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Subsidizing babies: welfare or investment?
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Photo: Mike Babcock
Across the Western world, people are not having enough babies, and old people are staying old longer. This is a simple summary of the problem of “aging populations”. The trend of women choosing to work rather than staying at home and procreating coupled with health care innovations that make people live longer, two arguably beneficial phenomena, have spawned what many think is an imminent crisis. There will soon be a sparse taxpayer generation relative to the size of the retired generation. Since the former provides the funding for the care of the latter, this imbalance generates many problems. To increase the size of the working population, two simple and intuitive proposals appear to be gaining the most ground in the debate. One is to increase the age of retirement - which would transfer some out of the retired group to the working group. As a short-term fix, it works, but older workers have lower productivity and will eventually retire, no matter how high the requisite age to do so becomes. There is no avoiding the problem of low birth rates. Thus, the second and more far-sighted approach entails giving women incentives to have children - which is where old party lines begin to present an obstacle. Americans generally accept (sometimes grudgingly) the welfare state. Many call for Social Security and Medicare reform, but do so because of perceived structural inefficiencies within the programs. Few truly think that the care of the elderly should be left entirely to the market. The idea of subsidizing motherhood is more controversial. For conservatives it may evoke images of unskilled young women staying home and continuously producing children for their slice of government cheese. For liberals and feminists, it may seem offensive to reward a traditional lifestyle choice that women have been fighting to distance themselves from. These perspectives are all, unfortunately, incredibly short-sighted. When considering a redistribution of wealth organized by the government, people usually consider the givers and recipients today, not 30 years from today. In the short-term, rewarding motherhood is indeed a transfer from wealthy working people to those who choose to stay at home and have children. In the long-term, it is a transfer to those same working people when they choose to retire. When those workers retire, virtually every good and service they will consume will have been produced or imported by the grown-up babies whose existence they subsidized. Rewards to motherhood don’t just encourage procreation over work, they keep the entire structure of the welfare state and the economy in general afloat. Furthermore, they don’t even have to entail the loss of young females from the work force. Perhaps the best reward to motherhood is the creation of high-quality, easily-accessible daycare. This way, the mother herself doesn’t have a perverse incentive to have children in order to receive a government check, nor is she encouraged to abandon her job and return to an existence as a traditional housewife.
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