President Trump wants to spur a Baby Boom. His proposals will be ineffective at best, while costly and counterproductive in the long run. Moreover, offering a $5,000 cash bonus to have an additional baby would create some perverse incentives. More on that below.
My parents had three children. One aunt and uncle who lived near us had four children, while another aunt and uncle had five. My wife shares a similar experience. There were three children in her family and some relatives had even more. Our experiences growing up are not unique. There were as many families who had three or even four children as there were families who had only one or two.
Birthrates in developed countries are declining to below replacement level. Throughout the developed world, families have fewer children but invest more in them. In centuries past, children were hard to prevent, and one-third or more did not survive to celebrate their fifth birthday. Furthermore, historically children were an asset to the family business, which was often a farm or a herd of livestock. At some point in the early 20th Century, offspring transitioned from being a family asset to being a household expense. Families left the farm, moved to towns, and began working non-agricultural jobs. They no longer needed cheap labor to milk cows, plow fields or slop pigs. Kids no longer were expected to earn a profit so much as they were expected to pick up after themselves and assist with household chores. As an aside, this is also when the modern concept of a childhood engaged in play and the coming-of-age teenage years began.
What are some of the other reasons women are having fewer babies? The reasons are complex. Women began joining the workforce in large numbers 50 to 60 years ago. Their contribution to the family unit is earning income, not birthing cheap labor. They have less time for childrearing. Estimates vary but children cost around $310,000 to raise to adulthood. That is a steep price for households that need to be saving for retirement. Americans want more leisure time. Kids must be chauffeured around to soccer practice, equestrian lessons, intermural sports leagues and even travel sports leagues. There is also the expectation that kids should each get their own bedroom, and houses are more expensive than in previous generations. Daycare costs rival a mortgage. Having babies gets expensive. Then there is college to consider.
A cash bonus for having a baby will be too little to motivate most women to have more children than they otherwise would. It could, however, raise entitlement spending if some couples have kids they cannot afford for the quick cash. Also, the promise of cash for a baby will undoubtedly encourage Democrats to advocate for the return of more generous child tax credits, another costly endeavor. Overall, a baby bonus will not increase birthrates to any degree but will boost entitlement spending. As Vox reports, “…the effect tends to be fairly modest and can vary a lot depending on the country and the specific group of people receiving them.”
A professor, writing in the Wall Street Journal suggests subsidizing IVF procedures. Professor Lenard Lopoo claims that making IVF more accessible would result in babies who otherwise would not have been born, thus avoiding paying for babies who would have been born regardless. While that is quite possibly correct, it could result in higher prices for IVF and yet another costly health insurance mandate.
Depopulation in developed countries is worrisome to Western governments, mostly because they made old age entitlement promises they cannot keep without future workers. It is easy to make political promises when the bills will not come due for 30, 40 or 50 years. It is much harder to pay for promises (i.e., debts) made 50 years ago without workers willing to pay for them.
Society has changed in profound ways in the past 100 plus years. Gone are the days when children were an asset to work the farm and could marry and purchase farms of their own when reaching adulthood. Kids are expensive, requiring significant investments. The trend worldwide is for families to have fewer children and invest more in each one. This is not going to change.
Read more at: