Social Security in Circles

I'm confused. James Capretta argues in The Weekly Standard that Social Security benefits discourage large families and that, therefore, we must cut Social Security benefits in order to increase the birth rate in order to . . . make it easier to pay for Social Security benefits.

There's some truth to this argument, but on another level I think it pretty obviously doesn't make sense. One needs to first decide whether or not one believes there should be a generous defined benefit public sector pension program and then think about child rearing issues in light of that. All that follows from this is that there needs to be some level of balance between public sector support for retirees and public sector support for kids and their parents. The conservative solution is to level down, by reducing benefits for retirees and the progressive solution is to level up with better education, day care, work-family policy, etc. The conservative way, people need to have more kids to support them in their old age, and women will need to stay at home to care for these larger broods in a world without high-quality preschool options. The liberal way, better preschool and children's health care benefits slightly increases both the fertility rate, the workforce participation rate, and the overall level of human capital. Either way, in principle, you can make the math work out.

Comments

Why in the world would we want to increase the birthrate? Because we enjoy sitting in traffic jams, and waiting in lines?

There are plenty of third world countries we can direct the conservatives to, where their dream of poor old-age benefits inspiring people to have large families is the order of the day. They can witness first-hand the wonderful benefits of overpopulation, as they dodge starving children begging for their money. As an added benefit, they can even experience repressive sexual mores like they've never dreamed of.

Posted by Jim W | April 30, 2007 2:28 PM

I've always thought we should make an add on portion of the Social Security tax tie directly back to one's own parents, unless there has been a legal estrangement. It seems like it would give a bit more incentive for some parents to invest in their kids.

Posted by AJ | April 30, 2007 2:36 PM

Why in the world would we want to increase the birthrate?

to ensure that the US stays WASPy, and that we aren't overrun by the Hispanics and Arabs who want to turn the US into a Spanish-speaking Mecca. the White Man must be preserved.

Posted by cleek | April 30, 2007 2:38 PM

Yeah, the math works out both ways... but one is a ponzi scheme.

Posted by mpowell | April 30, 2007 2:50 PM

"There's some truth to this argument"?!!??

No. There's no truth to this argument. It is a right-wing lie, another falsehood designed to enlist racism and "family values" in the cynical war on social security.

In traditional agricultural societies, when children began to contribute economically at about age 6, there was a lot of truth to this argument. Even after compulsory schooling, as long as most married women did not work outside the home and so the incremental financial outlay needed to support an additional child was low, there was some truth to this argument.

But today, when at all levels of society most married women must engage in wage labor outside the home and most families depend on paid daycare to permit them to do so, this argument is entirely false. Children today are a net financial drain on any family, and people have them because they want them, not because of their economic value.

Of course, Matt, you have no children, are five decades from retirement, and have obviously never given ten minutes' thought to what really motivates people to have children.

You are starting to piss me off, Mr Y. This isn't your first post that assumes some falsehood to be true because it would make sense in some non-existent world of Econ 101. Stop pontificating and start working. Just because something seems sensible to you at first glance doesn't mean it's worth our time or your effort.

Posted by Bloix | April 30, 2007 2:56 PM

Shouldn't public policy be neutral towards whether women (or men!) want to stay home with the kids or not? Subsidized day care makes the families that choose to have a parent stay home paying for the families where both parents work. Why not just increase the generosity of the tax credits for children, and let people decide for themselves if they want to use daycare?

Posted by ed | April 30, 2007 3:16 PM

i've done enough reading in the social history of the family to know that neither parent nor child liked the system under which it was the children's obligation to take in and care for their parents.

Posted by howard litwak | April 30, 2007 3:23 PM

I'm thinking Washington DC has some radio-wave problem that bends the thinking of people who live too close.

First of all, there is no truth to Capretto's argument, because there is no guarantee that children will support their parents in their old age.

The next question would be if we can afford high birthrates, and the answer is a clear no. The years of the Bush administration have shown that even children who are amply educated and trust-fund endowed by their parents- especially those children, in fact- are simply too expensive for society. Think Halliburton execs, trillion-dollar Iraq War, and falling taxes on superwealthy.

You would think that any normal person outside the Beltway, after reading Capretto's article, would throw the magazine on the floor in disgust and swear never again to waste their time on a magazine which would print such rubbish.

But Matt will probably keep reading, hoping that someday it will be worth his time. That kind of thing seems to happen a lot...in Washington DC.

Posted by serial catowner | April 30, 2007 3:43 PM

My generation (X), in poll after poll, shows they're convinced that Social Security won't be there for them in their retirement, and as far as I can tell GenY believes pretty much the same thing. And yet, no one I've spoken two has ever told me they had any kids-- much less multiple children-- to help shore them financially in their old age. Crazy, huh?

Posted by Persia | April 30, 2007 4:07 PM

needs to be some level of balance between public sector support for retirees and public sector support for kids and their parents.

Why not have both? It works for Scandinavia and they have the highest quality of live in the world, in spite of horrible weather. Of course it means higher taxes on the wealthy, and less income inequality.

Posted by fasteddie | April 30, 2007 4:21 PM

A scenario with insufficient "working-age" people to fund Social Security probably means there is a labor shortage. With a labor shortage, wages would increase and working conditions would improve, so more "retirement age" people probably would be willing to work part-time or full-time and thereby either pay into Social Security or at least reduce the size of retirement payments being made by Social Security.

Posted by H-Bob | April 30, 2007 5:34 PM

I do coke, so I can work harder, so I can make more money, so I can buy more coke, so I can work harder...

Posted by Professor Booty | April 30, 2007 6:59 PM

Am I the only one who thinks the government has no damn business trying to influence my decisions about how many children to raise? Or that it's both predictable and alarming that the supposed right to do so flows from a governmental decision to impose a government "benefit" upon me?

Posted by Shelby | April 30, 2007 7:14 PM

And yet, no one I've spoken two has ever told me they had any kids-- much less multiple children-- to help shore them financially in their old age. Crazy, huh?

The stock market gives you better return on your investment than the maternity ward.

Posted by Consumatopia | April 30, 2007 8:46 PM

To create incentives for long term socially beneficial behavior, we could make some of the Social Security payment dependents upon how much net taxes your children pay. If, say, you have four children who each pay in annually more than $25k more than they take out in government expenses you could get a bigger social security check than if you had one kid whose maintenance on Death Row was a net burden on society.

Posted by Steve Sailer | April 30, 2007 11:47 PM

Shelby:

US government doesn't decide how many kids you have. However, budgetary decisions made by the Federal government create incentives that increase or decrease the rate of population growth. Given that creating a budget is the government's business, it is absolutely the government's business to be aware of how policy decisions affect the rate of population growth. It follows that governments will debate what consistutes 'good' or 'bad' in terms of population growth and will make policy that supports a desired outcome.

Which has the effect of the US government incentivizing you to have more or less kids. (And that's just the way the world works.)

Posted by Saam Barrager | May 1, 2007 3:04 AM

Two thoughts.
First, any reduction in Social Security benefits as a goad tiward raising the birthrate will backfire since people will become even more anxious about the future and will increase their savings, leaving less money for child-rearing.
Two, today's middle class natal strategy of having few children but focusing many resourcse on tehir upbribnging actually makes sense: you are better off in old age if you have just one child who is an investment banker, medical specialist or corporate attorney, than several children in low-pay, dead-end jobs.

Posted by Aleks311 | May 1, 2007 12:47 PM

Sigh. Capretto's argument looks suspiciously like the pro-natalist policies that have been tried in lots and lots of countries and, as a rule have had very little impact on peoples' decisions about how many children they will have. They sometimes convince people to have their children*sooner* but no research I know of shows that these policies actually work to convince people to have more children overall.

There's just a lot more to that decision than economics, people. You know this.

And you also know that the desire for "larger families" is about ideology, about a normative, and unrealistically nostalgic view of family life.

Posted by larry | May 1, 2007 7:37 PM