Depopulation or the Detroitification of Japan

There is a spectre haunting the developed world--the spectre of Detroitification. (Take that, Marx and Engels!) It involves depopulation and industrial hollowing out destroying the tax base of locales barely able to provide basic public services. Aside from the highly questionable logic of Japan incurring more debt to "cure" problems arguably caused by an oversized debt overhang, I have a more fundamental doubt about its economy moving forward. Simply, demographics dictate that an ever-shrinking population places nearly-insurmountable pressure on enfeebling the economy. Too many seniors drawing on too many benefits compared to too few working-age persons--it's a bad situation only set to get worse:

The estimate shows that Japan’s population in 2040 will stand at 107.276 million, a decline of about 20 million from 2010′s 128.057 million. A January 2012 estimate by the same [National Institute of Population and Social Security Research] institute had shown that in 2060, Japan’s population will number 86.737 million, about 30 percent less from the 2010 level.

Japan has been experiencing a natural population decrease since 2007, with annual deaths topping births. In 2011, the total fertility rate — the average number of babies a woman gives birth to during her life — was 1.39. A total fertility rate of 2.07 is required to maintain population levels. Although the public sector has been taking steps to make it easier for women to have more children, it will be extremely difficult to improve the situation.

While industrial stagnation is perhaps less evident in Japan at the moment, the fiscal implications of these hollowed-out societies remain the same. There are already signs of Detroit-esque lapses in the provision of public services emerging:

The progress in the graying of the nation means that the need for social services for residents such as medical and nursing care services will increase. The population decrease means that the nation’s total tax revenues will decline. As a result, grants from the central government to local governments will diminish. Both the central and local governments must find ways to overcome the imbalance between revenues and outlays. It will become all the more important for both the public and private sectors to increase chances for women to fully utilize their abilities in the workforce.

The effects of a population decrease are already being felt. Cases in which road bridges have been closed to traffic because of a lack of funds for maintenance and a drop in the number of users are increasing. Forests exist whose owners are now unknown. The number of vacant houses are increasing. Some municipalities have passed by-laws under which they will demolish vacant houses that have become dangerously dilapidated [my emphasis].

The spectre of Detroitification is hard to beat, and its footprints are unmistakeable.With current leader Shinzo Abe unwilling to consider meaningful migration reform as a solution thus far, it's the Motor City writ large and not Godzilla that's looming ominously in Japan's skyline.