I found this an arresting headline – “Is Europe Turning Japanese?” – but a goofy opening paragraph:
The dismal growth prospects of many European countries has raised an increasing number of questions about whether large parts of the continent will emulate Japan of the 1990s and endure a decade-long economic stagnation. On the face of it, a long-lasting Japan-style post-bubble slump with deflation seems a plausible outcome for a large part of the continent.
For a start, Europe’s would be a no-bubble slump – and, as for “decade-long economic stagnation”, you should be so lucky. Japan isn’t in a “slump”, it’s in long-term decline. In my book, I recalled the days of hysteria about how “the yellow peril was annexing America and pretty soon they’d be speaking Japanese down at the shopping mall”:
It didn’t happen and it’s never going to happen. In the Nineties, I tended to accept the experts’ line that Japan’s rising sun had gone into eclipse because its economy was riddled with protectionism, cronyism and inefficient special-interest groups. But so what? You could have said the same in the Sixties and Seventies, when the joint was jumping. The only real structural difference between Japan then and Japan now is that the yellow peril got a lot wrinklier. What happened in the 1990s was what Yamada Masahiro of Tokyo’s Gakugei University calls the first “low birth-rate recession”. It’s not the economy, stupid. It’s the stupidity, economists – the stupidity of thinking you can ignore demography.
In that sense, Europe isn’t “turning Japanese”; it’s halfway there. In 1950 in Greece, one retiree was supported by roughly eight workers; by 2030, that ratio will decline to the point where one retiree will have to be supported by a mere two workers. That’s according to the official OECD figures. But the OECD defines “retiree” as “64 and over”, and workers as 20-64. And nobody in Greece works till 64. Hairdressers retire at 50 because it’s categorized as a “hazardous profession”. So realistically the worker/retiree ratio is probably heading for something closer to one-to-one-and-a-half. And, once that math becomes widely known, at least one of that one-and-a-half is gonna get the hell out rather than throw away his working life in a vain attempt to prop up Andreas and Spirou’s lavish retirement home.
Oh, but don’t worry about Greece. It’s being bailed out by Germany – a nation with marginally less insane social programs but just as fatal demographics. Here’s the way to look at it: How many banks would lend money to nonagenarians living beyond their means and riddled with lung cancer, heart disease and tertiary syphilis? That’s the EU bailout.