Generation Depends vs. Generation Dependent

Yesterday on Stuart Varney’s Fox business show he interviewed an economist about Japan and its demographics. For an important country they are terrible. He admitted that more adult diapers are sold there than baby diapers. Depends outdoes Huggies. Few babies and a lot of old people.

So many old people that the Emperor’s habit of giving centenarians a silver sake cup hit 20,000 this year. 20,000 100 year olds and few babies coming along to balance the future.

Jerome Koch in the writes,

Japan has one of the oldest populations in the developed world. Yet, while the economy struggles, capable firms like Toyota continue to produce jobs and generate wealth. Domestically, Japan suffers from price deflation due lack of consumer demand. While the Japanese yuppie enjoys falling prices, Japanese companies are seeing their profits fall. As a result, the Japanese Central Bank has had to provide a steady dose of Quantitative Easing. The Japanese M2 money supply has grown 3% annually for the last 20 years. Because of its aging population, Japan also instituted higher sales taxes to pay for its leviathan public sector. Forty-three percent of Japan’s national budget is now consumed by interest payments alone (that’s 9% of its GDP). But the Japanese should consider themselves fortunate. Japan has a per capita GDP of $45,000 and remains one of the world’s largest creditors with some $3.1 trillion in foreign holdings. But this cannot go on forever.

Are we that different? Evidently not. “Continuing a 12-year decline, the U.S. birth rate has dropped to the lowest level since national data have been available, according to statistics just released by the Centers for Disease Control (CDC). The birth rate fell to 13.9 per 1,000 persons in 2002, down from 14.1 per 1,000 in 2001 and down a full 17 percent from the recent peak in 1990 (16.7 per 1,000), according to a new CDC report, “Births: Preliminary Data for 2002.” CDC analysts say the birth rate is dropping as the increasing life span of Americans results in a smaller proportion of women of child childbearing age.”

So who’s going to fund Generation Depends?

Koch continues:

It is difficult to predict exactly where our economy will go in the long run. Currently, inflationary pressures in food and energy are more a product of U.S. monetary and regulatory policies than market forces. Like Japan, our long-term economy will face inflationary and not deflationary pressures. Older societies consume less than younger growing societies. China will soon be flooded with its elderly, and within a decade many places in Europe will see falling populations. Both North and South America will soon be in the same boat. This has long-term ramifications for U.S. agriculture and manufacturing exports. And with sagging domestic demand, the U.S. will not be able to make up the shortfalls overseas. How our economy will correct for this is impossible to tell. This will come about as our president and the Beltway class are implementing an ever growing set of far-reaching regulations and higher tax regimes. Some believe that a total collapse of our financial system will result. While I don’t yet subscribe to this dystopian future, I am at a loss to wonder how our society will survive as it becomes older and our numbers eventually become fewer.

We are looking at fewer people to support the increasing numbers of elderly and their health care needs. We have fewer men wanting to marry, more divorces and an impending return to the marriage penalty tax.

The housing industry which likes to think it is rebounding (I don’t) will continue to have trouble since fewer homes will be needed.

Yet President Obama and the Democrats harp on Planned Parenthood, contraceptive rights and abortions at a time when we need and can provide for more Americans.

They wonder why we are messed up?

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