{"id":566090,"date":"2021-06-16T17:07:16","date_gmt":"2021-06-16T21:07:16","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=566090"},"modified":"2021-06-16T17:07:26","modified_gmt":"2021-06-16T21:07:26","slug":"japanification-how-americas-economy-could-see-a-permanent-decline","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/japanification-how-americas-economy-could-see-a-permanent-decline\/","title":{"rendered":"\u2018Japanification\u2019: How America\u2019s Economy Could See A Permanent Decline"},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"&quot;\"><div class=\"counts mashsbcount\">18<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2Fjapanification-how-americas-economy-could-see-a-permanent-decline%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=566090&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47--><div><img decoding=\"async\" src=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2021\/06\/GettyImages-109439584-1200x800-1.jpg\" class=\"ff-og-image-inserted\"  style=\"display:none\"><\/div>\n<p><span>In 2013, former Treasury Secretary Larry Summers popularized the term \u201csecular stagnation\u201d \u2014 a reference to a nation\u2019s decline into permanently sluggish economic growth. Economists use the phrase interchangeably with \u201cJapanification\u201d \u2014 the process of a nation adopting the traits of Japan\u2019s economy.<\/span><\/p>\n<p><span>As former Cato Institute senior fellow Daniel Mitchell <\/span><a href=\"https:\/\/www.cato.org\/blog\/japans-descent-keynesian-parody\"><span>summarized<\/span><\/a><span>, Japan merges \u201cmisguided entitlement programs that are found in most developed nations\u201d and \u201ca quadrupling of the debt burden\u201d with \u201cfar-worse-than-usual demographics.\u201d In other words, Japan\u2019s economy is simultaneously limping along due to decades of Keynesian economic activism and a diminishing populace. Both phenomena inhibit the nation\u2019s long-term economic expansion.<\/span><\/p>\n<p><span>For any civilization, economic and demographic stagnation leads to a death spiral.\u00a0<\/span><\/p>\n<p><span>Most immediately, an aging population decreases the tax base from which governments can fund healthcare and retirement handouts. More broadly, however, a shrinking labor force diminishes an economy\u2019s ability to innovate and produce. With fewer people comes less output and less entrepreneurship \u2014 an effect intensified when government debt exerts a downward force on productivity.<\/span><\/p>\n<p><span>Western nations are increasingly wary of their own slides into Japanification. European countries especially are <\/span><a href=\"https:\/\/www.worldfinance.com\/wealth-management\/europes-growing-risk-of-japanification\"><span>observing<\/span><\/a><span> negative replacement rates, older populations, and ballooning public debt in the wake of the 2008 recession.<\/span><\/p>\n<p><span>The United States is not far behind its cohorts across the pond.<\/span><\/p>\n<p><b>Population Decline<\/b><\/p>\n<p><span>For one, American replacement rates have dropped tremendously. Although American women bore an average of 3.65 children in 1960, the fertility rate dropped to 1.93 births per woman by 2010. Birth rates again <\/span><a href=\"https:\/\/www.cdc.gov\/nchs\/data\/vsrr\/vsrr012-508.pdf\"><span>reached<\/span><\/a><span> record lows in 2020.<\/span><\/p>\n<p><span>For another, labor force participation is steadily diminishing. After a half-century of growth, labor force participation reached its apex in the late 1990s, when nearly 70% of Americans between 25 and 54 years old were actively employed or seeking employment. For the last two decades, however, labor force participation has continuously declined, reaching 61% in May 2021.<\/span><\/p>\n<p><span>Both a decline in birth rate and a decline in labor force participation reflect worrying inefficiencies; indeed, American human capital is not being applied to physical capital to create goods and services. The Bureau of Labor Statistics <\/span><a href=\"https:\/\/www.bls.gov\/opub\/mlr\/2018\/beyond-bls\/down-and-down-we-go-the-falling-us-labor-force-participation-rate.htm\"><span>affirms<\/span><\/a><span> that the effects of a weaker labor force are \u201cslower economic growth\u201d because fewer people are working, \u201ca rising dependency ratio\u201d because there are fewer workers to support those who are not working, and \u201chigher tax rates\u201d because the tax base from which the government draws revenue is smaller.<\/span><\/p>\n<p><b>Government Debt<\/b><\/p>\n<p><span>Excessive federal spending further contributes to national economic decline.<\/span><\/p>\n<p><span>For the past four decades, government debt in the United States has continuously increased as a percentage of output. In the early 1980s, the debt-to-GDP ratio was slightly above 30%; today \u2014 especially following multiple COVID-19 omnibus stimulus bills \u2014 it is nearly <a href=\"https:\/\/fred.stlouisfed.org\/series\/GFDEGDQ188S\">130%<\/a>.<\/span><\/p>\n<p><span>Meanwhile, output growth is progressively slowing. Over the past four decades, the real GDP growth rate has seen a noticeable shift <a href=\"https:\/\/fred.stlouisfed.org\/series\/GDPC1\">downward<\/a> \u2014 a reality that reflects lower year-over-year increases in American productivity.\u00a0<\/span><\/p>\n<p><span>Indeed, according to the Heritage Foundation\u2019s Index of Economic Freedom, the major <\/span><a href=\"https:\/\/www.heritage.org\/index\/country\/unitedstates\"><span>obstacles<\/span><\/a><span> to economic freedom in the United States are \u201cexcessive government spending\u201d and \u201cunsustainable levels of debt.\u201d The Japanese economy is likewise <\/span><a href=\"https:\/\/www.heritage.org\/index\/country\/japan\"><span>restricted<\/span><\/a><span> by \u201cgovernment spending.\u201d<\/span><\/p>\n<p><span>Government debt tends to \u201ccrowd out\u201d investment; as investors finance public debt instead of private ventures, their dollars are prevented from facilitating economic growth.\u00a0<\/span><\/p>\n<p><span>Indeed, the \u201ccrowding out\u201d effect is a contributing factor to economists\u2019 pessimism about the <\/span><a href=\"https:\/\/www.dailywire.com\/news\/comparing-trump-and-bidens-covid-relief-bills\"><span>American Rescue Plan<\/span><\/a><span>, the <\/span><a href=\"https:\/\/www.dailywire.com\/news\/nonpartisan-economists-say-bidens-infrastructure-plan-will-decrease-economic-growth\"><span>American Jobs Plan<\/span><\/a><span>, and the <\/span><a href=\"https:\/\/www.dailywire.com\/news\/bidens-american-families-plan-is-far-from-a-new-deal-economic-boon\"><span>American Families Plan<\/span><\/a><span>. Though they spend trillions on stimulus programs, the proposals spend so far beyond the federal government\u2019s means that future GDP growth is sacrificed on the altar of short-term expediency.<\/span><\/p>\n<p><span>Unless policymakers begin thinking about the future, the United States may indeed follow Japan into economic atrophy.\u00a0<\/span><\/p>\n<p><span>To rip Keynes\u2019 famous one-liner drastically out of context: \u201cIn the long-run, we are all dead.\u201d<\/span><\/p>\n<p><i><span>The views expressed in this opinion piece are the author\u2019s own and do not necessarily represent those of The Daily Wire.<\/span><\/i><i><span>The Daily Wire is one of America\u2019s fastest-growing conservative media companies and counter-cultural outlets for news, opinion, and entertainment. Get inside access to The Daily Wire by becoming a <\/span><\/i><a href=\"https:\/\/www.dailywire.com\/subscribe\"><i><span>member<\/span><\/i><\/a><i><span>.<\/span><\/i><\/p>\n","protected":false},"excerpt":{"rendered":"<p>In 2013, former Treasury Secretary Larry Summers popularized the term \u201csecular stagnation\u201d \u2014 a reference to a nation\u2019s decline into permanently sluggish economic growth. Economists use the phrase interchangeably with &#8230;<\/p>\n","protected":false},"author":1,"featured_media":2280502,"comment_status":"close","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2021\/06\/GettyImages-109439584-1200x800-1.jpg","fifu_image_alt":"\u2018Japanification\u2019: How America\u2019s Economy Could See A Permanent Decline","footnotes":""},"categories":[],"tags":[],"class_list":["post-566090","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry"],"fifu_image_url":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2021\/06\/GettyImages-109439584-1200x800-1.jpg","fifu_image_alt":"\u2018Japanification\u2019: How America\u2019s Economy Could See A Permanent Decline","_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/566090","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=566090"}],"version-history":[{"count":0,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/566090\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/2280502"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=566090"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=566090"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=566090"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}