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From Demographic Boom To Dependency Bust
The economic and asset bubble in Japan burst in 1990, at roughly the same time as its demographic structure reached a tipping point. As UBS' George Magnus notes, the working age population began to fall, marking the start of a relentless rise in both the total and old age dependency ratios; and, he adds, a comparable phenomenon occurred in the US and Europe between 2005-2010. On current trends, Magnus warns, China will replicate at least the demographic part of this phenomenon between now and 2016, against a backdrop of rising concern about the structural nature of the slowdown in economic growth, along with rising credit intensity, indebtedness, and misallocation of resources.
Via UBS' George Magnus,
The suggestion of causality running from demographic tipping points to major economic crisis is, of course, provocative. But even if there are more proximate causes and explanations, the fingerprints of demographics are indisputable. All periods of rapid economic growth, credit expansion, technological advance and financial euphoria are invariably followed by a sombre hangover. Japan blazed this trail a little earlier, but other Western economies followed in the 1990s and 2000s. These trends were unquestionably driven in part by the so-called demographic dividend, or the phase in which the baby boomers reached the age range associated with a change in savings and consumption behaviour. The demographic dividend has now turned into a drag.
The combination of weak fertility and rising life expectancy, with its consequences for the working age population and old age dependency is unique. Advanced economies simply cannot replicate the relatively rapid recovery by Asian economies out of the balance sheet crisis of 1997-98, bearing in mind the region’s younger, expanding populations.
Adding the youth and old age dependency or support ratios, we can now see a different picture.
The "Total Support Ratio" Boom and Bust
From the 1960s onwards - a little earlier in Japan - the total support ratio rose everywhere and more or less continuously, until about 1990 in Japan, and 2005-2010 in the US and Europe.
The peaks coincided pretty well with the peaks in economic expansion and asset markets. The turn down in the total support ratio, however, is significant because it represents the combination of the negative, second-round effects of falling fertility on the working age population, the end of the fall in youth dependency, and, importantly, the point at which rising total dependency is exclusively down to the increase in old age dependency.
Japan’s support ratio is now approaching 1.5 workers per older citizen, and is predicted to carry on falling to parity in the middle of the century. The US and Europe are predicted to follow Japan, though support ratios are not expected to fall as far.
Demographic weaknesses in the labour market, exacerbated by the on-going balance sheet recession, are contributing to a loss of consumer, homeowner, and entrepreneurial mobility and flexibility. This undermines the productivity and higher labour force participation, which constitute two important coping mechanisms for population ageing.
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Obviously on this analysis, India is the next superpower.
They got the gold!!!
"Obviously on this analysis, India is the next superpower."
Obviously on this analysis, India is the next crisis.
Fixed it for ya'! ;-)
There is a good case fr this, but a lot can happen before it would theoretically play itself out. I figure it will be something for my children to keep in mind, and they aren't going to be born for a while, if ever.
The reality that someone has to pay the piper, and that those someones will be working, has to be acknowledged.
Don't worry, Congress is on top of this. As we speak they're preparing an immigration bill that will let PLENTY of new people in. Only problem is they'll be issued EBT cards the moment they arrive or "come out of the shadows". They want the American Dream same as everyone else- to sponge off the country's endless entitlement system.
An entitlement state with open borders has never avoided failure. And that's where we're headed.
Hispanic workiers bust their chops. To say they want to spong is a myth.
If, by bust their chops, you mean depress wages and drive Americans out of the workplace, then you are correct.
They (and their facilitators) just prefer a system where they don't pay taxes, healthcare costs, and get all the freebies that can find.
Add to that that most of them just strolled across the border and somehow get the idea they can demand rights and citizenship at will.
Not sure what you mean by 'spong' since I can spell. But if you mean 'sponge', I could show you every day the insane amount that it happens and yet I am expected to just accept it and pay the bill.
This carnard? Again? Really?
It's probably been about 15 years now, but a real study was done concerning field labor costs as a percentage of the cost of produce by (I think it was at USC, but wherever it was, it was no hotbed of conservatism, that I do recall).
Field labor, it turns out, is about 15% of the cost of your head of lettuce. And field laborers are not paid as little as what most people seem to think. In fact, from personal experience in the orange groves of Florida several decades ago, I know for a fact that it can actually pay pretty damn well if one is willing to work, if not all that hard, at least pretty hard and pretty diligently for more hours than, oh, say, your average government employee puts in.
Accordingly, one could double the pay of field labor to $20-30 an hour, and your head of lettuce would go up about fifteen cents.
In fact, the study went on to conclude that, before we would all be subjected to the dreaded Five Dollar A Head lettuce, field labor wages would have to rise to $500 an hour or thereabouts (literally).
In other words, it's pretty damn obvious that there is some room here to increase wages, here in America, for Americans, without making lettuce or strawberries unaffordable.
For that matter, someone point out to me why it would be horrible to allow field labor wages to rise. To $20 an hour or $30 or whatever? All of a sudden, there'd be a glut of good paying jobs here in the Central Valley of California. That's bad? Well, sure. It'll mean that your socks or your lettuce are going to cost ten or twenty cents more. So what? At least compared to the pathologies associated with illegal immigration? Or taxpayers picking up the tab for making that labor life sustaining?
Well, Americans are lazy and etc. Mexicans work hard. Right?
About ten years ago (right around the time of George Bush's amnesty push), there was an article in The Wall Street Journal, I think it was, that went into some detail about a [nursery in California, I think it was] where, every April, a slew of Mexicans arrived (legally) to work until November or thereabouts. They lived in barracks type accomodations provided by the company and were paid $12 an hour.
Now, I'd be the first to admit that that doesn't sound particularly appealing. (Perhaps I'd feel differently if I or my family were starving, but we're not.)
However, in the article, they interviewed a few of the Mexican field hands, and one of them was a little surprised, saying, "Are you kidding? This is great. I can make more money here in a day than I can make in a week back home [(in Mexico)]."
See what the problem is? We pay Americans $12 an hour, but we pay the Mexicans - what? - $80 an hour?
For $80 an hour, I'll live in a barracks and pick strawberries like a motherfucker. All day long.
And for that kinda dough, I guarantee you that I would have no problem filling the bus with enthusiastic and grateful workers no matter where I went ... the parking lot of Beverly Hills High School or the EBT line on Michigan Avenue in Detroit.
In other words, it's not just that we pay Mexicans more than we pay Americans, we pay them so much more that they are incentivized to work hard.
If you really think Mexicans work harder than Americans (well, *certain* Americans, anyway) in any sort of abstract sense, well, first off compare and contrast the two countries. Too, I'd bet my life that 'an American' is no more inclined to sit in the shade and drink cervasas than a Mexican. Considering the word "siesta," and its origins, one might even wonder if Mexicans might even be more predisposed thus.
Ima- you might think I would disagree with you, but I won't. I used to run a landscaping company long ago. I hired Mexicans off the street in my town when I needed some help. I was a teenager at the time. I was strong and motivated. I worked my ass off (how about $200 tax-free cash per day in my pocket, every day, working sun-up to sun-down). And that was ~1983 dollars, too.
And those Mexicans worked my ass into the ground. Almost every one of them could do any given job faster than I could (not always better, but almost always faster). I have a GREAT deal of respect for their work ethic.
However, this isn't that. This is practically and engraved invitation to bring people into our country who do NOT have such a work ethic. This is a dumb-ass immigration idea that will be a net DRAG on the country.
You might not like them moving in and taking jobs, but Hispanics are some hard working people. In Texas, 95+% of all the manual labor is done by Hispanic migrant workers.
Doesn't take much analysis to figure out we are toast. Best get ahead of whats left of the curve and get your illegal alien identity card. Its the only thing that might protect you from the government and appears to be the receiving line for all future benefits. I wonder if when they "legalize" the "undocumented" if they will also provide them with their Democratic Voters registration card? This has worked out just great. They couldn't destroy our economy to a third world status fast enough through their policies, they had to open the borders to third world'ers to get the "oppressed and dependent" numbers up. The power of mob democracy.
Systemic collapse on track.
Collapse it by overrunning the productive nations with 3rd world socialist, under-productive immigrants. Brainwash 1st World nations that it is their responsibility, even their salvation, to take them in. Take advantage of their better nature and guilt (white, affluent, etc) to allow them to infiltrate and overrun all of the social systems (education, health, welfare) until it is to late to stop. Divide the affluent nations internally against this invasion through the use of red/blue politics to make sure there is no agreement to stop it. Once critical mass of socialist takers is in place, there is no turning the tide short of civil war.
Once that comes, UN can step in, separate warring parties, partition and penalize the 1st worlders for their raciss, aggressive ways. And then we are into the next cycle of One world unification and marginalization/subjugation of the production people to feed the masses, all for the benefit of the vampire class that continues to leach off the entire populace.
Young girls are so scarce, they are resorting to temporary Hairy legs to keep the dogs at bay
Just noticed, started in China, not Japan, but I bet it will travel!
HAHAHAHAHAHAHAHAHAHA!!!
I JUST MAILED THAT ONE TO ALL MY FEMALE COWORKERS :)
that would be so much the rage this summer :)
Goes to prove that QE stupidity does not mix well with demographic trends which are much more probable.
Hispanic workiers bust their chops = bullshit
Japan will surely go bust.
But after the implosion of government debt, and the probably devastating knock-on effect to the rest of the economy, there is potential for the economy to reform itself and eventually emerge much stronger on the other side:
http://nipponmarketblog.wordpress.com/2013/06/19/the-phoenix-japan-inc-2-0/
Demographers have shown for some time now that China would get old before it got rich. A more recent accelerator for the aging dilemma is the trend that Chinese women don't want more than one child now, due to social constraints and lack of support- infant child care, rising cost of living, etc, etc.
So maybe the good ol' USA can get back on top and be the world hegemonist it has always been accused of being, the last standing (now kinda "tottering" under a debt load) superpower and all...
The whole world would be more sustainable with a smaller human population, everywhere, so complaining about "aging" societies is whining about a good trend, unless you are into exploiting people as slaves / taxpayers.
Hey Dawgs,
Just spent the Spring in Manila and was stuned by the hoppin' culture & economy. The single most amazing feature of the country-side is the hordes of kids everywhere!
I haven't seen this many kids since I was their age in the 60s. Then I checked the demos and my shock is complete:
http://www.indexmundi.com/philippines/age_structure.html
That's 53% of the population; or 55 Million Kids under 25! PURE VENTURE CAPITAL!
https://www.cia.gov/library/publications/the-world-factbook/rankorder/2119rank.html?countryName=Philippines&countryCode=rp®ionCode=eas&rank=12#rp
I'm not sure even China can compete with this demo tho they have almost twice that population segment:
http://www.indexmundi.com/china/age_structure.html
And to top it off the PI is right smack in the middle of Asia-Pacific.
Goin long PI futes!