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The Empty Playground and the Welfare State
How government policy discourages people from having children

(Darren Gygi)



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The fact that children are not only future contributors to old-age programs but beneficiaries of them does not force any modification to this analysis. The childless still free-ride. Or think about it this way: Imagine a society where from time immemorial each woman has had two children. For one unusual generation, each woman has three children, and then the society reverts to the historical norm of two. The temporary increase in fertility would improve the finances of that society’s old-age programs, and this effect would never be undone. The ratio of contributors to beneficiaries, that is, would temporarily rise above what it had originally been and then fall back to its original level but not below it.

Nor does the fact that governments finance the education of children by taxing everyone, including the childless, affect the analysis. Educational expenses are only part of the economic cost of raising children, including the cost of forgone income. And everyone got an education paid for by someone else, whether his parents or taxpayers generally. Parents are not free-riding on the childless.

Even if entitlements reduce the number of children, it may still be the case that they improve social welfare. Hans-Werner Sinn, a German economist, has noted that old-age entitlements can be seen as a kind of insurance policy. They protect people against the risks that they will be unable to have children, or that their children will be unable to provide for them, or that they won’t want to. He suggests that the desire to enforce obligations toward parents was a major motive behind Bismarck’s creation of these programs. But this argument, he notes, can justify only a “moderately sized” set of entitlements. If the elderly often leave some of their pension funds to their children and grandchildren, the transfer programs are larger than optimal. In passing he suggests that the effects of entitlements on family size in his country have been anything but small: “In Germany, generations of households have learned that life in old age can be pleasant and economically sound even without children. The idea of marrying and having children in order to ensure satisfactory consumption in old age had been common before Bismarck’s reforms. A century later” — Sinn was writing in 2002 — “this idea has largely vanished, and a growing number of people prefer to stay single or at best form a ‘dink family’ — with double income and no kids.”


Contents
May 28, 2012    |     Volume LXIV, No. 10

Articles
Features
Books, Arts & Manners
  • Rob Long reviews The Tyranny of Clichés: How Liberals Cheat in the War of Ideas, by Jonah Goldberg.
  • Arnold Kling reviews Uncontrolled: The Surprising Payoff of Trial-and-Error for Business, Politics, and Society, by Jim Manzi.
  • Jay Nordlinger on the composer Michael Hersch.
  • Charles C. W. Cooke on Walt Disney.
  • Ross Douthat reviews Sound of My Voice.
  • Kyle Smith on the NFL draft.
Sections
The Long View  .  .  .  .  .  .  .  .  
Athwart  .  .  .  .  .  .  .  .  
Poetry  .  .  .  .  .  .  .  .  
Happy Warrior  .  .  .  .  .  .  .  .