In Reply to Baby Bonuses

We have LauraS to thank for her recent post about governmental experimentation with baby bonuses. She shared a riveting 3,000-word white page authored by Ross Guest examining all aspects of this pronatalist policy. His article appeared in the think tank publication Policy, which has been covering big issues and creating a public policy dialogue for Australia and New Zealand since 1984.

Mr. Guest's article is well-researched, but his endnotes alone would take you a half an hour to read -- not a blog reader’s usual attention span, so I decided to post my reaction to it on the front page in order to shed more light on this important topic.

Most noteworthy:

• One measure of determining appropriate growth rate is to compare it to income per capita, i.e.: What can the people afford on their real incomes?
• Population growth is a factor of immigration and fertility. How does a country chose a correct demographic path? This also raises some ethical issues. If it’s not about sheer numbers, then what is this policy about?
• According to the movie, The Hitchhiker’s Guide to the Galaxy the ultimate world population number is 42 -- ha ha! What is that,…one person per country?
• Everyone knows that the bigger market always gets catered too. It means bigger profits, but did you know:

“A larger market can also stimulate innovation by making it more profitable. A higher population also implies a greater probability of knowledge breakthroughs which have positive snowballing effects on productivity (a process of so-called endogenous growth).”

• Japan, Russia and Italy…and who knew, Singapore are all experiencing population declines. New Zealand and England are on the list too.
• Canada has a Baby Bonus program!!!
• Australia and the U.S. are not in population decline, neither is the world at large. The U.S. population is maintaining replacement rates. Australia's population is projected to grow.
  
• U.S. tax benefits have may have attributed to the Baby Boom generation phenom. It's hard to prove.
  
• Singapore’s baby bonus comes with strings attached, to be sure some of it goes to benefit the child.
• The unanswerable question: What is ideal population,...um, more Catholics? Muslims? We know what the Pope would say.
• Who pays? All of us. Remember we little people, childfree or not, fund the government.

Here’s the author’s summary:

"In summary, is the Baby Bonus a good pronatalist policy? The negatives are that it wastes expenditure by paying parents who would have had children anyway, and a more debatable negative is that it allows parents to spend the money on whatever they want which may include plasma TVs and so on that may not benefit the child. The positives are that it is simple and transparent, and it allows maximum parental choice with regard to expenditure. My view is that Singapore got it about right with its initial model, in two ways: by paying only for the second and third child, and by having two components—a lump sum cash payment and a co-contribution toward education expenses. Not paying for the first child partly alleviates the ‘waste’ problem, and the economic case for encouraging large families by paying a Baby Bonus for fourth and subsequent children is weak due not least to concerns about the average investment by parents in education per child when there are large numbers of children."

Draw your own conclusions Purple Women^TM.

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