The last month has greatly change what I see as the default future. Instead of seeing the last few centuries of exponential world growth continuing until a new much faster growth mode appears within a century or two, my default is now darker. The economy declines after population peaks in roughly thirty years, and innovation then grinds to a halt, with the economy not rising again until world population is dominated by Amish-
I like the tax waiver idea! If attached to the mother it would have a secondary benefit, namely encouraging men to stay married to the mother of their children (lest they lose the tax benefit). Two-parent households are shown to have many positive benefits for children.
The US has a get out of jail free card here in the form of immigration. There are no lack of young people who want to move here, and we let in about 1m annually vs. 3.6m natural births. I suspect that politicians' first instinct will be to turn up that spigot because it's cheap and has other benefits, but it begs the question of how long other countries will let their people freely emigrate when the population crunch comes in earnest.
A better solution would be to give the tax benefit to the father - women initiate the vast majority of divorces today. In essence, we've already tried incentivizing women to have children with welfare. That didn't work out too well.
But, this is ludicrous - we don't need just MORE people, we need well-raised people. Quality of children reared is more important that quantity.
Most of the global young are low IQ, their immigrating here will be a net fiscal burden amongst other problems. If anything trying to solve the fertility problem that way will just make things worse.
You can get nearly all the benefits of tapping into global talent by offering anyone that can score 130+ on an IQ test $1M to immigrate.
I see news articles suggesting Hungary planned to try something along Bryan’s idea in 2019. — women with four kids pay no income taxes for life.
A nit: what about the time value of money? If we expect a kid to generate X of taxes in their lifetime, that’s not worth X to the government now, cause they have to pay interest on their debt.
Hungary passed a law in 2019 exempting women with four children from income taxes, for life. This is the first effort that at least sounds somewhat like actually trying.
Yet when considered in detail, this was a rather terrible implementation. There is a mismatch here between what women and families want and what this is pushing them towards.
Even with a large income tax break, asking women to have four children is rather ambitious. The one-time payments for the first three children are not that different from zero, the main effect only kicks in if you have four. Then there is no substantial further benefit to having five.
The benefit then comes in the form of not paying income tax rather than a direct payment. That means that to get the benefit, the mother of four has to be working.
There are exceptions, but presumably if you choose to have four children in order to get financial benefits, what you want to do with that funding is stay home with your children. That’s not allowed here. The income tax benefits don’t even seem to pass to the father or husband, so they can support a family on their own. I do get it, given how easy that would be to game, but it doesn’t seem great. It also creates a very strange and huge incentive to have stay-at-home fathers, and to encourage various forms of tax fraud, I am sad I have not yet watched any movies about this.
All the incentives here are twisted and highly inefficient. Another problem is that most of the benefits paid are going, for a while, to go to women whose children were already born under the old regime.
Then early this year they extended the policy to all mothers under 30. If you have one child by 30, you are exempt from income taxes for life.
This essentially wipes out the four-child policy, other than retroactively. The number of women who are going to have zero children before 30, then have four or more later, is very small.
The new rule seems much more interesting. Hungary’s tax rate on personal income is 15%. So this is a permanent 17% boost in take-home pay if you have your first child before 30. That seems like a very strong incentive to have your first child before 30, even if you weren’t sure if you wanted one or not. Not as strong as a similar-expected-value one-time payment or guaranteed income steam. Still warping the tax incentives in very strange ways. Still pretty great.
Long term I am very curious to see what this does to tax rates. If the majority of Hungarian women do not pay income tax, that is going to require a substantial tax hike. It also will be very interesting to see the impact on earnings, and on the gender pay gap, and on norms of child care. If a couple gets married in their 20s, and knows that the women is permanently immune from income taxes and the man is not, so the women’s pay is worth at least 17% more, what happens?
It is too early to know what the new rule will do. What about the old rule, which had 4 years to work, together with other efforts? Those efforts include a maternity benefit of about $6k, marriage benefit of about $10k, a baby bond for each child, a super generous child care allowance, tax refunds and preferential mortgage rates for housing costs, extra vacation that scales with the number of children, you name it.
"In Hungary the fertility rate has increased more than anywhere else in Europe, rising from 1.25 children per woman to 1.59 in 2021. ..."
Most of that happened before 2019, and all of it before 2023. And there is a long way to go to get to 2.1. It still does show that some combination of efforts is having a real impact.
Still, this is an actual real start. Given the differences in costs and the weird implementation choices, it is difficult both to calculate the total cost and to translate this to an expected cost to do a similar thing in America. - end of quote -
It is still beyond me why you consider lower fertility and a slowdown or even reversal of population increase to be a problem. I'm not a Paul Ehrich fan, and am not against population increase. I do not think population increase will be a disaster. I don't see, either, why population decrease will be a disaster. Your idea that it will be is, to me, as nuts as his view that it will be some kind of elixer.
As far as explanations go, demographers for many decades have observed that as a population becomes more affluent, their birth rate goes down. When I started grad school at Princeton (in chemistry, in 1972) I stopped in at the office of Ansley Coale, a well known demographer then on the faculty, who mentioned this immediately. He said, that the standard explanation is that poor folks have more kids because most of them will die, but some will survive to take care of their parents in their old age. In more affluent groups, people accumulate wealth that will see them through old age, and many countries have the equivalent of social security that helps.
I don't know if that "standard explanation" is still in vogue, but all I can say is that it makes sense to me. That's a low bar :-), but I frankly don't know whether there is an alternative explanation or whether it is now or was then significantly contested, or what evidence, pro and con, has been amassed on this question over the past 50 years.
I might add that the same contrast can be made comparing affluent and poor subpopulations. I think it was Dick Gregory who said something like "The rich have trust funds; the middle-class have bank accounts and the po' have children."
I think I've asked this before, so:
1. Why do you think lower fertility is bad?
2. Do you have any problem with the "standard explanation" I just described, and if so, what is it?
Agreed, it doesn't seem obvious to me that a shrinking population necessarily implies low innovation.
We could make a counterclaim that fewer people will motivate higher levels of automation. That has been argued by historians regarding the great Plague in Europe; that fewer serfs on hand drove innovations in farming productivity. Historians also contend that this shortage of labor is what led Europe to outpace China starting in the 1500s: In China there was always a surplus of labor, so there was less impetus for the types of innovations that led to the industrial revolution – despite China being significantly ahead of the West in the 1400s.
In a more modern context, I can imagine there would be less opposition to, say, the development of automated trucks if there was a genuine shortage of truck drivers.
Maybe innovation is more like oil production: There are oil reserves that can profitably be tapped for $10 a barrel, and some (like fracking) that only become profitable at $70 a barrel. When the price of oil increases, it brings more reserves online. In similar fashion, we might imagine there is a reserve of possible productivity-enhancing innovations, but it takes an increase in the cost of labor (due to declining population) to bring more of those possible innovations to fruition.
Peter, I concur. Lower fertility isn't inherently problematic; it's a complex issue influenced by affluence, societal structures, and ethical considerations. Policies should be rooted in a comprehensive understanding of these factors, guided by principle.
I like the idea. It just seems like there will be a huge challenge convincing the general public that we should have pro-fertility policies. After all, there is an easy way for people to be pro-fertility in their personal lives - just have more kids. And the core problem is that not enough people are doing this.
We need some sort of "pro-fertility" faction in order to get any policies along these lines. It's like the early days of the YIMBY movement, we need to get some attention and we need to be open minded about who the political allies would be and what sort of policies would be possible.
You're making some big assumptions about peoples willingness to forego consumption to finance dept because there might be more taxpayers decades from now to fund their future consumption.
More likely more kids means the dependency ratio will get worse in the short run, which will tax present resources. The short run is the timeline of most voters and politicians.
This was the explicit logic South Korea used when it purposely tried to crater its own fertility. That it would juice short term economic growth and stabilize the regime. I suspect this is also why a place like China doesn't do it, Xi and the rest will be dead by the time it matters.
That doesn't mean it isn't a good idea. As I'll post below I think this all makes a lot of sense. But mainly in the "long term good for society as a whole" sense. I also would finance it with debt if that's easier to get is passed.
I think that if parents could vote on behalf of their under 18 children we could get it done.
I don't see why it's clear we want to. Sure, greater population means faster technological advancement and growth but it also means more people live in a less advanced and comfortable time.
For instance, suppose increasing the number of people alive during the middle ages would have speed up technological advancement and brought about the industrial revolution earlier. Whether or not that would have been desierable depends on whether you've on net increased the number/fraction of all people who will ever live's standard of living and that seems like a very nonobvious question.
Seems to me we need to know just how paralizeable human advancement is and how resource bound it is to figure out if this is a good idea.
Point is that extra economic growth comes at the cost of shifting people who would have been born in the future to being born now reducing their qualify of life and it's not obvious when that tradeoff is positive.
To give the limiting case, compare a world in which people evolved right after the asteroid that killed the dinosaur (so more population because in our world no people lived then) and a population of 100 million people lived as hunter gatherers for 60 million years but only industrialized 10 years before we did...I think that would clearly be not worth it. So the comparison is clearly more complex than just does it increase the rate of growth.
Yes, obviously fewer people mean less economic growth. But it also means that a greater fraction of people live in the future when more growth has happened.
Would it be a good tradeoff if doubling the number of people who lived in the medevil period moved the industrial revolution forward 10 years? I think not because that increase in economic growth isn't worth forcing a greater fraction of all people to live at such a poor time.
Re Peter G comments that more people sooner is/might be bad: your comments would have more validity in a country without such huge per capita national debt, and lacking unfunded mandates for the old. But AFAIK this applies to no Western/modern country anywhere
A cheaper way to boost potential tax revenue from future generations is to pay for IVF+PGS to select for brighter babies, and even offer a large incentive for using genetic testing to select embryos. The benefits to the national economy from smarter babies would be much greater than the increased tax revenue per baby. Why? Most of the benefits of brighter people are not private. Most of the increases in GDP flow to the rest of the population.
If we could rapidly raise IQ then it could preserve or even increase the number of very bright people even as the general population shrank in size.
If we just pay for the thing, kids, parents could spend that money on IVF if they see that as their most cost effective strategy. Not clear why we should be pateralistic to them re such strategies.
While I am not sharing the intense worries about a future decline in population back to levels of today (8bn), or 1974 (4 billion) or indeed Einstein's annus mirabilis (1905: below 2 billion), I do believe Caplan's idea of more massive tax-reductions for parents the way to go. If one feels like caping those for the richest 1% at 10k or 50k or 100k a year: easy said and done. More tricky: A well-earning college-prof has 4 kids or more: How to waive say 300 k taxes if his usual income-tax is only say 60k? - First year maybe cold cash instead, to de-incentive a run to looong shifts at the office instead of helping with the night-shifts; later hefty bonus-payments on completion of high school (or better: according to SAT-results - 100k if in the top 10%, zero if in the lowest 20%.). - All this sounds rather useless to a well qualified, SINGLE mother-in-spe, though. Which some might consider a feature, not a bug. Still.
(1) "He suggested N=1, but dividing $300K by the average annual federal tax bill of $13.4K gives N>22" Your logic of dividing $300K by $13.4K to get 22 years of parental tax relief is based on the dubious idea that the child will *actually* contribute $300k to reducing the national debt so that's how much we should incentivize reproduction. The child will eventually be paying $13.4K taxes too when they're an adult (and ignoring inflation etc.) Only about 11% of the federal budget goes into paying interest on the national debt. Most of it goes into services whose costs scale with the population. So it would be more accurate to say the child, once adult, is "worth" only around $13.4k * 0.11 = $1500 a year with respect to paying down the national debt. Over a working lifetime that's perhaps $60k, not $300k. Actually the child's contribution is less than that, perhaps negative, because the national debt is increasing. Another worker plausibly would add more to the debt (because of federal services to support that worker) than the worker helps pay off.
(2) We should not expect that a 10% increase in the population would equate to a 10% increase in GDP. Much of GDP depends on factors that do not much change based on the population, such as natural resources, treaties and established trade relations with other countries, military presence, transportation infrastructure, international intellectual property of companies like Microsoft, Apple, or Disney. Countries with very high populations often have low GDP per capita. So, if you want to increase the population to increase our national ability to pay down the national debt, there would be diminishing returns, perhaps even negative returns.
(3) "Population peaks in roughly thirty years" - again, where are you getting this 30 years figure? The last time you said 30 years I pointed out the UN projection is that world population will peak in 2086 - over 60 years away. Now you've repeated the 30 years figure without any cited source.
(4) The US is already projected to increase in population to 400 million by 2060 as a combination of immigration and natural increase (births - deaths). If, for tax purposes/national debt purposes, we wanted increase beyond that, funding *immigration* could be a better bet than funding births, because an adult immigrant starts paying taxes immediately instead of in 20 years
(5) Where is the political will to make current sacrifices to pay down the national debt? That just isn't happening because US politics is too short-termist. If it was happening, it would happen through an increase in taxes and reduction in spending.
"funding *immigration* could be a better bet than funding births, because an adult immigrant starts paying taxes immediately instead of in 20 years"
Bro your average third world peasant is never going to pay more in taxes then he takes out in benefits. Even prime age workers get old and have kids eventually.
The people coming to the US are not "average third world peasants". A third of them (about 500k people/year) come here for school: Overwhelmingly to universities as undergrads or grad students. Go to any tech company in the US and you will find many, many people (the majority in some companies) who took this path into the US. These are intelligent, productive people by any standard.
It must be very convenient to substitute prejudice for data. https://www.cato.org/blog/fiscal-impact-immigration-united-states Looks like the budget outlook (taxes - benefits) for immigrants is actually higher than the budget outlook for native-born, at every level of education. See table 31.
1) Poland has tried that for a few years now - the version with direct payments, they pay around 13% of median salary (~$2500, median salary is ~$18k) per child[1]. In the US, paying 13% would mean $6700 for 18 years = $120k for each kid. This is quite close to your proposal. Now: the consensus is that it (mostly) doesn't work. Which was non-obvious from the start, but is pretty obvious after 7 years of running the program. I am very sceptical of whether the implementation details (making it a tax allowance instead of a direct payment, etc) would change this. Price elasticity of having children is just very low. You have listed a lot of good reasons in one of your last posts for why this is true.
2) Right now, Amish and similar groups have high fertility, but then the children mostly leave the community. Why do you think this is a bad model of what would ultimately happen? Amish have about 7 children on average, which means that (assuming average of 1.5 child per non-Amish woman) they can constitute about 10% of the population, and the US would still have population growth.
My fellow citizens in Poland are very creative in tax evasion (as evidenced already by the percentage of people who have 1-person firms instead of being employees to benefit from lower b2b taxes). Thus I predict that offering anything more complicated than "500PLN for each child each month" will definitely motivate people to optimize for that small differences (formally move to other city, formally lower/rise paycheck and compensate in cash, this kind of things). In particular the idea to exempt mothers from taxes will almost certainly cause a lot of companies to be formally sold for 1$ to mothers just to evade taxes or some other crazy schemes. I'd keep it as is not to give people stupid ideas :) Note that this level of law interpretation creativity is something we in Poland are born with and find it much easier than actually having one more child.
Personally, I hope that even though these 500pln do not directly motivate people to have one more baby, they indirectly end up in hands of baby shoes makers, kindergarten owners, and other builders of infrastructure, and it was always lack of such infrastructure which was cited as main reason people don't want more kids. I hope that this money will trickle down to exactly these places which are important for (existing) parents' comfort, and then this will cause second order effect of making it easier for next generation of grown ups tp decided to have children.
However there is one thing that I am still a bit more optimistic about. Let’s assume population declines in a 1,6 fertility scenario. My assumption would be that the net technological output would decrease given we operate without advanced AI, but the output wouldn’t really be negative in the sense that we forget about existing technology. Not that population decline isn’t bad, but at what point it would actually lead to economic decline is quite hard to predict. I would argue that anything below 4 billion people is very bad in general.
I know that this is how economists use to describe the decline of technology between the classics and the Middle Ages in Europe. But to what extent this applies to the present is less certain I would claim. As we document so much and literacy isn’t concentrated just among the elites. I am sometimes not so sure if our current difficulties in building nuclear plants for example are to some extent a matter of lost technology as you know we can still build them but we build them more expensive than we used to. But that seems rather unlikely it’s more a matter of scale it’s easier per nuclear plant to build ten of them in average than one of them over a 5 year period especially if parts of the defense department consider it vital
“ a big reward burst at random times across different geographic areas or population types.”
Could you explain how this would be anything but problematic? Would seem to be a civil rights violation as well as invite massive gaming of the system, potentially reduce beneficial migration, etc.
Dumb (or perhaps not so dumb) question: in the U.S:
Given that in the U.S. we already have both a child tax credit and a dependent deduction, rather than invent and describe new tax breaks or credits, wouldn’t tweaking each of these appropriately - amount and rules/phaseouts - do exactly what you’re looking for?
The fact that each already exists also gives you the mechanism to have the effect be greater for higher earners but also correct for the regression to the mean issue you cite. And while slightly harder politically, perhaps, having the deduction be greater for MFJ would be a marriage incentive as many below have noted would be beneficial here.
Have you calculated - or could you - what the child tax credit and dependent deduction amounts would need to changed by to approximate the total $$$ effect per child you’re looking for?
Interesting. Haven't we already hit max population in developed countries a long time ago? How much does it help that poor African countries keep our growth positive as a world?
The key is to have growth of productive citizens. Another child born in Africa adds far too little to world GDP.
Yes, the U.S. better than essentially any other country can survive sub-replacement fertilization rates for a very long time because we can attract high productivity immigrants from around the world (of course, doing that optimally would require the political will to reduce illegal immigration massively while raising legal immigration significantly, and one of the two major parties is completely opposed to the former).
Most other developed countries around the world do not share our advantage in being able to attract and incorporate (assimilate now being a loaded word politically) large numbers of productive immigrants, and so these developed countries need something like what Robin is proposing far more than we do.
Less developed countries have far greater problems than fertility, and indeed lack of fertility is not a meaningful problem there.
Robin, your new vision of the future looks very much like mine except that what I call the Millennium you refer to as a dark future “dominated by Amish-like insular religious high fertility communities.”
We both see a religious revival as inevitable, probably after some form of calamitous decline of our current society. But why must a religious renewal / revolution necessarily be so dark? The Abrahamic religious movement brought a moral big God into a world of child sacrificing small gods. The Christian revolution built on that foundation to bring us human rights and egalitarian philosophy. Civilizations rise and fall but revelation is what drives progress. Why should we not look forward with hope to a Millennial future that is both fertile and bright?
I like the tax waiver idea! If attached to the mother it would have a secondary benefit, namely encouraging men to stay married to the mother of their children (lest they lose the tax benefit). Two-parent households are shown to have many positive benefits for children.
The US has a get out of jail free card here in the form of immigration. There are no lack of young people who want to move here, and we let in about 1m annually vs. 3.6m natural births. I suspect that politicians' first instinct will be to turn up that spigot because it's cheap and has other benefits, but it begs the question of how long other countries will let their people freely emigrate when the population crunch comes in earnest.
A better solution would be to give the tax benefit to the father - women initiate the vast majority of divorces today. In essence, we've already tried incentivizing women to have children with welfare. That didn't work out too well.
But, this is ludicrous - we don't need just MORE people, we need well-raised people. Quality of children reared is more important that quantity.
Agree on restricting benefits to married parents.
Most of the global young are low IQ, their immigrating here will be a net fiscal burden amongst other problems. If anything trying to solve the fertility problem that way will just make things worse.
You can get nearly all the benefits of tapping into global talent by offering anyone that can score 130+ on an IQ test $1M to immigrate.
I see news articles suggesting Hungary planned to try something along Bryan’s idea in 2019. — women with four kids pay no income taxes for life.
A nit: what about the time value of money? If we expect a kid to generate X of taxes in their lifetime, that’s not worth X to the government now, cause they have to pay interest on their debt.
Time value of money is included in "present value" calculations of future debt obligations.
Zvi had some critical comments on this (and other countries). Long post, https://thezvi.substack.com/p/fertility-rate-roundup-1 to save you the scrolling down, here is the Hungary part:
Hungary passed a law in 2019 exempting women with four children from income taxes, for life. This is the first effort that at least sounds somewhat like actually trying.
Yet when considered in detail, this was a rather terrible implementation. There is a mismatch here between what women and families want and what this is pushing them towards.
Even with a large income tax break, asking women to have four children is rather ambitious. The one-time payments for the first three children are not that different from zero, the main effect only kicks in if you have four. Then there is no substantial further benefit to having five.
The benefit then comes in the form of not paying income tax rather than a direct payment. That means that to get the benefit, the mother of four has to be working.
There are exceptions, but presumably if you choose to have four children in order to get financial benefits, what you want to do with that funding is stay home with your children. That’s not allowed here. The income tax benefits don’t even seem to pass to the father or husband, so they can support a family on their own. I do get it, given how easy that would be to game, but it doesn’t seem great. It also creates a very strange and huge incentive to have stay-at-home fathers, and to encourage various forms of tax fraud, I am sad I have not yet watched any movies about this.
All the incentives here are twisted and highly inefficient. Another problem is that most of the benefits paid are going, for a while, to go to women whose children were already born under the old regime.
Then early this year they extended the policy to all mothers under 30. If you have one child by 30, you are exempt from income taxes for life.
This essentially wipes out the four-child policy, other than retroactively. The number of women who are going to have zero children before 30, then have four or more later, is very small.
The new rule seems much more interesting. Hungary’s tax rate on personal income is 15%. So this is a permanent 17% boost in take-home pay if you have your first child before 30. That seems like a very strong incentive to have your first child before 30, even if you weren’t sure if you wanted one or not. Not as strong as a similar-expected-value one-time payment or guaranteed income steam. Still warping the tax incentives in very strange ways. Still pretty great.
Long term I am very curious to see what this does to tax rates. If the majority of Hungarian women do not pay income tax, that is going to require a substantial tax hike. It also will be very interesting to see the impact on earnings, and on the gender pay gap, and on norms of child care. If a couple gets married in their 20s, and knows that the women is permanently immune from income taxes and the man is not, so the women’s pay is worth at least 17% more, what happens?
It is too early to know what the new rule will do. What about the old rule, which had 4 years to work, together with other efforts? Those efforts include a maternity benefit of about $6k, marriage benefit of about $10k, a baby bond for each child, a super generous child care allowance, tax refunds and preferential mortgage rates for housing costs, extra vacation that scales with the number of children, you name it.
"In Hungary the fertility rate has increased more than anywhere else in Europe, rising from 1.25 children per woman to 1.59 in 2021. ..."
Most of that happened before 2019, and all of it before 2023. And there is a long way to go to get to 2.1. It still does show that some combination of efforts is having a real impact.
Still, this is an actual real start. Given the differences in costs and the weird implementation choices, it is difficult both to calculate the total cost and to translate this to an expected cost to do a similar thing in America. - end of quote -
Thanks, this is great. A quick google was only bringing up articles from 2019, so this was very informative.
Four kids is a relatively high bar.
It is still beyond me why you consider lower fertility and a slowdown or even reversal of population increase to be a problem. I'm not a Paul Ehrich fan, and am not against population increase. I do not think population increase will be a disaster. I don't see, either, why population decrease will be a disaster. Your idea that it will be is, to me, as nuts as his view that it will be some kind of elixer.
As far as explanations go, demographers for many decades have observed that as a population becomes more affluent, their birth rate goes down. When I started grad school at Princeton (in chemistry, in 1972) I stopped in at the office of Ansley Coale, a well known demographer then on the faculty, who mentioned this immediately. He said, that the standard explanation is that poor folks have more kids because most of them will die, but some will survive to take care of their parents in their old age. In more affluent groups, people accumulate wealth that will see them through old age, and many countries have the equivalent of social security that helps.
I don't know if that "standard explanation" is still in vogue, but all I can say is that it makes sense to me. That's a low bar :-), but I frankly don't know whether there is an alternative explanation or whether it is now or was then significantly contested, or what evidence, pro and con, has been amassed on this question over the past 50 years.
I might add that the same contrast can be made comparing affluent and poor subpopulations. I think it was Dick Gregory who said something like "The rich have trust funds; the middle-class have bank accounts and the po' have children."
I think I've asked this before, so:
1. Why do you think lower fertility is bad?
2. Do you have any problem with the "standard explanation" I just described, and if so, what is it?
Thanks....
Agreed, it doesn't seem obvious to me that a shrinking population necessarily implies low innovation.
We could make a counterclaim that fewer people will motivate higher levels of automation. That has been argued by historians regarding the great Plague in Europe; that fewer serfs on hand drove innovations in farming productivity. Historians also contend that this shortage of labor is what led Europe to outpace China starting in the 1500s: In China there was always a surplus of labor, so there was less impetus for the types of innovations that led to the industrial revolution – despite China being significantly ahead of the West in the 1400s.
In a more modern context, I can imagine there would be less opposition to, say, the development of automated trucks if there was a genuine shortage of truck drivers.
Maybe innovation is more like oil production: There are oil reserves that can profitably be tapped for $10 a barrel, and some (like fracking) that only become profitable at $70 a barrel. When the price of oil increases, it brings more reserves online. In similar fashion, we might imagine there is a reserve of possible productivity-enhancing innovations, but it takes an increase in the cost of labor (due to declining population) to bring more of those possible innovations to fruition.
Peter, I concur. Lower fertility isn't inherently problematic; it's a complex issue influenced by affluence, societal structures, and ethical considerations. Policies should be rooted in a comprehensive understanding of these factors, guided by principle.
Forgive me if I missed something, but doesn't that up-front payment just become more debt that has to be paid?
Yes but more people can pay that debt bac
I like the idea. It just seems like there will be a huge challenge convincing the general public that we should have pro-fertility policies. After all, there is an easy way for people to be pro-fertility in their personal lives - just have more kids. And the core problem is that not enough people are doing this.
We need some sort of "pro-fertility" faction in order to get any policies along these lines. It's like the early days of the YIMBY movement, we need to get some attention and we need to be open minded about who the political allies would be and what sort of policies would be possible.
But their own kids cost them. This costs no one nothing!
You're making some big assumptions about peoples willingness to forego consumption to finance dept because there might be more taxpayers decades from now to fund their future consumption.
More likely more kids means the dependency ratio will get worse in the short run, which will tax present resources. The short run is the timeline of most voters and politicians.
This was the explicit logic South Korea used when it purposely tried to crater its own fertility. That it would juice short term economic growth and stabilize the regime. I suspect this is also why a place like China doesn't do it, Xi and the rest will be dead by the time it matters.
That doesn't mean it isn't a good idea. As I'll post below I think this all makes a lot of sense. But mainly in the "long term good for society as a whole" sense. I also would finance it with debt if that's easier to get is passed.
I think that if parents could vote on behalf of their under 18 children we could get it done.
I don't see why it's clear we want to. Sure, greater population means faster technological advancement and growth but it also means more people live in a less advanced and comfortable time.
For instance, suppose increasing the number of people alive during the middle ages would have speed up technological advancement and brought about the industrial revolution earlier. Whether or not that would have been desierable depends on whether you've on net increased the number/fraction of all people who will ever live's standard of living and that seems like a very nonobvious question.
Seems to me we need to know just how paralizeable human advancement is and how resource bound it is to figure out if this is a good idea.
No, less people would make for a less advanced economy: https://www.overcomingbias.com/p/shrinking-economies-dont-innovate
Point is that extra economic growth comes at the cost of shifting people who would have been born in the future to being born now reducing their qualify of life and it's not obvious when that tradeoff is positive.
To give the limiting case, compare a world in which people evolved right after the asteroid that killed the dinosaur (so more population because in our world no people lived then) and a population of 100 million people lived as hunter gatherers for 60 million years but only industrialized 10 years before we did...I think that would clearly be not worth it. So the comparison is clearly more complex than just does it increase the rate of growth.
Yes, obviously fewer people mean less economic growth. But it also means that a greater fraction of people live in the future when more growth has happened.
Would it be a good tradeoff if doubling the number of people who lived in the medevil period moved the industrial revolution forward 10 years? I think not because that increase in economic growth isn't worth forcing a greater fraction of all people to live at such a poor time.
Re Peter G comments that more people sooner is/might be bad: your comments would have more validity in a country without such huge per capita national debt, and lacking unfunded mandates for the old. But AFAIK this applies to no Western/modern country anywhere
A cheaper way to boost potential tax revenue from future generations is to pay for IVF+PGS to select for brighter babies, and even offer a large incentive for using genetic testing to select embryos. The benefits to the national economy from smarter babies would be much greater than the increased tax revenue per baby. Why? Most of the benefits of brighter people are not private. Most of the increases in GDP flow to the rest of the population.
If we could rapidly raise IQ then it could preserve or even increase the number of very bright people even as the general population shrank in size.
If we just pay for the thing, kids, parents could spend that money on IVF if they see that as their most cost effective strategy. Not clear why we should be pateralistic to them re such strategies.
Because paternalism isn't the end of the world bro.
Israel provides free IVF for everyone. They are the only developed country with replacement fertility.
There is no conflict here. You can pay for both kids and IVF.
While I am not sharing the intense worries about a future decline in population back to levels of today (8bn), or 1974 (4 billion) or indeed Einstein's annus mirabilis (1905: below 2 billion), I do believe Caplan's idea of more massive tax-reductions for parents the way to go. If one feels like caping those for the richest 1% at 10k or 50k or 100k a year: easy said and done. More tricky: A well-earning college-prof has 4 kids or more: How to waive say 300 k taxes if his usual income-tax is only say 60k? - First year maybe cold cash instead, to de-incentive a run to looong shifts at the office instead of helping with the night-shifts; later hefty bonus-payments on completion of high school (or better: according to SAT-results - 100k if in the top 10%, zero if in the lowest 20%.). - All this sounds rather useless to a well qualified, SINGLE mother-in-spe, though. Which some might consider a feature, not a bug. Still.
(1) "He suggested N=1, but dividing $300K by the average annual federal tax bill of $13.4K gives N>22" Your logic of dividing $300K by $13.4K to get 22 years of parental tax relief is based on the dubious idea that the child will *actually* contribute $300k to reducing the national debt so that's how much we should incentivize reproduction. The child will eventually be paying $13.4K taxes too when they're an adult (and ignoring inflation etc.) Only about 11% of the federal budget goes into paying interest on the national debt. Most of it goes into services whose costs scale with the population. So it would be more accurate to say the child, once adult, is "worth" only around $13.4k * 0.11 = $1500 a year with respect to paying down the national debt. Over a working lifetime that's perhaps $60k, not $300k. Actually the child's contribution is less than that, perhaps negative, because the national debt is increasing. Another worker plausibly would add more to the debt (because of federal services to support that worker) than the worker helps pay off.
(2) We should not expect that a 10% increase in the population would equate to a 10% increase in GDP. Much of GDP depends on factors that do not much change based on the population, such as natural resources, treaties and established trade relations with other countries, military presence, transportation infrastructure, international intellectual property of companies like Microsoft, Apple, or Disney. Countries with very high populations often have low GDP per capita. So, if you want to increase the population to increase our national ability to pay down the national debt, there would be diminishing returns, perhaps even negative returns.
(3) "Population peaks in roughly thirty years" - again, where are you getting this 30 years figure? The last time you said 30 years I pointed out the UN projection is that world population will peak in 2086 - over 60 years away. Now you've repeated the 30 years figure without any cited source.
(4) The US is already projected to increase in population to 400 million by 2060 as a combination of immigration and natural increase (births - deaths). If, for tax purposes/national debt purposes, we wanted increase beyond that, funding *immigration* could be a better bet than funding births, because an adult immigrant starts paying taxes immediately instead of in 20 years
(5) Where is the political will to make current sacrifices to pay down the national debt? That just isn't happening because US politics is too short-termist. If it was happening, it would happen through an increase in taxes and reduction in spending.
"funding *immigration* could be a better bet than funding births, because an adult immigrant starts paying taxes immediately instead of in 20 years"
Bro your average third world peasant is never going to pay more in taxes then he takes out in benefits. Even prime age workers get old and have kids eventually.
The people coming to the US are not "average third world peasants". A third of them (about 500k people/year) come here for school: Overwhelmingly to universities as undergrads or grad students. Go to any tech company in the US and you will find many, many people (the majority in some companies) who took this path into the US. These are intelligent, productive people by any standard.
It must be very convenient to substitute prejudice for data. https://www.cato.org/blog/fiscal-impact-immigration-united-states Looks like the budget outlook (taxes - benefits) for immigrants is actually higher than the budget outlook for native-born, at every level of education. See table 31.
1) Poland has tried that for a few years now - the version with direct payments, they pay around 13% of median salary (~$2500, median salary is ~$18k) per child[1]. In the US, paying 13% would mean $6700 for 18 years = $120k for each kid. This is quite close to your proposal. Now: the consensus is that it (mostly) doesn't work. Which was non-obvious from the start, but is pretty obvious after 7 years of running the program. I am very sceptical of whether the implementation details (making it a tax allowance instead of a direct payment, etc) would change this. Price elasticity of having children is just very low. You have listed a lot of good reasons in one of your last posts for why this is true.
2) Right now, Amish and similar groups have high fertility, but then the children mostly leave the community. Why do you think this is a bad model of what would ultimately happen? Amish have about 7 children on average, which means that (assuming average of 1.5 child per non-Amish woman) they can constitute about 10% of the population, and the US would still have population growth.
[1] (Wikipedia article about this: https://pl-m-wikipedia-org.translate.goog/wiki/Rodzina_500_plus?_x_tr_sl=pl&_x_tr_tl=en&_x_tr_hl=en&_x_tr_pto=wapp)
No, 92% of kids stay in the Amish community.
I agree the larger amounts I'm suggesting might not be enough. But we should at least try them.
…and even if you were correct about the Amish, far fewer leave their native *countries* to go elsewhere
https://ec.europa.eu/social/main.jsp?catId=1124&langId=en&intPageId=4718#:~:text=Family%20Care%20Capital%20is%20granted%20up%20to%20a%20total%20amount,per%20month%20for%20one%20year.
"The monthly amount is chosen by the parent, i.e. it may be either PLN 500 per month for two years or PLN 1,000 per month for one year."
Does this benefit really pay for 18 years or just 1 or 2?
My fellow citizens in Poland are very creative in tax evasion (as evidenced already by the percentage of people who have 1-person firms instead of being employees to benefit from lower b2b taxes). Thus I predict that offering anything more complicated than "500PLN for each child each month" will definitely motivate people to optimize for that small differences (formally move to other city, formally lower/rise paycheck and compensate in cash, this kind of things). In particular the idea to exempt mothers from taxes will almost certainly cause a lot of companies to be formally sold for 1$ to mothers just to evade taxes or some other crazy schemes. I'd keep it as is not to give people stupid ideas :) Note that this level of law interpretation creativity is something we in Poland are born with and find it much easier than actually having one more child.
Personally, I hope that even though these 500pln do not directly motivate people to have one more baby, they indirectly end up in hands of baby shoes makers, kindergarten owners, and other builders of infrastructure, and it was always lack of such infrastructure which was cited as main reason people don't want more kids. I hope that this money will trickle down to exactly these places which are important for (existing) parents' comfort, and then this will cause second order effect of making it easier for next generation of grown ups tp decided to have children.
What changed your worldview?
What's the alternative?
It's not like this problem is getting any easier as time goes by.
If it doesn't work some olds will get shafted on their treasuries and we will have enough young people to start over.
However there is one thing that I am still a bit more optimistic about. Let’s assume population declines in a 1,6 fertility scenario. My assumption would be that the net technological output would decrease given we operate without advanced AI, but the output wouldn’t really be negative in the sense that we forget about existing technology. Not that population decline isn’t bad, but at what point it would actually lead to economic decline is quite hard to predict. I would argue that anything below 4 billion people is very bad in general.
Economic decline implies scales shrink, so we'd drop and forget larger scale techs.
I know that this is how economists use to describe the decline of technology between the classics and the Middle Ages in Europe. But to what extent this applies to the present is less certain I would claim. As we document so much and literacy isn’t concentrated just among the elites. I am sometimes not so sure if our current difficulties in building nuclear plants for example are to some extent a matter of lost technology as you know we can still build them but we build them more expensive than we used to. But that seems rather unlikely it’s more a matter of scale it’s easier per nuclear plant to build ten of them in average than one of them over a 5 year period especially if parts of the defense department consider it vital
“ a big reward burst at random times across different geographic areas or population types.”
Could you explain how this would be anything but problematic? Would seem to be a civil rights violation as well as invite massive gaming of the system, potentially reduce beneficial migration, etc.
Dumb (or perhaps not so dumb) question: in the U.S:
Given that in the U.S. we already have both a child tax credit and a dependent deduction, rather than invent and describe new tax breaks or credits, wouldn’t tweaking each of these appropriately - amount and rules/phaseouts - do exactly what you’re looking for?
The fact that each already exists also gives you the mechanism to have the effect be greater for higher earners but also correct for the regression to the mean issue you cite. And while slightly harder politically, perhaps, having the deduction be greater for MFJ would be a marriage incentive as many below have noted would be beneficial here.
Have you calculated - or could you - what the child tax credit and dependent deduction amounts would need to changed by to approximate the total $$$ effect per child you’re looking for?
Interesting. Haven't we already hit max population in developed countries a long time ago? How much does it help that poor African countries keep our growth positive as a world?
The key is to have growth of productive citizens. Another child born in Africa adds far too little to world GDP.
Yes, the U.S. better than essentially any other country can survive sub-replacement fertilization rates for a very long time because we can attract high productivity immigrants from around the world (of course, doing that optimally would require the political will to reduce illegal immigration massively while raising legal immigration significantly, and one of the two major parties is completely opposed to the former).
Most other developed countries around the world do not share our advantage in being able to attract and incorporate (assimilate now being a loaded word politically) large numbers of productive immigrants, and so these developed countries need something like what Robin is proposing far more than we do.
Less developed countries have far greater problems than fertility, and indeed lack of fertility is not a meaningful problem there.
Robin, your new vision of the future looks very much like mine except that what I call the Millennium you refer to as a dark future “dominated by Amish-like insular religious high fertility communities.”
We both see a religious revival as inevitable, probably after some form of calamitous decline of our current society. But why must a religious renewal / revolution necessarily be so dark? The Abrahamic religious movement brought a moral big God into a world of child sacrificing small gods. The Christian revolution built on that foundation to bring us human rights and egalitarian philosophy. Civilizations rise and fall but revelation is what drives progress. Why should we not look forward with hope to a Millennial future that is both fertile and bright?