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Demographic Doom? Germany, Italy, Korea, & Japan Face Workforce Collapse By 2050

Demographic Doom? Germany, Italy, Korea, & Japan Face Workforce Collapse By 2050

Forget the trade war, debt, deflation, automation, and artificial intelligence: one of the most significant threats to the global economy and the future of the world as we know it is demographics.

A new OECD report, published by International Business Times, said Korea, Japan, Germany, and Italy could see their working-age populations decline to dangerously low levels by 2050.

The report took each OECD country’s population between the ages of 20 and 64 in the year 2000 as a base and was able to project the 2050 population. What they discovered was the working class population by 2050 would be 80% of its base year in Korea and Italy. In Japan, the workforce population would be much worse, approximately 60% of its original size.

For the OECD as a whole, there are about 34 countries from around the world, the size of the working age population is expected to increase by 111% of its original size by 2050. Much of the growth will be driven by stable birth rates and growing populations, like Australia and Turkey.

The OECD noted that Japan’s working-age population has been in collapse for nearly three decades. Korea’s working-age population was expanding until just recently but is expected to begin contracting this year.

For countries experiencing a decline in the working-age population, there will be widespread consequences across all aspects of the global economy: as households shrink, so does discretionary spending, and ultimately will impact living space. In developed markets, large cities will see increased pressure on real estate and rent prices for apartments.

In a separate report, we showed how countries around the world are set to experience a decline in the number of children per household in the 2000 – 2030 period. More specifically, looking from 2015 out to 2030, Euromonitor expects developed markets to have a ~20% decline in the number of children per household and developing markets a ~15% decline.

 …click on the above link to read the rest of the article…

Japan’s Demographic Time Bomb Keeps Ticking

When I warn about the fiscal and economic consequences of America’s poorly designed entitlement programs (as well as the impact of demographic changes), I regularly suggest that the United States is on a path to become Greece.

Because of Greece’s horrible economy, this link has obvious rhetorical appeal.

But there’s another nation that may be a more accurate “role model” of America’s future. This other country, like the United States, is big, relatively rich, and has its own currency.

For these and other reasons, in an article for The Hill, I suggest that Japan is the nation that may offer the most relevant warning signs. I explain first that Japan shows the failure of Keynesian economics.

…ever since a property bubble burst in the late 1980s, Japan’s economy has been in the doldrums, and its politicians deserve much of the blame. They’ve engaged in repeated binges of so-called Keynesian stimulus. But running up the national credit card hasn’t worked any better in Japan than it did for President Barack Obama. Instead of economic rejuvenation, Japan is now saddled with record levels of debt.

In other words, Japan already is a basket case and may be the next Greece. And all this foolish policy has been cheered on by the IMF.

I then highlight how Japan shows why a value-added tax is a huge mistake.

Japan’s politicians also decided to impose a value-added tax (VAT) on the nation. As so often happens when a VAT gets adopted, it turns into a money machine, as legislators start ratcheting the rate higher and higher. That happened in Europe back in the 1960s and 1970s, and it’s happening in Japan today.

And regular readers know my paranoid fear of the VAT taking hold in the United States.

But here’s the main lesson in the column.

The combination of demographic changes and redistribution programs is a recipe for fiscal crisis.

…click on the above link to read the rest of the article…

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