2) Cutting retirement benefits for the childless (or low fertility) is a loser.
I predict the political viability of this plan as negative 5000%. I think it would also cause massive strife within families (imagine how much money grubbing tiger parenting we will get when your children are literal slaves who have to pay you).
All of that said, I support the general thrust. Here is a much simpler and more politically viable change:
1) Current SS benefits go completely untouched because they are the third rail of politics.
2) Current payroll taxes are increased on people who have fewer kids and lowered for people that have more kids. Basically, raise the X% that SS/Medicare collects but give a Y% payment per kid. If you have a lot of kids Y% can even be greater than X%.
Trying to align premiums and claims on retirement insurance is a lot easier to do by changing premiums and changing claims. The insurance justification is that kids are future taxpayers and so people taking the expense of raising them are paying payroll taxes in another form. People who don't take on this expense need to subsidize those that are so they can collect when they are older.
The other big thing that would help fertility is to get school choice whoever we can. We already spend a lot on children but unfortunately we fund systems and not students which means we get a lot less fertility benefit out of each dollar.
"Enslaving your own children is a loser...your children are literal slaves who have to pay you" Don't think this is accurate unless you consider the current taxpayer a "slave" to the state. (There are libertarians who think this but they are a tiny minority, not relevant to questions of political viability.) Parents are able to claim a portion of their kids' tax payments. They can't force them to work.
"Cutting retirement benefits for the childless (or low fertility) is a loser" This is the problem. This policy is (relative to status quo) redistribution from childless elderly ppl towards elderly with children. It's not politically feasible unless ppl are okay watching nonstop coverage of childless old ppl destitute on the streets
The main difference I had in mind is to create a transferable asset out of parents' right to a transferable % of their kids future tax payments. So parents could sell part of those rights to pay for parenting expenses.
A very good scheme, 've been thinking on the same line for several years. I mean, how does a society counteract the antifertity combination of Bismarck's social security legislation starting in the 1870s together with the availability of contraceptives starting in the 1960s? However, there are a number of caveats that need to be taken care of. Otherwise, they will immediately be used as substantive criticism:
1. Working parents don't need them - the tax returns should be specifically marked for "old-age" pensions. Specifically, it's not uncommon for grandparents to do child-care. Makes socially much more sense that travelling around the world! Tax returns for parents who are yet not in pension could be used to pay in into an annuity scheme that only starts when the parent starts his or her pension. But on the other hand - one would definitely need this to extend to grandparents, grand-grandparents and all the way up!
2. Parents of daughters would be strongly discriminated vs parents of sons if daughters choose to take time off to care for their brood. However, if parents respond to this disincentive by aborting female fetuses, this will dramatically enhance the fertility problem. It is a well-known dilemma in China and India, for example.*
3. Rich males obviously could and probably would support several polygamous relationships earning multiple family income on future taxes. I mean, what's not to like about it if one can? Elon Musk? However, this will undermine societal cohesion by multiplying the number of rich dads looking for well-paid sinecures for their kids. Again, a well-known problem in polygynous societies in the Middle East**
4. Knowing that you are raising kids with a side glance to future returns could lead to a 3rd wave eugenics. There are pluses and minuses, but one needs to be clear-eyed about that. Just as there will be an explosion in demand for egg donors.
*One solution is to tie the returns of married children to the return of higher tax-paying partner in the marriage. This would encourage having daughters, as well as seeing them getting gainfully married.
**Another solution would be that if one were monogamously married while these illegitimate kids were growing up, the tax returns from these kids would not be available for paternal pension.
Yes, and I resent it. I would resent doing it to my own children even more.
I would abolish SS if I could, but that's not realistic. Once we take benefits as a fixed third rail of politics, the only thing we can realistically change is premiums (taxes).
If your children are your slaves you can just unslave them by cancelling the obligation and giving them all the money back. You can't do that if your children are slaves to strangers.
If the entire point of this proposal is to use my child's slave wages to incentivize me to birth more slaves, how would freeing my child slaves incentivize me to have more children?
My children are enslaved to strangers because old people, especially poor childless old people who think they are owed something for their past taxes, are a strong voting block. I don't expect this to change anytime soon.
What I might be able to do is force those poor old people to pay additional taxes when they are younger and earning money, so that I can have a lower tax burden when I'm younger and I've got all sorts of bills related raising children.
The state already enslaves our children. The question is whether it should move some of their returns to their no longer working parents and grandparents.
What do you think the odds of being able to cut off childless people from social security and Medicare are? I’d rate it at 0%.
You’ll just end up throwing this system on top of the current one. And I don’t even like it as a standalone (I don’t want to force my kids to pay me money).
You don't need to cut anyone off. Probably, people will get 1/3 based on their former paid social securities dues and 2/3 on taxes and social security dues of their offspring. Plus, income from private annuities. All three sources, fully taxed of course.
So if you have no kids and have not paid into private annuities you would have pretty meager income in old age. Unless you had an altruistic urge and married a young widow with small kids.
Also, no-one imagines that basic social security incl medicare will be gone. BUT if you subsisted on basic social security and your 10 kids also subsist on basic social security you won't see any more income, as your kids don't pay taxes on earned income...
In European countries parenting expenses are already largely taken care off by the governments. See Germany, for example. Hasn't moved the needle on fertility much, though. Whereas, specific dedication to old-age pensions might. Particularly if combined with aggressive taxing of insurance annuities currently used for private pensions.
European countries provide a bunch of government services that people may or may not value. If for instance you don’t want to send your kid to gov daycare, then free daycare isn’t worth much to you. None of them give cash because the service providers and not the parents are the real beneficiaries.
And? In Germany, people get quite substantial Elterngeld (parent money) in the first 2 years, even if the child is not in free day care. As I say, didn't move the fertility needle much.
According to Google the maximum period is 14 months and at the maximum benefit is $1,800 a month. Though most collect less on both amount and duration.
14 x $1,800 = $25,000 or so. That is a fuck of a lot less than it costs to raise a child.
Again, every single "family support" provided in the developed world is DRASTICALLY LOWER than the cost of rising a child. If you stick parents with 90% of the cost don't be surprised when they respond to incentives.
Making them transferable would be a bad idea, it would signal low status to keep or sell the deed to your child's share, meaning high status people wouldn't be incentivesed to have more children by the policy, and It wouldn't increase the status of having children.
1. This would be a straight money transfer from poorer people (the young) to richer people (the old) which in turn would depress the fertility of the young.
2. It will create another tax with money wasted on collection, distribution, audits and litigation by a growing bureaucracy.
3. Most old people I know will hate taking money from their children. Even if they give it back part of the tax will be eaten by the bureaucracy.
4. The tax can't be too big so not having kids is still the best decision from a financial standpoint. Put that kid money in an ETF and it's going to beat the tax both in returns and certainty.
5. Encouraging money obsessed people to breed might be a bad idea.
6. The whole thing feels like something from China rather than the West, mixing confucian duty to your elders with a greedy bureaucracy.
People thinking of having kids need money NOW. When they are young and trying to pay the bills and not even close to their peak earnings. If you want to increase fertility you've got to change the premium structure (taxes paid when young) not the claims structure (payments received decades later). Getting a big boost to earnings in your 20s when you are having kids will do a lot more for fertility then the vague promise of being able to loot your children when you are old.
People don't need the money when they are old (and the ones that do need it when they are old are going to lobby the shit out of the government to make sure they get it whether they had kids or not, old people vote!)
The whole idea is just too complicated and autistic. I appreciate it because I like the VIBE of the idea. But it feels Dead On Arrival to me.
I’m all for thinking about clever incentive schemes outside the Overton window, but this seems to patchily replace the original purpose of social security which was to guard the elderly against poverty.
While this does incentivize people to have children, it removes protections for elderly single people, those whose spouses died before they had kids, those whose children have died or moved to other countries and renounced their citizenship, etc.
I just feel like there are too many edge cases that seem unfair.
I guess I’d rather push the Pareto frontier forward than have it slip backwards in some places.
This actually feels very close to the sci-fi book The Unincorporated Man where everyone sells shares in themselves and parents and the govt are allocated a certain amount of shares at birth.
It sounds good, but there is one problem I can think of. Many people these days are not very good at long term financial planning, they might have a problem with this idea.
I am glad the Hanson scheme is getting more attention. My research/writing on pronatelist policies led to a similar conclusion: their effects are limited.
Policies like maternal leave seem to have virtually no effect, while payouts (tax credits) and free childcare do seem to encourage families to have more children.
But your conclusion here is correct: to date our policy moves are modest compared with the positive returns of having more children. This is due to fiscal constraints.
The Hanson scheme gets around this by essentially codifying the practices parental/child care that has been in place for thousands of years.
It's a reasonable solution, one that could solve our shrinking population and national pensions sustainability simultaneously. I imagine though, very difficult to put into practice.
The idea that young women will make fertility decisions based on financial needs 30 years in the future is certainly something. Certainly, if they were accustomed to taking care of themselves that payment might be a factor they would consider.
If you are a young fertile woman and you know that in your old age, your pension will be minimal. Yep, going for an uncertain and low-paying career slog would be more difficult.
I don't think we should give up on the idea that vat babies can fix this. Simply not having to spend nine months hauling around what is in a biological sense a giant parasite may significantly shift the trade-off for women. Further, men would no longer need women to reproduce, making more types of family structures feasible.
In terms of balance sheet finances, true. In terms of "how much would you have to pay me to experience the expected value of the medical effects of pregnancy", not true.
Love the post, it's a fascinating idea and one that sounds promising to me!
Some feedback on section, though:
"This may seem unjustifiable, but to a family-oriented society, it should be considered a fine trade-off. The reason is, families are accorded more moral value than singles."
This will offend people, and it's not a needed passage, because there's a better argument: Raising families is expensive. Singles can much more easily save for themselves.
Have you read « The WEIRDest people in the world »? An important point the book makes is that the reasons the west is successful are, in part, due to our much weaker family structures… we don’t have clans and clan ownership of resources. This is unlike what was both historically true and is still true in many parts of the world.
If parents’ survival became much more economically linked to their children it seems like the policy would reverse this trend, and strengthen family and clan structures, as exist already in much of the world.
This feels like it's replacing being unable to afford kids with being unable to afford parents. At least with kids people have the choice of whether to burden themselves.
If I was responsible for my parents economic survival, I think I would have just had a nervous breakdown rather than have a bunch of kids.
And if I was worried about my own economic future (which appears to be the main motivation here) then I would certainly not rely on potential future kids bankrolling me! I would delay/forgo starting a family to make sure I built up a really good pension first!
This proposal feels like it would create financial pressure and financial uncertainty, both of which would discourage a lot of people from having kids.
Which just leaves the idea that we could save on SS by deciding not to pay it to a whole bunch of people, which is very risky at best (and a downright humanitarian disaster at worst.)
I'd be interested in seeing how the author works out the details related to how regression to the mean among poor and rich families supports the scheme. My reading of Chetty and others is that social mobility in the US is pretty weak and that family dynasties tend to be pretty long-lasting. The Hansen plan in my naive understanding would seem to support continued social immobility.
At first I was like this is absurd, and then I was like maybe it’s not, and now I’m somewhere in between. I might just agree with this structure at a high level.
In the best case with good kids and a good family I think this system is great, I’d way rather pay taxes to my parents than the government.
But I’m sure there would be some really bad behavior by shitty parents and kits left obligated to pay for the rest of your life. What qualifies a parent as deserving your life's taxation?
There's something about a persons success being owned by their parents that makes me fear this would result in bad incentives and bad relationships.
I love the brainstorm. However,
1) Enslaving your own children is a loser.
2) Cutting retirement benefits for the childless (or low fertility) is a loser.
I predict the political viability of this plan as negative 5000%. I think it would also cause massive strife within families (imagine how much money grubbing tiger parenting we will get when your children are literal slaves who have to pay you).
All of that said, I support the general thrust. Here is a much simpler and more politically viable change:
1) Current SS benefits go completely untouched because they are the third rail of politics.
2) Current payroll taxes are increased on people who have fewer kids and lowered for people that have more kids. Basically, raise the X% that SS/Medicare collects but give a Y% payment per kid. If you have a lot of kids Y% can even be greater than X%.
Trying to align premiums and claims on retirement insurance is a lot easier to do by changing premiums and changing claims. The insurance justification is that kids are future taxpayers and so people taking the expense of raising them are paying payroll taxes in another form. People who don't take on this expense need to subsidize those that are so they can collect when they are older.
The other big thing that would help fertility is to get school choice whoever we can. We already spend a lot on children but unfortunately we fund systems and not students which means we get a lot less fertility benefit out of each dollar.
"Enslaving your own children is a loser...your children are literal slaves who have to pay you" Don't think this is accurate unless you consider the current taxpayer a "slave" to the state. (There are libertarians who think this but they are a tiny minority, not relevant to questions of political viability.) Parents are able to claim a portion of their kids' tax payments. They can't force them to work.
"Cutting retirement benefits for the childless (or low fertility) is a loser" This is the problem. This policy is (relative to status quo) redistribution from childless elderly ppl towards elderly with children. It's not politically feasible unless ppl are okay watching nonstop coverage of childless old ppl destitute on the streets
You can't fix the claims side you can only fix the premium side.
Also, decades long feedback loops don't work. You want more kids. You need to reward people directly when their in their prime fertility age.
The main difference I had in mind is to create a transferable asset out of parents' right to a transferable % of their kids future tax payments. So parents could sell part of those rights to pay for parenting expenses.
A very good scheme, 've been thinking on the same line for several years. I mean, how does a society counteract the antifertity combination of Bismarck's social security legislation starting in the 1870s together with the availability of contraceptives starting in the 1960s? However, there are a number of caveats that need to be taken care of. Otherwise, they will immediately be used as substantive criticism:
1. Working parents don't need them - the tax returns should be specifically marked for "old-age" pensions. Specifically, it's not uncommon for grandparents to do child-care. Makes socially much more sense that travelling around the world! Tax returns for parents who are yet not in pension could be used to pay in into an annuity scheme that only starts when the parent starts his or her pension. But on the other hand - one would definitely need this to extend to grandparents, grand-grandparents and all the way up!
2. Parents of daughters would be strongly discriminated vs parents of sons if daughters choose to take time off to care for their brood. However, if parents respond to this disincentive by aborting female fetuses, this will dramatically enhance the fertility problem. It is a well-known dilemma in China and India, for example.*
3. Rich males obviously could and probably would support several polygamous relationships earning multiple family income on future taxes. I mean, what's not to like about it if one can? Elon Musk? However, this will undermine societal cohesion by multiplying the number of rich dads looking for well-paid sinecures for their kids. Again, a well-known problem in polygynous societies in the Middle East**
4. Knowing that you are raising kids with a side glance to future returns could lead to a 3rd wave eugenics. There are pluses and minuses, but one needs to be clear-eyed about that. Just as there will be an explosion in demand for egg donors.
*One solution is to tie the returns of married children to the return of higher tax-paying partner in the marriage. This would encourage having daughters, as well as seeing them getting gainfully married.
**Another solution would be that if one were monogamously married while these illegitimate kids were growing up, the tax returns from these kids would not be available for paternal pension.
So not only can I enslave my children, I can sell those slavery rights to total strangers?
On this view everyone is already a slave to total strangers.
Yes, and I resent it. I would resent doing it to my own children even more.
I would abolish SS if I could, but that's not realistic. Once we take benefits as a fixed third rail of politics, the only thing we can realistically change is premiums (taxes).
If your children are your slaves you can just unslave them by cancelling the obligation and giving them all the money back. You can't do that if your children are slaves to strangers.
If the entire point of this proposal is to use my child's slave wages to incentivize me to birth more slaves, how would freeing my child slaves incentivize me to have more children?
My children are enslaved to strangers because old people, especially poor childless old people who think they are owed something for their past taxes, are a strong voting block. I don't expect this to change anytime soon.
What I might be able to do is force those poor old people to pay additional taxes when they are younger and earning money, so that I can have a lower tax burden when I'm younger and I've got all sorts of bills related raising children.
So your solution to the hardships of the slavery imposed on you and your offspring is just to enslave everyone else to a greater degree?
The state already enslaves our children. The question is whether it should move some of their returns to their no longer working parents and grandparents.
What do you think the odds of being able to cut off childless people from social security and Medicare are? I’d rate it at 0%.
You’ll just end up throwing this system on top of the current one. And I don’t even like it as a standalone (I don’t want to force my kids to pay me money).
You don't need to cut anyone off. Probably, people will get 1/3 based on their former paid social securities dues and 2/3 on taxes and social security dues of their offspring. Plus, income from private annuities. All three sources, fully taxed of course.
So if you have no kids and have not paid into private annuities you would have pretty meager income in old age. Unless you had an altruistic urge and married a young widow with small kids.
Also, no-one imagines that basic social security incl medicare will be gone. BUT if you subsisted on basic social security and your 10 kids also subsist on basic social security you won't see any more income, as your kids don't pay taxes on earned income...
So you want people who didn't have kids to take a 2/3 reduction in the SS and Medicare?
Good luck with that on the campaign trail.
Beyond basic social security income and medicaid?
In European countries parenting expenses are already largely taken care off by the governments. See Germany, for example. Hasn't moved the needle on fertility much, though. Whereas, specific dedication to old-age pensions might. Particularly if combined with aggressive taxing of insurance annuities currently used for private pensions.
European countries provide a bunch of government services that people may or may not value. If for instance you don’t want to send your kid to gov daycare, then free daycare isn’t worth much to you. None of them give cash because the service providers and not the parents are the real beneficiaries.
And? In Germany, people get quite substantial Elterngeld (parent money) in the first 2 years, even if the child is not in free day care. As I say, didn't move the fertility needle much.
According to Google the maximum period is 14 months and at the maximum benefit is $1,800 a month. Though most collect less on both amount and duration.
14 x $1,800 = $25,000 or so. That is a fuck of a lot less than it costs to raise a child.
Again, every single "family support" provided in the developed world is DRASTICALLY LOWER than the cost of rising a child. If you stick parents with 90% of the cost don't be surprised when they respond to incentives.
The point is - they should have biological incentives to reproduce by themselves. I mean - that has been how it has been for 500MYears so far.
They have a biological incentive to fuck. Fucking doesn't make babies the same way it used to.
Making them transferable would be a bad idea, it would signal low status to keep or sell the deed to your child's share, meaning high status people wouldn't be incentivesed to have more children by the policy, and It wouldn't increase the status of having children.
1. This would be a straight money transfer from poorer people (the young) to richer people (the old) which in turn would depress the fertility of the young.
2. It will create another tax with money wasted on collection, distribution, audits and litigation by a growing bureaucracy.
3. Most old people I know will hate taking money from their children. Even if they give it back part of the tax will be eaten by the bureaucracy.
4. The tax can't be too big so not having kids is still the best decision from a financial standpoint. Put that kid money in an ETF and it's going to beat the tax both in returns and certainty.
5. Encouraging money obsessed people to breed might be a bad idea.
6. The whole thing feels like something from China rather than the West, mixing confucian duty to your elders with a greedy bureaucracy.
Parents would be free to transfer this tax right to their kids.
Then what is the point?
People thinking of having kids need money NOW. When they are young and trying to pay the bills and not even close to their peak earnings. If you want to increase fertility you've got to change the premium structure (taxes paid when young) not the claims structure (payments received decades later). Getting a big boost to earnings in your 20s when you are having kids will do a lot more for fertility then the vague promise of being able to loot your children when you are old.
People don't need the money when they are old (and the ones that do need it when they are old are going to lobby the shit out of the government to make sure they get it whether they had kids or not, old people vote!)
The whole idea is just too complicated and autistic. I appreciate it because I like the VIBE of the idea. But it feels Dead On Arrival to me.
I’m all for thinking about clever incentive schemes outside the Overton window, but this seems to patchily replace the original purpose of social security which was to guard the elderly against poverty.
While this does incentivize people to have children, it removes protections for elderly single people, those whose spouses died before they had kids, those whose children have died or moved to other countries and renounced their citizenship, etc.
I just feel like there are too many edge cases that seem unfair.
I guess I’d rather push the Pareto frontier forward than have it slip backwards in some places.
This actually feels very close to the sci-fi book The Unincorporated Man where everyone sells shares in themselves and parents and the govt are allocated a certain amount of shares at birth.
It sounds good, but there is one problem I can think of. Many people these days are not very good at long term financial planning, they might have a problem with this idea.
I’d extend that to say we have a problem with lack of long term thinking in general, beyond just financial thinking.
People would adapt or starve
When they are old and start starving it would be a bit too late. How would they fix it at that point?
Great peice Cremiuex!
I am glad the Hanson scheme is getting more attention. My research/writing on pronatelist policies led to a similar conclusion: their effects are limited.
Policies like maternal leave seem to have virtually no effect, while payouts (tax credits) and free childcare do seem to encourage families to have more children.
But your conclusion here is correct: to date our policy moves are modest compared with the positive returns of having more children. This is due to fiscal constraints.
The Hanson scheme gets around this by essentially codifying the practices parental/child care that has been in place for thousands of years.
It's a reasonable solution, one that could solve our shrinking population and national pensions sustainability simultaneously. I imagine though, very difficult to put into practice.
The idea that young women will make fertility decisions based on financial needs 30 years in the future is certainly something. Certainly, if they were accustomed to taking care of themselves that payment might be a factor they would consider.
If you are a young fertile woman and you know that in your old age, your pension will be minimal. Yep, going for an uncertain and low-paying career slog would be more difficult.
I don't think we should give up on the idea that vat babies can fix this. Simply not having to spend nine months hauling around what is in a biological sense a giant parasite may significantly shift the trade-off for women. Further, men would no longer need women to reproduce, making more types of family structures feasible.
Pregnancy is a very small part of the costs of child rearing in the modern world. I predict close to zero impact.
In terms of balance sheet finances, true. In terms of "how much would you have to pay me to experience the expected value of the medical effects of pregnancy", not true.
Love the post, it's a fascinating idea and one that sounds promising to me!
Some feedback on section, though:
"This may seem unjustifiable, but to a family-oriented society, it should be considered a fine trade-off. The reason is, families are accorded more moral value than singles."
This will offend people, and it's not a needed passage, because there's a better argument: Raising families is expensive. Singles can much more easily save for themselves.
Have you read « The WEIRDest people in the world »? An important point the book makes is that the reasons the west is successful are, in part, due to our much weaker family structures… we don’t have clans and clan ownership of resources. This is unlike what was both historically true and is still true in many parts of the world.
If parents’ survival became much more economically linked to their children it seems like the policy would reverse this trend, and strengthen family and clan structures, as exist already in much of the world.
Lol, Lil’ BAPist Nigga, y’all cooked! https://kiwifarms.st/threads/bronze-age-pervert-bap-costin-vlad-alamariu-associates-bapists-bapsphere-frogtwitter-greek-statue-twitter-the-talmudic-network.190081/page-57
This feels like it's replacing being unable to afford kids with being unable to afford parents. At least with kids people have the choice of whether to burden themselves.
If I was responsible for my parents economic survival, I think I would have just had a nervous breakdown rather than have a bunch of kids.
And if I was worried about my own economic future (which appears to be the main motivation here) then I would certainly not rely on potential future kids bankrolling me! I would delay/forgo starting a family to make sure I built up a really good pension first!
This proposal feels like it would create financial pressure and financial uncertainty, both of which would discourage a lot of people from having kids.
Which just leaves the idea that we could save on SS by deciding not to pay it to a whole bunch of people, which is very risky at best (and a downright humanitarian disaster at worst.)
Great concept—but far too complex. Must meet the KISS standard for many reasons.
Decouple SS remedies from fertility encouragement.
Good stuff. Regarding social security and direct benefits for parents, I have written on this before: https://t.co/Tch7n1UBuV
First time hearing the Hanson approach. TBF I am partial to my own proposal.
I'd be interested in seeing how the author works out the details related to how regression to the mean among poor and rich families supports the scheme. My reading of Chetty and others is that social mobility in the US is pretty weak and that family dynasties tend to be pretty long-lasting. The Hansen plan in my naive understanding would seem to support continued social immobility.
At first I was like this is absurd, and then I was like maybe it’s not, and now I’m somewhere in between. I might just agree with this structure at a high level.
In the best case with good kids and a good family I think this system is great, I’d way rather pay taxes to my parents than the government.
But I’m sure there would be some really bad behavior by shitty parents and kits left obligated to pay for the rest of your life. What qualifies a parent as deserving your life's taxation?
There's something about a persons success being owned by their parents that makes me fear this would result in bad incentives and bad relationships.