Regarding the effect of population decline on GDP, should one look more deeply at the changes in composition of the population rather than just at the total population size?
For example, the total population size may not have changed much over 15 years, but it has aged greatly, and older people are likely to spend less and less (apart from on healthcare)?
Also, is the demographic *outlook* not a reason for people to be trying to spend less and save more, knowing how difficult future years will be as the working population collapses?
One could say that the future-looking demographic forecasts are as big a factor influencing current spending patterns as the past demographic changes?
Lastly, when looking at populatiojn size in Japan, do you include foreigners who are living, and often working, in Japan? I expect those numbers will be increasing to offset the falling working population, and will be an increasingly large economic factor, even if they only have temporary residency status.
It still leaves the question open, if GDP growth is necessarily a good indicator to chase? If construction is down, one could tear down all houses every 5 years and rebuild them to raise GDP. But would it make the country wealthier, or just massively waste resources and lead to losses in real wealth? Same with government spending to increase GDP, it will almost certainly be largely very inefficient, lead to wrong incentives (try and get money from METI instead of investing in actually sensible R&D?)… Seems like one needs a better indicator than GDP, that measures actually value creation… Gross Negative Entropy Product? Still, it is true that Japanese private companies have not been at the forefront of global economic growth and can (need to?) do more to reform their business practices to become globally competitive (again).
Regarding the effect of population decline on GDP, should one look more deeply at the changes in composition of the population rather than just at the total population size?
For example, the total population size may not have changed much over 15 years, but it has aged greatly, and older people are likely to spend less and less (apart from on healthcare)?
Also, is the demographic *outlook* not a reason for people to be trying to spend less and save more, knowing how difficult future years will be as the working population collapses?
One could say that the future-looking demographic forecasts are as big a factor influencing current spending patterns as the past demographic changes?
Lastly, when looking at populatiojn size in Japan, do you include foreigners who are living, and often working, in Japan? I expect those numbers will be increasing to offset the falling working population, and will be an increasingly large economic factor, even if they only have temporary residency status.
It's not just the economy. In fact, profits are eroding (much) quicker than the economy.
https://mtaylor.substack.com/p/japans-evaporating-profits
It still leaves the question open, if GDP growth is necessarily a good indicator to chase? If construction is down, one could tear down all houses every 5 years and rebuild them to raise GDP. But would it make the country wealthier, or just massively waste resources and lead to losses in real wealth? Same with government spending to increase GDP, it will almost certainly be largely very inefficient, lead to wrong incentives (try and get money from METI instead of investing in actually sensible R&D?)… Seems like one needs a better indicator than GDP, that measures actually value creation… Gross Negative Entropy Product? Still, it is true that Japanese private companies have not been at the forefront of global economic growth and can (need to?) do more to reform their business practices to become globally competitive (again).