Fertility Rates and Government Intervention

I have been writing on the weird conservative tax plan to give money to every parent who isn't poor (I, II, III). This is not how it was initially sold of course.

My favorite in the genre of extreme deception about the plan came from Reihan Salam who wrote an entire piece about soaking the childless to give to parents. In the piece, he describes the importance of this in general terms as if he wants to assist all parents: it's costly to raise kids, kids are important for the future, etc. He never lets on that his actual plan is not a natalist policy to support parents in general, but a policy to give more money to all parents who aren't poor.

The exclusion of the poor from this massive welfare state expansion is curious on a number of grounds. The US has the highest child poverty rates in the developed world precisely because we have pathetic levels of family benefits. Excluding the poor from an expansion in family welfare benefits seems particularly cruel in that context. Moreover, as I detailed (again) in my last post on this, all of the arguments the conservatives have used in favor of it do not support excluding poor people from it. The main story they tell is that the point of the new benefits is to pay parents for the future payroll taxes of their grown kids, which would imply equal benefits to all parents regardless of their income.

Distortions

One of the points I've been wanting to make on this, but have so far restrained myself from doing, is about this weird notion of distortion they rely upon in their argument. But Robert Stein's recent comments give me an excellent opportunity. He is reported to have said that the idea of the program is "to allow people to have the number of kids they would without government intervention."

The argument is that the government distorts incentives to have children by intervening in the economy via creating Social Security and Medicare. And so this plan to give money to every parent except the poor ones will correct that.

As a preliminary point, "allow" is a weird word choice here. Nobody disallows anyone from having kids. They choose not to have kids.

But the more interesting point here is this notion of "without government intervention." I love this idea. It's the greatest bit of empty rhetoric that flows from the right-wing, a sheer delusion that doesn't actually refer to anything concrete, but operates as a shield that allows them to avoid making full-throated justifications for their preferred institutions.

What is this baseline world "without government intervention" and how many kids would people have in it? Well we know, as a basic matter, that people have less kids in societies that are richer and more stable. The developmental economists tell us that becoming richer and more stable is a function of government institutions, in particular things like inventing property institutions, contract institutions, corporations, and so on.

Stein seems to want to hold all else equal in society, but then tick SS and Medicare off and guess as to how many more kids that ticking off would result in. But that does not tell us how many children there would be without government intervention. We should hold all else equal in society and then tick off property law, contract law, securities law, corporate law, commercial law, patent law, copyright law, and every single government economic institution. I'd guess that ticking off all of those institutions, and thereby bringing us to the world "without government intervention" in the economy (aka as the Grab What You Can World), would cause national income to plummet and birth rates to massively spike, maybe to seven children per woman.

Thus the marginal reduction in fertility caused by government intervention in the economy is somewhere near four to five children per woman. Is this the baseline we are working towards with natalist policy? The no-government-intervention baseline where, due to the poverty resulting from a lack of political-economic institutions, women each have seven kids?

If this is not the the proper baseline to measure the fertility distortion of "government intervention," then what is? Surely it's not just ticking SS and Medicare off, is it?

Conclusion

It's hard to imagine folks are actually impressed by these distortion arguments precisely because child-having is always tied up in governing institutions. The government institutions that create capitalism impact how many kids people have, just as the government institutions that create feudalism, socialism, primitive communism, and so on do. The "no intervention" baseline is utterly imaginary and refers quite literally to nothing that has ever existed.

In the instant case, I am not sure if people drawing upon this argument (which is unsuccessful in any case with regards to why we should deprive the poor of the expansion in child welfare benefits) actually buy into it or not.

On the one hand, a lot of people are really under the mind spell where they actually do seem to think "interventions" and "distortions" mean anything more than "deviations from the interventions and distortions I personally like." So you can see how someone might genuinely get sucked up into trying to triangulate the number of kids that would exist in the no-government-intervention world.

On the other hand, it's such an out-of-left-field argument here that it is extremely difficult to imagine anyone started with "let's end child-having distortions" and then worked their way to this proposal. What's more likely is they started with this proposal and then worked backwards towards some argument for it. That's more consistent with the rhetoric of this reform conservative genre, after all. They claim to be searching out concrete proposals that they can sell as uplifting the middle class. The most obvious way to accomplish that is to give a bunch of money to the middle class because people love it and it helps them a lot (it even helps poor people). And here is a proposal that does that. The other points are probably more about dissembling than anything else, an especially important thing to do if you also want to maintain your anti-welfare bona fides.

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