Old ideas about age

PUBLISHED : Thursday, 04 November, 2010, 12:00am
UPDATED : Thursday, 04 November, 2010, 12:00am

When I was young, I thought experience was overrated. I thought clear-sighted analysis, energy and 'pure reason' were much more important. It took a long time, but I now think there's a need for both. For example, people who have been through booms and busts know one will follow the other; younger people tend to expect booms to continue forever.

I'm not sure, though, that experience is taken into account when people speak of 'working-age population'. They're using a definition that has gone unexamined for decades - they're slaves of some defunct demographer. These thoughts may be relevant when considering China's demographic transition. The numbers boggle the mind. So far, they have been mostly numbers that China could cheer about. But the numbers could get ugly.

The term 'demographic transition' means population changes that occur when a country emerges from a pre-industrial state. First, death rates are cut by better public health care and cures for diseases. Second, adults bear fewer children because of their higher survival rate. Step two doesn't immediately follow step one; hence, a bubble of surviving children works its way through the population, taking three generations or more to emerge.

Before the transition began in China, infectious disease was so rampant and survivors to advanced age so few that, in 1963, 42.3 per cent of all deaths occurred in the 0-4 age group. Only 34.8 per cent of deaths were among those over 50. By 1975, the transition had kicked in. Deaths in the younger age group dropped to 14.3 per cent; and increased in the older group to 67.3 per cent. The median age at death increased from 9.6 in 1963 to 63.2 in 1975.

The stage-two numbers are no less striking. Outside China, countries with 'very low fertility' - fewer than 1.5 births per woman - comprise a population of 506 million. In China, the combined population of provinces with fertility rates below 1.5 is over a billion, twice that of all other countries.

The theory suggests that the demographic transition spurs economic growth. After step one, surplus children are dependent on the working-age population. But, as fertility drops and the bubble of surviving children reaches working age, the dependency ratio falls sharply - freeing the bubble (now working age) to fuel the economy. As the bubble ages, however, it becomes dependent again on the now-younger and smaller (because of lowered fertility) working-age population.

To remedy this situation, analysts recommend either many more immigrants - probably not an option for China - or an immediate increase in the birth rate to recharge the working age cohort. This may be more difficult than lowering the birth rate was in the first place; many low-birth-rate countries have tried to increase birth rates but failed.

This analysis rests on the definition of working age as those from about 15 to 65, with the assumption that technological breakthroughs and entrepreneurial activity tend to come from people in their 20s and 30s. Those energetic twenty-somethings and thirty-somethings need other people in the workforce, too.

In the United States, the retirement age was 65 in the 1950s when life expectancy for men was also 65. Now life expectancy is more than 75, yet the retirement age is only beginning to be raised. Many people 'retire' only to work more actively after retirement - often with more satisfaction - consulting, teaching, writing and engaging in other productive activities. It seems absurd to think of people over 65 as 'dependent' when one considers septuagenarian and octogenarian leaders like Deng Xiaoping, Konrad Adenauer and Winston Churchill.

Future economies must include a role, perhaps a key one, for those beyond what is now thought retirement age - not only so they won't be dependent on the economy, but because the economy may depend on them. A new relationship between the young and entrepreneurial and the old and experienced may be the emerging trend that shapes the future economy.

Michael Edesess is a visiting scholar at Hong Kong University of Science and Technology's Division of Environment