Japan's GDP must shrink!

JerseyBoy said:

Your idea is a pie in the sky. I don't think that is going to happen. Aging population, dwindling pool of productive workers in Japan, its unease with accommodating the foreign residents, and others will make it hard for Japan to maintain the living standard.

As people age, there is an increasing need for health care service. Also, older people will experience the reduced physical and mental ability. As a large proportion of Japanese population over the retirement age is on the rise, the burden on the economy and public finance will get bigger, which will reduce the resources for economic investment (instead, Japan will increase expenditures).

In the meantime, more dynamic countries would maintain their growth path and might gain the competitive advantage against the Japanese companies.

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If pensions are low, the burden the working population will not be excessive, and working people will earn more than today if GDP is stable while the working population decrease as a proportion to the total population.

If on the contrary the government decides to increase taxes to support the retired with decent pensions, healthcare and social care, the burden on the working population will become unbearable. In such as case it is likely that many younger Japanese will seek employment abroad to escape these prohibitive tax regime. This would only make things worse.

The challenge for the Japanese government will be to adjust the tax rates progressively as the working population decreases and find the right balance so as not to discourage younger people from staying in Japan.

JerseyBoy said:

You can keep dreaming (once it stops growing, the country's economy will lose its edge. Other countries will catch up sooner or later if Japan is stuck in the zero growth).

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Do not confuse growth with money. Money can be made without national growth, through foreign investments. Astroboy explained the difference between GDP and GNI. GDP does not count return on foreign investments.

If a country invest massively in emerging economies, its own economy can decrease and people could be getting richer from return on foreign investments. Switzerland is a notorious such case. The Japanese and Americans are also doing a lot of investment in China, SE Asia and Latin America.

The problem with this system is that it creates inegalities between the investors and the non-investors in the home country. Only investors get richer, while the rest of the population follows the downward trend of the national economy. This is why the gap between the rich and poor is increasing fast in the USA. Japan is a bit different since most of the active population works for big corporations making the investment. The rest (e.g. restaurant owners) profit from spending of these salarymen.

European Union said:

Why is it laughable for Japan to join EU? Is it because it was laughable that Galileo proposed the earth was round? I am not sure about your statement.

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Because the EU is and always will be limited to countries in Europe (+ overseas dependencies). It is not a worldwide organisation like the UN (including WTO), OECD or OPEC.

Japan suffers from the human condition as does everyone else.

We are a creation that has the ability and freedom to multiply and breed without restriction.

However, we have a limited supply of food, resources, space, and even time.

We either acknowledge this, and find a balance between our breeding and our resources. Or we breed to our hearts content, and make plans to use our inflated population to capture and take others' food, resources, and property.

Which approach should Japan take?

I've heard it suggested - by a Japanese government minister, I believe - that Japan embrace its shrinking population, live off the affluence created by the growth of the 20th century, and focus on refining and preserving the culture instead of economic growth.

stormchasar said:

I've heard it suggested - by a Japanese government minister, I believe - that Japan embrace its shrinking population, live off the affluence created by the growth of the 20th century, and focus on refining and preserving the culture instead of economic growth.

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Japan aims to seek economic growth, but not 3-10% per annum but some 1-2%. Japan does not need strong growth but modest economic growth is essential as it needs to reduce governmet debt per GDP.