Thursday, April 10, 2008

Stagnation Celebration

Dean Baker has an article on the how the "demographic crisis" predicted circa 2030 is really a benefit.

Baker explains how the fallacy that in each country, each older generation must be backed up by a same-sized or larger younger generation(s), in order to keep the ratio of W/R ratio (my lingo for purpose of illustration) sufficiently high, where W = number of workers, & R = number of 65+ retired seniors.

I never bought this fallacy myself, because it seemed to be
1 unsustainable. Eventually the human society/economy must learn to operate with a constant or declining population. If every generation grows even slightly (say 1%) bigger than the prior generation, at some future time there won't be enough resources to maintain a certain standard of living, such as the US 2008 median standard of living. This might be in 50 years or 1000 years, but logic says it would eventually happen. Even if our descendants circa figure out how to colonize the solar system, the same fate would eventually occur.

2 productivity. I recall Baker saying in another article that productivity has risen 66% in the last 30 years, yet only the top 1% or 5% of income folks have had a meaningful improvement in living standards, the rest have faced constant or declining living standards. Shouldn't all the cumulative productivity allow the society to operate with a declining population?

I guess Japan will be living experiment to see who is correct. Japan almost certainly will have a declining population this century.

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