Simon Black Explains How Japan Is Causing Its Own Demise

Tyler Durden's picture

While not necessarily a new topic, one which has been previously dissected by such strategists as Dylan Grice, the quandary of Japan's deteriorating demographic shift is one that the country can not afford to delay in addressing, yet continues to do just what the US does so very well, by kicking the problem into the future, and hoping it will resolve itself on its own. Today, Sovereign Man Simon Black shifts his focus on the Japanese demographic crunch in a piece titled "Japan is causing its own demise." As always clear and concise, the questions he brings up are critical. And therefore very unlikely to get an answer by anyone in "control" before it is too late.

Japan is causing its own demise, by Sovereign Man

Most people have never heard of Lee Kuan Yew... but he's an incredibly important figure in one of the world's most cutting-edge economies.  As Singapore's first prime minister, he governed for 3 decades, overseeing his country's transformation into a modern, developed economic powerhouse.

Prior to Lee's tenure, Singapore was fairly provincial backwater under British colonial rule; completely devoid of natural resources, its only real importance was as a conveniently located trading post.

Post-independence, Lee's government passed substantial labor, immigration, and tax reforms that were incredibly favorable to businesses and foreign investors. These policies are widely viewed as the spark for Singapore's economic growth, and Lee is still heavily revered today for those decisions.

In short, he has a Mandela-like influence in his society... and when Lee speaks, people listen in Singapore.

Last week, Lee made some remarks about immigration and Singapore's aging population, indicating that in order to avoid a disastrous population decline, Singapore needs to attract young immigrants to save the economy in the long run:

"At these low birth rates, we will rapidly age and shrink... So we need young immigrants. Otherwise our economy will slow down, like the Japanese economy.... [Young immigrants] will increase our population and talent pool. Singapore will be vibrant and prosperous, not declining and ageing."

Low birth rates and declining populations tend to have terrible consequences for an economy; in countries which have a bloated social welfare network, for example, a declining population means that fewer and fewer people are paying into a pension system that supports more and more beneficiaries.

Perhaps more importantly, though, an aging population dramatically shifts its consumptive habits. Older folks are notoriously thrifty, usually opting to save their money for an uncertain future. They don't have young children to go through a different size shoe every month, college tuition to pay for, etc.

Saving is ordinarily a good thing for an economy-- it's an essential ingredient in long-term growth along with technological advancement. But 'being thrifty' isn't necessarily the same as 'saving'.

Generating a large pool of savings requires a society to produce much more than it consumes... and with a declining population, even though a society is consuming less, it is also producing less because the labor force is decreasing as well.

The net effect of population declines is a deteriorating standard of living and a host of social welfare system that go bust. Whatever younger generation that still exists is usually burdened with the clean-up costs, but this only increases their rate of emigration. Nobody wants to get stuck with the check.

Japan is a rather famous example of a developed country with a demographic crisis. The rising cost of living and decades-long economic decline caused families to have fewer children, such that the birth rate for the last 30+ years is well below the 'population replacement level' of 2.1 births per woman.

With a median age of 44.6 years, Japan already has one of the oldest societies in the world (compared to 39.6 in Singapore, 40.7 in Canada, 36.8 in the United States, 28.9 in Brazil, 25.9 in India, and 31.7 here in Chile).

Japan also has one of the world's highest life expectancies and highest costs of living... which means that the long-term cost to support idle pensioners is extremely high.

One would think that the Japanese government would be rolling out the red carpet for young foreigners, yet Japan remains a fairly closed society. Foreign residents comprise less than 2% of the population according to government statistics, not enough to even qualify as a drop in the bucket.

Without serious addressing this issue and attracting young foreigners both at the economic and cultural level, Japan runs substantial risk of fading into obscurity.

It's amazing how so many governments don't get it... going out of their way to repel or even prevent talented foreigners from settling, as if the fundamental freedom to work hard and prosper is somehow derived from bloodlines, ethnicity, or irrelevant, invisible lines on a map.

These governments will figure out soon enough that labor and intellectual capital are easily exportable assets. Some governments like Singapore, Estonia, and Chile understand that truth, and they've laid out incentives to compete for foreigners and establish conditions for long-term growth.

Singapore's open, mutli-lingual, multi-cultural society is well-equipped to deal with the matter... and given the host of residency incentives that it already provides to talented foreigners, I suspect this free market approach will become a model for global migration and population stability.

Sometime in the next two years, I expect the government to act quickly and unveil a new series of packages aimed at attracting younger people to Singapore; I will look forward to telling you more about it when the time comes.

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SheepDog-One's picture

What? Japan get with the program, just print more money and pump up your stocks. Most on Zerohedge agree this is a totaly failsafe economic model.

jus_lite_reading's picture

Indeed. With Ireland now printing its own EUROS out of F'ing thin air, all other debtor ations will do the same and solve all problems in a matter of minutes.


Simply print. ----  The Fed is officially, "unsinkable." China's growth is "unstoppable." And those food riots popping up are nothing to be concerned with- the people will simply starve to death, and the problem will be solved. <sarc off>

citationneeded's picture

How did we (if at all) get by through the millenia without demographic planning?

SheepDog-One's picture

Why mess with yucky demographic planning when you can just run the printers at full speed? Voila, problems all solved.

DaBernank's picture

We died before we turned 40 and were constantly engaging in warfare.

AnAnonymous's picture

Generating a large pool of savings requires a society to produce much more than it consumes...


Hurrah! Again, the fabulous story of producing more than consuming. Of course, as human production activities are all consumption activities, well, hurrah...

This guy confuses saving and waste. Could be lethal to him as he no longer lives in the US.

SheepDog-One's picture

Pffffht...all so 1990's style, 'savings, production, planning' what a set of old fashioned notions....just ramp up the printing press to full speed!!

AnAnonymous's picture

They were (for most of them) based on waste.


Growing on waste...

Azannoth's picture

There are 2 types of immigration, you can import young skilled and talented White/Asian men and women(Singapore) or you can import 3rd world black/brown people without skill and talent(Europe and America)

The results are self explanatory

Non Passaran's picture

Above post is a typical example of content that turns (normal) people away from ZH these days.

(Personally I don't care if someone posts such crap, but I'd like to be able not to read it, which is why I'd like to have the Ignore User patch added to ZH site code.)

JW n FL's picture

You... WE! should suffer all the forms of ignorance available.. as a reminder, to what our duty should be...

GDE's picture

Well that content is just the awfull truth. Immigration is a desaster for Europe and I hope the Japanese will never make that mistake. The european civilizations will not survive to immigration and multiculturalism. Good job, Uncle Sam.

goldsaver's picture

I fail to see what is so contemptible in the above post. In order to be economically and societally beneficial, immigration must consist of migrants that have a net positive contribution to the country the migrate to. If the migrant is young, bright and educated, the overall contribution will be a net gain to the overall production in the country. If the migrant is uneducated, low skilled or old, the contribution is a net negative as his/her participation in the country consumes more goods and services that it produces. That is reality.

In the US, for example the vast majority of immigrants from Mexico (brown people) are either low skilled/uneducated (fruit pickers, domestic service, gardeners), criminal (MS-13 and other drug gangs) or old (grandma been brought over by her family). There is no logical matrix by which anyone can claim that their contribution outweighs their footprint of consumption in this country. Sorry, reality sucks. You might use the standard fare talking points, it does not changes reality. Paco mowing the lawn does not produce enough to outweigh his emergency room visits, his 9 kids attending the public school system or his welfare/social security/SNAP subsides.

Young Asian immigrants, on the other hand, are usually educated, have an engineering or IT degree and can produce multiples of their footprints in both actual goods and services and tax remittances to the Fed. They are usually fully employed (or self employed), start their own businesses and hire other Asian migrants providing a multiplying wealth effect.

Pointing out reality is not racist. It just is.

If your fragile psyche can not handle the truth, I recommend you try MSNBs instead. Or perhaps MTV. The new series "Skins" is pretty hot with all those nubile 15 year olds (yuck, I just pucked in my mouth a bit)

yellowbr's picture

sad, but sadly rather true.

Of course a country needs also low-skilled workers, but if they have ambition & respect towards the host country, it will be a net gain.

In Europe, too many immigrants are not interested in getting to know the host country but are only interested in exploiting all the benefits, while shielding them off from the host's culture.

Azannoth's picture

If you don't like the Truth why read ZH in the 1st place ?

sensei's picture

Props to you for speaking the truth - no matter how ugly it is to hear.

sethstorm's picture

How about neither for a while in the US?  Perhaps there is something to learn about Japan.

AnAnonymous's picture

Dont ask too much from Japan. They have already it very hard to deal with their Burakumin and Hinin population issues. Useless for them to advance to the next stage as they are still floundering with low level population absorption.


Bigger Dickus's picture

Gold longs are being raped.

Gold bugs will only see the bottom at $1050.

By then most of them will have sold and will be too scared to buy the dip. $1600 should be the end of the bull market for gold before Japan-style deflation sets in.


SheepDog-One's picture

1050? Well since all the experts said it would never get over $1,000, not bad.

Bigger Dickus's picture

The charts tell me that the top of the bull market in stocks is june and the intermediate top in gold is in.

Sudden Debt's picture



what where they thinking... luckely we are all much smarter...



yellowbr's picture

Exactly!! And the US is much smarter, cuz hey... the Chairman just said so, "it cannot happen to us"!! Rosenberg is totally wrong with his comparing charts!

dark pools of soros's picture

"Generating a large pool of savings requires a society to produce much more than it consume"

only in relation to ANOTHER society that has to be the consumer, no?   If it was just within the one society, then all the extra production goes to waste while they shun the over consumption


So perhaps Llyod & Ben ARE doing God's work after all?

Bubbles...bubbles everywhere's picture

Listen to Yew, or this wil not end well.

Piranhanoia's picture

one word answer;   "Idiocracy"

Gordon Freeman's picture

Keep the barbarian round eye far from these shores, neh?

Johnny Lawrence's picture

Speaking of Japan, look at the advance/declines in their market since the crash of 1990:
















As it stands today, the Nikkei is 73% below its nominal peak of late 1989.  So to say, we're in a new bull market because of one strong rally is a bit retarded, especially when the economic similarities between us and 1990s Japan are striking.

Personally, I need to learn how to better play those bear market rallies, but let's not kid ourselves.  We're in a world of shit.  Everything that's being said now "We're in a recovery", "business is improving", etc.  All of this stuff has been said before.   And look what happened.


zero intelligence's picture

"We need more suckers to keep the Ponzi going."


The problem in Japan is not that they have old people. There's nothing wrong with old people. The problem is that they are not set up to deal with old people. They just need to set things up to deal with old people.

goldsaver's picture

Ok, I'll bite. How? How do you set up your society to support a larger portion of the population that produces less and consumes more. Oh yeah. You get the Bernank to print you some more debt notes. Silly me.

fearsomepirate's picture

Japan's government is run by Keynesians, who think jobs are a scarce commodity and the chief thing any stagnant economy lacks is sufficient slips of paper with numbers printed on them.

commoninvestor's picture

Sorry to spoil the fun. Nowadays, the government and mainstream media have spinning tendentious lies to delude the public.

I'm a local Singapore citizen and I have this to say:
Singapore has no freedom of information and speech. Almost everything is being suppressed here.

Recently, Singapore government boasted about 10% economic growth. GUESS WHAT? I AM JOBLESS now despite being well-educated with skills and experiences.

Singapore government-linked welfare and help groups did nothing (not a single cent), just sweet talks and waste of my time and depleted savings. There was a period couple of years back when I WAS UNEMPLOYED FOR MORE THAN 1 YEAR. And that time, Singapore government still boasted about growth!

More surprises? I have a close friend (also local) and he is among the unspoken long-term discouraged unemployed in Singapore.



AnAnonymous's picture

As long as you can chew gums... Oh wait, you cant.

sethstorm's picture

Indeed - it's all fun and games until your government can shout "Defamation!" if you don't fit their picture.

Stuck on Zero's picture

This is so much malarkey.  The U.S. lets in huge numbers of immigrants and has the worst economic performance in the world right now.  We have the most prisoners of any country in the world and 80% are immigrants or first generation immigrant children.  Almost 10% of immigrants are retirement age.  Immigrants have, on average, 5.5 children which places a huge load on schools systems.  Increased immigration means an increase in population and requires massive amounts of infrastructure development.  Japan does not need so many people.  It has solidly moved into the 21st century and uses automation everywhere.  They are smart.  We are dumb.

Lord Koos's picture

"We have the most prisoners of any country and 80% are immigrants or first generation immigrant children."


Sounds like bullshit to me... where are the stats for this claim?  

Stuck on Zero's picture

Here's all you need to know: " In 2000, the average age of an immigrant was 39. That's about four years older than the average age of a native-born American. That number includes immigrants who have been in the country a long time."



pitz's picture

Exactly.  Japan didn't get to having 130 million people on an island less than the size of California, without having a good handle on economics and the soundness of not allowing unfettered immigration.

GDE's picture

Prisons in Europe are also full of immigrants and these are rarely Asian.

JS1234's picture

This criticism is only valid if the function of a country is just maximizing GDP.  Like maybe the function of a country is the preservation of a kind of people.

Atch Logan's picture

This guy is mixing up social theory, economics and keynsian blarney.

His logic is sophistry, like that of a pretentious eighth grader.

How does he even know what he is trying to say?




GDE's picture

Japan like the rest of the earth is overcrowed. A country with less people has better chance to feed properly its citizens and make a better living for them.

pitz's picture

I think the author has it all backwards; a shrinking population means that there is more resources and more production, to be shared amongst fewer people, which improves living standards.  Its no coincidence that the least densely populated countries in the world have the highest living standards and per capita GDP. 

Japan has also taken steps to deal with the loss of workers.  For instance, it doesn't have a financial sector that is bloated and produces nothing.  It uses vending machines whenever possible instead of human labour.  And it hasn't allowed its economy to be ruined like that in the United States by excess immigration.

While Japan will be shrinking its way to prosperity, nothing less than genocide in the United States will restore it to its former glory.  I say, fire up the ovens, and lets get on with it!

BigJim's picture

Feel free to lead by example, fascist.

rete's picture

"As always clear and concise..." and also somewhat wrong. From individual census agencies, the median age:

Canada: 39.7 (July 1, 2010)

Singapore: 37.4 (mid 2010)

InconvenientCounterParty's picture

The young people are all staring down at their gadget dejour rather than making eye-contact with the opposite sex.

I don't care how you market it, if a gadget does not increase your chances of copulation, it's kind of pointless right?


Lapri's picture

Let them fade. They'd rather fade away than seeing their country full of "foreigners" who don't share their values and genes.

topcallingtroll's picture

Japan would rather go into obscurity than allow too many of the inferior races (everyone else) onto their island. They are pinning all their hopes on super intelligent.robots that will clean house, help with homework, design and build.toyotas, and also.has the vibrating vagina for the fastidious japanese male too busy playing on the computer to chase any real poon.