In his classic The Constitution of Liberty F.A. Hayek points to inflation as one of the most pernicious ways government usurps the power of individuals to support themselves in retirement and increases dependency upon government-provided welfare systems. Writing in 1960, he showed how government-caused inflation had eroded—sometimes by two-thirds or more–the purchasing power of savings of a typical retiree in Germany, France, or the U.S.
In these circumstances, even people with a moral or ethical will to save and to remain independent of the state had been essentially robbed of this option by government actions, and—to make matters worse, if not hopeless—had been corrupted into becoming an interest group pushing for larger government welfare programs.
Read the rest of the story: Cutting Old Age Entitlements: Why Japan Can Lead the Way.
In 1979 Ezra Vogel, a Harvard academic, wrote a book entitled “Japan as Number One: Lessons for America” in which he portrayed Japan, with its strong economy and cohesive society, as the world’s most dynamic industrial nation. Three decades later, Japan holds lessons of a less encouraging sort. Economists in the stricken West have been poring over the data on the deflation that it has suffered since the bursting of the asset-price bubble in 1990. Yet deflation may be just one symptom of an even bigger problem that, as our special report this week argues, is squeezing the life out of the Japanese economy: ageing. Unless Japan takes dramatic steps to re-energise its shrinking, greying workforce, its economy will suffer.
Other countries face this dismal prospect too. Although Japanese society is growing older faster than anywhere else in the world, plenty of others are shuffling along behind it.
Read the rest of the story: The Japan syndrome.