Thursday, May 28, 2009

Demographic Redux

Rod Dreher speaks favorably of David Goldman's article on America's demographic decline. While Goldman calls the problem exactly right, I am somewhat less sanguine about either the efficacy or the political feasibility of his one innovative idea.

Shift part of the burden of social insurance to the childless. For most taxpayers, social-insurance deductions are almost as great a burden as income tax. Families that bring up children contribute to the future tax base; families that do not get a free ride. The base rate for social security and Medicare deductions should rise, with a significant exemption for families with children, so that a disproportionate share of the burden falls on the childless.

The obvious problem is that this impedes family formation. People don't get married to get rich. They get married because they are rich. Yes, this is an artifact of female economic emancipation. But since feminism isn't going away, we have to understand that heavy taxes on single men mean that they will have the harder time reaching a financial status where they become viable marriage partners.

Dreher favorably quotes Phillip Longman in this vein:

Other sectors of society have effectively appropriated for themselves much of the value in human capital created by families, contributing to the strain on parents and a decline in overall fertility rates. Public policy and current law stacks the odds against those who choose to raise children. We need to make major adjustments to the social contract in order to allow parents to retain more of the return that comes to society through their investment in children. Because having and raising children is a public good, the next social contact should focus on supporting parents and children as early in life as possible.

Having and raising productive children is a public good. And productive children tend to be born to productive parents. The only method politically available for providing support to productive parents is a tax deduction: it only works for those earning enough money to pay taxes, and with progressive income taxes, the more you earn, the more the deduction is worth to you.

But we are already doing this. Otherwise, it's well nigh fanciful to imagine that our low-human-capital population breeding dysgencially can be much deterred from their behavior with politically available means. Even if I did favor cutting the social safety net, this is unlikely to be successful politically, and unlikely to work: plenty of starving countries make lots of babies. And, say, paying welfare recipients to accept sterilization is the kind of thing that only gets traction at Half Sigma.

4 comments:

Anonymous said...

Which is why we should only tax older unmarrieds at a higher rate. They are the ones making the most money anyway. I am agreed that it makes little sense to tax young people starting out, so maybe start the higher tax rates at 30 or 35.

- Thursday

Anonymous said...

plenty of starving countries make lots of babies.But not at North American or European real estate prices, and not in a North American or European. As long as we don't allow squatters, we effectively force the poor to spend a fairly large amount on housing. Not being out on your butt in the Canadian winter, for example, creates a marvellous incentive for not getting too crazy with the number of children you have.

- Thursday

Anonymous said...

Correction:

. . . and not in a North American or European climate.

- Thursday

Φ said...

Thursday: not just unmarrieds, but even married couples without children. I would tend to favor the older age, recognizing that some people get a late start.

That's a goood point about the effect of climate on the fertility-productivity curve.