Best of the Week
Most Popular
1.The Greatest Stock Market Crash Of Your Life Is Just Ahead… – Warns Harry Dent - GoldCore
2.Budget 2016: Borrowing, Lifetime ISA, House Prices, Economy, Syria, Brexit and Stocks - Nadeem_Walayat
3.Gold Price Intermediate Top - Clive_Maund
4.Brussels Terror Attacks, Death of the European Union, BrExit Wake up Call - Nadeem_Walayat
5.Stock Market Maybe This Time is Different? - Tony_Caldaro
6.UK House Asking Prices Break Above £300k! Housing Market Paralysis - Nadeem_Walayat
7.A Big Reason Why Silver Price Is Set To Soar - Hubert_Moolman
8.The Financial Crisis Has Just Begun; Is The American Dream Is Over? - Chris_Vermeulen
9.Gold Stocks Spring Rally - Zeal_LLC
10.GLX, GLDX, Baby Gold Bull Market Stillborn? - Rambus_Chartology
Last 7 days
Silver Bullion Has Key New Player – China Replaces JP Morgan - 4th May 16
Gold Stock Picks Up Over 400%, What's Next ? - 4th May 16
U.S. Treasury Secretary Jack Lew: Puerto Rico Needs Urgent Action - 4th May 16
Technical Trading Mastery for Traders & Investors - 4th May 16
Derivatives Crisis Of Banks…Worldwide - 3rd May 16
Bank of North Dakota Soars Despite Oil Bust: A Blueprint for California? - 3rd May 16
Stock Market Technical Analysis - 3rd May 16
Central Banks Need a Higher Gold Price : Hello GATA - 3rd May 16
A Currency War Battle That Europe and Japan Can’t Afford To Lose - 3rd May 16
When the Truth is Found to be Lies, Confidence in Currency Dies - 2nd May 16
How Brexit Could Help All of Europe - 2nd May 16
US House Prices Outpacing Official Inflation Rate, Household Income - 2nd May 16
USD Still Declining... - 2nd May 16
Gold & Silver Rally Huge as Central Bankers & Analysts Flub - 2nd May 16
Stock Market Bounce Day - 2nd May 16
Stock Market Uncertainty Following Two-Month Long Rally - Will It Continue? - 2nd May 16
Stock Market Correction Underway "Upside Objective Reached" - 2nd May 16
USD, Yen and an ‘Inflation Trade’ Update - 2nd May 16
Gold Commitments of Traders and More - 1st May 16
The Magic of Gold Ratio Charts - 1st May 16
Consensus Forming: China Heading Back Into Financial Crisis - 30th Apr 16
The Next Technical Price Targets for Gold & Silver - 30th Apr 16
Stock Market Downtrend Should be Underway - 30th Apr 16
Gold And Silver – A Clarion Alarm Call For All Paper Assets - 30th Apr 16
US Economic Statistics LIES, LIES AND OMG, MORE LIES - 30th Apr 16
Stock Market Strong Elliott Wave Relationship is Developing - 29th Apr 16
Fed's Kaplan: Brexit to Factor in US June Interest Rate Decision - 29th Apr 16
Silver Miners Strong in Grim Q4 - 29th Apr 16
Is Silver a better bet than Gold in the Near Future? - 29th Apr 16
How to Use the CoT Report in Gold Investing? - 29th Apr 16
Sri Lanka is Intriguing: Areas to Consider for Value Investing - 29th Apr 16
Gold “Chart of The Decade” – Maths Suggest $10,000 Per Ounce Says Rickards - 29th Apr 16
Are We or Are We Not in a New Gold Bull Market? - 29th Apr 16
Silver: The “Five Year Plan” and the Great Leap Forward - 28th Apr 16
Michael Hudson: The Wall Street Economy Has Taken Over The Economy and Is Draining It! - 28th Apr 16
AUD/USD - Trend Reversal or Just a Bigger Pullback? - 28th Apr 16
A Gold Revaluation Could Transform Your Financial Status - Overnight - 28th Apr 16
Monetary Policies Misunderstood - 28th Apr 16
Gold Bullion vs Gold Miners - 28th Apr 16
OECD Suggests BrExit Would Cut Net Migration by 1.2 Million by 2030 - 28th Apr 16
MP Naz Shah Punished for Tweets Made During Israel's Genocide of Gaza Palestinian People - 28th Apr 16
Global Recession in 2016 and Beyond - The Obvious Evidence - 27th Apr 16
Why Gold Bugs Need to Stop Listening to The Fear Mongers and Start Thinking for a Change - 27th Apr 16
BlackRock’s Fink: Fed to Raise Interest Rates by Quarter Point ‘at Best’ - 27th Apr 16
Gold More Productive Than Cash?! - 27th Apr 16
Donald Trump Will Fire Janet Yellen and Be Trapped - 27th Apr 16
Money Saving Gardening by Propagating Roses From Cuttings - Propagating Rose Plants Over 2.5 Years - 27th Apr 16
Facebook Censors Pro Trump and Negative Hillary News - 27th Apr 16
This is the Era of the Democrats and Your Taxes are Going Up - 27th Apr 16
Long Awaited Gold Price Breakout - 26th Apr 16
Crude Oil Price Double Top or Further Rally? - 26th Apr 16
Madness in the Crimex Gold and Silver Trading Pits - 26th Apr 16
Britain's Prospects: GBP and BREXIT - MAP Wave Analysis - 26th Apr 16
CRB, Gold, Oil, Cotton, Coffee - 7 Must See Commodities Charts - 26th Apr 16

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Catching a Falling Financial Knife

Are American's Having Enough Babies to Stop Turning Japanese?

Politics / Demographics Dec 06, 2012 - 10:47 AM GMT

By: Money_Morning

Politics

Keith Fitz-Gerald writes: A new study by The Pew Research Center shows that the birth rate in the United States has dropped to the lowest level since 1920, when reliable statistics were first made available.

The birth rate dropped precipitously last year to only 63.2 per 1,000 women of childbearing age (which is defined as 15 to 44 years of age). That is half of what it was in 1957 at its peak.


Most people aren't troubled by this -- but they should be. Here's why.

Our low birth rate has tremendous implications at all levels of our society. What's more, it is yet another sign that we are turning Japanese.

Now I know the idea that we are becoming more and more Japanese-like is not without its fair share of criticism.

People question me all the time about it - challenge me is more like it - arguing that the United States is different. That somehow, unlike Japan, we're going to escape the economic mess we've created for ourselves.

Having spent more than 20 years closely involved in Japanese society as a businessman, a husband, a father, and a part-time resident, I think that's wishful thinking.

The truth is any population decline in the United States will have severe implications for our economic way of life exactly the way it has in Japan.

And it's not just the numbers of births that matter, but rather all of the things that stem from low birth rates years down the line.

The Future Pitfalls of the Decline in U.S. Birth Rates
For example, a lower birth rate means fewer job prospects in the future. It also means fewer workers feeding into a system that actually requires more workers to support the greying society we live in.

With declining birth rates, Japan is now expected to drop from 2.8 workers supporting each retiree in 2008 to 1.5 by 2050.

Here in the United States, our trend is headed in the same direction, where a mere 2.6 workers will be expected to support each retiree by 2050. That's a 44.68% decrease from the 4.7 workers in 2008 -- and a whopping 85.65% reduction from the 42 workers who supported each retiree at the end of WWII.

There are implications in terms of health care rationing, too. It will affect home care, assisted living, traffic, mobility, technology, and taxes. Especially taxes...

Of course, with the fiscal cliff approaching, the tax debate is now front and center. But lower birth rates also mean much of the debate is misdirected.

It's not so much a matter of taxing the rich as it is how we deal with declining revenues. No matter how you cut the moral debate about taxing the rich or having more people pay in, fewer workers will mean future tax receipts go down.

And that, in turn, means there will be even less to spend when the rapidly graying population needs it the most.

Our military is also predicated upon national policies that have been developed during times of economic prosperity and are now being carried out at a time of transition. This is a mismatch. Older societies tend to be more survival oriented, so it's entirely possible that the way in which our nation conducts itself in the international community will change.

Perhaps that's not such a bad thing, though, if we are less likely to send our sons to war so easily - but that's a subject for another time.

Our immigration policy, too, merits serious consideration in light of the low birth rate data, especially when we've been building a model based on newly immigrated foreign- born mothers having more children than U.S.- born women. Just because that's worked in the past doesn't mean that the same thing will work in the future.

That's the case, for instance, among Mexican immigrant women who were singled out by the Pew data as having the largest birth rate decline of any group included in the study - 26%. That's a 400% larger decline than U.S.- born women, who saw their overall birthrate fall 6%.

Am I making a mountain out of a molehill here? After all, one data point does not make a trend.

Further, you can counter, as many people do, that modern contraception and better sex education are also factors that could contribute to slowing childbirth.

Both of those things are true; I merely think there's more to this story.

Having spent more than two decades carefully studying both countries, I am convinced that there is a link between economic development and fertility.

Specifically, I believe falling fertility rates here in the U.S. herald some truly world- altering ramifications, not the least of which is that we are making the same damning mistakes Japan has made over the last 30 years.

The similarities include:

•The lowest birth rate in history and one that's going in the wrong direction - check.
•A growing number of old people dependent on a smaller number of workers - check.
•Failed stimulus programs - check.
•Outrageous amounts of debt that can never be paid back being spent to make up the leverage gap - check.
And I'm not alone. There is an increasingly vocal group of scientists who believe that higher human development is negatively correlated with lower fertility rates. In other words, the more "advanced" a society becomes, the less fertile it is.

Others, like Mikko Myrskyla of the Max Planck Institute for Demographic Research, believe that there is a "j-curve" of sorts, and that advances in economic development can reverse fertility rate declines.

I think this is like counting leprechauns under the rainbow. The laws of nature are immutable:

1) If you don't have new children, you cannot replace your population.
Japan is literally dying. It's got the worst demographics ever recorded. The number of senior citizens, or "silvers" as they are called because of their silver- colored hair, is growing faster than both the number of new workers needed to support them and the number of children needed to replace them.

So fast, in fact, that the last Japanese will be born in 3011 -- only 1,000 years from now, according to a study from Hiroshi Yoshida of Sendai.

Between the low birth rate and aging population, Japan will lose more than 33% of its population by century's end. The Japanese government estimates that the birth rate will drop so far, so fast, that it will hit a mere 1.35 children per woman in her childbearing years within the next 50 years.

This is made worse by the fact that 36% of men between the ages of 16 and 19 have no interest in sex. More than 60% of unmarried men don't have girlfriends while more than 50% of single women in the same age group are not dating.

So far the United States remains a highly "sexed" society but how much longer will that last? I don't know. But the data, whether you include immigrants or not, seems to suggest that reproduction is the issue.

2) It's becoming too expensive to raise children.
Raising a child from birth to the point where he or she becomes a productive adult can bankrupt even the most productive of families in Japan. My wife and I, for example, know plenty of couples who are perfectly happy not to have children because they don't want the economic stress of raising children in Japan when the economy has been stuck in a rut since they were born.

This has significant implications, particularly when it comes to future employment and the housing recovery everybody seems so fixated on.

You can have the best jobs in the world, but if there's nobody to fill them, the point is moot. Productivity per worker may rise, but barring the massive advances in robotics and other compensatory technologies everybody expects, overall productivity will decline.

As for housing, it's much the same story. People may not think immediately about this, but in Japan where we've seen this play out over 20+ years, the results are extremely evident. Rural housing remains but a fraction of what it cost at the height of Japanese prowess. Many homes are simply empty and decaying.

Banking debt there remains underestimated even today and construction companies are confounded by staggering low levels of new housing formation (the numbers of new families being formed) and the number of young people moving permanently back in with their parents.

It will be the same here in 30 years' time.

3) Technology provides limited compensation.
Many people assume that the use of robotics and other technology will help alleviate the burden associated with aging. I share that opinion but believe it will do nothing to change the societal impact of bad economic conditions on fertility rates.

More than 50% of the world's population now lives in countries with falling and, more specifically, below- replacement fertility numbers. That number was a mere 8% in 1970, according to an older paper by Nobel laureate Professor Gary Becker of the University of Chicago and a deep thinker when it comes to the effects of low birth rates on future economic activity.

4) Immigration might help in the short term but can't solve the problem.
One of the reasons that Japan is in such trouble is the near- complete lack of a workable immigration policy. Migrant workers remain tightly controlled and their children are not recognized as Japanese citizens -- even if they are born on Japanese soil.

Japan has experienced a tremendous shift in education, how young people are employed, and a dramatic polarization of younger versus older members of their society. Have s and have- not s are not the issue. What seems to be at stake is the sentiment that the older generation has had it all, while leaving tremendous burdens to the younger generation that they didn't sign up for.

We've had tremendous immigration into the United States but that appears to be flattening, and our immigration policy remains a wreck despite the fact that it's very different from Japan's.

5) Politicians may not be able to fix this
America, like Japan, is torn on many levels. We are looking to Washington with ba ted breath, hoping our leaders can solve our problems -- but that may be completely futile.

Even if our politicians come to their senses tomorrow, they may not be able to fix this. And, if there is a lesson to be learned from Japan, perhaps that's it.

Demographics is not a policy issue. Declining birth rates are about demographics. They are inescapable.

That's why we must continue to invest in companies that favor the aging population, create technologies we need as oppose to those we simply want, and that pay us for the risks we take.

Source :http://moneymorning.com/2012/12/06/is-america-h...

Money Morning/The Money Map Report

©2012 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2016 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife