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America’s Fertility Problem February 11, 2013

Posted by federalist in Economic Policy, Education, Human Markets, Social Politics, Taxation.
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America is fortunate to be lagging the demographic collapse that is plaguing Europe and the Orient, so we will have time to observe both the socioeconomic problems that low fertility creates and the means of fixing them.

Already some European countries have adopted extreme measures to stimulate childbearing: From tax credits and grants to increasingly generous time-off and childcare programs.

Jonathan Last, author of What to Expect When No One’s Expecting: American’s Coming Demographic Disaster, summarizes the current state of affairs in America and looks at some potential policies to motivate reproduction.

Indeed, for most Americans it is irrational to choose to have children today. The marginal cost to an educated working couple is staggering: Direct financial costs alone can run well into six figures and, if one pays for the “best” education, can even break seven figures. At least one earner is usually taken out of the workforce for years, incurring substantial opportunity costs in career and earning potential. And we rarely credit parents for the time, stress, and emotional agony of raising a child to maturity. Relatively speaking, life without children is a luxury: a carefree existence flush with money and freedom.

In a selfish world in which women often out-earn men and couples can easily avoid reproducing, who is having babies? Those too incompetent to use birth control, or too ignorant to rationally account for the full costs? Those on the fringes who can actually expect a net positive return on childbearing thanks to welfare systems?

There are many who bear children for religious and altruistic reasons. Indeed, when it comes down to it, modern childbearing is a gift to society as a whole. Children might grow up to honor and support their parents, but government will all but guarantee that as adults they will pay taxes to support their grandparents’ generation.

Until recently children were mostly unavoidable products of adult couplings, but they were also greatly desired because they eventually conferred status and security on their parents. Just as modern contraception has divorced coupling from reproduction, the senior welfare systems of modern government have severed parents from the support they could traditionally expect from their particular children.

Among Jonathan Last’s policy prescriptions for restoring fertility:

  • Recognizing that children are the future tax base, reduce the cost of bearing them by significantly cutting the tax burden on parents. (Or, presumably, wait until we are so far down the demographic cliff that we have to go European and outright pay people to bear children.)
  • Destroy the higher education cartel, which defers marriage, increases the opportunity cost of stepping away from the workforce to bear children, and then exacts a final, enormous toll to get the child out of the nest and into the most desirable jobs.
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Comments»

1. Michael - February 11, 2013

Children should not be viewed as a tax base; they should be viewed as a liability. Where are these future tax payers supposed to work? Where are the resources they require going to come from? The issue of over population is not limited to India, China, and the third world. It is a global issue.
So, the baby boomers are not going to be able to rely on another generation to support them in their old age – GOOD! The baby boomers have squandered so much of the available resources and run up so much debt that the following generations will be paying for their sins long after they have died.
If they get little uncomfortable in their old age, too damn bad. Economics is not a zero sum equation until you factor in limits on continued expansion. We cannot afford to continue growing this way. In the future, the richest countries will be those with the smallest population. Children are a luxury we can no longer afford. Having more than one child should be considered a sin.

2. federalist - February 12, 2013

I agree that children should not be viewed — or used — as a tax base. But humans are an asset, not a liability, since they are on net producers. (If your argument is that young humans are a liability that is true, but it ignores the full picture which is that children are just productive adults that haven’t yet matured.)

Countries do not get “rich” by reducing their population. In a static analysis per capita wealth could be increased by reducing the population, but from there GNP would decline relative to countries that grow not only productivity per capita but also the number of producers.

Now, you may argue that whatever it is that humans “produce” is not worth the investment or consumption of natural resources. I will address this question in my next post. But if you believe that humans are a blight on the universe then what are you sticking around for?

3. Michael - February 12, 2013

Having spent most of the last 30 years in Asia, I can assure you that excess population seriously degrades the standard of living. In the past, it was common to have a lot of kids to work in the fields; however, with the advent of tractors, this is no longer necessary. When these same farmers reduce the number of kids they have to just two, the resources available to them are sufficient to send their remaining kids to college. Even a farmer in India has a sufficient grasp of economics to understand that one doctor or engineer can contribute far more to the long-term security of his family than a half dozen people doing menial labor.

In the US, the situation is no different. One man with a tractor is able to cultivate enormous areas of land. One person using a computer can outperform a dozen people working under the previous paradigm. The fact is that technology is making it possible for us to be more productive and increased productivity means fewer people are required to do the same work. What is the point of having children just to fill positions that have been made redundant. Let’s take advantage of scientific advancements to raise the standards for a smaller group of people, rather than jeopardizing the future of everyone.

I do not believe that humans are a “blight on the universe”. I believe that until humans are able to expand their population without extracting a grievous cost on the environment, and on one another, we must learn to control ourselves. Obviously, anyone who wants to have children wants them to grow up in a healthy environment, where there is space to move around and opportunities to pursue their dreams. These options disappear when there are too many people in the world.

We do not NEED more people.

Let’s try to ensure that the few we bring into this world have the opportunity to live a prosperous life.

4. federalist - February 13, 2013

I see a few good points and a few misleading ones in there:

  1. Note that underlying your whole comment is some unarticulated existential premise. Maybe it is true that “we do not need more people,” but one can’t assess the validity of that statement unless you first assert what purpose people serve.
  2. Yes, workers in the developed world are generally vastly more productive than workers in the least developed. However the cost of producing developed-world workers is also vastly greater. As an extreme example: If we follow a child born into the most impoverished third-world city for his whole life it is conceivable that his gross production will amount to nothing more than, say, harvesting $1000 of scrap metal. But unless he enjoys some welfare his lifetime consumption is almost certainly less than his production. Even if his lifetime consumption is $999 he was still a net producer of $1. We can make all sorts of moral judgments about his life: Was it fair to bring him into such (relatively) dismal circumstances? Is it an afront to human dignity to allow one person to spend his entire life struggling to produce only $1 at a time when most humans can produce that much in an hour? These are good ethical questions but they belong in a different discussion. Here it is sufficient to note that the expected net productivity of all humans is positive.
  3. There are some extreme cases where it is likely that children will be net-negative producers (i.e., they will die or be disabled before they can produce more than it cost to bear and raise them). Something like the protracted famine of late twentieth-century Ethiopia comes to mind. But I assert that these are rare exceptions.
  4. Whether there is “enough” “space” or “opportunity” for marginal children is a normative question, and one that is more a function of politics, technology, and infrastructure than of the absolute numbers of people in existence. Likewise the question of whether marginal children are “extracting a grievous cost on the environment, and on one another….”
  5. You set up a fringe hypothetical scenario of a family that can afford to send one child to college, but who with more children could only produce menial laborers. In general a family that can send one child to college is not reduced to poverty by a few more. In fact there are economies of scale to multiple children, so the marginal cost of bearing additional children is significantly less than the first. Obviously the total resources available to the first are reduced by additional children, but I doubt you’d be able to support a general assertion that this results in the net productivity of all of a family’s children decreasing as family size increases. I.e., while additional children might decrease the lifetime productivity of the first, the productivity of additional children more than compensates for any possible marginal decrease in their older siblings.
  6. Speaking of fringe scenarios: Consider also that you can’t predict the extreme outcomes of even the most impoverished children: World-class artists, scientists, entrepreneurs, leaders — whatever you value — have emerged from the most impoverished circumstances.
5. federalist - February 14, 2013
6. Net Human Product and Our Purpose | Federalist - April 25, 2013

[...] matters: Something that, after adolescence, few people stop to consider in any broad context. Discussion following my post on falling fertility raised the Grand Question: What is our Purpose? In the context of that post a successful human life [...]


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