Child Care: Massive Benefit for “the Economy”?
An Economist article on government subsidization of child care (day care) is full of economic lessons, although not necessarily or exactly those that the magazine draws (“British Child Care Is Expensive: Making It More Affordable Would Help Some Mothers Into Paid Work,” June 30, 2022).
The magazine correctly suggests that a statement by the outgoing British prime minister, Boris Johnson, is questionable: better access to child care, said the politician, “would have a massive benefit for the economy.” We can be more radical: the statement is meaningless if the benefit is not net of cost or if, by “the economy,” Johnson did not mean all UK citizens or residents. In any event, better access to baby food or diapers or clothing or large apartments would have the same effect.
It is true that the venerable magazine and often offers refreshing perspectives and sets the problem correctly:
In an ideal world, the government would not have to worry about any of this. Based on their preferences and potential earnings, parents would make a rational judgment over whether to outsource child care or keep it in-house; it might make sense for them to borrow to cover short-term costs, for instance.
The sentence that follows, however, is not sufficiently informed by the economic way of looking at things:
The question for policymakers is how much parental behaviour does reflect actual preferences and how much it is driven by constraints. …
In a free society, “constraints” are made of other people’s preferences and their equal freedom of choice. For example, most consumers are not willing to pay more for goods and services that use the less regular labor of women who choose to have ten children.
The magazine also writes:
But there is also plenty of evidence that constraints are an issue. Three in five non-working mothers say that they would prefer to work, given the right child care.
Of course. Most good things have costs, that is, constraints. Many non-working people would prefer to work given the right salary. Many people would prefer to read more books or to go to the gym more frequently if it required less time or money. Many would shop at Whole Foods if it were not so expensive. Many would prefer to live in Los Angeles if they could get both the benefits of the city and none of its costs. And so forth. The real question, subliminally alluded to by The Economist, is whether these choices are made by individuals given their preferences and constraints, or by the government given its agents’ own interests and constraints.
A sentence that shortly follows helps identify the error of imagining an ideal government world:
Cheaper child care could help growth, in other words, but policies would need to be well-designed to target genuinely constrained parents and to stop costs spiralling out of control.
The first clause would be true only if we defined “economic” growth as the growth of the production of the goods and services that the government prefers its flock to consume—more child services as opposed to fewer concerts or less beer, for example. The important second independent clause assumes that (to paraphrase the doubts expressed by the Economist about the preferences of rational parents) rational government behavior reflects the preferences of everybody in the economy, which public choice economics has shown is the mother of all heroic assumptions, instead of representing bureaucratic and political interests and constraints.
To avoid being what James Buchanan called normative eunuchs, we may consider another factor: personal responsibility, which is inseparable from the ethical belief in equal and sovereign individuals. In this perspective, each individual adult (or voluntary family grouping) must make his own trade-off between, on the one hand, the joy and learning benefits of having and rearing children and, on the other hand, the opportunities that must thereby be forgone. Time and other resources are limited.
And how did our forebears, who were poorer than us, do it? Anyone today who is willing to be, net of child care, as poor as our forebears were could raise as many children as they did with as little help from Big Brother as they had. This remains true despite changes in relative prices between their time and ours; for example, housing and domestic servants have become much more expensive relatively to domestic appliances and robots, which have become much cheaper (they previously had an infinite price).