A smarter way of subsidizing parenthood

By Felix Salmon
April 3, 2014
Ben Walsh has a great roundup of the discussion surrounding Reihan Salam’s proposal that we institute a surtax on the childless.

" data-share-img="" data-share="twitter,facebook,linkedin,reddit,google" data-share-count="true">

Ben Walsh has a great roundup of the discussion surrounding Reihan Salam’s proposal that we institute a surtax on the childless. At a societal level, we want population growth — more children — but when it comes to individual households like my own, there are often compelling reasons to have few or no children at all. As countries get richer, their birth rates decline, with nasty demographic consequences.

One fix to this problem is simple: more immigration. Salam has another: giving people a bigger financial incentive to procreate, baked in to the tax code. But take a step back, and no one’s really disagreeing with the fundamental premise underlying such proposals. A country can only thrive if it has the human capital to do so, and it’s one of the most important roles of any government to maximize the value of its country’s aggregate human capital. One way it does that is by encouraging population growth; but the main way it does that is by providing universal education. After all, as technology advances, the skills that a country’s workers boast are ever more important than the simple number of warm bodies in the labor force. If your country falls far behind on education (think Portugal, or even Puerto Rico), then it will surely fall behind economically as well.

So if you don’t want to start fiddling with the tax code to try to penalize the childless, maybe an easier way to achieve much the same goal would be to invest more, at a federal level, in education.

Right now, most education funding happens locally — which encourages the idea that education is more for the benefit of individual children than it is for the benefit of the nation as a whole. Each community is responsible for its own education funding, and parents are prone to paying enormous sums, in the form of higher property prices and higher property taxes, in order to get their kids into better-funded schools where the kids come from wealthier households. Those sums are a substantial cost of having kids —as, of course, is all the money that parents pay towards other forms of education, including private-school fees and college tuition fees. On top of that, the student-loan crisis is essentially an artifact of the way in which US society forces individuals to pay for their own education, even though that education will ultimately benefit society as a whole.

The result is a country where the childless are prone to consider themselves to be subsidizing other people’s children: we (the childless) are paying taxes so your kids can get a good education. This is narrowly true, but it misses the bigger picture — that we (the childless) should want kids, in general, to be well educated, for any number of reasons, most of which boil down to the fact that it makes us better off in both the short term and, especially, the long term.

Rather than raising taxes on the childless, then, why not just spend a lot more money, at the federal level, on education? There’s no shortage of possible investments: everything from pre-K through post-graduate studies could use more cash. Such expenditures would narrowly benefit kids, and their parents, more than the childless — but would ultimately benefit everybody. And by making it easier and cheaper to raise a well-educated child, they might even encourage parents to have more kids.

Most importantly, if the burden of education funding started to move from the local to the federal level, that would help enormously in leveling the educational playing field. If I’m a parent, I care deeply about the schools my kids go to, and much less about all the other schools. If I’m a non-parent, by contrast, I care much more about the aggregate output from the educational system as a whole: my interests are society’s interests.

So let’s move educational funding up the chain a few notches. It will help parents more than non-parents, while doing so in a way which is more than fair to the latter.

Comments
28 comments so far

“At a societal level, we want population growth”

Says who? And even if true, when do you stop?

“A country can only thrive if it has the human capital to do so, and it’s one of the most important roles of any government to maximize the value of its country’s aggregate human capital. One way it does that is by encouraging population growth”

That certainly isn’t a fact orIs this just to pay for Social Security? science, and it’s not a universally held opinion. Because we really don’t need to have lots of kids to help us on the farm any more. In fact, as automation takes over more jobs, we need even less people to maintain our standard of living.

It’s possible that we will figure out a way to have enough energy, food, and water for a larger population, but we don’t have to have a larger population, and there is no reason why those who don’t have kids should have to subsidize those who do.

Posted by KenG_CA | Report as abusive

Ditto to KenG_CA… rich westerners don’t want the population of their country or their earth to grow.

Felix is pro-equality wishing for a more even distribution of the worlds resources… he’s a better man than I am since that outcome would reduce our standard of living by 75% to get to the global average.

Best hopes for very gradual population decline so that we can tax the earth natural systems a bit less with each generation.

Posted by y2kurtus | Report as abusive

Raising a child is cheap if you lower the bar. Food, water, and a room for 18 years — you can probably manage that for $100k.

Educating a child is expensive. Perhaps $15k/year for the elementary years, $20k/year for secondary education, and $30k/year for college. Your typical college grad has consumed $400k of education by that point.

Agreed with KenG that population growth isn’t and shouldn’t be the goal. But we do need to educate the next generation so that they can take over when we’re ready to retire.

Posted by TFF | Report as abusive

If you just replace “people” with “resources,” then all the arguments for immigration sound like 19th century colonialism.

Posted by billyjoerob | Report as abusive

“At a societal level, we want population growth”

Why? We’ve got plenty of people. We don’t need more.

Posted by RockIslandLine | Report as abusive

What no country on the planet has is enough free birth control and family planning, or adults responsible enough to know not to keep churning out seedlings of themselves, while expecting the rest of the world to shoulder that burden. Humans are 7 billion and have destroyed both the oceans and air, we’re working on making every square inch of groundsoil toxic, as well. We re a blight on the planet and were even 3 or 4 billion ago. In one generation, we will be a 9 billion strong mass of sweaty violent parasites unable to still control screwing and breeding. More of what is already too many for the sake of a consumer economy in every nation is not the answer.

Posted by timebandit | Report as abusive

Humans are not fungible, so you should care about what populations you’re subsidizing.

Yeah, I know … sounds like eugenics. Bummer.

Also, has the experience of fed involvement in education been such a success that you’d want more?

Posted by Zeken | Report as abusive

Dumb premise (that we need more people) and dumb concept (to throw more money at education). Until the grip of the teachers unions is broken, any money spent will only go to salaries. Education needs competition and vouchers is the way to do it – then let the parents choose the schools that work and should receive the voucher money.

Posted by stevedebi | Report as abusive

And what a HAPPY COINCIDENCE, this proposal would also shovel money towards a favored democratic party constituency.

Take a look at the massive increases in educational funding over the last 40 or 50 years and the absolutely stagnant/declining educational outcomes.

Espousing “more funding” as the answer to improving educational outcomes is either based in ignorance or duplicity.

Posted by EndlessIke | Report as abusive

I am amazed that it took as many as eight comments to turn this into a rant against the Democrats. Reuters posters usually manage to do it in three…

Posted by BlueInBama | Report as abusive

Wow, these comments seriously terrifying if you assume they represent the opinions of a cross-section of the population. To remain competitive in this new century we will need our most of our population to be technically competent in order to be productive and contribute to the United States’ industrial base. The draw in human upkeep from the boomer retirees will take a fair percentage of our countries current industrial capacity. If the OMB data is correct, that might be as much as 30%-40% of the nation’s current outlays. This, coupled with the retirement of such a large, skilled subsection of the workforce will require us to both meet and exceed current productivity. In any other case there will be a global economic depression.
For our future economy to retain a sound industrial base, we will need men and women with Science, Technical, Engineering, and Mathematics(STEM) skills which can only be acquired through university education. Many promising and competent students who should be focused into these programs are being stymied by both the cost of the university education being solely the responsibility of the student and their family.
I felt the author was setting forward a reasonable proposition in that we should concentrate on fixing the federal education subsidies. As it stands, our population is relatively poorly educated to those in the EU and Asia. This is shown quite clearly by the number and quality of academic papers being produced by extra-nationals in U.S. universities.
In addition primary education needs more than just standardization mandates to properly prepare students for university. Recent studies have shown that the success of college bound high-school students are highly dependent on the amount of funding the school receives. The cost in terms of time and money for remedial university classes is staggering.

Posted by leumasmc | Report as abusive

leumasmc, there is a big difference between saying we should invest (even heavily) in education and saying we should subsidize parenthood. Also, his premise for subsidizing parenthood is based on the idea that we need more people in the U.S.. Even if that were true, we could import them like we import lots of other things.

I view education just like infrastructure, it has to be maintained.

y2k, see, we disagree less than you think.

Posted by KenG_CA | Report as abusive

.
WhY On Earth would you want more children,

when you don’t have jobs or FOOD for those already present ?

This is the typical insanity. This is the typical Keynesian belief.

Create more people, to consume more. Means we all get wealthy.

. Bizarre.

.
. Why would we want more people, WHY would we want more population WHEN WE CAN’T FEED THE ONES WE HAVE.

.
.
. Of course more people, more pollution, but that is another topic.
.

WHEN YOU CAN FEED AND CLOTHE AND HOUSE AND EDUCATE

Those children already here, THEN tell me about subsidizing the population to create more.
.
.
..

Posted by Alexaisback | Report as abusive

Finland never sought to make its students rank first in the world in testing. That was the shocking consequence of a national program intended primarily to eliminate inequalities in public education.

Posted by OkieRedux | Report as abusive

Nobody has yet figured out how to sustain an economy with falling population, so yes, we do need more young people in the U.S. And those young people need to be educated, more now than ever. If people only see funding the public university system in political terms of teachers’ unions — are universities even unionized any more? — so-much-so that they’d rather dump public money into vouchers and for-profit colleges, well, that’s just cutting off your nose to spite your face.

Posted by radt0005 | Report as abusive

Those who think we need more people in US or anywhere for that matter should read “Ishmael” by Daniel Quinn.

It’s a relatively short book, a fast, pleasant read that makes some important points regarding sustainability and addresses some other philosophical issues, as well.

Posted by breezinthru | Report as abusive

I agree, seven billion greedy people is too many for planet Earth. We are using the water our children will need tomorrow to get energy to heat our homes and drive our cars today. We are blowing the tops off the most beautiful mountains, turning the entire area into a wasteland, to get coal.

At about two billion greedy people, in order to be able to feed ourselves, we developed non-sustainable agriculture (manufactured fertilizer and factory farms).

At about three billion greedy people we fought two horrible world wars over what the Germans called “Lebensraum” — space to live. We cannot have peace on earth with seven billion people.

In ten years there will be eight billion greedy people. In fifteen there will be nine billion. (See the Wikipedia article on world population.)

Posted by Oma | Report as abusive

Population growth is based on the unpaid labor of women. Another way of stating it would be: Population growth is based on the exploitation of women’s love for our children.

It takes a lot of work to make an adult human being. There are nine months of pregnancy with attendant risk of one’s life and future health, not to mention discomfort and incapacity. Then come approximately six to sixteen years of 24/7 supervision and nurture, followed by the need for higher education. This is the most important job any human does.

If we paid a fair wage for raising children we could not afford the kind of population growth we have. If we paid what raising children is worth we might value adult people enough to create conditions in which they could thrive. We might value them enough not to waste them in imperialist wars.

Posted by Oma | Report as abusive

“At a societal level, we want population growth — more children…. As countries get richer, their birth rates decline, with nasty demographic consequences.”

The premise of this piece is laughable. If declining birth rates go hand-in-hand with a rising standard of living, it makes no sense to try to get richer by reversing that process.

We do not want more population growth “at a societal level.” However, it is true that there is an element of society – corporations – who benefit greatly. Population growth translates into more consumers, higher total sales and profits.

There was a time when population growth was in everyone’s interest. Business profited by the growth in its customer base and society benefited from the growth in the labor force necessary to manufacture the products we need for a high standard of living. But economists fail to recognize the inverse relationship betweeen population density and per capita consumption and that, beyond some point, overcrowding begins to erode per capita consumption and our quality of life. At that point, the interests of corporations and the interests of society diverge regarding further population growth.

One could argue that the U.S. is already beyond that point. Other nations, many times more densely populated (like Japan, Germany, China and host of others) have clearly breached that level and are utterly dependent on manufacturing for export to sustain their bloated labor forces. The resulting global trade imbalance nearly collapsed the economy a few years ago and still threatens it today.

Those who argue for population growth to support an aging population aren’t thinking ahead. Since unending population growth is clearly impossible in a finite world, it’s a problem that must be faced at some point. It would be much better to face it now than sometime in the future after we’ve continued to use that pyramid scheme to put off the day of reckoning.

Pete Murphy
Author, “Five Short Blasts”

Posted by Pete_Murphy | Report as abusive

Logic 101:
What is wrong with this premise?

Instead of raising taxes, why not just spend a lot more money?

Posted by annayllop | Report as abusive

@ Pete Murphy

Thank you, Pete Murphy! At last, someone says that we cannot have a rising standard of living for a growing population on a finite planet. You have made my morning.

I would like to suggest a second departure from the economic theories we all know and love. What if consumption increases with quality of life to a certain point, then diverges?

Certainly, the desire to own more than someone else lowers quality of life, since there will always be someone with a bigger house, car, yacht, etc.

The amount of things a person can do and own are limited by the time they have to live. Further, do people who have two homes have a better quality of life, having to maintain connections to two communities and two circles of friends? Does owning land one has never seen or a house with rooms one never uses increase the quality of life?

Everyone needs food, shelter and transportation; but beyond that what increases our quality of life?

I believe quality of life depends upon our connection to other human beings, and that is best when no one is exploited. What a world we could build!

Posted by Oma | Report as abusive

Teachers already have of the plum jobs in America. It’s a part time job paying full time wages. Then you get to retire at 75% of final salary at 30 years. This means they’re walking out in their early 50′s. While you and I work until 67.

Posted by Handbook | Report as abusive

@Handbook, it is such a TERRIFIC plum job that half of all young teachers leave the profession within their first five years. Think on that one for a moment…

When I taught full-time I was spending 50 hours a week during the school year on the job. Not much downtime during that day, either, unlike office work. I quit when my own kids were born, as it wasn’t realistic for me to continue to put that much energy into the job. (I’m now back to teaching part-time, 30 hrs/week at a job I enjoy, but making less than $30k/year with no benefits. No complaints, but it isn’t as cushy as you seem to think.)

Not all teachers begin in their early 20s. I was 27 before I started, and (if I had managed to work straight through both children) would not have been eligible for the kind of pension you describe until I was well into my 60s. I’ve seen teachers in their 50s pressing to put in the last ten years to collect that pension, and it isn’t a pretty sight. Working with teenagers for 50 hours a week wears you out!

You are working until you are 67?!?!? Teachers are forced to contribute 11% of their salary to the pension fund. If you have done the same for your entire career, then you ought to be able to retire long before that age. I took my pension contributions out of the system when I quit, invested them on the side, and (with very modest continuing additions) am on pace to retire comfortably before the age of 60. (Figure I’ll get the kids through college, then reconsider.) THAT would never have happened if I had continued to teach.

Posted by TFF | Report as abusive

Heck, I think we should have a tax on children. That seems to be a more logical solution to me. Say $300 per year per kid. For those on food stamps we can deduct it from their stamps. For those on stamps and welfare, deduct it from both. This crap of subsidizing children is totally stupid.

Posted by birder | Report as abusive

Nooooo!!! Why should the federal government become even more involved in education? For crying out loud, the national government is too big and powerful already! Too many people nowadays reflexively assume that the federal government has to get more involved in practically everything! Spare us! Cripes!

Posted by ExDemocrat | Report as abusive

These modern day Malthusians are evidence that the scarcest resource is clear thinking people.

Posted by MorgantownJoe | Report as abusive

First, all you previous posters – if you have no children, then eventually everyone will be old with no-one to care for them.

Secondly, I don’t think there should be any problem with having the childless contribute. Oh, but wait! They already do if they own property; property taxes are based on the property owned, and are often used to fund education, so the childless are ALREADY CONTRIBUTING to education.

Thirdly, if one has a grown child, one should not be considered childless again.

Posted by mmmSquirrels | Report as abusive

By all means, let the Federal Government spend more money on education. The schools are almost perfect. A little more Federal money will be just the ticket.

Posted by Publius | Report as abusive
Post Your Comment

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/