Japan: the need to reinvent an older society that works!

Over the last 30 years, Japan has transformed itself into a geriatric country with  one of the lowest birth rate in the world at 1.45 children per woman and the highest average age (47) on par with Germany.

At the same time, the country has seen its economic growth stagnate. It is actually a miracle that it is not negative yet considering the fact that its population is now decreasing by over 300,000 persons a year. (The main reason is that the working population between 25 and 65 is still growing slightly.)

Whatever the government does, the trend is not reversible. Free education as was just announced and better care for children cannot compensate for cramped urban accommodations and a low marriage rate. The slight percentage increase we have seen over the last 10 years from 1.23 to 1.45 cannot hide the falling birth rate in absolute numbers.

Most economists often make erroneous previsions based on faulty long term linear projections. But for population, long term linear projections work. In 10 years the baby boomers generation will be on its way out and immigration can't replace it fast enough. The Japanese population will therefore stand at 102 millions in 2050, 20% below its current level, give or take a few millions.

Japan needs a quick and simple solution!

Fortunately, one is available:

Redefining old age!

When the retirement age was decided in the late 19C by Bismark in Germany, it was fixed at 65 as that was considered a ripe old age with very few people living much beyond as this was just above the average life span at the time.

Move forward 150 years to Japan and the picture could not be more different.

Old people everywhere! In the cities, in the countryside, in offices and factories. Driving tractors and buses. But more than anything, young old people, full of energy and strength who simply forgot to grow old! Will they ever retire? Should they?

As all social issues, this is a sensitive subject and it is very unlikely that anything will change short of a major shock to the system. But this is exactly what is coming Japan's way. The sharp drop in fertility will soon be followed by a carving out of the working population, just as the number of retires explodes together with budget deficits. Something must give. 

Fortunately, as we have seen, many "old" people are not old anymore. Marketeers have long noticed that young retirees between the age of 65 and 75 tends to be far healthier and more active than their forebears. More importantly, many are still working, maintaining a higher income as well as a more active lifestyle.

This is not a fluke, it is a trend. A trend that will soon redefine not only aging but working conditions.

Older people do not need to work full time, since usually they already have accumulated capital, nor are they in charge of children anymore. They also often have optimized their living conditions and expenses, prioritizing free time over income.

All developed countries are facing this issue but none as acutely as Japan. 

Interestingly, putting older people back to work is not exactly a new idea. My great grand mother in the Jura mountains straddling France and Switzerland spent the last 20 years of her life to the age of 93 with a caretaker who was 20 years younger and took good care of her, earning a stipend and free lodging in the process. This was common practice then before pensions became ubiquitous.

Japan, especially in the countryside where the problem of aging is most acute has an almost infinite number of available lodging, often approaching 20% of all dwelling in some remote areas. (A little over 10% for the country on average.) This will not revive the countryside but any mechanism which increase the flow of money to villages and remote cities, especially along the coast of the Sea of Japan will be welcome. 

Robots may or may not offer a long term solution. Some people are optimistic on this subject, I am not. Because  what older people need most is human care which is exactly what robots are the least capable of. This will change but not anytime soon and most certainly not at a price most people can afford.

In the meantime, redefining old age will therefore look more and more attractive as a solution. A "sexy" marketing name will help: Young senior or active senior? One last step before aging is definitively made obsolete? 
   

The AI Revolution: Our Immortality or Extinction

Here's a fascinating discussion about the risks and possibilities of ASI (Artificial Super Intelligence) with insights from  Nick Bostrom and Rey Kurzweil.

Article: Tim Urban  
January 27, 2015
https://waitbutwhy.com/2015/01/artificial-intelligence-revolution-2.html

It dates back from 2015, almost prehistory in the field of AI but remains as comprehensive as can be. All potential aspects of AI are discussed in depth including the singularity as well as out of fashion ones such as the "grey goo". Although newer ideas such as the "simulation hypothesis" are of course not included.

What I find most interesting is that in the long list of potential answers, the most probable one, "We don't know!" is not given more thoughts.

ASI is beyond our grasp, in the sense that a 3D sphere is beyond a 2D circle. In this respect, the most telling example is the one of extra terrestrial beings. Statistically they should be there, somewhere, but clearly they are nowhere to be seen. This is a paradox, but only from our perspective.

In reality, the answer is probably quite simple: There are all over the place but are not visible to us. They do not cross the galaxy in interstellar ships, Star wars like, do not communicate with any type of wave we can intercept, do not "expand" across the Universe or whatever we can imagine. It is quite likely that evolution, past the human and civilization stages takes a sharp turn that we do not understand towards new goals we cannot fathom.

Likewise for ASI, it's goals, thought processes and mere existence may be forever beyond our grasp like a tunnel with sharper and sharper turns.

As the article explains, we cannot confine a ASI in a box since a higher intelligence will necessarily find a way out however cleverly we build the box. We will necessarily be outsmarted. Then why even try?

If it is our destiny to build the next level of evolution as seems to be the case, why not accept it and do what we must, comes what may?

Competition in any case gives us no choice: "We" do it or "they" do it!

This was the case with nuclear devices during the second world war. Likewise, the coming conflagration will greatly accelerate whatever progress in AI we would have made anyway if just a little slower.

Evolution as we understand it now under its new variant of punctuated bursts of hyperactivity is but an unending race towards a goal of higher efficiency. Long periods of quiet, balanced equilibrium suddenly broken by unforeseen events creating the conditions for extreme competition, towards the next paradigm where a new equilibrium can be found.

The only difference with AI is that we have no clue whatsoever what such a future will look like or even if we still have a place in it. There seems to be a event horizon in front of us beyond which nothing is visible not imaginable.

It would have been nice to pause and give it some thoughts before rushing in. The laws of nature give us no such choice. ASI is our future, always was. Let's hope for the best.

Trade wars

"There are decades where nothing happens and there are weeks when decades happen!" is a quote from Vladimir Ilyich Lenin but it could as well be a Chinese proverb from ancient time.

Today the markets are stunned that in the end there was no deal between the real estate mogul and the descendants from Sun Tzu who wrote the basics of Chinese military strategy in 500 BC.
 
"The art of the deal" or war by another name?

A quick overview from the BBC
https://www.bbc.com/news/business-48196495

The United States could have spent many more years exchanging paper money against Chinese goods, it cost nothing literally. The arrangement did work beautifully for over 50 years as the Gulf monarchies recycled their petrodollars in US and European assets with no end in sight. Why not China? But of course the Chinese had other ideas. While American corporations invested massively in buying back their own stocks to inflate their value artificially finding no other investment with a better ROI, Chinese companies doubled down on technology to bridge the gap and in some respects, they have succeeded. 

I was stunned a month ago to find out that my Wawei phone did not work anymore in the US. New Chinese 5G technology may represent a menace to America but my "old" Wawei phone? Likewise, the arrest of Meng Wanzhou, CFO of Wawei in Canada in January was an unmistakable message that the gloves were off.

Because the transition from UK to US hegemony between the two world war happened smoothly, there is a false assumption in the West that this should always be so. History says otherwise. The Chinese are doubtless aware of this and preparing accordingly.

In all likelihood they consider that we are already at war. Thanks to nuclear weapons it may hopefully never turn to a hot war but the game is on and the prize will be to secure access to technology, resources and raw materials. (as always) 

Trump considers that China has everything to lose by not negotiating and even threatened that he would be ever tougher after his reelection in 2020. But I am afraid that this is not how China is approaching the "game". We live in a dollar based and therefore US dominated international system. Would the system breaks down, which is a clear possibility, the US has far more to lose and more than any country, should be aware of the risk.

With the silk road initiative, China has started the process of reorganizing the world in a Chinese centric way, nothing less. This too means war by another name.
25% tariff on Chinese goods will only accelerate the process of reorienting the world trade routes. A recession was coming anyway and would have crashed international trade in late 2019, early 2020. It will now be transformative and we should prepare accordingly.

On June 17th, 1930 President Hoover signed the Smoot-Hawley Act which imposed tariffs on more than 20,000 imported goods.
This coincided with the worst economic downturn of the 20th century. U.S. GDP declined 8.5 percent in 1930, 6.4 percent in 1931 and 12.9 percent in 1932.

From a data specialist point of view, I found the market comments over the weekend stunning in their over reliance on data. Listening to commentators, it looks like every twitch and itch of the market is having a direct effect on Trump statements putting him in a stronger position when the market rise and in a weaker one when it falls. Could there ever be a worse approach to negotiating with China which almost by definition is taking a long term approach to the issue? There will be no elections in China in 2020. But by 2030, the country must be number one, whatever it takes!

 In a future post, we will be looking at the impact on Japan, squeezed between its relations with the US and its dependency on Chinese manufacturing. As well as the canaries in the coal mine of international trade in Asia: South Korea and Singapore.