A variation on a Dean Baker theme that bears repeating. Once you start noticing them, you’ll hear warnings about the hazards of a slowdown in population growth all over the place.
Some time back I reviewed Herman Daly’s 1997 Beyond Growth for a local wood-chip-based publication. In it, Daly argues (I oversimplify) for a move from quantitative to qualitative growth. It’s still useful; check it out.
This time the problem child is South Korea, which the Post tells us will have the oldest population on the planet by 2050. They may not have enough people to work as valet parkers at restaurants or the mid-night shift at convenience stores. This sounds very scary. Just imagine, a low unemployment rate and high wage; what a disaster!
The decline in South Korea’s saving rate, which is the main issue in the story, turns out to be much less of a story when you read through it. According to the article, one reason for the low saving rate is the large amount of money that Koreans spend on education in the form of private schools, tutors, and other expenditures to ensure that children do well in school.
In GDP accounts, education spending by households is counted as consumption. In reality, it is a form of investment. More educated workers are more productive workers. If the next generation of South Koreans all have the equivalent of medical degrees or PhDs, they will not have to worry about their lack of saving.