Are Childless People Freeloading on the World’s Parents?

A few days ago, Ramesh Ponnuru made an interesting case for a massive U.S. tax break for childrearing—not a piddly deduction, but a honking big $5,000-per-kid credit. His reasoning (to which I was led by Ross Douthat): While you childless people are raking in that disposable income, we parents are spending ours on the little ones. When we all retire, though, our now-adult children will be supporting the social security system that sends payments to everyone. They’ll be helping to support us, who raised them, and you, who didn’t. So we should be compensated for your free-riding.

I find this logic hard to dispute, though I don’t agree at all with the framework in which Ponnuru places it. He claims modern social-welfare systems to help the elderly—like Social Security and Medicare in the U.S.—have lowered fertility in the nations that have adopted it. When people had to rely on particular individuals to support them in old age, he reasons, they had more kids. Now one generation as a whole relies upon the next as a whole. You don’t need kids of your own to collect Social Security, you just need to live to 65 and share the nation with people who did become parents. To support the claim, Ponnuru cites several economic studies that claim to pinpoint just how much of developed nations’ fertility drop can be attributed to the welfare state.

It could be a convincing argument, except for one fact: Fertility (defined as the number of children per woman of childbearing age in the population) has been dropping worldwide for half a century. It has dropped in nations with welfare states. It has dropped in nations without. It has dropped in China, with its severe “one-child” policy, and in India, without such measures. In 1950, the world’s overall fertility rate was 5 children per woman per lifetime. Today it is 2.26, and falling. According to the World Bank, in 1980, Benin’s fertility rate was 7.0; in 2010 it was 5.3. Brazil’s was 4.1 in 1980, 1.8 in 2010. Malaysia was at 3.8 in 1980, but 2.6 in 2010.

It could be that welfare states add more momentum to a universal trend. But for that to be true, fertility rates should be inversely correlated with the generosity of benefits in nations around the world.

They aren’t: Germany has a generous social welfare program, and its fertility rate in 2010 was 1.4. But Norway and France, which also have cradle-to-grave protection by American standards, are very close to the 2.1 “replacement rate” at which a developed nation’s population stays stable. That’s higher fertility than you’ll find in Iran, where the social security system is private and doesn’t cover a quarter of the population.

So I think Ponnuru’s argument makes sense on ground of fairness. It doesn’t hold water, though, as a way to defend national fertility. (And, yes, that’s a goal whose worth one could debate in theory; but in the real world of course all nations are in the business of staying in business).