One way for Minnesota to distinguish itself from other places that are contending with workforce and population struggles is to face them head on.
It will be no small feat.
It’ll take some brave Democrats to move the party beyond its focus on anti-corporate populism, some brave Republicans to move beyond reflexive bashing of immigration, some union leaders who realize how their rules inhibit growth and business leaders who recognize that a dearth of workers and customers is becoming a bigger problem than taxes.
Minnesota is in the vanguard of U.S. states to face the problem of staying rich without growth. We can learn from places in Asia and Europe that have been dealing with it longer.
On visits to Seoul and Hong Kong last month, two cities where I lived before coming to Minnesota in 2013, I met some economic policymakers and analysts who wish leaders had confronted demographic challenges more aggressively before reaching the difficult stage they’re now in.
In Hong Kong, one of Asia’s longtime economists, Frederic Neumann of HSBC, reminded me Japan was the first country to see its population level off and start to decline. An economic powerhouse in the 1980s, Japan’s performance since has been dubbed “the lost decades” due to slow growth, recessions and deflation.
“We can blame monetary policy mistakes or fiscal policy mistakes for the sluggishness of the Japanese economy, but the reality is 70 percent or 80 percent of the lost decades is explained by demographic headwinds,” Neumann said. “And I think that’s a precursor of what you’re seeing elsewhere.”
Today, South Korea has an even lower birth rate than Japan. It’s about 30% lower than 20 years ago when it was the same as today’s birth rate in Minnesota.