Thanks to my wife for taping Sunday’s episode of “CBS Sunday Morning,” which was devoted to the subject of animals. I watched it last night. One of the segments covered what seems to be a new phenomenon in Japan – pets. As it turns out, it’s a perfect example of my theory at work – an example I hadn’t thought of but could have predicted if I did – so I thought I’d share it with you.
It’s hard to believe that something as simple having pets – so ubiquitous in American society – has only more recently caught on in Japan. Now everyone there wants one. But there’s just one problem. A large percentage of the population lives in tiny apartments where pets aren’t allowed. So the CBS story highlighted a sort of “rent-a-pet” boutique where, for $25 per hour, people could rent a dog to walk around on a leash. There was a long line outside the shop – people waiting patiently for the opportunity to experience this simple pleasure.
So here’s yet another example of how a high population density erodes per capita consumption. Think about what this does to the per capita consumption of all products associated with pet ownership – veterinary services, pet food and all the paraphernalia that goes along with owning Fido or Kitty: leashes, chew toys, beds, scratching posts, etc. The cost of owning a medium-sized dog in America is over $1,000 per year. So, for every 25-50 dogs in America, another job is created. Since the median family income is about $48,000, if the average family had one medium-sized dog, it would contribute 2% to our GDP and likely account for three million jobs . Cut that figure in half, as would easily happen in a population density like Japan, and that’s a 1% cut in GDP. That’s not huge but, hey, all we’re talking about here is pets. Extend that to every other product and you start to understand how a rising population density begins to erode employment.
Some will say that this has nothing to do with a high population density – that the Japanese people are either predisposed to living in tiny accommodations or they are more enlightened than Americans, choosing a more efficient existence. Nonsense. The average Japanese family would upgrade their digs to a 1,500 square foot home (modest, but about the median for Americans) in a heartbeat if they could. But it’ll never happen for them, not in their wildest dreams. Japan is just way too crowded. They’ll never be able to enjoy a modest home, a garden, a lawn, a lawnmower, a car in the garage or even a garage. Nor would Americans or any other people who allowed their population density to grow to that level.
Imagine living in these conditions. Imagine waiting in line to rent a dog for an hour. Imagine living in a home where leaving space for two people to pass each other is a critical factor in determining how to position your sparse furniture. Imagine commuting to work every day in a train so packed with people that you can barely move because owning a car is too impractical. Imagine that simple pleasures like playing golf or tennis or going to the beach must be planned far in advance because of the crushing demand for those facilities. Finally, imagine what all of this does to per capita employment when more and more people are forced to share the same amount of space, fewer facilities and fewer products.
If you can imagine these things, especially that last one, then you’re on your way to an understanding of global economics that eludes the most respected of economists.