June 12, 2019
That’s what Robert Samuelson tells us today in his column. That might seem a strange concern for a country that is ten times as densely populated as the United States, but Samuelson apparently sees it as a real nightmare.
After all, if its population keeps shrinking, Japan will face a severe labor shortage. They may have a hard time getting people to fill lower paying lower productivity jobs. For example, it might be hard to find workers to shove people onto Toyko’s overcrowded subways.
But it gets worse. As a result of the social services required by the elderly Japan has been running large deficits and built up an enormous debt.
“The mounting deficit spending has in turn ballooned Japan’s government debt to 226 percent of GDP — ‘the highest ever recorded in the OECD area’ and roughly twice the U.S. level.”
Yes, and the burden of this debt is absolutely crushing to the Japanese people. According to the I.M.F., Japan’s debt service burden will be equal to 0.1 percent of GDP this year, which is equal to roughly $20 billion in the U.S. economy. If the country continues on its current course, its debt service burden will turn negative in two years.
The issue here is that Japan has negative (nominal) interest rates. Lenders pay the Japanese government to borrow their money. As a result, the interest burden on Japan’s “higher recorded” debt is no burden whatsoever.
But wait, it gets worse. Samuelson tells us (citing economist Timothy Taylor):
“Half of Japanese children born in 2007 are expected to live to 107.”
As we can see, the situation in Japan is pretty bad. Samuelson warns us that it could be our future too, which I suppose might be possible if we fix our health care system.
Anyhow, I will have more to say about Japan next week, but Samuelson and his clique really need to do a better job of finding a bogey man.
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