WEDNESDAY, AUGUST 14, 2024

 WEDNESDAY, AUGUST 14,2024 MORE DEMOGRAPHICS

Twp days ago, I wrote about the United States Census Bureau’s predictions for the year 2100.

I want to look at another economy that might be struggling with population loss and negative predictions -Japan.

Japan is experiencing a demographic crisis due to a declining birth rate and an aging population. The country's population is projected to decrease by 30% by 2070, with the percentage of people aged 65 and older increasing to around 40%. This could negatively impact Japan's social security system, which is already struggling to support a retired population with fewer workers paying taxes.

Whoa- population DECREASE of 30%, and about 40% older 65.  

Who will have the children to keep Japan viable? The 40% over 65 will not have children.  

Japan has seen this coming, but solutions are complicated.  The government has bonuses to families with children and encourages families to have more children.  

Part of the problem is Japanese culture.  As an island nation, Japan is pretty insular. Unlike the United States with a diverse population, few in Japan were born in Japan (or born to two Japanese parents).  In the United States, it is common (or more common) for a couple to have mixed racial ethnicity. So, if (say) a Korean person moves to Japan, it would be difficult for that person to have a Japanese spouse.  If a Korean couple move to Japan and has children, the children would have a hard time blending in to Japanese culture.  

The Tokyo Foundation for Policy Research wrote the following: 

A shrinking labor force will act as a drag on economic growth, and a growing imbalance between the mostly elderly beneficiaries of social insurance (pensions, healthcare, and nursing care) and the working people whose premiums support those programs could threaten the sustainability of our social security system. At the root of this “quiet crisis” is Japan’s ever-falling birthrate.

In response, the Kishida administration has announced plans for a massive new spending package aimed at stemming the decline in births, arguing that the next six or seven years are Japan’s “last chance” to address the problem and avoid disastrous consequences. The government has called for concentrated efforts over the next three years, with ¥3.5 trillion in new spending allocated to childcare and other support for families with children. But such ambitious new programs—like Japan’s burgeoning defense budget—need funding sources, which the government has yet to clearly identify funds.

 

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Research over the years suggests a replacement rate of 2.1 is the minimum.  So a woman (couple) needs to have 2.1 children.  (It is hard to have 0.1 children - but some families might have three children).  The current replacement rate in Japan is 1.26 - way under the replacement rate.  

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The United States' population is growing due to immigration. Those people coming across the border bring children into our economy. In the long run, more children mean more jobs, education, infrastructure projects, and a better life.

When countries like Japan and the United States don’t replace their populations, they can end up with a “top” heavy economy - that is, more and more seniors - who aren’t working and drawing social security checks - and thus more social security taxes are placed on those that are working.  What if (hypothetical), one million immigrants are allowed into the United States every year?  Sure, that would put pressure on existing systems.  ESL (English as a second language) schools would be bustling.  More Hispanic families would probably live in Texas, New Mexico, Arizona, and California.  North and South Dakota probably wouldn’t see much growth.  (and other northern states like Wyoming and Montana).  

The traditional role for immigrants was blue-collar labor. That seems to be true—in my area, home building (and related trades—heating, plumbing, electrical) are positions for Spanish speakers. As the Germans moved to the United States, they settled near other German speakers and settlements. Eventually, they learned English and fit in.

It can be complicated - and government policies are challenging to draft and enforce.  

Can the United States handle more immigration? Yes, but can Japan handle more immigration? Probably not.  

The statistics show that the future is uncertain for countries with declining populations.  

LOVE WINS

The United States has learned to be a “melting pot” for people of different backgrounds and cultures.  But Japan has not been a good melting pot.

LOVE TRANSFORMS

To make immigration work, countries must build support groups and encourage immigrants.

Karen Anne White, August 14, 2024