Here’s a cheery headline to start the week: Japan 2014 births fall to lowest on record but deaths rise.

From the FT:

Deaths outnumbered births in Japan last year by the widest margin on record, underscoring the scale of the challenge facing the government as it tries to ensure a dwindling pool of workers can support growing ranks of pensioners.

The urgency of getting the country’s finances in order was highlighted this week as preliminary figures indicated that Japan’s population fell by a record 268,000 in 2014.

According to the data published by the ministry of health, labour and welfare, births slipped by 2.8 per cent to a low of 1m, while deaths rose fractionally to a high of 1.27m…

If the current nationwide fertility rate of 1.4 stays unchanged, a task force warned in November, then Japan’s population of 127m would drop by almost a third by 2060 and by two-thirds by 2110.

Even if the fertility rate were to rapidly rise to the replacement level of 2.07 by 2030 and then stay there, the population would keep falling for another 50 years before stabilising at a little less than 100m.

I tip my hat to Japanese Prime Minister Shinzo Abe for at least making the effort to shake up Japan’s sluggish economy with his Abenomics reforms. But it won’t matter. Japan will never recover.

Try as he might, Abe can never be Japan’s Reagan or Thatcher. As sick as Britain and America were before the Reagan and Thatcher revolutions, the problems facing both countries were political. A politician with sufficient charisma – Reagan – or cojones – Thatcher – could have fixed them. But you can’t “fix” demographics with politics.

In a modern economy, consumer spending is the dominant contributor to GDP. But consumer spending requires consumers, and Japan has fewer of them every year. And the ones they do have are older and more inclined to save than spend.

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