Japan Can Expect to Become Less Crowded and Less Polluted and the Post Screams "Crisis"

Japan is one of the most crowded countries in the world. It hires people to push commuters into over-packed Tokyo subway cars during rush hours. Given its overcrowding, it is difficult to see why the Japanese people should view the prospect of the declining population as a crisis, as the Washington Post argues in a "news" story.

In fact, Japan's economy continues to produce far more than it consumes, which is why it has a trade surplus, something that appears in the Post article as a serious negative. In fact, economists would argue that this is exactly what a country with an aging population should be doing: running trade surpluses so that it can draw on foreign assets in future decades.

It is not clear what sort of crisis the Post envisions from the aging of Japan's population. It seems to believe that Japan will face a labor shortage, but of course this is the opposite of the situation at present where its economy is operating far below full employment. In the future, if its economy does begin to reach full employment levels of output, then this would simply mean that labor goes from less productive jobs to more productive jobs. This is a process that always happens in growing economies. That would mean that positions in some less productive jobs, like the Tokyo subway people packers, may go unflled.

--Dean Baker

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