Tuesday, December 27, 2005

Immortality, Fertility & Conscience

Nobel laureate economist Dr Milton Friedman was interviewed by Charlie Rose, the result which was aired late yesterday evening on America's PBS. This in itself is an amusing paradox worth considering since most of Dr. Friedman's close friends and disciples would eschew the very concept of a Public Broadcasting Corporation, thus depriving us of the still-lucid old man's oftentimes contentious views about the state of the world and the great economic debates of our times.

He commented upon many subjects: the Reagan years; his self-stated unequivocal victory over JK Galbraith and the Keynesians; the moral turpitude of communism and central banks (as well as most central bankers), Greenspan and Bernanke excepted. He also weighed in on Japan, the details of which I reveal shortly. While I respect Dr Friedman (as a Nobel Laureate), and what he has achieved in his life and career, I must say I find many of his opinions as disagreeable as those of Ayn Rand. While this is not the time for a long missive and though I am not qualified to find fault in his economic theory (my BSc being no match for his PhD and distinguished teaching career), my gripes with the famous laureate center upon the philosophical and social implications of his theory and rhetoric. In particular, while I don't doubt that in economic terms a nation where government occupies less than 15% of GDP may indeed be more efficient and create greater total output than a nation where government subsumes a 45% share, and while I would even admit that, distributionally-speaking, it MIGHT result in "more things for more people", I have grave concerns and reservations about what the social face of this society would resemble in the modernity in which we find ourselves.

For I am the first to admit that it would be wonderful indeed if the village (and her villagers) looked after its own. If children cared for their parents in old age. It would indeed be preferable (and novel) if a strong work ethic were universally distributed, as it would be if the same were true of education, wisdom, opportunity, and physical health and ability. That there were no indigent, malevolent, periodically sick or ill, nor wars; if greed, corruption, and dishonesty were rare as edelweiss in Florida, and people always did "the right thing" whether that was to pay taxes, or respect the common good or interest. In THAT world, on THAT planet (which is seemingly far from this terrestrial orb) a 15% slice for government might even be too much. But OUR world, THIS world, IS different....much much different. And as a result, I find it ironic that progressives and liberals are the actual pragmatists fostering and nurturing solutions that MIGHT help create better outcomes for people that those callously dealt by the market, and minimize the externalities resulting from the econonomic and social relations between men and women (where "better outcomes" is defined by, and includes words like "dignity", "need", "charity", "opportunity", "accident", "kindness", "respect" and yes, even "altruism". By contrast Friedman (and his disciples) appear quixotic in their objectives since the world required for Friedman-ite philosophy and economic theory to prosper - and more importantly - be superior to progressive social democracy, differs dramatically from the world as IT IS and as we know it.

With that off my chest, the reason for this post, was that Mr Friedman spoke about some things Nippon that I have promised to reveal. They are surprisingly close to my own thoughts. He said, Japan is in better shape than it has been for a long time, and their prospects are bright. BUT (and there always is a "but"), BUT, Japan is a nation with a severe dearth of births (my words, not his) which in combination with the wholesale lack of immigration, is both worrying and troublesome. He pointed out that the demographic contraction of the Japanese people over the coming decades will be dramatic and severe and unlike anything we've experienced in the modern age - something that is likely to have economic consequences.

Does this mean the TOPIX will fall? One cannot say. But it is interesting to observe that the impending demographic implosion has caught the prescient eye of Dr Friedman. This will likely mean, whether one agrees or disagrees with the good Professor's social conscience (or lack of one) that these concerns will at some not-too-distant point in the future, be front-page news, and capture the imagination of pundits and investors alike.

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