Population, that is
It’s conventional wisdom that economic growth requires a growing population; thus the gnashing of teeth over shrinking numbers in, e.g., Italy. Last week, Fred Hiatt took a look at Japan, where the birthrate is down to 1.25 (2.1 is required to maintain a stable population) and the population shrank by about 21,000 last year.
Somewhat surprisingly, the Japanese don’t seem to be fighting the trend. Instead, they seem intent on showing that shrinking population and economic growth are compatible:
The trick will be "innovation," [Prime Minister Shinzo] Abe said, and economic reform. In fact, robots and other ways to improve productivity are one of four possible routes to economic growth despite an aging population. The others would be making better use of women; immigration, which has increased slightly but remains unpopular in this ethnically cohesive country; and keeping the elderly working longer. …
Not every old person is going to work. But, Ogawa said, "there will be some adjustment. Japan’s not going to fall apart."
Let’s hope not. The world is in dire need of a demonstration that human beings don’t have to breed like rabbits to survive.
Of course, this is just prelude to the deeper and more important question: could a country like Japan allow a controlled contraction of its economy and remain comfortable?
"It brings you to a very tough question," [demographer] Toru Suzuki says. "What is happiness? Can we be happy without economic growth?"
(See also: Mike Wendling’s piece on the vexations of shrinking population.)