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Japan's GDP must shrink!

Will Japan's GDP shrink?

  • Yes

    Votes: 10 76.9%
  • No

    Votes: 3 23.1%
  • What is macroeconomics?

    Votes: 0 0.0%

  • Total voters
    13
15 Dec 2008
38
0
16
This is a Macroeconomic problem and easily explained if two things are understood. Modern and classical economies are made up of the efficient use of Land Labour Capital and Enterprise. The GDP of an individual nation is made up of 3 broad items, population, technology and capital, that are used to classify a variety of sub-terms. Population size determines GDP size, if population grows, GDP grows. Advances in technology also increase GDP. As an example consider this, 10 years ago it took 1 minute to make 1 CD. Now in the same time you can make 20 CDs or more. It's not time that has changed, it's technology. Finally, capital, which can be your capital investment. One factory with 2 assembly lines will perform better than an identical factory with one assembly line.


China Example
Ever wondered why China is growing so fast? Most people straight out say population. But the problem is, this population has exploded during Chairman Mao's era due to his economic policy of "a strong nation is one with a large population". Counter to today's one child policy, people were encouraged to have more children. He has in fact grasped only one aspect of GDP growth, population, but has neglected the other 2 important aspects. Today China is enjoying a sudden influx of foreign capital and technology and these two factors alone are the cause of China's rapid growth. Consider this, of all capital investment in China, at least 50% is foreign.


Japan's GDP must shrink
Consider this, Japan's population is not growing, yet GDP is barely continuing to grow. Ever wondered why? The answer is, the Japanese government has kept Japan's economy just from sinking. The rate to borrow monies to invest in new capital is at an all time low. Also, the Japnese are almost obsessive with technological advances. In short, Japan is using extreme capital and technology policies to maintain the GDP from falling due to Japan's shrinking population. How long can this go on before the Japanese GDP eventually shrinks in both potential and real GDP? And what are the answers to this problem? Immigration? Population boom? Free flow of labour with other developed countries? Do know that even if Japan does eventually master the art of robots, robots are not known to be big spenders.


Do also read my other thread under the section of Japanese politics.
 
Japan's GDP must shrink
Consider this, Japan's population is not growing, yet GDP is barely continuing to grow. Ever wondered why? The answer is, the Japanese government has kept Japan's economy just from sinking. The rate to borrow monies to invest in new capital is at an all time low. Also, the Japnese are almost obsessive with technological advances. In short, Japan is using extreme capital and technology policies to maintain the GDP from falling due to Japan's shrinking population. How long can this go on before the Japanese GDP eventually shrinks in both potential and real GDP? And what are the answers to this problem? Immigration? Population boom? Free flow of labour with other developed countries? Do know that even if Japan does eventually master the art of robots, robots are not known to be big spenders.
Do also read my other thread under the section of Japanese politics.

The most common approach to measuring and understanding GDP is the expenditure method:

GDP = consumption + gross investment + government spending + (exports − imports), or, GDP = C + I + G + (X-M).

So, in order to increase GDP, either more NET exports, or more consumer spending, or more investment by private sector, or more government spending.

As you pointing out, Japan is matured, and already the population peaked out.
Thus, consumption growth is not expected, and due to the huge government debts, more government spending is not expected, either.

Thus investment by private sector & Net Export are the possible solution.

But before talking about that, do we really need to increase GDP ????
IF Japan can maintain GDP, GDP per Capita will increase naturally as population does not grow --- which is better for Japan in terms of sustainability. 😌
 
The most common approach to measuring and understanding GDP is the expenditure method:
GDP = consumption + gross investment + government spending + (exports − imports), or, GDP = C + I + G + (X-M).
So, in order to increase GDP, either more NET exports, or more consumer spending, or more investment by private sector, or more government spending.
As you pointing out, Japan is matured, and already the population peaked out.
Thus, consumption growth is not expected, and due to the huge government debts, more government spending is not expected, either.
Thus investment by private sector & Net Export are the possible solution.
But before talking about that, do we really need to increase GDP ????
IF Japan can maintain GDP, GDP per Capita will increase naturally as population does not grow --- which is better for Japan in terms of sustainability. 😌


Yes, that is how GDP is calculated. What you missed is, that to grow GDP, it is up to 3 factors alone. Population, Capital and Technology. Let's assume Japanese exports grow and population declines, what will happen to the GDP? Simple, the GDP will fall, including per capita. With a smaller population the government's ability to tax revenue to finance its expenditure will fall. Also, consumer spending will also fall, robots and machines don't spend money. Finally, capital investment will also fall. Why build more houses, roads, factories or anything else for that matter when half the population is gone? Now the amount of export growth Japan would need to stop its GDP from falling, including per capita, would be astronomical!


And if you were right in the first place, why would the Japanese government keep the interest rate at an all time low? Simple, the Japanese government is in desperation, trying to use extreme capital lending to stimulate the economy. Likewise, this also explains the obsession with technology, robots and automation. Japan's GDP would likely continue to grow steadily and robustly if the population was not shrinking, either stable or growing very slowly.
 
consumer spending will also fall, robots and machines don't spend money. Finally, capital investment will also fall. Why build more houses, roads, factories or anything else for that matter when half the population is gone? Now the amount of export growth Japan would need to stop its GDP from falling, including per capita, would be astronomical!
Dont forget Kamikaze..:p
There are a lot of natural disasters in Japan.
The war breaks the thing and revives it.
The war makes a profit very much.
The prosperity that destroys in Japan and is more abundant though it is imprudent. population also revives by instinct. i hope:p
robots and machines don't spend money.
The factory is not built if there is no industrial-use robot of Japan
in foreign countries.
why Japanese Yen is so high?
why korean won is so low? the condition is almost same as an exporter
It is because of the very stability.
It is a chance of the domestic expansion .
 
Dont forget Kamikaze..:p
There are a lot of natural disasters in Japan.
The war breaks the thing and revives it.
The war makes a profit very much.
The prosperity that destroys in Japan and is more abundant though it is imprudent. population also revives by instinct. i hope:p
The factory is not built if there is no industrial-use robot of Japan
in foreign countries.
why Japanese Yen is so high?
why korean won is so low? the condition is almost same as an exporter
It is because of the very stability.
It is a chance of the domestic expansion .


You misuerstood my post. When I said robots and machines don't spend money, I did not mean that they are not being sold. What I meant was, robots and machines are not consumers. They don't buy goods and services. They also don't require government spending on school, health or others.
 
But before talking about that, do we really need to increase GDP ????
IF Japan can maintain GDP, GDP per Capita will increase naturally as population does not grow --- which is better for Japan in terms of sustainability. 😌
Your idea is a pie in the sky. I don't think that is going to happen. Aging population, dwindling pool of productive workers in Japan, its unease with accommodating the foreign residents, and others will make it hard for Japan to maintain the living standard.

As people age, there is an increasing need for health care service. Also, older people will experience the reduced physical and mental ability. As a large proportion of Japanese population over the retirement age is on the rise, the burden on the economy and public finance will get bigger, which will reduce the resources for economic investment (instead, Japan will increase expenditures).

In the meantime, more dynamic countries would maintain their growth path and might gain the competitive advantage against the Japanese companies.
 
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Your idea is a pie in the sky. I don't think that is going to happen. Aging population, dwindling pool of productive workers in Japan, its unease with accommodating the foreign residents, and others will make it hard for Japan to maintain the living standard.
As people age, there is an increasing need for health care service. Also, older people will experience the reduced physical and mental ability. As a large proportion of Japanese population over the retirement age is on the rise, the burden on the economy and public finance will get bigger, which reduce the resources for economic investment (instead, Japan will increase expenditures).
In the meantime, more dynamic countries would maintain their growth path and might gain the competitive advantage against the Japanese companies.

In your theory, all countries need to attain GDP growth via increasing population.... That's pretty unsustainable, I think.

Some 50 years, 3 billion people live in this planet, and now more than 6 billion,
in which 1.3 billion are Chinese and 1 billion are Indian. I personally that we don't need more than that. In Japan, 130 million are living in this small islands.
Instead of increasing population, Japan should seek prosperity per capita, meaning ... letting Chinese & Americans & Indians work on behalf of us. 🙂
 
Instead of increasing population, Japan should seek prosperity per capita, meaning ... letting Chinese & Americans & Indians work on behalf of us. 🙂
You can keep dreaming (once it stops growing, the country's economy will lose its edge. Other countries will catch up sooner or later if Japan is stuck in the zero growth). There is a good possibility for the other way around. No one knows what is going to happen in the future. But, my money is going to be outside of Japan on that bet.

I suggest you run for a right wing Japan-first party and start killing excess unwanted people to maintain the optimal per capita GDP. This seems what you are suggesting (I am reading between the lines).
 
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In your theory, all countries need to attain GDP growth via increasing population.... That's pretty unsustainable, I think.
Some 50 years, 3 billion people live in this planet, and now more than 6 billion,
in which 1.3 billion are Chinese and 1 billion are Indian. I personally that we don't need more than that. In Japan, 130 million are living in this small islands.
Instead of increasing population, Japan should seek prosperity per capita, meaning ... letting Chinese & Americans & Indians work on behalf of us. 🙂



No my theory is based on widely accepted Macroeconomic theory that GDP grows through 3 ways, population, technology or capital. However, if population decreases, as I have already explained, government expenditure, investment and consumer spending will drop. Japanese technology and capital investment must be so high as to support a really dramatically huge export increase to maintain the Japanese GDP at it's curent level. Look at this, GDP = C + I + G + (X-M). The C + I + G will drop in size due to the drop in population. However, X is the exports while M is the imports. So the exports must be high enough to offset the loss of 3 different areas. This is impossible to do.


You also suggest that Japan will get China, India and USA to work for Japan. How? GDP is calculated by what is produced in the respective country. Consider this, if a Japanese factory opens in China, is this calculated as part of Japan's or China's GDP? Let me make it easy for you and tell you the correct economic answer. A Japanese factory built on Chinese soil will become part of China's GDP. So the only way Indians, Chinese and Americans can work for Japan is if they immigrate to Japan.


And you also seem to suggest that Japan will simply import more from those 3 countries, to work for Japan. You do realize that due to this equation, GDP = C + I + G + (X-M), (X-M) means that if you import more, your GDP will decrease. So any imports to Japan from India, China or USA, will decrease Japanese GDP.
 
No my theory is based on widely accepted Macroeconomic theory that GDP grows through 3 ways, population, technology or capital. However, if population decreases, as I have already explained, government expenditure, investment and consumer spending will drop. Japanese technology and capital investment must be so high as to support a really dramatically huge export increase to maintain the Japanese GDP at it's curent level. Look at this, GDP = C + I + G + (X-M). The C + I + G will drop in size due to the drop in population. However, X is the exports while M is the imports. So the exports must be high enough to offset the loss of 3 different areas. This is impossible to do.
You also suggest that Japan will get China, India and USA to work for Japan. How? GDP is calculated by what is produced in the respective country. Consider this, if a Japanese factory opens in China, is this calculated as part of Japan's or China's GDP? Let me make it easy for you and tell you the correct economic answer. A Japanese factory built on Chinese soil will become part of China's GDP. So the only way Indians, Chinese and Americans can work for Japan is if they immigrate to Japan.
And you also seem to suggest that Japan will simply import more from those 3 countries, to work for Japan. You do realize that due to this equation, GDP = C + I + G + (X-M), (X-M) means that if you import more, your GDP will decrease. So any imports to Japan from India, China or USA, will decrease Japanese GDP.

"GDP" - an indicator to gauge economy - is a bit outdated today as the world economy has been globalized. So, "GNI" for you.

Gross National Income (GNI) comprises the total value produced within a country (i.e. its Gross Domestic Product), together with its income received from other countries (notably interest and dividends), less similar payments made to other countries.

The GNI consists of: the personal consumption expenditures, the gross private investment, the government consumption expenditures, the net income from assets abroad (net income receipts), and the gross exports of goods and services, after deducting two components: the gross imports of goods and services, and the indirect business taxes. The GNI is similar to the Gross National Product (GNP), except that in measuring the GNP one does not deduct the indirect business taxes.

For example, the profits of a Japan-owned company operating in the USA will count towards Japan's GNI and US GDP, but will not count towards US GNI or Japan GDP.

Understood ?
 
"GDP" - an indicator to gauge economy - is a bit outdated today as the world economy has been globalized. So, "GNI" for you.
Gross National Income (GNI) comprises the total value produced within a country (i.e. its Gross Domestic Product), together with its income received from other countries (notably interest and dividends), less similar payments made to other countries.
The GNI consists of: the personal consumption expenditures, the gross private investment, the government consumption expenditures, the net income from assets abroad (net income receipts), and the gross exports of goods and services, after deducting two components: the gross imports of goods and services, and the indirect business taxes. The GNI is similar to the Gross National Product (GNP), except that in measuring the GNP one does not deduct the indirect business taxes.
For example, the profits of a Japan-owned company operating in the USA will count towards Japan's GNI and US GDP, but will not count towards US GNI or Japan GDP.
Understood ?



You seem to be under the incorrect impression that GNI or GNP is a new method for calculating how well of a country is. In fact the United States used to use the GNP in its national accounts until 1992. The fact is, the most simple and reliable method, still widely used and taught across the world, is the GDP method.


I think you have to face the fact. Japan's declining population will lead to a huge fall in GDP. Look at my explenation above. The only way to offset this is to either increase fertility rate to 2.0 babies born to women, as to maintain population stability, or be slightly above 2.0 as to have a very slow and steady population growth. On the other hand, you can get used to the idea of a much weaker Japan in the next 20-30 years.
 
You seem to be under the incorrect impression that GNI or GNP is a new method for calculating how well of a country is. In fact the United States used to use the GNP in its national accounts until 1992. The fact is, the most simple and reliable method, still widely used and taught across the world, is the GDP method.
I think you have to face the fact. Japan's declining population will lead to a huge fall in GDP. Look at my explenation above. The only way to offset this is to either increase fertility rate to 2.0 babies born to women, as to maintain population stability, or be slightly above 2.0 as to have a very slow and steady population growth. On the other hand, you can get used to the idea of a much weaker Japan in the next 20-30 years.
Hey, European Union, Astroboy won't be interested in hearing and accepting the arguments which do not fit his worldview. He is just pulling the numbers willy-nilly (without analyzing what those numbers really mean), sprinkling his thoughts with some concepts he read in the textbook econometric theories.
 
Hey, European Union, Astroboy won't be interested in hearing and accepting the arguments which do not fit his worldview. He is just pulling the numbers willy-nilly (without analyzing what those numbers really mean), sprinkling his thoughts with some concepts he read in the textbook econometric theories.



Thank you for all your input in the thread. I am keen to hear Astroboy's or anyone else's ideas about the Japanese economy. This is good for him and me. I can learn a lot from other people's views and perspective through dialogue and I hope so can the other person. 👍
 
Thank you for all your input in the thread. I am keen to hear Astroboy's or anyone else's ideas about the Japanese economy. This is good for him and me. I can learn a lot from other people's views and perspective through dialogue and I hope so can the other person. 👍


I am telling my opinions based on facts. Regardless of interests, nobody can change the reality, I believe. The following post of mine show the reality of Japanese economy look quite different from what it is said by the "media".


Japan's Current Account Surplus Jumps 26% In 2007
http://www.foxbusiness.com/markets/e..._477160_3.html

Japan's current account surplus increased in 2007, marked the highest reading for the second straight year since comparable data became available in 1985.

Trade account is always surplus and thus not interested. But The income account, net income from Japanese investment overseas, reached yet another record-high surplus in 2007, up 18.4 percent from the previous year and the fifth straight year of growth.

An increase in direct investment returns and stock dividends from Japanese investment abroad pushed the income account surplus up to a record for the fourth straight year......
The income account surplus exceeded that of merchandize trade for the third straight year, indicating Japan's economy depends more on returns from overseas investment as a major source of income than on earnings from exporting goods.

Japan is earning income earned from investment overseas, and in other words, people in overseas are working for Japan, and Japanese don't need to work so much.

Most of developed countries earns income from overseas investment, but that of Japan is now siginificant.

Japan's income balance 2007: +16,273 Billion JPY (170 Billion USD)
US income balance 2006 (latest): +36.6 Billion USD
http://www.bea.gov/international/xls/table1.xls

Japan earns trade surplus, while USA is usually trade deficits.
Plus Japan earns from foreign investment about 5 times more than USA.
Japan cannot consume money within Japan, and thus interest rate is always near ZERO, and Japan invest money in foreign countries. And again income from investment overseas piles up....

Those numbers of 2008 must be different, but the point is that Japan does make investment (not Gambling) for real economies.

"GNI is more important for Japan than GDP".
 
I am telling my opinions based on facts. Regardless of interests, nobody can change the reality, I believe. The following post of mine show the reality of Japanese economy look quite different from what it is said by the "media".
"GNI is more important for Japan than GDP".
And, you are quoting a news story from a mainstream media......

Most of those econometric figures are very abstract without much of qualitative data. The various econometric formulas may give you the false sense of understanding what is happening in an economy.

I agree the GDP figures do not give you a full picture as they include the unproductive use of capital and resources. In the GNI ranking, Japan is in the middle of pack, which is nothing spectacular to gloat.
 
I am telling my opinions based on facts. Regardless of interests, nobody can change the reality, I believe. The following post of mine show the reality of Japanese economy look quite different from what it is said by the "media".
"GNI is more important for Japan than GDP".



I would call economic data quoted by Foxnews questionable at best. Have you heard of the Economist? It is a far more powerful and reliable source of information on economics. It also makes for dry reading. However, according to an article I could find, Japan is a shrinking giant and far worse of economically than the USA. However, some of the key reforms suggested to heal Japan are easier labour movement and immigration. The easiest way for Japan to have access to well educated labour and a huge market is to join the EU. The other alternative is to take immigrants from all over the world or continue to decline.



Shrinking giant


The Japanese economy is sliding into a painful recession


When will Japan emerge from its recurrent economic nightmare? Certainly not this year nor perhaps next year, if the country's latest GDP numbers are any indication. The world's second-largest economy officially fell into recession earlier this year; it contracted both in the second and third quarters. That much was clear already. What was not clear was just how comatose the economy has become. The Japanese government provided the answer on December 9th: its revised third-quarter GDP showed a sharper quarter-on-quarter drop of 0.5% than the initially reported 0.1% decline. Annualised, the economy shrank 1.8%. And many cannot see the bottom.
 
I think who is behind all this crisis are international bankers (e.g The Rothchilds, a Jew family) who control central banks around the world for their own agenda of "unification" of the world. I mean all the crisis in the past was caused by these central banks intentionally for their own gain only. Now that they have all the money they want, what they want now is power. Leaders, crooked politicians, international bankers who belong to secret societies are plotting to dominate the world. What they call is for The New World Order under one world government. If you watch documentaries like Zeitgeist, The Money Masters and others related to Freemasonry and Illuminati you'll understand.
 
It is that we saw the real thing and the imitation that this year was
experienced.
of course, imitation, that is , Bubble...


The age of the credence of the bubble starts ending, and only cash and the
thing becoming the ages of credence .

I hope the age starts changing from the world's largest debtor to the world's largest creditor country.:p
The Japanese should recognize that a genuine age came.
so,...........
 
It is that we saw the real thing and the imitation that this year was
experienced.
of course, imitation, that is , Bubble...
The age of the credence of the bubble starts ending, and only cash and the
thing becoming the ages of credence .
I hope the age starts changing from the world's largest debtor to the world's largest creditor country.:p
The Japanese should recognize that a genuine age came.
so,...........


Dear friend,


I have read and tried to understand and interpret your post several times, but I cannot quite get it. Could you try one more time? I would appreciate that.


Can you also tell me your opinion about immigration and free labour markets in a simpler way? Also, how do you feel if Japan joined the EU and Japan then would have access to a market of 650 million people and a huge labour market of the same size?


Thank you in advance for your opinion.
 
Can you also tell me your opinion about immigration and free labour markets in a simpler way? Also, how do you feel if Japan joined the EU and Japan then would have access to a market of 650 million people and a huge labour market of the same size?

at first. indeed it is laughable that Japan joins EU though there might be an alliance
.
The age is already a principle of the multipole.

an interesting about EU for Japanese is ....
Count Richard Nikolaus von Coudenhove-Kalergi and Mitsu Aoyama

Richard von Coudenhove-Kalergi - Wikipedia
 
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at first. indeed it is laughable that Japan joins EU though there might be an alliance
.
The age is already a principle of the multipole.
an interesting about EU for Japanese is ....
Count Richard Nikolaus von Coudenhove-Kalergi and Mitsu Aoyama
Richard von Coudenhove-Kalergi - Wikipedia



Why is it laughable for Japan to join EU? Is it because it was laughable that Galileo proposed the earth was round? I am not sure about your statement.


These Japanese people can think about it. Who are they are like in terms of culture, law, governance and traditions. The Chinese or the Europeans? And who would the Japanese rather be with in the long run. Europeans are about equality and multi polarity, while Chinese are about something totally different.
 
Why is it laughable for Japan to join EU? Is it because it was laughable that Galileo proposed the earth was round? I am not sure about your statement.

Even turkey can not join..why?

1)Japan doesn't abolish the death punishment
2)Fiscal deficit / GDP .. less than 3%
3)The outstanding obligation/GDP...less than 60%
at these point, it is impossible..

4)If Japan use Euro instead of Yen, what happen to $ and east asian currency?
 
Even turkey can not join..why?
1)Japan doesn't abolish the death punishment
2)Fiscal deficit / GDP .. less than 3%
3)The outstanding obligation/GDP...less than 60%
at these point, it is impossible..
4)If Japan use Euro instead of Yen, what happen to $ and east asian currency?



Turkey cannot join because of their human rights problems. On top of that, Turkey is not fully democratic, doesn't have completely free media, the law of Turkey is flawed and there is a myriad of other problems.


I am not exactly sure how big of a problem the death penalty would be to the EU, but I know that Japan convicts 99% of all people taken into custody. This would be a bigger concern. This means 1 of 2 things. Japanese police either always arrest the right person, or Japanese courts often put innocent people in jail and onto deathrow.


Much of the economic stats you mentioned are the obligations to join the eurozone and the euro currency. Japan can choose to opt out of the eurozone for as long as Japan whishes. If Japan did intend to join the eurozone, Japanese Yen could be convereted to euro by all governments. Germany's Deutsche Mark was a currency more traded then the Japanese Yen, because Germany is the biggest exporter in the world. But they were the founders of the euro, because of its big benefits.
 
Instead of increasing population, Japan should seek prosperity per capita, meaning ... letting Chinese & Americans & Indians work on behalf of us. 🙂

In addition, let robots work for us. 🙂

Tokyo University has unveiled its latest house-keeping robots which are able to do tasks ranging from washing dishes to doing the laundry.
BBC NEWS | Asia-Pacific | Japan's housekeeping robots

So future is bright because Japanese will be able to reduce working hours and let people of other countries & robots work for us. :)
 
So future is bright because Japanese will be able to reduce working hours and let people of other countries & robots work for us. :)
I don't want to rain on your sci-fi fiction parade. But, have you ever thought whatever job you have could be shipped out to those countries? Maybe it's time to wake up and smell the coffee?
 
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