US and other trade deficit countries to pressure trade surplus countries
The US complains that Germany and China are export economies, but
don't stimulate or allow enough domestic demand for goods, including
imported goods. But Germany and China have aging populations that
are set to shrink, and older working people aren't into buying, but are
interested in producing goods and saving up for retirement. Moreover, in
Europe many people don't work beyond 55, so they start saving for
retirement earlier than in the US:
Distorted Global Economy: US to Bully Germany on TradeSurplus at the G-20, by Christian Reiermann, 9 Nov 2010
Comparison of German and US workforce up to 2050:
Each year fewer Germans enter the workforce:
http://news.bbc.co.uk/2/hi/business/6159233.stmexcerpt: The Federal Statistical Office estimates that people aged 65 in 2050 will live for 4.5 years longer than those at the same age today. At the same time, the average age will rise from 42 to 50, while the number of people aged over 80 will rise from four million to 10 million, it said. Coupled with a shrinking birthrate, this means that the total number of people in the workforce will drop by 22% to 39 million from 50 million.
The age structure of Germany is an upside down pyramid. Not even half as many kids are born each year as was born during the 1960s. Moreover, most Germans don't work past 55 years old, and the bulge of Germans born during the 1960s are just 5 to 10 years away from turning 55:
http://www.destatis.de/bevoelkerungspyramide/
One can see why one Ambrose Evans-Pritchard, the
International Business Editor in London for The Telegraph,
wrote:
EU rescue costs start to threaten Germany itself, 27 Nov 2010excerpt: While Germany's public and private debt is not extreme, it is very high for a country on the cusp of an acute ageing crisis. Adjusted for demographics, Germany is already one of the most indebted nations in the world.
By comparison the US birthrate and population is relatively stable the last 50 years, so there will be no labor shortage--or at least there will be warm bodies, but maybe not with the necessary skill sets due to the lack of support for education that's epidemic in the US. Those with high incomes complain they can't find and hire US citizens with the necessary skills, so they want Green Cards for skilled foreigners, but the fault is that those with high incomes are paying historically very low income taxes, forcing students into great debt to the federal government if want higher eduction: http://en.wikipedia.org/wiki/File:Uspop.svg
Due to China's One-Child Policy, it also has fewer in the
younger generation. Also, the bias towards having boys
(which can be seen in the chart below) means there will
be fewer women to produce the next generation:
Japan during the 1980s was an economic powerhouse,
similar to Germany today. With a smaller younger
generations, all their money could go into R&D and
production instead of schools, homes, roads, bridges and
other infrastructure and services. However, Japan sank
into recession during the 1990s as a large number of its
workers began to retire and were not replaced by the
younger cadre. If demography is destiny, Germany will
be in the same boat as Japan within ten to twenty years:
The UK Age Structure (or Age Pyramid) looks
healthy as far as economics go:
The reason that France is doing okay while Germany
is not is France started helping working mothers in the
1970s so even a mother of three could continue working,
but Germany wasn't aware of its demographic problem
until 2000. By then a culture of childlessness had developed,
and that will take time to overcome. By the way, at least
since the 1980s France had large billboards with pictures
of babies that promised government support to mothers.
France plans to pay cash for more babies, 22 Sep 2005excerpt: France's family policy, launched in the 1970s, aims to improve the country's birthrate and keep as many women in work as possible. "The main point is that women here no longer stop working when they have children: the majority work, even those with three kids," said Ms Meda
Europe’s shrinking giant, Nov-Dec 2009excerpt: The seeds were sown for this development during the 1970s, when more and more German women began to work. But family policy remained bound to the idea that mothers of small children should stay at home. The state saw no reason to provide childcare or even organise school hours so that both parents could go to work. Forced to choose, many women opted to work rather than have children.It is only since 2000 that politicians have become aware of the looming demographic catastrophe. Family benefits have been greatly improved and childcare expanded.But now the country is stuck in what demographic experts call a fertility trap: birth rates have been so low for so long that having few or no children has become the social norm.
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related web sites:
Analysis: German tempers fray as U.S. policy gulf widens
By Stephen Brown and Andreas Rinke
BERLIN | Wed Nov 10, 2010
excerpt: U.S. diplomats are trying to convince Germany "Europeans are the best partner the U.S. could have," as Assistant Secretary of State Philip Gordon said on a recent visit to Berlin.
"But the danger is that anti-American sentiment in Germany could grow," said Klose.
At the Center for American Progress in Washington, Michael Werz said U.S.-German tensions reflect difficulties adjusting as Asia and other developing areas outstrip Europe and America in economic and demographic growth and divert their attention.
"The census shows the U.S. population's center of gravity is shifting 20 meters a day away from the north-east toward the south-west due to immigration from Asia and the South," he said.
On top of that, Obama lacks the instinctive European focus of some of his predecessors like Bill Clinton, said Green. But it is also "part of a mature bilateral relationship to recognize the fact that they are not exclusively focused on each other."
Historical Center of Population of the United States:
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Demographic Future Is Now: Eastern Germany Confronts Skilled Labor Shortage
By Markus Dettmer, Alexander Neubacher and Janko Tietz, 18 Nov 2010
excerpts: For years, demographers have been warning that Germany could face a labor shortage as its population ages. In eastern Germany, such scarcities have already become reality. Competition for talent is fierce -- and businesses are becoming more generous.
Businesses in the states of the former East Germany have to be especially creative. The eastern states are ahead of the rest of the country in at least one respect: From Rügen in the north to Plauen in the south, the lack of skilled workers that western states will not fully experience until about 10 years from now has already become reality.
On the other hand, an internal survey conducted by the Federal Employment Agency among its 176 local employment agencies shows that the lack of skilled workers is already a reality today. Two-thirds of the participating agencies reported significant bottlenecks in many areas. In July, there was an average of 7.5 unemployed workers for every open position. The study lists 16 professions, from plumbers to engineers to doctors, in which the problems are especially glaring.
While the number of new apprenticeship agreements in trade professions in the West was still 4.4 percent higher than in the previous year, that number has already declined by 1.7 percent in the East. There are simply not enough young people anymore. As a result, companies in the eastern states are now recruiting both skilled workers and trainees in the West.
These developments show that the lack of skilled workers is no longer an economic problem but a structural one. Well-trained individuals are becoming the most important and scarce commodity in a modern industrial and service society. This doesn't just apply to Germany, but in hardly any other country is the outlook quite as dramatic.
Beginning in 2012, the number of people in the 20-to-64 age bracket will decline sharply. Economists refer to this group as the potential labor force. It includes everyone who is theoretically available to the labor market in an economy. By 2030, there will be 6.3 million fewer people in this group than there are today.
For employees, the initial consequences are not unpleasant. On the whole, wages will increase and the income gap between the East and the West will narrow..."Wages will explode, especially for new hires," says industrial sociologist Burkart Lutz, adding that there will be a "substantial increase in average wages." At the same time, however, the lack of skilled workers creates "a substantial potential for crisis," especially for companies in eastern Germany, says Lutz. In the worst case, the region could be in for "another wave of deindustrialization."
Such princely treatment of new hires has been the exception to date. Unless Germany manages to compensate for a declining population by adding more women and older people to the workforce, as well as bringing in professionals from abroad, the entire country will be threatened with a downward spiral.
The threat is sufficiently real to have made an impression on politicians. Almost all ministries in the federal government are currently involved in eight working groups that address the lack of skilled workers in one way or another.
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Land of the Setting Sun: Can Japan Reverse Its Long Decline?
By Wieland Wagner, 11/18/2010
excerpts: Back in the 1980s, Japan was an economic powerhouse and the envy of the world. But there appears to be no end in sight to its current decline, as jobs are lost, pensions cut and companies move overseas. The country's much-vaunted social cohesion is also disintegrating as people find themselves forced to rely on their own resources.
Japan's decline began in the mid-1980s. The economy was overheated. In response to pressure from the United States, Tokyo was forced to substantially revalue the yen, making its exports more expensive. To offset the losses, the Japanese government pumped massive amounts of money into the economy, and the central bank drastically lowered its prime lending rate.
With the cheap money, the Japanese began speculating in stocks and real estate. The property where the emperor's palace stood in downtown Tokyo was supposedly worth as much at the time as the whole of California. And because terrestrial profits were no longer enough for them, Japanese developers seriously began planning cities in the ocean and on the Moon.
But then the Bank of Japan began feeling queasy about the boom and raised interest rates. This led to a massive crash on the Tokyo stock market, followed by a sharp decline in the real estate market. After that, Japan kept launching new economic stimulus programs to save what was left to save. In the process, it accumulated more debt in relation to economic output than any other leading industrialized nation.
The stimulus programs didn't do much good. Admittedly Japan is by no means Greece, which profited at the expense of its European neighbors. Instead, the Japanese government borrowed from its own thrifty citizens. The Japanese are now doing their best to save face. It is a dignified decline, but in the process Japan is in danger of using up its own reserves.
Committing Suicide Politely
Even the homeless living in Tokyo parks neatly place their shoes in front of their makeshift cardboard shelters before crawling inside. People committing suicide bow politely before throwing themselves in front of trains. In Tokyo, a railway line had special, bluish lamps installed along its tracks to calm potentially suicidal commuters. Of the more than 30,000 Japanese people who commit suicide every year, many are victims of the economic decline.
Suzuki greets visitors in his office, which is the size of a car showroom -- a holdover from better times. The painting behind his desk depicts a sun so red that it could be sinking below the horizon.
Suzuki, too, is becoming increasingly affected by the apocalyptic mood. The figures he quotes sound grim. His revenues from corporate taxes declined by an unusually drastic amount last year, he says.
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Labels: demographics, economy, politics
posted by Yoel Natan @ 6:52 PM
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