Ms. Ambassador!

When Caroline Kennedy goes before the Senate for her confirmation hearings to become the U.S. Ambassador to Japan, she could surprise everyone by showing an appreciation for Japan's single most important issue -- its aging population.
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When Caroline Kennedy goes before the Senate for her confirmation hearings to become the U.S. Ambassador to Japan, she could surprise everyone by showing an appreciation for Japan's single most important issue -- its aging population. While "aging" might not seem as sexy as the news of Japan's 2020 Olympics, the environmental sensitivities and future of nuclear energy post tsunami disaster or the China/Japan territorial disputes, I can assure you, it is!

And in a paper just released by the IMF, it is precisely the reality of aging societies -- what the IMF author, Patrick Imam calls, "Shock from Graying: Is the Demographic Shift Weakening Monetary Policy Effectiveness" -- that is now thought to be one of the factors in the recent relative ineffectiveness of monetary policies. Dr. Imam writes,

...monetary policy also has a weakened effect on the economy due to changing demographics. Demographic profiles vary significantly by country: while some countries are ageing more rapidly than others (e.g. Germany, Japan); no part of the world remains untouched by this phenomenon. With fertility rates plummeting around the world--often below replacement rate--including in low-income countries, the world is going through an unprecedented demographic shift that is leading to a rapidly graying world.

Ambassador Kennedy will find that, while the issue of an "aging population" may, for many countries, be just below the surface, it is front and center in Japan. The Japanese government and leaders across its society fully understand that their population, which will have roughly 40% over 60 within a couple of decades, is beset by a historical challenge neither they nor anywhere in the world has ever been seen. Japanese leaders are also acutely aware that they are the proverbial "canary in the coal mine" as the rest of the globe also addresses this profoundly new demographic construction of society. It's not just that there will be more than 1 billion people over 60 globally by 2020, but it's that there will be more people over 60 than under 14, that is really the point. In Japan, there will be more adults than babies needing diapers by 2020, a condition that is equally coming to South Korea and Western Europe shortly after, as they, too, begin to experience the consequences of increased longevity against the stunningly low birth rates that we have come to understand characterize all modernizing societies.

But, as Ambassador, she will be far more welcome if she can concentrate on solutions to this otherwise perilous demographic reality . And as the September IMF Paper suggests, the rest of the world, too. Solutions that can transform Japan's aging population -- and with it a model for the rest of us on the planet -- to become new sources of economic growth. If she concentrates on this more positive approach, she will also be prepared for 2014 when the Japanese take over the lead of the OECD through which they will be championing their Ministerial confabs on "Healthy and Active Aging." For good answers you might turn to the World Economic Forum's "Global Population Aging: Peril or Promise."

So, Ms. Ambassador, if not before the Senate, certainly before you get there, prepare how you will also work with the Japanese leadership to find the solutions for creating what Japan is calling their "Silver Economy," which, you also know will have answers to our own challenges around Social Security and Medicare. As Ambassador to Japan you can ensure America and Japan collaborate on ways to keep people healthier and more active as they meet the seminal challenge of our era -- population aging, clearly warned by none other than S&P in their Global Aging Reports and now affirmed by the IMF. Our children, too, will welcome such a visionary collaboration between America and Japan because it is in their century that our life-course has to be reinvented. How long we work, different stages of education, our life-long financial security and how to keep us healthier longer. These are as critical for economic growth as for personal life styles in an era when the proportion of young to old has been profoundly reversed.

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