[p2p-research] Japan's Demographic Crisis

Paul D. Fernhout pdfernhout at kurtz-fernhout.com
Mon Aug 17 09:01:34 CEST 2009

Michel Bauwens wrote:
> I know this is a very popular theme in the U.S., and very attractive to
> young people ...
> hell, the boomers you are critiquing where saying the exact same things
> about their parents 40 years ago ...

I don't think it was exactly the same, but no doubt some of it might be
right. :-)

But demographically, a post WWII baby boom generation has been a strong
voting block, and they voted for social programs when they were young, low
taxes when they were middle aged, and lots of services for the elderly as
they aged. Which would have been fine, except at each age the benefits for
other generations have been cut away (speaking broadly).

Colleges used to cost less and offer more (professors, not TAs with language
difficulties). Many of that generation got all sorts of benefits related to
war service, like subsidized tuition or low interest mortgages (the GI bill).

There was less land speculation back then. There were also less social
mandates about quality of some things including housing (which has both good
sides and bad sides). In general, their were more affordable housing options.

There was less TV advertising back then to create insatiable desire or to
tell people they were incomplete.

True, people have more stuff now, but dealing with it all can be alienating
from community. Even too much choice can cause unhappiness.
   "The Problem Of Too Much Choice"

> but then as now: 1) there are poor and rich youth, and their situations are
> very different; 2) there are poor and rich old people and their situations
> are very different

Sure, there is that. But most people are not rich.

So, in the USA, anyone over 65 gets free-to-the-user fairly comprehensive
medical care (and a cheap supplement). Anyone under that age gets nothing
(some kids get some stuff by special programs).

Anyway, it may be hard for someone with European roots to see the depth of
the anger someone young in the USA might feel about this -- to be paying
15.3% of low wages to support old people who also have most of the real
estate equity, who had a better social deal for decades, who have pensions
from being in the now non-existent unions, and so on -- and then the young
person will not have access to health care when it is so much cheaper to
provide for the young.

Sure, there is a rich-poor divide too, of course. But a lot of it is also a
young-old divide. One may argue about who should work (as in maybe its OK
for the old to have a basic income but the young to have to work, from one
perspective) but access to medical care seems like more of a right to all at
this point.

Also, ironically, because older people are living longer and healthier
lives, we can more and more see happy old people and stressed out young
ones. So, that is another reason there are less children being born in
industrialized countries like the USA.

> Social change needs broad coalitions that need a focus on commonalities.

Sure. Absolutely. Both young and old need medical care.

Except, right now, only the old have it by right, and they cost the most to
insure. And so much money has gone to war and the banks, that now people are
arguing over much smaller amounts. So, why should the old want any change?

> Blaming poor old folks for exploiting rich youngsters will get us nowhere,
> it's an instrument of division ...

There is a very specific demographic issue here. It may of course be good to
figure out ways to patch it over. The USA drifted into it.

It is only intentional now to the extent older voters are attacking the
health care reform proposals (as the example I linked to). In that sense,
with the issue on the table and seniors shooting it down, yes, old people
are explicitly now exploiting the young. There only defense is ignorance as
to how the system works.

Remember, in the past things seemed to be getting better in each generation.
The current US generation is going backwards on many indicators. There is
always a risk of revolution in such a situation. At least, that is what is
suggested in the chapter on scarcity in the book "Influence":
Revolutions often happen when things have been getting better for a while
and then things stop or go backwards.

> People who have worked their whole life deserve access to health care and
> decent pensions, and young people deserve all the support they can get to be
> creative in the world without extreme precarity ...

Sure. Except conditions were easier decades ago, back when one worker could
support a family with mainstream aspirations and a full-time stay-at-home
parent. But this is the perceived social situation now:
Amelia Tyagi: More and more families today are sending both parents into the
workforce -- it's become the norm, it's what we now expect. The overwhelming
majority of us do it because we think it will make our families more secure.
But that's not how things have worked out. By the end of this decade, one in
seven families with children will go bankrupt. Having a child is now the
single best predictor of bankruptcy, and this holds true even for families
with two incomes. So we looked at the data for two-income families today
earning an average income. What we found was that, while those families
certainly make more money than a one-income family did a generation ago, by
the time they pay for the basics -- an average home, a health insurance
policy, a second car to get Mom to work, child care, and taxes -- that
family actually has less money left over at the end of the month to show for
it. We tend to assume with two incomes you're doubly secure. But if you
count on every penny of both of those incomes, which most families today do,
then you're in big trouble if either income goes away. And obviously, if you
have two people in the workforce, you have double the chance that someone
will get laid off, or double the chance that someone could get too sick to
work. When that happens, two-income families really get into trouble, and
that's how a lot of families quickly go bankrupt.

As in "Capitalism Hits the Fan", real wages in the USA have not risen much
in thirty or more years. But productivity has gone up at least a couple
times. VP Biden recently said real wages have dropped 3% since 2000, while
productivity has gone up 20%. Where does the wealth go? It gets concentrated
in a few hands, mainly the rich and/or the old. But, concentrated wealth,
pursuing maximum abstract returns, then leads to all sorts of other social
problems like more precarious jobs from more competition over them. If
wealth is spread around, so then people may own a share of the company they
work in, they will probably consider jobs as an aspect of policy. But if you
own a share of GE stock, then "Neutron Jack" is your hero:
"During the early 1980s he was dubbed "Neutron Jack" (in reference to the
neutron bomb) for eliminating employees while leaving buildings intact. In
Jack: Straight From The Gut, Welch states that GE had 411,000 employees at
the end of 1980, and 299,000 at the end of 1985. Of the 112,000 who left the
payroll, 37,000 were in sold businesses, and 81,000 were reduced in
continuing businesses. In return, GE had increased its market capital

Schooling has gotten longer and harder and more boring (relative to life
outside school) and more and more out of date with a changing society. Also,
it is all more expensive, making for more burdensome property taxes and
college loans. In the past, you could get a union job with needing at most a
high school diploma that might have paid US$10 an hour after WWII (US$80 an
hour by today's valuation), but now, many kids are luck to get a US$10 an
hour a job (in today's currency) after they have racked up fifty thousand
dollars of debt going to college (say, to study engineering or farming).

So, the truth today is more like "all people deserve access to health care
and decent basic income". :-)

Financially, the social programs in the USA were set up as pyramid schemes.
It used to be it was about sixteen workers who paid in per retiree at the
start, now it is around three.
Back in 1950, as the baby boom was just getting started, each retiree's
benefit was divided among 16 workers. Taxes could be kept low. Today, that
number has dropped to 3.3 workers per retiree, and by 2025, it will
reach--and remain at--about two workers per retiree. Each married couple
will have to pay, in addition to their own family's expenses, Social
Security retirement benefits for one retiree. In order to pay promised
benefits, either taxes of some kind must rise or other government services
must be cut.

Medicare, as smaller amount of that 15.3% FICA tax (2.9% of payroll) went
from 4.6 people in 1970 to about 3.7 per "hospital insurance beneficiary"
now, so it is not as much of a pyramid scheme:
Still, with rising hospital and doctor visit costs (and no sliding scales so
much), it is a much bigger problem than in 1970 to have no health insurance
when older people have it (and in fact, because older people have it, costs
for everyone tend to float up for various reasons).

So, one can see why, as with Bernard Madoff's pyramid scheme victims, the
youth of today might think they are getting a much worse deal than the
people who got in early on the scheme?

The rise in real estate values in the USA have transferred much money from
the young and middle aged to the very old. In turn, the money of the very
old is being sucked out by the medical system (including through nursing
homes, an issue that hits the middle class hard). So, the money often won't
go back to the young as inheritances or taxes or public infrastructure or
anything like that. That is more and more what the basic money pipeline in
the USA looks like: young sick family to old healthy person to doctors and
institutions. That pipeline is not a setup for a healthy society, even if
vast quantities of money are being spent on "health".

To be clear, I'm all for old people getting medical care. What is unfair in
this day and age in the USA is saying *only* old people should get medical
care. It is more than unfair. It is also stupid. How can sick (or dead)
young people hold down jobs to pay for old people's care?

> Why would we have to choose between both options, and not combine them???

As above, that is the way it is now. But yes, I think we should have health
care for all, and a basic income for all.

And as our technology continues to improve (3D printing, learning medicine
on demand through the internet :-), then we may see lots of cost fall, or
see people able to do more medicine without money. Already, people are
getting ideas about treatments from the internet. This is not without
problems, but it shows what is possible cheaply if it were better formalized
as decision trees or semantically linked somehow with a medical search
engine or something like that.

> If you start discussing 'generations' as if they were truly existing
> coherent entities, then the old folks would say with justification: you are
> wasting your time gaming and internet-ing, not being socially engaged to
> solve any of the real issues in the world ..

They might be right. :-)

Still, more and more people are voting based on what they learn from the web.

But the fact is, since the old people in the USA vote in disproportionate
numbers, it is their lack of compassion for younger generations that could
be a big part of the problem. Or if one wants to spin it differently, it is
their fear for themselves that makes them prevent change, even when they
know the current system is unfairly hurting young people.

And, the insurance industries are playing this, and they are getting old
people scared (the Palin "death boards" comment), and so old people have
stopped thinking rationally; this is all so that insurance companies can
continue as a parasite to suck one third of every health care dollar while
young people in the USA have no reliable access to medical care. That was
what my quote and comment was about from that town hall meeting -- an old
person just focusing on themselves, and ignoring how young people were going
to get their medical needs met. Pure selfishness. And worse, stupidity
because if the young are sick or too poor to become doctors, who will help
take care of the old? Robots, of course, as mentioned in the article. :-)
But that still leaves the young people out in the cold.

As I see it, it is the duty of each generation to "pay it forward" to the
next. So, in general, parents invest in their children, and their children
invest in their grandchildren, and so on.

When children are investing in their parents and grandparents, something is
deeply broken evolutionarily. I'm not saying kids should not be helpful or
contribute to their household or society, or that they should not be nice to
their elders, but that is something different than "paying it forward".
Also, with growing pyramidal demographics, maybe a family might have one
childless kid out of ten take care of the parents, but when families have
one or two children (like in the west), paying things backward becomes a
much less defensible idea, where the parents then become replacements for
their own grandchildren, taken care of by their childless children. With
people living longer, this only becomes a worse problem in that sense, since
parents will remain a continual burden until their children are past their
own child-bearing years.

But paying it backward is what is happening with the current situation in
the USA, because it was a pyramid scheme, not any sort of true investment
plan for social security, and other aspects of health care make even
Medicare have some of those aspects. So, the old people who got in early
(when they were young) are benefiting much more than is fair considering
what a kid from today can expect.

Really, we're talking people earning low wages in the USA paying about 15%
of their paltry income to pay for an old person's health insurance and basic
income when the young person often can't go see a doctor. Something is just
wrong there. Conveniently, when the press talks about tax rates in the USA,
they always leave out that part of taxes when they talk about low "federal

And for those who suffer without medical care, they are more likely to die
and so never receive social security benefits. So, they pay into a system
they will never get benefits from. There are racial aspects of that too,
essentially black people are supporting white people's retirement by that
sort of demographic transfer, given black people don't live as long on
average as white people in the USA.
"White men had a record life expectancy of 76 years in 2006, and black men
saw their life span increase to an average of 70 years. White women on
average can expect to live to 81. The life expectancy for black women is
just under 77."

So, basically, black men in the USA get almost no social security or M
edicare benefits if they start at 65 (the age is going up), but most of the
money goes to white women.

> would that be fair ... perhaps for some ... but would it get us anywhere?

One can talk about equity, and I am all for it, but these are basic facts of
how the USA demographics work in relation to the wealth transfer systems
that are in place now. A more equitable system, that is blinder to race and
age, might be to give everyone medical benefits and a basic income. Then,
for example, black men might live longer too.

There is one caveat to everything I wrote, which is increasing abundance in
some areas. The internet is supporting a free peer commons for health 
information. 3D printers may someday print medical tools or medicines at 
home. Simulators may make it easier to train doctors or medical specialists. 
Free software medical AIs might help with better local medical decision 
making. So, if all these things improve, the young person of today may be 
getting the better care that and old person in a conventional medical 
setting. But, that day still seems some time away, even if, personally, I 
have already found some good medical advice on the internet (as well as some 
bad or inappropriate advice too). So, to the extent old people helped create 
the conditions for the internet and these other developments, they can 
rightfully claim to be supporting the young generation and "paying it 
forward", even if not financially.

--Paul Fernhout

> On Mon, Aug 17, 2009 at 3:04 AM, Paul D. Fernhout <
> pdfernhout at kurtz-fernhout.com> wrote:
>> Ryan Lanham wrote:
>>> http://www.businessinsider.com/japan-is-dying-2009-8
>> From there:
>> "Japan's population shrunk by the most ever, 45,914 people, in the year
>> ended March 2009 based on latest data. Japan's demographic death is getting
>> worse.It's a bad time to be young in Japan. Not only are there fewer of you,
>> but your parents' generation is putting you further into debt with cushy
>> benefits. Meanwhile, you fight for fewer traditional jobs. ... The most
>> recent data shows that things are getting worse, not better, and if this
>> continues we would expect GDP declines to become a permanent feature of the
>> country. Perhaps now we understand corporate Japan's fascination for
>> robots."
>> Exactly. And this would be the United States too, if it weren't for
>> immigration and births by immigrants who still know how to have fun and
>> raise families. A lot of Western Europe is facing the same issues. And,
>> someday soon, the rest of the world may face it too, as family and community
>> gets replaced by gadgetry and virtualization.
>> That is just as I said towards the end of my previous post (the "solar pv
>> is cheaper than coal" one). Forget "Peak Oil". The industrial world is
>> facing a "Peak Population" crisis. :-) We are "amusing ourselves to death".
>> We desperately need to convince people to invest in having bigger families
>> and using more (sustainable) resources before it is too late. :-)
>> And, despite all that, there are few good jobs for the young. Now, beyond
>> Greek kids rioting, French kids are rioting again:
>>  "Second night of unrest near Paris "
>>  http://www.philly.com/inquirer/world_us/20090811_In_the_World.html
>> They know they're getting a raw deal. They have just been so heavily
>> schooled they have trouble seeing exactly what went so wrong.
>> We desperately need to reorganize the basis of industrial society (basic
>> income, the end of compulsory schooling, local 3D printing, peer production,
>> gift economy, free commons, etc.). It is indeed a *social* crisis, not a
>> *technical* crisis (except to the extent that our technical infrastructure
>> reflects our social assumptions and political priorities).
>> And, just like in Japan, in the USA oldsters are saying the young should
>> suffer to pay for oldster benefits while getting none of their own (except a
>> thirteen year prison sentence is Prussian schools). Example (again, and with
>> my commens in brackets):
>> http://www.nydailynews.com/news/2009/08/14/2009-08-14_seniors_give_pol_an_earful_want_mouthful.html
>> """
>> One senior [with US government supplied comprehensive health care supplied
>> through Medicare and a US government supplied basic income called Social
>> Security] wanted to know how the government would pay for a program to cover
>> some 47 million uninsured [young] Americans [most who were paying payroll
>> taxes of 15.3% of all their small income to supply his health care and basic
>> income]. "Where are the doctors and nurses going to come from to cover all
>> these new people?" he asked [after likely having voted in such a way as to
>> prevent those young people from having enough wealth or initiative to become
>> doctors, or to be successful enough in life to pay even more to support him
>> in his own age.]
>> """
>> It's a supreme dysfunction of a society -- a society drowning in the
>> potential for universal abundance and universal community and universal
>> happiness and universal health. It is a society where oldsters invest in
>> immortality by living an extra few miserable years of "frailspan" rather
>> than invest in immortality through "paying it forward" to a next generation
>> by voting for them to have a chance for a decent life, basic medical care,
>> and a family. And so, the youngsters strike back like in Greece and Paris.
>> And maybe soon everywhere.
>> Rich versus poor. Oldster versus Youngster. All drowning each other in
>> fresh water because they are worried there will not be enough water to
>> quench tomorrow's thirst while we live on the coast of the Great Lakes.
>> Maybe this is somebody somewhere's idea of a big joke? :-)
>> But it is the kind of joke that is not so funny when it happens to your own
>> civilization. :-(
>> --Paul Fernhout
>> http://www.pdfernhout.net/

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