Will Nations Fund Fertility?

Sep 10, 2023

Added 22Sep: I’ve changed my mind; this post is wrong.

Some hope that the world’s fertility fall might be reversed by governments subsidizing fertility. But on reflection, that seems unlikely to me. Let me explain why.

Some think that in the old days folks had kids as a way to pay for their retirement. But it seems that parents have almost always given much more to their kids overall than they’ve gotten back. They did this because they wanted to help their kids. And all that was back when parenting effort was low, and kids felt obligated to care for indigent parents; that tradeoff seems even worse for today’s parents.

In most past times and places where there was slavery, slave owners didn’t find it profitable to pay for slaves to have kids to later be sold as adult slaves. But the U.S. south was an exception; slave kids were a profitable investment there. So I admit that it is possible for investing in kids to make sense financially.

But if it is going to make sense for nations today to pay folks to have kids so that those kids can later pay that nation back, the current situation for nations will need to be much closer to the US south slave case than it is to the usual case of parents or slaves in history.

Note that there are likely small fractions of potential parents who are at the edge of deciding either way, and thus can be pushed over the line to have kids with relatively low payments. This may well be worth doing. The question here is if it is worth it financially for nations to pay to increase their fertility from say current US/Canada levels of 1.6/1.4 up to over replacement fertility of 2.1. That likely requires much larger payments.

Here are some factors that should influence the calculation of nations considering paying for kids:

Capital opportunities: The better are options for investing in capital around the world, the worse investing in more local people looks.
Interest rates: the less we discount the future, the better any investment looks.
Parenting standards: the more effort parents are expected to put into parenting, the worse this looks.
Early pairing norms: the easier it is to get people stop school and pair up to mate early in life, the better.
Adult obligation levels: the more that adult kids can be obligated to repay nations, the better.
Ease of emigration: the easier adults can leave this nation to evade such debts, the worse.
Ease of immigration: the easier it is to import workers to handle retirees instead of growing such workers locally, the worse

Overall this looks bad for the nation investing plan. Mainly for the same reasons that it looks bad for individuals. I doubt many would be induced to have more kids today even if they could be assured that their kids would not shirk strong obligations to take care of them when they retire. And if individuals don’t care enough personally to have more kids, it seems doubtful they will push politicians to care enough collectively.

Added 11Sep: In case it isn’t obvious, I don’t intend to praise or endorse slavery here.

Jack

It's funny how over the last 40 years our society has transitioned so many women into the workforce, and to what end? All that extra income has led to skyrocketing costs for housing, college, and other big-ticket items because families have more willingness (and ability) to pay. We're all just out-bidding each other. Now that the dust has settled, everyone is still living in the same houses and attending the same colleges, only now it needs two incomes instead of one, and kids have become an extravagance. Faustian bargain if you ask me.