Japan’s overall population fell from 128.1 million in 2010 to 122 million today but Japan’s working age population peaked in 1995. If we discount the economic bubble then the real estate collapse from the 1990s to today correlates with the working age population collapse.
It is also the aging of the population. The median age increased from 37 to 49. Peak consumer spending is about 48. The people who work declines and drops production of income and people age and drops the demand. The real estate collapse in Japan crushed the wealth of the middle class. This is what will happen soon to China, Europe and the world economy.
There are some people who assume that population decline will make the world better and eventually there would be a turnaround to people wanting to have kids. The people in 80 years would have lived through generation after generation of declining incomes, housing prices and mostly long economic depressions and recessions. If the people today have less hope for the future, why would we expect our descendents to have hope for the future if there we are handing them decades of economic hardship?
Another thing to remember is that national and other debts are increasing and the growing burden falls on fewer and fewer people. The per person debt will skyrocket. This would lead to default on the debt.
This will continue and get over twice as bad for Japan. Japan’s median age will hit 53 in 2040 and 54 in 2050.
China will hit median age of 47 in 2040 and 50 in 2050.
China and much of Europe are already heading into the same issues that Japan did.
Property prices in China are down 20% with the Evergrand real estate speculation collapse.
An analysis from 1975-2015 in Japan shows, housing price falls faster with declining population than it increases with increasing population. However, in more recent periods, while the correlation between house price decline and population decline stays robust, the relationship between house price increase and population increase disappears. This confirms the overall decline in housing prices across regions since the bubble burst, regardless of population growth.
In reality, negative effects on housing prices from population decline may be even larger than model predictions. The results suggest a larger decline in housing price associated with population loss than a housing price increase with the same size of population gain. Given the shrinking population in many prefectures, a further housing price decline could be a medium-and long-term trend. The linkage between population loss and a housing price decline could lead to a vicious cycle—residents expecting a housing price decline may sell their houses and have less incentives to own houses, which will add to already-existing oversupply for houses and create further downward pressures on housing prices.
Brian Wang is a Futurist Thought Leader and a popular Science blogger with 1 million readers per month. His blog Nextbigfuture.com is ranked #1 Science News Blog. It covers many disruptive technology and trends including Space, Robotics, Artificial Intelligence, Medicine, Anti-aging Biotechnology, and Nanotechnology.
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I saw some comments about Peter Zeihan on the previous posting. Since the discussion there is closed, I will say it here.
I think Zeihan is insightful when it comes to geography and logistics. He is somewhat insightful on demographics as well. But the basis of his schtick is the notion that the rest of the world is somehow too crazy, psychotic, and stupid to be able to peacefully trade and develop economically with each other without the benefice of American hegemony. Its a variant of American “exceptionalism”. This is a conceit that far too many Americans have and is the root cause of our destructive interventionism these days.
Zeihan was good about 10 years ago. But he lost it due to a combination of TDS and covid-19. This combined with his conceit of American exceptionalism has caused him to make predictions that have not come true. His most outlandish one was his prediction in summer of ’22 that there would be massive global famine by fall of ’22. Obviously this has not happened.
I no longer pay much attention to him. His first three books were good. But his last one was not good at all.
One factor that never seems to be mentioned in population collapse discussions is that brutal certainty of the natural selection algorithm, and it means that this population decline is probably only temporary.
People are having less kids now for various reasons – (I’ve seen dating apps, economics reasons cited above as prime examples). But the kids being born today are born to people who ignored those factors and had kids anyway, and some of that behaviour will be hereditary. So they will be less susceptible to economic or other discouragements when they reach child-bearing age, and will probably have more.
If one thinks of economic disincentives or dating apps as like a pathogen that reduces fertility, then it’s obvious that over time the portion of the population that’s most resistant to them will come to dominate. Fast forward a generation or two and the population as a whole will have become resistant and will start to have as many kids as resources allow, just as every living thing always does eventually. Of course, some other fertility-reducing ‘pathogens’ might appear over that time scale, but the current issues will probably be overcome by the natural selection process.
If you want people to have babies… PAY THEM!
Make children an economic positive to a couple, NOT a negative.
That is it… that is how you stop population loss and start the population increasing.
The US can stave off this for a few decades by importing Latinos. BUILD THE WALL BUILD THE WALL BUILD THE WALL BUILD THE WALL ….. Bwa ha ha ha ha MEDIAN AGE DATA AUSTRALIA 37.9 NEW ZEALAND 37.7 USA 38.8 JAPAN 49.5 ITALY 48.1 GERMANY 46.7 CHINA 39.8 We know China will go off a cliff and can’t import enough Mexicans to make a difference.
“China will go off a cliff and can’t import enough Mexicans to make a difference.”
They won’t. This process will take 20-30 years. They still have plenty of labor to move from agri to production/services (at the same time automating agriculture more) and each year knowledge economy is growing rapidly (more innovations, more engineers and scientists – bigger budget for science and tech).
AGI/advanced robotics will be here this decade, well before population crisis will start to be felt in China, EU, even Korea.
I think we’ve got education the wrong way around. Something interesting is happening at the upper ends of the class spectrum. More education = more durable marriages = more kids. These couples have the resources and opportunity, unlike the rest of us.
There’s one more relevant factor in depopulation. We’ve handed matchmaking over to for-profit dating apps. The privatization of public goods, services and infrastructure is extortion for profit. Private military contractors never want to win or lose wars – because then the war is over and there’s no more profit. Privatized fire-fighting burns cities to the ground because that’s maximum profits when they’re making a profit on every fire they put out.
The profit in dating apps is not in the marriages but in the bed-hopping churn. Apps want their dupes satisfied enough to keep coming back to the service – where they will see more ads or pay another monthly fee – but never so satisfied they partner up, get married, have kids and never return. Lust (dopamine/androgens/endorphins) is fighting with pair-bonding (vasopressin/oxytocin). That’s the difference between a product that promotes dependency/addiction and a public service designed purely for the benefit of citizens. The destruction of Western Civilization makes private equity happy. (Similarly we used to go to church to sing (oxytocin/FoxP2). Now, if we go at all, it’s more often than not for partisan rage and grievance (dopamine/adrenaline/cortisol).)
We see the same logic backfiring in for-profit “friendship” on social networks – shallow, fleeting connections that produce alienation and bullying. Privatized, ad-driven social media is essentially anti-social and incentivizes disinformation and distrust.
This privatization logic permeates all public infrastructure and services, acting as a tax on actual valuable economic activity like family formation. This is the result of legalizing bribery in the 1970s and calling it protected free speech, not to mention instituting a corporate personhood doctrine in contravention of the Founder’s wishes – all of which stems from a slow-rolling putsch centered around the Supreme Court.
If our economy doesn’t respect our biology by providing basic support for life, it won’t survive.
So many smart answers, I have little left to add, but I’ll try.
Japan’s Debt-to-GDP ratio is roughly 264%, as of the end of 2022: https://worldpopulationreview.com/country-rankings/debt-to-gdp-ratio-by-country.
It’s the highest in the world and it doesn’t matter. It’s money they owe themselves. The Japan Post Office makes a healthy commission selling bonds to ordinary Japanese to “pay” for the debt, even though in reality, their debt, like America’s, will never be paid off. The last time America paid off its debt was under President Jackson in 1836 and a deep deflationary depression immediately followed. In fact, every time the national debt starts getting paid down, we go into a recession. Rodger Mitchell posted a chart of all American recessions and debt drawdowns to prove it: https://mythfighter.com/2019/05/25/how-we-can-prevent-recessions-and-depressions/. Money going into the federal governemnt through taxes is money coming out of the economy as a whole, which can cause recessions (it depends too on what government invests in and if it lifts production).
The causes of house price reduction are various, including permissive zoning and an allowance for housing that would be illegal in the U.S., for example on narrow lots: https://www.youtube.com/watch?v=6htrxbVN5PI. You can get a functional studio in Tokyo for $250/month and homelessness is virtually non-existent even though Tokyo is STILL the world’s largest city. We don’t do that in America, even in the largest most expensive city, here in NYC. MY company & consortium wanted to build the world’s largest mixed use building the world with 7,630 units, but even when it still seemed like the land might be available (half the site wasn’t), we ran into all kinds of political obstacles, even though the pro forma showed a $9.1b profit, conservatively: https://bit.ly/RAInvestor and (video): https://bit.ly/Riverarch.
Life is far worse in those countries where fertility rates are still high. When women are in a position to have fewer children, everyone is living better with much more value placed on individual lives and productivity.
AI, labor-savings devices, artificial wombs have all been mentioned already. But AI is already causing layoffs in tech, communications, even the law. Top up-to-date talents still causes 6-7 figure salaries, but the increase in employment since Biden took over is entirely in PT and Gig jobs; FT jobs are actually declining slightly. See the chart of labor composition toward the bottom of this article: https://www.zerohedge.com/economics/inside-most-ridiculous-jobs-report-recent-history-12-million-immigrant-jobs-added-one.
Of course there are still jobs to be done and people who want to do them, but the reward system isn’t there since we are again a Rentier society, or a Technofeudalist society, according to economist Yanis Varoufakis. As Wade Riddick pointed out, until the reward structure changes we’re going to have housing bubbles, and wealth from rent-seeking, while also having vast hordes of poverty and homelessness.
The vast majority of human potential is wasted. We need to do more with the people we have instead of breeding useless (or worse) eaters. The real danger is that the people who ARE reproducing are usually the least productive and are even destructive. It’s hard to know how to stop them without hurting the innocent children, but clearly rewarding having children is unnecessary for them, they do it anyway, even in poverty.
Environmentally, every resource is stretched to the breaking point and/or it causes so much pollution to get to them that it’s ruining and overheating the world (subsidence, poor forest management, lousy neglected infrastructure, poor zoning decisions and building codes are more responsible for the things blamed on climate change anyway, but I digress).
There has never been a species of our size, with our appetite for resources, in our numbers. Not even close. It’s better we voluntarily cut back our numbers rather than wait for plagues, wars, and famine to do it.
Well yes, there’s a surplus of housing now. Some of it rotting away. I view this as a plus for not wasting resources, and simultaneously reducing waste and pollution, which comes from a lower population. They can completely abandon smaller village or outlying towns. There’s a savings in not having to wire power or run water or sewer, or maintain roads, earmark community services and everything else that goes with maintaining a civilization.
Countries don’t default on debt when they borrow in their own currency. It’s a basic identity in econ 101. Exceeding borrowing capacity results in inflation, not default. And that isn’t what caused our recent consumer inflation; deaths, supply chain disruptions, war and business cartelization of the economy did all that. If you want to see price inflation in America from financialization, follow the unsustainable debt: real estate, medicine, college tuition.
I actually think your charts underestimate the collapse of Japanese residential real estate for exactly that reason: decades of financialization are masking the true fall in value – especially at the rapidly depopulating rural fringes. Real estate around the world is still in an unsustainable bubble, especially measured against the shrinking number of potential home dwellers.
In any event, this depopulation is driven by a lack of private debt forgiveness – not the compensatory rise in national debt needed to prop up a failing private market. If you want more families to form, people will need enough money for the required budget. That means salary inflation and relative (though not absolute) asset deflation.
Quoting from my post yesterday on this topic (that didn’t make it):
“As a society, you get what you pay for. American capitalism pays for executive bonuses, stock buybacks (destructive insider trading – See Lazonik’s _Predatory Value Extraction_), financial derivatives, campaign donations (the last Pennsylvania Senate race hit a third of a billion dollars) and various other aspects of rent-seeking and hoarding through asset bubbles (especially acute in medicine and housing, two natural monopolies)…
“So we don’t pay for babies, plain and simple. In fact, we punish people who want to have them. This is what’s so outrageous about Dobbs (2022). There isn’t a single thought given to the fact that being pregnant is dangerous, hard work that should be financially compensated for when you force someone to [be pregnant]. The majority’s logic in that case reeks of slavery mentality. Women’s labor is simply invisible as work. Yet if the government drafted Alito and sent him to fight in Ukraine without a paycheck or medical benefits, he’d be outraged. Mothers dying in childbirth to protect innocent life, though, doesn’t register.
“We have an economy that rewards CEO’s for destructive financial rent-seeking and punishes actual value creation, so what do you expect? As the late, great Charlie Munger said, ‘Show me the incentive and I will show you the outcome.'”
Ancient Rome depopulated and slowly descended into feudalism because of its inability to control its predatory oligarchs. Look at a population chart of Rome. We’re headed in the same direction.
You’re also discounting the baleful influence of chemistry oligarchs pumping toxins like microplastics into our bodies and screwing up our diets. All of that affects the immune system which itself has profoundly complicated and mysterious roles to play in human fertility.
Thank you. For all of that.
No problem, I am in my TOE-TAG home. When I leave here, I’ll have a toe-tag attached….and won’t care..or even know….
I wish our housing bubble would collapse.
I don’t consider the decrease in natural growth as being the same quality as the Black Plague. Plague deaths didn’t just kill the elderly, and not all funerals are the same. The loss of a child is far more traumatic than the loss of the elderly essential to old age conditions.
As for the impact of the decreased total population, the population used to be less in the past and that wasn’t considered to be a crisis at the time. Also, this being demographics, the changes occur over decades. We are entering an era of advancing technology including the manufacturing of highly productive robots. Also, the next few decades will probably show breakthroughs in artificial wombs.
So, I think that we should wait and see just how bad (or not) the population decline is.
All these debt per capita, recession etc. economical problems will become laughable soon, in post ASI world. In post ASI world, economy will be 10 000’s to trillions of times larger than today.
Brian, you’re reporting about it, you have written about billion bots (this is not even post ASI reality), just scaling today’s tech, so you know about what vision I am talking about.
It’s coming fast, so we will have such standard of living soon and in such world when everyone has higher standard of living than richest men on the world today, maybe people will choose to have more kids (due to not only per capita of billions per head but also tons of new amazing technologies which ASI will help develop). Or maybe we won’t choose to have 5-10 kids, but with such tech, we won’t need 100B people.
Either way, point is, the future is not bleak, because we’re very close to developing AGI/ASI.
The economic bubble should not be discounted. There is always a collapse after the bubble is created.
“The future”, may be more predictable and even controllable to people who see events happening now, and say “This is actually happening” This is REAL. I may not like it, but it’s reality. One way to do this is to get your “news” from multiple sources, not just those were you get your ego massaged. This applies to people on the “right or left”.
Of course, one needs to know the difference between “news” (reporting actual events), and opinion. (The person “reporting” the “news” tells you what it means.) Excuse me, but when you hear about events, isn’t it up to you to figure out how that “news” affects you, if it does at all? Everyone has the power to change the very nature of their world. If everyone only knew that…