Japanese Minister Tells Pensioners: Spend Money or Die

What would your reaction be if deputy prime minister Barnaby Joyce came out and advised Australia’s elderly to ‘hurry up and die’?

One of sheer horror? Bewilderment and bemusement?

Regardless of age, we suspect the vast majority of you would be aghast that a public figure, with influence at federal level, would have the gall to broach a subject of such absurdity.

Almost certainly, his tenure as deputy PM would come to an abrupt end (an early death, if you’ll excuse us). We also have a sneaking suspicion the Coalition wouldn’t fare well at the polls on 2 July either.

And yet, that’s exactly what occurred in Japan last week.

Taro Aso, the deputy PM of Japan, added another notch to his regretful history of ageism at a rally in Hokkaido province, brazenly noting:

I recently saw someone as old as 90 on television, saying how the person was worried about the future. I wondered, “How much longer do you intend to keep living?”

At the ripe old age of 75, Mr Aso is no spring chicken himself. Which makes his comments all the more baffling. Just how much longer does Mr Aso intend to keep on living, anyway? In any case, it’s telling that he chose to pick out a 90-year old to make his point.

Mr Aso’s remarks were made as part of a rallying cry urging Japan’s elderly to spend more in order to boost economic growth. He continues:

The biggest problem at present is how everyone is staying put. If you don’t spend the money you have, that money will mean nothing. What’s the point of accumulating more wealth? Just looking at the money you have?

If any paragraph better summed up the zeitgeist of the contemporary financial system we live in, we’ve yet to see it.

Savings, passing on inheritance to kin…these aren’t judicious things to aspire to. They’re problems that need solving; either through spending, or death.

The way that Aso sees it, ‘stingy’ 90-year olds are an impediment to growth. Forget that they’ve paid their dues to their country, filling government coffers with taxes along the way.

None of that matters. ‘What have you done for me lately?’ is the prevailing mood.

Yet spending among retirees is not the reason Japan’s economy has been stagnating for the better part of three decades.

The real issues, and the patent solutions that exist to these problems…those are wilfully ignored by Aso and his government cronies.

In their eyes, Japan’s weak growth couldn’t possibly be as a result of other causes. Like the reckless currency debasement Japan has been undertaking for decades. It couldn’t possibly be because of the irresponsible and downright irrational credit infusion led by the Bank of Japan.

It’s retirees instead, those with little means of accruing new savings, that are the problem.

There’s no doubting that Japan faces an existential crisis. But its policymakers refuse to address the real problems. Instead, they waste time pinning blame on helpless nonagenarians.

In truth, this isn’t a new development. Japan’s growth predicament has been an issue for decades. There is a reason why the idiom ‘the lost decade’ was attributed to Japan’s period of stagnation in the 1990s. It’s a sickness that Japan can’t shake. Why?

It shouldn’t surprise you that Japan’s economic woes are intimately connected to its demography. The overarching reason for Japan’s stagnation is demographic. Somewhere along the way, the Japanese forgot how to reproduce.

Today, Japan officially holds the title of the oldest nation in the world. To illustrate the magnitude of this problem, there were more adult diapers sold in Japan than baby equivalents in 2012. That’s symbolic…and bleak.

Over the next half century, the island nation of 127 million is set to see its population halve. People are getting older. Every generation is smaller than the last. It means fewer and fewer tax payers accounting for a burgeoning number of dependents amounts. In other words, nothing short of economic suicide.

In fairness, this is an affliction affecting the rest of the world too. Outside of sub-Saharan Africa, birth rates have plummeted just about everywhere. Those below replacement level (2.1 children per family) face grave economic hardships. Japan has a miserly birth rate of just 1.4. But it’s not alone.

Those that wonder why Europe has stagnated over the past decade haven’t looked at a population pyramid of late. Growth in Europe, as in Japan, is never again going to be anything better than par. Not without a major correction to its demographic sinkhole, anyway.

As in Japan, the Europeans can look forward to a future where 2% growth rates are not normal, but enviable. And this on a continent where migration is not only widespread, but the cause of much conflict at present.

As long as Japan finds itself at the bottom of the birth rate rung, you can’t expect anything less. ‘Demography is destiny’ has never been truer, or more relevant, than it is today.

Remember, an inverted population pyramid not only retards growth, but is almost impossible to recover from. And as every generation becomes smaller than the last, the likelihood of resetting this imbalance diminishes.

Even if everyone started reproducing like rabbits, it would still take generations to revert back to something resembling normality. That, in this instance, would be a bottom heavy population pyramid, with a large number of consumers and taxpayers supporting a smaller number of dependents at the top.

However, a population boom is well beyond the Japanese. There is no evidence that anything of the sort is on the cards. If anything, things are getting worse, not better.

What about immigration, Mr Aso?

Perhaps the most interesting aspect of Mr Aso’s comments is the fact that there is no mention of immigration as a solution to Japan’s ails. Especially considering that it could improve Japan’s demographic and economic crisis in equal measure.

But immigration remains something of a taboo in Japan. Starkly, Japan is one of the most homogenous societies on the planet. A recent study at Aoyama University suggested that just 0.2% of Japanese citizens have some kind of foreign descent. In the 21st century, with rampant immigration and globalisation, that figure almost defies belief.

Either way, it highlights the extent of Japan’s hostility to immigration. Across the world, immigration is a key social and economic policy that nations like Australia have used to their benefit going back to foundation. In Japan, it’s not even part of the political discourse.

Japan could alleviate some of the problems facing its economy by opening the floodgates to migrants. And they could do so without embarking on the same kind of multiculturalism that’s raised ire elsewhere. Healthcare workers from South East Asia are a dime a dozen. That might seem a palatable option to a nation that’s top of its class when it comes to ethnic homogeneity (and that wants to keep it that way).

Not only would immigration ease the stress on government budgets — through increased taxation — but it’d solve one of the main issues plaguing Japanese society: how to care for its vast number of elderly.

Regrettably, however, it appears that immigration is beneath Japan. The preferred course of action, instead, is to enact inane policies like Abenomics, sending Japan into an ever worsening spiral of debt driven calamity.

Mr Aso is unlikely to drive Japan’s elderly to suicide anytime soon. But the economy that his government presides over shares some characteristics with its elderly. Everyone in Japan, it seems, is dying a slow death.

Mat Spasic,
Contributor, Markets and Money

Markets and Money offers an independent and critical perspective on the Australian and global investment markets. Slightly offbeat and far from institutional, Markets and Money delivers you straight-forward, humorous, and useful investment insights from a world wide network of analysts, contrarians, and successful investors.

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