven't bought a cup of coffe a human made in at least a decade. That's some poor barista's salary not getting paid.
Not that I would know the difference between a 5/10 coffe from a machine and a theoretically 10/10 coffe a professional would make. And a machine makes one for a whole lot cheaper.
There are always those families (especially among the religious) that would have larger families, with not obvious things that limit them. Knowing nothing about Japan, but living in the U.S. where birthrates are also falling, I would think state effort should be put into this.
[1]: https://www.lesswrong.com/posts/c4daDbQD398BmW5k5/on-car-sea...
https://www.ipss.go.jp/pp-zenkoku/j/zenkoku2023/pp_zenkoku20...
I feel like this is set in stone at this point. Virtually no chance these will change in the next 6 years.
>“Simple economic measures such as increase of subsidies are not going to resolve the serious problem of declining births,”
This is going to be shockingly bad for Japan. They are about 15 years too late to do anything about this anymore. Though at the same time they have no choice but to do something regardless. Else become much worse off later.
>adding that a conservative mindset espousing traditional gender roles at home and at the workplace also needs to change.
That's a very bad decision on their part that will exacerbate their crisis.
>Surveys show that younger Japanese are increasingly reluctant to marry or have children, discouraged by bleak job prospects, the high cost of living
Easy enough to understand the root cause here. Extreme taxation for their growing 260% public debt to gdp.
You might say, "default on the debt" but that isn't going to fix anything neither, probably make things worse.
Way too simple. This is the case already. Here in Canada you literally get paid ~$2000/kid/year. straight up cash. This is true elsewhere as well, and each place has the same aging population and low fertility.
This isn't a matter of what can fix the problem. The actual cause of the problem is government essentially legislated this to be the case. This problem largely speaking is the root cause of political polarization.