by Dean Baker
Oh no, Japan is running out of people!
That’s what Robert Samuelson tells us in his latest column (Washington Post, 6/12/19). 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 US level.
Yes, and the burden of this debt is absolutely crushing to the Japanese people. According to the IMF, 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 US economy. And 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 “highest ever 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 healthcare system.
Samuelson and his clique really need to do a better job of finding a bogeyman.
A version of this post originally appeared on CEPR’s blog Beat the Press (6/12/19). Messages can be sent to the Washington Post at [email protected], or via Twitter @washingtonpost. Please remember that respectful communication is the most effective.