The Graying of the Third World

October 19, 1994|By GREGORY MILLMAN

New York -- The recent international conference in Cairo generated acrimonious debate about the means used to control population growth. Yet the world now faces an entirely new population crisis caused in part by the success of population control. The World Bank calls it ''the old-age crisis,'' and it's hitting the developing world harder than anywhere else.

''Rising life expectancy and declining fertility -- welcome indications that development is working -- also mean that the proportion of old people in the general population is growing very fast, particularly in many developing countries,'' World Bank chief economist Michael Bruno warns.

In fact, the proportion of elderly in the world population will double over the next three decades. And most of the old people will be in poor countries. ''The increasing proportion of old people is caused in part by the decreasing proportion of children,'' the World Bank notes in a just-released report ''Averting the Old Age Crisis.'' China, whose population-control programs have been among the world's most successful, has one of the world's most rapidly graying populations.

In the industrial world, it took a century for the proportion of elderly to double, from 9 percent to 18 percent. China's population will take only three decades to make the same transition, and Venezuela only 22 years.

Poor countries hit by this old-age crisis will face massive expenses for health care and pensions, compounded by the fact that they haven't had time to begin building financial infrastructure, like investment markets, to save for the future. But even rich countries will have problems. In the United States, Swe- Reducing the number of the young -- population control -- automatically increases the proportion of the old.

den and the Netherlands, workers retiring in the future will get less than they paid in to social-security systems.

In many countries, especially those in East Asia with strong Confucian cultures, social security was handled by the family. Now, not only are there fewer children to take care of older parents, but economic modernization has weakened traditional family ties. Instead of staying in the village, for example, young adults move to the city to find jobs. Educated children have less respect for their uneducated elders, and old folks are not generally welcome residents of their children's cramped urban apartments.

Some experts believe the old-age crisis could have been avoided had demographers been less preoccupied with the problems of population growth and more attentive to the problems that arise from greater proportions of the old. Reducing the number of the young automatically increases the proportion of the old in the population, notes James Schulz of Brandeis University, and in countries where advances in medicine have led to longer lives the old are even older.

Nor has the reduction in the population of young people freed up capital to help cover the costs of the growing numbers of old. In fact, as the World Bank documents, an old person costs more to support than a child, in part because children live with their parents while many elderly now live apart.

Whereas children need schools, the aged need pensions, hospitals and other care. ''In Thailand, where the fertility rate has declined rapidly over the past decade, average class size and student-faculty ratios have fallen far below the cost-effective point, yet these resources have not been reallocated,'' the World Bank notes.

Moreover, families with fewer children, rather than spending less on their children, actually spend more on each child, sending them to secondary schools and universities instead of just to primary school.

To meet the old-age crisis, countries in both the developing and the developed world need to shore up pension and social-security systems, according to the World Bank. But such reforms add up to political dynamite for the would-be reformers, such as cutting payroll taxes and retirement benefits for the rich and middle class, requiring people to save for their own retirement and getting the government out of the pension-management business.

Already, however, three countries -- Chile, Argentina and Australia -- have instituted mandatory savings for retirement, handled by privately managed pension systems.

Equally daring is the World Bank's recommendation that instead of expanding public pension systems, countries with young populations and strong extended families should shore up their traditional social systems.

Perhaps the most important lesson of the old-age crisis is that population-control policies designed with the best intentions often have unintended consequences that compound the problems they were designed to address.

Gregory Millman is a free-lance journalist specializing in economics and finance and the author of the forthcoming ''The Vandals' Crown'' (The Free Press, 1995). He wrote this commentary for Pacific News Service.

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