Fertility Rate: What figures-obsessed demographers seems to miss

An old FreeExchange post(still very relevant):

"THIS week's cover story about dealing with low fertility rates is, naturally, a dose of sober good sense. Yet plenty of people are not-so-sensibly panicked these days over thinning national populations with low animal spirits.


Earlier this month in The Times, Melanie McDonagh argued for subsidies and tax breaks for breeders, and even half-jokingly suggested an extra levy on the willfully barren. She's singing a tune similar to Philip Longman's in The Empty Cradle, where he stresses the dependence of economic growth and pay-as-you-go pension systems on steady or rising birthrates. We do not all equally perform our procreative duty to our countrymen, but, as Longman put it in an excerpt from his book:



"All of us benefit hugely from ... parental investment. What could you buy with your Social Security check, or your I.R.A.s for that matter, if everyone else in your generation had simply forgotten to have children or had failed to invest in them? Yet parents do not receive any greater pensions than non-parents for the sacrifices they make to raise and educate the future workers upon whom we will all depend in old age".


Longman and McDonagh seem to envision breeding and child rearing as a sort of public good likely to be underprovided if individuals are left to their own selfish devices. Those of us who decline to yield future workers are free riding off all that "human capital" produced by altruistic pram-pushers. But, as always, there is too little altruism to go around. So we should go for the next best thing: tax incentives.


There is something inherently repellant about a social vision in which wombs and their fruits are conceived primarily in terms of future labor productivity and tax receipts. But you don't have to be repelled to see that the "kids as public goods" picture doesn't add up.


First, it should be obvious that nations don't have to have pension systems highly sensitive to worker-to-retiree ratios. A shift to a system of mandatory personal retirement accounts immediately solves that problem. And then there are substitutes to native-born children. People born in other countries can also work and pay taxes. Indeed, if yours is a rich country, billions of less-rich people would like to come there. So let more of them come. And then there is technological progress, which allows machines to do some formerly human jobs, and increases the productivity of remaining human labour.


There is no reason a nation with a shrinking population cannot maintain steady rates of GDP per capita growth if mechanization and labour productivity gains keep up a good pace. Indeed, George Mason economist Robin Hanson argues that soon enough robots will be doing almost all the jobs anyway. So it is easy enough to imagine a country that maintains a high standard of living as the population eventually shrinks to ... nothing. People differ rather vehemently on this issue, but I see nothing wrong with a population dwindling away entirely, as long as living conditions remain high. All individual lives come to an end, but they are not therefore worthless. Societies don't last forever either, and neither do nation-states. A society that fades away in high style might count as a spectacular human triumph, not a failure. Where's the underprovided public good in steady-growth population decline?


There are more questionable assumptions lurking behind the "kids as public goods" argument. For one thing, some people produce neither an economic nor fiscal benefit to society. Some children will end up as free-riders, consuming more than they create. This runs us into the incendiary issue of child quality. If, for example, high IQ children tend to become more economically productive, creating more value to consumers in addition to paying more taxes into the system, while low IQ children tend to become markedly less productive and a net drain on the treasury, then natalist policy logic pushes toward eugenics. The logic of the argument also implies that highly capable people who choose lives of quiet contemplation are free riding, too, since they could be producing more economic output and tax revenue, but aren't--just as some of us could be creating future output and taxes in the form of children, but aren't. Should we have to pay extra taxes for time spent in acting school?


Blogger Randall Parker grasps both terrifying nettles in what I hope is a satirical post advocating the filtering of both the slackers and the unintelligent from the gene pool. I'm afraid his reasoning is valid, even if his assumptions are unsound. "I do not recognize a basic right to reproduce," Parker explains. "How can an act that creates huge external costs be a right?" If we insist, as Longman-style natalists tend to do, that each human life be viewed as a nexus of effects on the national interest, then how indeed? But then there goes your right to choose your own career and your right to consume what you like--choices that can also have large effects on others. I suggest rejecting the premise".