Too few of theseIs Japan headed for financial meltdown because of decades of below replacement-level birth rates? Ambrose Evans-Pritchard says that doom is nigh in a recent column in the London Sunday Telegraph. He quotes a number of economists, but Carl Weinberg of High Frequency Economics is the most outspoken:

“The debt situation is irrecoverable. I don’t see any orderly way out of this. They will not be able to fund their deficit. There will be a fiscal shutdown, a pension haircut, and bank failures that will rock the world. It is criminally negligent that rating agencies are not blowing the whistle on this.”

The crisis of Japanese finance is due to more factors than the birthrate, but Evans-Pritchard says that “a baby strike by young women” has been a major problem. Now there is “a real risk that Japan could end up in a major default,” according to Simon Johnson, former chief economist of the International Monetary Fund (IMF).

At the H.S. Dent Financial Blog, Rodney Johnson is even more emphatic.

“the real driver of the [Japanese] failure is the totally wrong response of the Japanese government to their real problem – falling birth rates fifty years ago.  In the face of such a demographic shift, taking on more economic burdens at the government level was the complete wrong thing to do as the expectation going forward is for economic contraction.”

Like Demography is Destiny, Johnson was amazed that the world-renowned Economist failed to understand the problem of falling fertility. “A 20, 30, or even 40 year view is not enough. We need to understand our obligations and abilities on a full 80 year cycle to clearly see how our policies of today will help or hinder the generations of tomorrow,” he says.

It’s not rocket science. If birthrates fall now, who will take care of the grandparents?

Michael Cook

Michael Cook is the editor of MercatorNet.