Prepare for the clash of the generations

New York was hot last week. I don't just mean that the temperatures were in the eighties. I mean that the world's capital was the hot ticket.

The opening of the United Nations is traditionally a time of motorcade madness, when smart cross-streets are blocked for hours by triple-parked Lincoln Continentals. But now that the Clinton Global Initiative convenes in the same week, it's practically impossible to get a decent hotel room. Not being a Hollywood planet-saver or an Irish philanth-rocker, it was all I could do to get a drink at the bar of the Mandarin Oriental.

To get everyone nicely warmed up, the Iranian President, Mahmoud Ahmadinejad, gave a series of loopy speeches, beginning at Columbia University. That allowed the great and the good to mouth off about "petty and cruel dictators" (as Mr Ahmadinejad was called to his face by the President of Columbia, Lee Bollinger). If only he would see the light and embrace democracy with the enthusiasm of, well, his neighbours in Iraq!

Then it was off to the CGI to hear Al Gore's umpteenth speech about the coming "planetary emergency". (Those of us who have to dream up three new lectures a week at this time of year can only marvel.) If only we could all stop being driven around in limos and flying around in private jets, we might actually do something about reducing those dreadful CO2 emissions! But then how the hell would we get to New York for these A-list boondoggles?

It was all going just fine, with not a cloud in the shimmering September sky, when those nasty generals in Burma decided to rain on our parade. The self-installed rulers of "Myanmar" are fully paid-up members of the Petty and Cruel Dictators Club, gunning down Buddhist monks who have ventured to demonstrate against their corrupt regime. And they seem able to do so with complete impunity because they are in possession of some of Asia's largest reserves of natural gas, which China will continue to buy no matter how many economic sanctions the United States imposes.

On Wednesday night the US, Britain and France proposed a United Nations Security Council resolution that would have condemned the Burmese government and tightened sanctions. The Chinese blocked it. So much for the UN. So much for the CGI. Whether it's political freedom you want or a curb on carbon emissions, the New York glitterati can propose, but it's the Chinese who dispose.

The rise of China is the single most important historical phenomenon of our time. A fifth of humanity is on the march - or, rather, behind the wheel. Yet there is a need to look closely at Chinese power before concluding that it is all over for the West and our dreams of a free world with a stable climate.

A few weeks ago I wrote about the environmental damage China is inflicting on itself in the breakneck dash for industrialised wealth. Now let's consider the demographic side of the story. For, on close inspection, China's 1.3 billion population may not be as big a source of power as many American and European commentators assume.

According to the UN's medium variant projection, the population of the world will increase from 6.5 billion to 9.2 billion between now and 2050. But China will account for just 4 per cent of that increase.

The most rapid growth will be elsewhere: in sub-Saharan Africa, where the population will more than double, as well as in the Muslim world (Iran's population will grow by 44 per cent), India (up 46 per cent), and the United States (up by more than a third). India's population will overtake that of China some time around 2025.

This is, of course, a consequence of the draconian one-child policy imposed by the Communist regime on China's population - or, to be precise, on China's womenfolk, who for a generation have had their fertility policed and restricted in a way that we in the West struggle to imagine.

As well as ceasing to be the world's most populous country, China will become almost as elderly a society as Europe. Today, fewer than 8 per cent of China's population are 65 or older. By 2050 that proportion could have risen as high as 24 per cent. The equivalent figure for Europe is 28 per cent; for the UK 24 per cent; and for the US 21 per cent. In sub-Saharan Africa, by contrast, the proportion will rise from 3 per cent to less than 6 per cent.

One way of understanding what this means for China's economy is to calculate a dependency ratio, conventionally expressed as the total number of elderly as a percentage of the working-age population. Right now the figure for China is 11 per cent, compared with 24 per cent in the UK and 18 per cent in the US. By 2050, however, the Chinese figure may be as high as 39 per cent, only fractionally lower than the UK ratio and significantly higher than that for the US.

Most economists assume that having a lot of dependants is a bad thing. The tax burden on workers must rise to pay for the rising number of retirees, and this acts as a dead weight, slowing down growth. The effects on financial markets are more complicated, depending on how the old behave: do they keep squirreling money away or go on endless holidays to "spend the kids' inheritance"? But the consensus view is that we should worry about going collectively grey.

Certainly, Japan is not a great advertisement for the senescent society. With a fifth of its population already aged 65 or over, it has become the sick man of the developed world, struggling to escape from a 15-year slough of low growth and deflation. The country's new prime minister, Yasuo Fukuda, is a sprightly 71.

It's not entirely true, mind you, that high dependency rates are economically bad. Children don't work either and (as I can confirm from personal experience) they are pretty expensive to raise. A hundred years ago, total dependency ratios (children and the elderly as a percentage of the working age population) were higher than they are today, because families were significantly larger. Having lots of young dependants didn't seem to put a brake on growth in those days.

But the critical point is that oldies are even more expensive than kiddies. For one thing, with average female life expectancy forecast to rise from 78 to 84, our second childhood may soon be longer than our first. Even more importantly, though doctors are remarkably good at keeping the human body going - replacing the hips of 100-year-olds, if necessary - they are much less good at maintaining the human mind. Old age has the benefit of experience, but the wisdom of years isn't much use if you're going gaga. The older we get, the slower we think. That is one reason why ageing Japan has a stagnant economy.

China is doomed to age, then, and almost certainly doomed to slow down economically. If ecological catastrophe doesn't stop the speeding Asian dragon in its tracks, then creeping senility will.

But this analysis raises a broader question about the generational conflicts that seem certain to arise in the years ahead. Elsewhere I have written about the prospect of a new "age war", taking the place of the old class war, as an ever larger band of retirees seeks to have their incomes supplemented by the tax payments of an ever-smaller workforce. Already the domestic politics of most European states are bedevilled by arguments about pensions and retirement ages.

Yet there may be an international dimension to this war of ages. Perhaps the great global division of this century will not be between Muslims and "Judaeo-Christians" or between East and West, but simply between the Old World and the Young World. Though not as youthful as African countries, India, Iran and Burma - to name just three - have, and will continue to have, significantly lower old-age dependency ratios than the countries permanently represented on the UN Security Council. Gaga will be pitted against Wah! Wah!

And while there will still be enough young men to take to the streets of Young World countries, as in Burma, the streets of the Old World will be like those of New York: clogged with limos, as the great and the good - and the geriatric - go impotently gaga together.

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