August 02, 2011

Individual people are not countries, and viceversa

Yes, surprise. Humanity is not just a collection of countries. There are individual people too. And a person is not a miniature country. It's something completely different. You should become aware of this fact when you meet a person, you meet a country and compare one to the other. You can shake hands with a person but not with a country.

Dennis Normile, Japan correspondent for Science, seems surprised about the existence of individual people, as opposed to countries, and is not yet fully aware of the conceptual consequences of this little-known fact. He writes in The upside of downsizing:
He [Akihiko Matsutani, a demographer] believes that per capita income [in Japan] could rise even as GDP shrinks, providing a more comfortable lifestyle for individuals despite diminished national economic clout.
He writes as if the fact that someone's income can rise independently of his country's GDP were a worth-mentioning, perhaps even controversial, hypothesis. The income of a person depends on her productivity. The GDP of a country depends on productivity and population. First lesson: countries have population, individual people don't.

He seems surprised by, or at least interested in, the fact that individuals can prosper "despite diminished national economic clout." He was probably surprised when, as China overtook Japan as the second largest economy, Toyota engineers remained well-paid Toyota engineers and did not suddenly become Third World peasants, as most Chinese still are.
Japan is not alone. Populations are shrinking in much of Eastern Europe and Germany [...]
Good for Japan. Loneliness is a bad thing. Bad for the Japanese. Fewer people means more loneliness. Second lesson: countries and people sometimes have opposite interests. As a person, not a country, I side with the latter.
Japan is leading this trend because it deliberately cut short its post–World War II baby boom.
Normile has yet to learn that countries don't do things deliberately. Individual people do. In the case of having children, this includes making compromises, reaching consensus and having fun with a person of the other sex. Countries can have baby country booms too - witness the Soviet Union or Yugoslavia - but they do so asexually.

Finally, leaving aside the question of whether individual people are worth a damn, Normile and/or Matsutani offer the following thought, which has the flavor of, to paraphrase Megan Evans, a "naive circular flow model of the economy" or of "perpetual motion machines":
He [Matsutani] thinks economic forces could push Japanese corporations to focus on making higher-value-added products less subject to competition from manufacturers in low wage countries. To attract employees from a shrinking labor pool, such companies will have to pay more and be more flexible, by accommodating working mothers, for example. Higher wages would also prop up domestic consumption.
If, because of a shrinking labor pool, companies have to pay more and be more flexible, they will be outcompeted by companies that do not suffer from such labor shortages. These would include, for example, Japanese companies moving to countries that allow immigration. And if there were labor shortages everywhere, higher wages would not prop up consumption because they would also drive prices up (or, to be more rigorous, companies could not pay higher wages because they could not charge higher prices).

Normile's article also offers a (final) solution to the problem of sustainability. But I will leave that for another day.

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