Sunday, February 10, 2008

Another take on economic decline

Now here's an interesting thing.

According to this article in the Washington Post, "For Japan a Long Slow Slide", the Japanese economy is in a gradual decline due to an aging population. They have one of the oldest populations, with the fewest children, in the world. And yet they have low crime, low unemployment, good health care and a relatively healthy happy and well-off population. Nobody seems too worried about the current economic downturn there.

The link between declining economy and aging population is not so much the expense of caring for elders but rather that elders just don't spend that much, they're out of the consumer game. We elders may very well have a dampening effect on the economy, but it won't be because we cost so much. It'll be because we don't spend so much. And with the growing crises of climate change, pollution and dwindling resources, is this such a bad thing?

Here's another interesting thing.

Another article in the New York Times, "Economy Fitful, Americans Start to Pay As They Go", suggests that the seemingly bottomless pocket of American consumer credit has been tapped out. Consumers can't spend any more because it's already spent. Credit cards are maxed out, homes are mortgaged to the hilt or lost in the sub-prime crisis, etc., etc.

Greenpa at Little Blog in the Big Woods jokes that not only are we experiencing Peak Oil but also Peak Patsy, the supply of "patsies" (aka fools, aka consumers) has peaked and is running out. There are no more savings to stripmine.

Americans have gone from a 10% savings rate in the 1980s to -13% (yes, that's a minus sign) last year. As a result many consumers are forced to spend much less, with the ultimate effect of dampening the economy. The economy is based on consumer spending and consumer spending is tapped out. True, there are a number of very rich people getting richer every day, but no matter how hard and fast they spend they are not going to keep the economy going all by themselves. So it's not just the elders spending less, it's everybody.

This may just be a good thing. The experts say that we baby boomers won't cut back on our high-rolling lifestyles, that exhorting us to take conservation measures and cut back on our profligate use of dwindling resources is useless, that we're a hardcore bunch of spoiled consumers who want to have our cake and eat it too. But perhaps we don't need to be exhorted, perhaps stripping us of our credit and our savings will do the job just as well.

And as for us leading edge boomers now in our 50s and early 60s, perhaps we've spent enough and are happy to get off that treadmill and smell the roses. Or just happy not to spend our time working 9 to 5 (now that's a joke, how about more like 8 to 6? or 9 to 9?) and then rushing from mall to mall to do our patriotic duty of keeping the economy rolling.

Last one out please turn off the lights...

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