Fixing Japan’s Demographic Disaster

Japan - Kyoto

Recently I’ve been trying to catch-up on the backlog of The Economist magazines that have been accumulating on my bedside table. As I perused the magazines, I came across this article titled “Land of Wasted Talent.” The article starts off simple enough:

Unlike an earthquake, a demographic disaster does not strike without warning. Japan’s population of 127m is predicted to fall to 90m by 2050. As recently as 1990, working-age Japanese outnumbered children and the elderly by seven to three. By 2050 the ratio will be one to one. As Japan grows old and feeble, where will its companies find dynamic, energetic workers?

But then things get weird. The obvious answer to me was — have more children . . . right? Well, no.  The answer, according to The Economist, is to throw more women into the workforce. Huh, say what?

I’m sorry, but where is the connection between having more women working and fixing Japan’s demographic disaster? The lack of internal logic like this article is one reason why I have a backlog of Economist magazines.

Frankly, the magazine’s quality of writing seems to be going downhill in pursuit of ideological purity (of a general leftist slant, it is a British magazine afterall). As such, I feel less compelled to read it on a regular basis. And if I see more anti-family articles like this one, maybe I’ll save myself a few bucks and cancel it altogether.

The Power of the Family

Free Form Family Tree - Extended Family

Harvard economists Alberto Alesina and Paola Giuliano have written a fascinating study on the power of the family as an economic unit (pdf).  This study adds heft to what I’ve written about in the past about how strong families act as an bulwark against hard economic times.  Here is what they have to say:

The structure of family relationships influences economic behavior and attitudes.  We define our measure of family ties using individual responses from the World Value Survey regarding the role of the family and the love and respect that children need to have fro their parents for over 70 countries.  We show that strong family ties imply more reliance on the family as an economic unit which proves goods and services and less on the market and on the government for social insurance.  With strong family ties home production is higher, labor force participation of women and youngsters, and geographic mobility, lower.  Families are larger (higher fertility and higher family size) with strong family ties, which is consistent with the idea of the family as an important economic unit.  We present evidence on cross country regressions.  To assess causality we look at the behavior of second generation immigrants in the US and we employ a variable based on the grammatical rule of pronoun drop as an instrument for family ties.  Our results indicate a significant influence of the strength of family ties on economic outcomes . . . people belonging to strong family tie societies appear to be happier and satisfied with their life. [emphasis added]

It is a real tragedy that so many Americans use to understand this simple, but now forgotten, truth.