the demographic sweet spot, leading to a massive increase in the workforce and fall in dependency ratios, is on the verge of reversing sharply, as has already happened in Japan. This will have the effect of raising real wages in most western economies, and that is likely to lead businessmen to invest more per unit of labour in order to raise productivity and to hold down unit labour costs. But insofar as the low investment ratio has been due to the short-termism of managers, owing to the incentive structure under which they operate, this particular cause of low fixed investment will continue.
