It’s swell that somebody like the Financial Times is finally discussing the relationship between fertility and finances, but apparently everybody still wants to shy away from discussing the opposite relation: between finances and fertility. Undoubtedly, this is a far more neuralgic topic (because then we’d have to, you know, actually do something right now, like, in the present and all): the effect that fiscal policy has on fertility rates.
Along that line, I’m always happy to (re-)introduce analyst John D. Mueller to any audience. Demographers have known about the worldwide decline in fertility rates, well, even before Mark Steyn wrote about (yeah, that long!). And some pretty brainy people — demographers, political scientists, economists, even the odd (and I do mean odd) evolutionary psychologist, have tried to figure out the causes, and I’ve read most of their proposals. Even the people who propose them admit they’re not all that impressive — they don’t account for that much of the variance.
But then I stumble across Mr. Mueller, quoting St. Augustine, writing waaaaay over there in some obscure journal that nobody ever heard of, and his simple equation accounts for enormously more of the data than anybody’s, including those of Nobel prize winners.
Basically, Mr. Mueller says, it comes down to this. People have children because they love them — or because they love themselves. And fiscal policy — being as it introduces incentives and all — has predictable effects on just how much capacity (Wretchard might say, ‘design margin’) people have for loving children, versus for loving themselves.
His paper, “How Does Fiscal Policy Affect the American Worker?” shows that if the level of social benefits supplied by a government goes up too much, fertility declines, and also, if a government taxes labor income too much vis a vis property income, fertility declines then also. This is true world-wide; it’s not a local phenomenon. Also, frequency of worship is POSITIVELY related to fertility (not as causation necessarily, but because it’s an index of people’s capacity to love more than themselves). Here’s how he says it:
“Fertility is about equally inversely related to per capita social benefits and per capita national savings, but strongly, positively related to frequency of worship (an indicator of people’s preference for persons other than themselves). Thus, either allowing social benefits to rise as a share of national income (as Democrats propose) or forcing workers to save more by shifting the tax burden to labor income (as Republicans propose) would tip fertility below the replacement rate of about 2.1 children per couple. Combining these analyses leads to an important conclusion: To avoid both a fall in fertility below the replacement rate and a rise in the unemployment rate as in Europe, social benefits must not be permitted to grow as a share of national income and must continue to be financed by taxes on labor income, while government services benefiting both workers and property owners must be funded by an income tax that falls equally on labor and property income.”
Go to this link. Then find ‘View as pdf’ at the top right, click on that, follow the directions that pop up and download the pdf of the paper, and read the whole thing.
