May 21, 2005

CHILDREN OF THE CHILDREN OF ABRAHAM:

Where Have All The Children Gone?: a review of Fewer by Ben J. Wattenberg & The Empty Cradle by Phillip Longman (Eric Cohen, Spring 2005, The Public Interest)

The new demography is best understood in three parts: the less developed countries (LDCs), the more developed countries (especially Europe and Japan), and the United States. Contrary to public perception, the most dramatic fertility declines in recent decades have occurred in the LDCs. From 1965 to 1970, the "total fertility rate" (or TFR, the number of children per woman) for all LDCs was 6.0; from 1985 to 1990, it was 3.8; from 2000 to 2005, it will be below 2.9 and falling. In 20 LDCs, fertility rates are already below replacement levels or soon will be— including Iran, Mexico, and Brazil. Central to this story is China, the world's most populous nation, whose TFR fell from 6.06 between 1960 and 1965 to around 1..8 today. This drop is due largely to China's coercive one-child policy. But it is also clear that the fertility free-fall in the developing world is not predominantly coercive; it is, rather, a spontaneous change in human behavior. And given that many of these nations are still poor, it suggests that modern wealth is not a prerequisite for fertility decline.

Wattenberg and Longman disagree somewhat about the economic and social significance of these changes for the LDCs. Wattenberg believes the decline in fertility rates could have mostly positive benefits, at least for several decades. The high rates of fertility in earlier decades and declining rates of infant mortality have created a large cohort of workers, better educated and more skilled than any previous native generation. This generational cohort is having fewer children and sending more women into the paid workforce. With fewer dependents and more producers, Wattenberg argues, GDP per capita in many LDCs is poised to increase dramatically. And as the local economy expands, the best and the brightest will stay home instead of heading overseas in search of economic opportunity. Wattenberg calls this the "demographic dividend."

But, as Longman points out, there are also reasons to worry. The demographic dividend must eventually be repaid. Today's generation of producers will age, and there will be fewer children (and thus fewer future workers) to support them. The LDCs, Longman says, may get old before they get rich. And so, where Wattenberg sees nations like India and China as prime examples of how the new demography might turn out well in the near future, Longman sees a potential long-term disaster: the coming of "4-2-1 societies," in which "one child must support two parents and four grand-parents," even as the economy drives workers away from the farms where their dependent elders still live.

On the question of Europe, Japan, and other modern democracies, both authors are in agreement: Depopulation is coming, and the economic and social consequences will likely be disastrous. The data are indeed staggering: Since the late 1950s, the TFR in Europe has fallen from 2.7 to 1.38—an astounding 34 percent below the replacement level of 2.1. Japan's fertility rate is 1.32. A large number of nations have TFRs between 1.0 and 1.2, including Russia, Spain, Italy, South Korea, and the Czech Republic. Generations of modern children are growing up without brothers and sisters, and roughly 20 percent of women in the leading nations of Europe have no children at all at the end of their child-bearing years. [...]

LOOKING AT AMERICA, THE FUTURE is more complicated. The United States has virtually the highest fertility rate of any advanced nation at 2.01, with Israel as the most notable exception. Yet there are dramatic differences between different regions (low fertility in the northeast high fertility in the west) and between native-born whites and Hispanic immigrants. Unlike Europe and Japan the American fertility rate has risen (if slightly) over the last two decades. But whether America is truly "exceptional" is unclear: Wattenberg says yes, because we continue to have children near the replacement rate, and we continue to welcome and assimilate working-age immigrants Longman is skeptical, and worries that American over-spending on health care could erase any demographic advantages we might have.

Still, both authors agree that America will confront many of the same problems as Europe and Japan—with fewer workers supporting more dependents, with few economic incentives for having children, with private pensions that threaten to bankrupt large companies, with a growing population of elders in need of long-term care, and an economy dominated by risk-averse retirees. While the Bush administration may overstate the urgency of the Social Security crisis, both Democrats and Republicans understate the urgency of the Medicare and long-term care crisis. How will we care for our ever increasing population of (increasingly disabled) senior citizens?

But if there are reasons to worry, there are also reasons for optimism. America is genuinely different from most other modern countries: It is a more religious nation, and this means that large parts of the population see 'both procreation and caring for the elderly as moral duties. It is a harder working nation, with a labor force that produces more wealth by working more hours and seeking useful employment even in retirement. It is a more self-reliant nation, with individuals more open to funding their own retirements rather than demanding expansions of the welfare state. And it is a more idealistic nation: Americans believe in the future, and the future requires having children.

AND THIS BRINGS US TO THE HEART OF THE MATTER, an issue not adequately considered by either author: Why have children at all (or more than just one or two), especially when there are so many reasons not to do so? Children are, after all, technologically avoidable (thanks in large part to the pill), economically expensive (and more so in cities), and culturally optional (particularly in the West).

In a chapter entitled "The Cost of Children," Longman explains why raising a child in America will cost middle-class families over $1 million, due mostly to the "opportunity cost of motherhood"—that is, the lost wages entailed in raising the young. He describes how our tax system punishes parents, who produce the "human capital" (the future citizens) who make national prosperity possible, but who as parents gain little economic reward for doing so. He also describes how dependent the nation's nonparents have become on other people's children, and how we consume more human capital (future workers) than we produce. As a response, Longman recommends a pro-child reform of the pension system, so that parents would get a one-third reduction in their payroll tax for each child under 18, but receive maximum retirement benefits only if their children graduate from high school.

Longman's analysis is both brilliant and perverse. In the end, he seems to forget the central role of culture in shaping procreation, which was (ironically) the reason he seems to have written the book in the first place—fearing that only the wrong kind of people (religious fundamentalists) will have children while the right kind of people (tolerant secularists) will not. But economic incentives will probably not move many secularists to be more fruitful than they other-wise would be. And while many individuals and couples believe they are having fewer children (or none at all) because of the expense of raising children responsibly, their behavior has much deeper roots: It is not fundamentally an economic issue, but a cultural one. For those who see children primarily as sources of personal fulfillment, other routes to happiness may seem more trouble-free. Children will often lose out in this utilitarian calculus, even if the state makes raising them less expensive.


Demography is the doomsday weapon of the Culture War.

Posted by Orrin Judd at May 21, 2005 4:19 PM
Comments

"In a chapter entitled "The Cost of Children," Longman explains why raising a child in America will cost middle-class families over $1 million, due mostly to the "opportunity cost of motherhood"that is, the lost wages entailed in raising the young."

Fascinating. I can hardly wait for Chapter 2--"The Cost of Caring for Aged Parents"

Posted by: Peter B at May 21, 2005 5:55 PM

Wow! Russia must be really rich now.

Posted by: pj at May 21, 2005 7:00 PM

--that American over-spending on health care could erase any demographic advantages we might have.--

He's not saying that we're keeping them alive too long, is he?

Posted by: Sandy P. at May 21, 2005 9:53 PM

Children can be expensive to raise, particularly if one is a single parent.
However, in a two parent household, children just aren't that expensive, especially if one has a houseful of 'em, to lower the per-capita fixed cost overhead.

When I see estimates that children cost a million dollars to raise, or a quarter-million to put through college, I just have to chuckle.

It's all in how one is willing to live, and what is considered a "necessity".

Posted by: Michael Herdegen at May 22, 2005 2:49 AM

My grandfather was born in Russia and escaped with his family when he was ten on the last train Stalin allowed out of Moscow. He raised eight children in Canada on a pastor's salary (plus odd jobs). Every one of them worked their own way through college.

Let's start by teaching women how to bake bread. How about the slogan, "Just pennies per loaf!"

Posted by: Randall Voth at May 22, 2005 3:57 AM

I think that it is the "lifestyle" costs of children that are more determinative than the dollar costs. I personally know of two childless couples who have all of the monetary resources to have and raise children comfortably. In both cases, it is the wife who refuses to have children, leaving the husbands who wanted them with the heartache of not having the opportunity to have them.

Posted by: Robert Duquette at May 22, 2005 5:07 PM

Robert Duquette:

In both cases, it is the wife who refuses to have children, leaving the husbands who wanted them with the heartache of not having the opportunity to have them.

A strong argument for polygamy.

Posted by: Michael Herdegen at May 22, 2005 8:21 PM

It's just culture.

Posted by: oj at May 22, 2005 8:27 PM

Michael: better set aside $200K for college. It is running $45K/yr right now.

Posted by: Robert Schwartz at May 22, 2005 9:28 PM

Robert:

What a load of BS: see Michael's post above. It IS all about how one is willing to live, and what one considers a neccessity. My wife and I went through two years of undergraduate education and three years of graduate education(and had one kid along the way) without ever coming close to paying half that much. Our parents each have five other children younger than us, so we got very little help for them.

That said, we saw a lot of undergraduates blowing $45 thou. a year of their parent's money - but there was no reason they had to.

One irksome thing I noticed, was that Ames, IA was doing its best to make it difficult to get a college education on the cheap by passing laws that effectively elimenated the kind of high-occupancy rathole basement apartments I lived in when I was a single student. Musty, stinky, crowded, noisy - and dirt cheap. I couldn't have afforded college without them.

Posted by: Jason Johnson at May 23, 2005 12:44 AM

Go ahead Jason. All I can tell you is that when your daughter decides to go to Northwestern instead of Ohio State, you tell your wife that we are not going to spend the money. I hope you can duck faster than I can:-) P.S. The $45K is tuition room, board, and books. There is no frippery in that budget.

Posted by: Robert Schwartz at May 23, 2005 1:10 AM

There's no need to spend more than $ 80K on four years of tuition, room & board, and books, unless one has a special talent that needs a particular institution to fully develop.

If one has more, and wishes to spend it, fine.
But it's strictly a choice.
In fact, using all available resources such as community colleges, internet courses, and CLEP tests, etc., it's easily possible to get an undergraduate degree for $ 60K or less, all included.

Further, as Orrin delights in pointing out, for many people college is a waste of time. They'd be far better off going to a trade school, and becoming HVAC techs, or learning computer animation.

Posted by: Michael Herdegen at May 23, 2005 5:18 AM

"There's no need to spend more than $ 80K on four years of tuition, room & board, and books, unless one has a special talent that needs a particular institution to fully develop."

Tell the female of the species, but, like I say -- duck.

Posted by: Robert Schwartz at May 23, 2005 10:37 AM

My daughter can go to Northwestern if she chooses, but she had better have one heck of a scholarship. I am lucky in that my wife is of the same mind. Most of the people in her family that have gone to college either had academic or athletic scholarships, and everyone works, both during the school year and through the summer.

The room and board portion of the Northwestern equation is particurally irksome. I don't doubt that one is required to live on campus for at least the first two years. What a racket.

Amen that not all should go to to college, my sister in law is exhibit A.

Posted by: Jason Johnson at May 23, 2005 12:20 PM
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