Japan Needs More Babies

Just read an article in the WSJ about how Japan may consider an increase in its consumption tax from its current level of 5%. The reason - they need the revenue to cope with the aging population in Japan. It's a similar issue to that of social security in the United States. As the population ages and there are not as many children born (as a percentage of the population), there are fewer and fewer wage earners to contribute to social security payments. As a result, payments or taxes must be higher. Birth rates are a key economic measure to monitor when looking at the long-term challenges of supporting the aging population. To put in perspective how dire Japan's situation is, they are ranked second to last in terms of birth rate - at 8.1 births per 1000 population. Germany's in a pretty bad situation as well with 8.2 births / 1000 population. Some benchmarks from the CIA World Factbook:

#1 - Niger - 50.16 births / 1000 population

#119 - Israel - 17.71 births / 1000 population

#152 - United States - 14.16 births / 1000 population

#159 - China - 13.45 births / 1000 population

#185 - United Kingdom - 10.67 births / 1000 population

#221 - Germany - 8.2 births / 1000 population

#222 - Japan - 8.1 births / 1000 population

It's obviously important to consider the mortality rate as well, but most developed countries are generally close on that measure. Japan's and Germany's economies are going to face an incredible challenge in the coming years.

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