Where Did Productivity Go? Can Incentives to Grow the Workforce Be Found?

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Where Did Productivity Go? Can Incentives to Grow the Workforce Be Found?

Authors:
Stephen Sexauer
Publication Date:
October 16, 2013

There has been extensive analysis of Japan’s high debt/GDP levels:

the current (increasing) levels of deficit and debt/GDP are not sustainable;
the tax increases required to balance the budget (10 percent of GDP) are too massive to ever be implemented; and
the main source of government bond-buying, Japanese savers, will shrink as the rapidly growing cohort of retirees moves from saving to dissaving.

Without a return to prior levels of productivity, combined with incentives to grow the labor force, current levels of debt/GDP will prove unsustainable and default will occur—either direct default or material debasing of debt.