Shrinking-population economics: lesson from Japan

Japan'population has been aging for years. And now it is shrinking. Policy makers and corporate planners are understandably concerned. A smaller and older workforce will mean a decline in productive potential. Declining tax revenues will starve already-strapped municipalities. Regions and industries accustomed to subsisting on public-works spending will lose their traditional grubstakes. Japan'pension and health insurance programs will become unviable. Government, business, academia and the mass media are rushing to come to terms with the new demographic realities. Their haste is all too evident in a flurry of unfounded pronouncements and half-baked theories about Japan's social and economic prospects. Akihiko Matsutani offers a refreshingly informed and far-reaching account of the implications of demographic change. In Shrinking-Population Economics, he exposes the futility of widely proposed measures for forestalling population and economic shrinkage, such as encouraging larger families and importing foreign workers. He urges Japanese, instead, to learn to live with a smaller, older population. Most strikingly, he argues persuasively that population shrinkage and aging promise to redress the great tragedy of Japan's postwar economic surge: the failure of economic growth to deliver commensurate improvement in the quality of life.