People in Japan Now Less than Half US Per Capita GDP

Japan had nominal (exchange rate per capita GDP) in 1988 that was 117% of the US level (17% higher) but this has fallen to less than half. On a purchasing power per capita income level Japan peaked at about 80% of the US level (about the level of France and the UK) but the PPP per capita GDP in Japan is 65% of the US level.

Japan had an economic miracle in the 1950s to the 1980s but Japan has been in relative decline for the past few decades.

Japan peaked at a second-tier per-person world economy and is now down to a third-tier level. They have slipped 20% on a PPP level and 55% on an exchange rate basis. Taiwan, South Korea and Czech Republic are ahead of Japan on various per capita metrics.

15 thoughts on “People in Japan Now Less than Half US Per Capita GDP”

  1. And this is why the birth dearth matters. Per capita GDP is in part driven by the percentage of the population who are productively employed, and 25% of the population of Japan are now of retirement age or older. By 2050 a third of the population are expected to be retired.

    Be the working population ever so productive, that is still going to drag down the GDP. And divert a huge fraction of what remains into elder support.

    • Though this pattern may be offset by the increase of AI and robotics as important parts of the economy. When AI is a drop in replacement for most human labor, the economy can grow rapidly even as the population declines – as long as wealth inequality doesn’t strangle demand.

      • Agreed. Old school demographics’ values of how much working support needed to provide services and senior coverage is out-dated, unsustainable, and morally questionable. Supporting retired government workers (or overly flush Fortune-500 companies’ directed pension plan workers) on 75%+ best wage retirements for nearly a third of their lives (25+ years) is non-sensical. This is not France or Greece nor should we ever look at such places as role models. The government should maybe provide ‘limited’ medical support for the last 5 – 10 years of your life – any other post-work partying time and fun-in-the-sun living is on your own dime – that being said, removing inheritance taxation, etc., is probably fair and reasonable.
        Aside from the politics, tech solutions and a sophisticated population need to take its own family size and quality, savings, modern solutions, etc., into account in preparing for non-full-time work and creating a high-quality productive population – not just an enlarged head count so as to encourage additional Walmarts and Amazon fulfillment centres. Quality over quantity. This will further reduce the need or common misconception for more people ensure to growth in GDP, tech solutions, etc.

        • Your “morally questionable” comment totally confused me, until I realized you were talking about welfare payments to retired people.
          That’s really a different question. It’s a related question, but it is not the fundamental problem.
          It doesn’t matter HOW everyone’s retirement is funded. You could have a society where 100% of all retirements are funded out of people’s individual savings. They would STILL need a bunch of young workers.
          A country full of old retired people with heaps of numbers in their bank accounts still need people to grow food, prepare food, deliver food, mow lawns repair cars, do the plumbing, keep the lights on, stop the roads crumbling, and all the other tasks.
          Retirement savings are just a means of exchanging previous work, done decades ago, for goods and services now. But that means we need goods and services now. And very, very few of our needs can be stored away until retirement. Even cars and houses still need someone working today for maintenance and fuel.

          I will grant that wine and spirits can be stored up for retirement. But that’s only 50% of your needs at the best of times.

          • I keep thinking about the ways we can invest in more durable materials to avoid later labor. It costs a lot to get your house painted now; it will cost more as the declining labor pool shifts to elder care. So while times are good get rot-proof aluminum siding or stucco. Masonry or metal fences, ceramic or metal roof, hardscaped yard… of course, you could just let the house go to hell in your twilight years, but then the kids inherit an expensive repair project in an era of declining real estate demand.

            Outside of the home that principle includes investing in automation, but can also cover cheap things like revising the codes which require landscaping around businesses (where I come from, we rely on immigrant labor to mow the lawn of the Taco Bell). We should be eliminating unnecessary labor bloat and using the freed up labor to invest in infrastructure durability upgrades.

          • I am grasping at what you’re getting at.. but for whatever reason –
            just optimistic supposition, at this point –
            I truly do not believe that we have an efficient (or even maximally-desirable – from a choice standpoint) society right now, even in the G7 countries. That we could have half the people out there doing the same amount of work as the current work force (with technological improvements and removing some of the pointless competition). Some hours of the Many and most hours of the Some could be just cut. Witness the amount of hours undertaken during the pandemic vs the year before and yet society did not collapse, just hesitated, stumbled. Of course, prolonged pandemic level shacking-up would have crumbled necessary infrastructure, etc.
            What does an efficient G7 world look like – less choice? quarter of the burger joints? half the car brands? 25% less hotels? no unions? people working 50+ satisfied years of their life at 50+ productive hrs per week + 20-25 years of pre-work existence and 10 to 15 years of post-work existence? what jobs could be 25 – 50% switched out by AI, roombas, factory-bots, warehouse retail increased vs storefront retail reduced? How many people are doing their ideally-matched jobs from day 1 to day 18,250?
            Am I talking about a ruthless, centralized system of labor coordination and task delegation and function assignment – probably not – just efficiency, transparency, quality of opportunity, tech substitution/ augmentation, etc. People can still be entrepreneurs, bosses, lackies, investors, sheep, CEOs, golf ball fetchers, etc. This is not about disabling the free-market or over-regulation – just embracing automation and centralized info, as initiated by companies and motivated individuals.
            The point is that the lockdown revealed how inefficient and backward our traditional notions of the work world are – granted some, if not many, revealed how unmotivated and utterly unsuited to self-managed work they are…
            The most foundational point is that increased head-count is not the guarantee of increasing society’s value and future prospects. Can a family with 3 kids guarantee that all 3 will be motivated go-getters aspiring to be top 25% in their field – maybe a rich family with nanny- but a poor or overworked family? Why bring 3 kids into this world if we accept that time&money investment into each one matters, and that can’t be provided, therefore increasing the likelihood of 1 or 2 working at the Qwikee Mart for 20 years? Better family Thanksgiving attendance?
            Besides, what is really important to This Community – technological greatness, I hazard. I posit that this could be provided by increasing the Incidents of Greatness within the region, industry, country. The higher the number of Incidents of Greatness, the more likely we have affordable and cutting-edge EVs, orbital hotels and research stations, fantastic communciations infrastructure, great STEM education, good entertainment tech, top notch energy and military, etc., etc. Does vastly increasing head count guarantee Incidents of Greatness? I posit not – many countries have huge populations, huge yearly increases, huge families, older societies, etc – do they have many Incidents of Greatness? Unlikely. We shouldn’t crash our population but nor should we assume that new hordes and marginally increasing GDP is the only or best way of promoting or accelerating Incidents of Greatness.

        • Jer,”…The government should maybe provide ‘limited’ medical support for the last 5 – 10 years of your life…”

          Yet the bankers, big business and MIC should be supported to the tune of trillions indefinitely.

          The FED lent, we know and was accounted for, $16 trillion in close to zero interest loans to the banks, from Rep. Ron Paul’s forced audit of the FED. $16 trillion. They got some $800 billion in cash (This is the reason the stock market was roaring after the building loan collapse and bank bail out. They’re buying up the whole entire economy with our money). Estimates of the total amounts several years ago from looking at financial data is $29 trillion. I bet it’s more, way more. It’s likely over $40 trillion or better. Where’s MY FREE INTEREST LOAN????? At $29 Trillion and 300 million Americans, we could have given a zero interest loan for every family of four of $386,666. Housing crisis solved and the economy would have roared with all that cash going into people’s pockets. Instead, the banks got all the money and the assets and we got the bill. We would be much better off printing money straight up and just giving it to people. There will be a gasp at this idea but if printing $29 Trillion and giving it to the banks is not bad then why would bankrupting the banks and giving $29 trillion to the public be worse?

          The whole western banking system is a scam. We give central banks principal plus interest for ALL money created. They give us nothing. Nothing at all. So in fact it is a mathematical impossibility to pay off the debt. We can’t make money to pay them off without making money encumbered with more debt. If we paid off all the debt under the present system, we would have, no money. None at all. A debacle.

          No one really says it much but maybe the reason the Japanese and Chinese are so successful and rose so fast was they are not idiots and do not give evil swindlers from central banks interest and principal on their fake money from nothing banking system. They create their own money and if debt is a problem, the State owned central bank just writes the debt off. So they aren’t miracle workers, they are just not fools like us.

          • I understand your take. Unfortunately, I don’t follow the relationships between the government & government-flavoured institutions and ‘too big to fail’ corporate dealings and their questionable C-suite task-masters. Though, I have always been conflicted on how we should ‘treat’ the technically-mediocre and otherwise shockingly-untalented corporate rich. Even toyed with the idea of what would happen if we simply lopped-off the top 5% wealth and top 1% income – who would be gone? and what would happen? Most engineers, lawyers, and doctors; and their technical entourages (most STEM professions), would still be with us but how would they organize themselves into profitable/ serviceable entities? It’s easy, and even warranted, for the sheep to disparage their shepherds – questioning their real value. But as someone who leans a bit Ayn Randian, these back-room dealings, financial shenanigans, and supply-chain fudging are pretty-much the glue that holds our society together – though not as blatantly superficial as with the russian oligarchs. A sad and currently necessary evil. I have occasionally considered how great it would be if an AI Client could be trained to manage/ run a Corporation. Rather than unionize, a complete staff could simply hire an AI to manage the entire business, and then shift their skills completely under that – reverse down-sizing. Not so much a Marxist fantasy as many would suppose – a truer meritocracy. Unpaid and optimized to meet the staff’s needs and company’s future dealings – the AI could be way more efficient – especially in dealing with other possible AI. Though, I have never heard whether AI are good at negotiating. Ho-hum – frustrating to see how actually like Dilbert the rich world is…

        • And how are you supposed to determine what the last 5 to 10 years of someone’s life is with any kind of accuracy? Not possible. Life expectancy is highly variable.

      • Potentially, automation could advance to the point where having half your population retired wouldn’t touch GDP at all. It’s not remotely that advanced yet.

    • Should have slightly below zero population growth. Why below ? Because of the inevitable stresses on the environment that comes with more people. If japan slowly has less population technology will be able to solve the productivity dilemma.

    • Should have slightly below zero population growth. Why below ? Because of the inevitable stresses on the environment that comes with more people. If japan slowly has less population ,technology will be able to solve the productivity dilemma.

  2. It’s interesting that life satisfaction in the years since Japan’s economic decline has consistently risen, despite conventional wisdom that GDP and economic growth %’s are good indicators of people’s well-being.

    It seems to me that, at least in first world Western countries, high economic growth tends to mostly benefit wealthier people. Regular people can sometimes be worse off, due to housing price bubbles and increased immigration putting stress on public services.

    • Life satisfaction is much lower in Japan than U.S. or other first world countries though. It has risen at a slower pace.

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