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The Sun Will Set but Not So Soon
| Article
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20650 |
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Section : |
MODERN THOUGHT
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| Issue
Date : |
10 / 1992 |
1,222 Words |
| Author
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Robert S. Ozaki
Robert S. Ozaki is professor of economics at California State
University, Hayward. His books include Amerikajin to Nihonjin,
The Japanese: A Cultural Portrait, and Human Capitalism: The
Japanese Enterprise System as World Model. |
A law of impermanence presides over the rise and fall of nations. In the year 1600, Spain was the richest country on earth. In 1700, the Dutch were the wealthiest. In 180, Great Britain assumed the position of economic supremacy. Around1900, the United States had surpassed Britain. By the year 200, many observers believe, Japan will be the most opulent of all nations.
The law suggests that nations' material fortunes are ephemeral against historical time, each nation apparently having just one chance for economic ascent. There has been no example of a major economic power that declined and then made a comeback.
There is no reason to believe that Japan is immune to the dictates of history. Japan will fall most probably through aging, signs of which are already visible. Its birthrate began to decrease in the late 1970s, reaching an all-time low of 1.57 (children born per woman) last year, a rate at which the country cannot reproduce itself. At this rate Japan's total population, currently 120 million will drop to 84 million in two generations, and to only 45,000 by the end of the twenty-first century.
Laffer's Long-Term Forecast
According to Professor Laffer, Japan's decline will come much sooner. He predicts that within the next two decades Japan will become a weak nation devoid of industrial dynamism, running trade deficits, no longer holding a formidable competitive edge in the world market, and having lost the status of great inventor globally as well as internally--a minor player in the economic league of nations.
Long-range economic forecasting is a hazardous venture. He may be right. If his predictions are correct, however, it will be by accident and not because of the soundness of his reasoning.
Laffer's scenario is based on the Keynesian notion of saving versus consumption and the so-called Pigou effect. He says that the fundamental source of Japan's phenomenal economic growth after World War II has been its extraordinarily high savings rate. More saving means more investment, faster capital formation, and a greater accumulation of wealth. Japan became rich because the people consumed less and saved more of their incomes.
But this, he holds, is bound to change. First, the Pigou effect: ceterisparibus, people spend more the greater their wealth. The
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