← Autodidact Archive · Original Dissent · EDUMAKATEDMOFO
Thread ID: 19874 | Posts: 2 | Started: 2005-08-29
2005-08-29 15:16 | User Profile
Concepts for the Creation of Human Capital
There are many people complaining rightly about the flood of illegal immigrants entering into our country, and the resulting loss of our history, culture and identity. But there is another half of this problem which most people neglect to mention. Unless we increase our natural birth rate, this country will cease to exist without immigration. Therefore, we have to solve the problem of how to increase natural birth rates before we can begin to address the issue of immigration.
There are several reasons why birth rates have decreased in western countries in recent years. However, I will confine my discussion to the financial aspects since these are the ones which are easiest for government to control. In pre industrial times, people benefited materially from having children. Most people lived on a farm and children shared in the chores which enabled the family to produce more. Many of the goods which were necessary for survival were made at home, from growing food, to spinning cotton or wool fibers to make thread and then making cloth from the thread for clothing. Housing was built by hand from local sources. Only a small fraction of those things necessary for survival had to be purchased from outside the family unit. When people grew old, they were cared for by their families. People without families had no hope of security in their old age. For this reason, it was a wise financial decision for people to have children.
Todayââ¬â¢s economic structure is different. Almost everything one needs for survival is purchased from sources outside the family with money earned from jobs outside the family. Most families cannot afford to take off from work to care for their parents since both spouses are needed to support the basic family. There is no material benefit to having children. In fact it is just the opposite. Look at a comparison of two families of equal income; one with several children and one without any. The large family will spend its income on items required for their children. This includes medical, food, clothing, and wedding expenses, and increased costs for housing, transportation, heating, electricity, phone, education, maintenance, presents, and vacations etc. A large family will also pay more money in sales taxes and embedded taxes which will typically more than offset the deductions available in income taxes. Their standard of living will subsequently be relatively low.
The childless family will use some of their income to live in relative comfort. The rest of the income will be invested so that it will grow over time at compound rates. Chances are they will retire early, and continue their elevated life style depending upon someone else to provide for their needs. But, who is it that will be satisfying those needs? The children of the large family will. Unfortunately, the large family when reaching retirement age will have very little saved for retirement. They wonââ¬â¢t have the money to hire their own children to do the tasks they are too old to do.
This is a system where people with children make an investment and the childless family gets the return. How many people would invest their money in a bank which promised to give the returns and the original principal to someone else? Clearly, this is an unfair system. Childless people need other people to have children for them, or they will starve to death in their old age. People with children have no need their childless neighbors.
Although there are many social benefits from having children, the average family has obviously made the decision that these benefits do not outweigh the increased financial costs. We need to look at this from the viewpoint of what our country needs to insure its own future. A society cannot produce economic capital without first producing human capital. In todayââ¬â¢s society, it might cost a typical family a few hundred thousand dollars to raise a child. During that childââ¬â¢s lifetime, he could be expected to make around 2 million dollars. Society as a whole is getting a 2 million dollar return in goods and services produced for an investment of a few hundred thousand dollars. Therefore, it is only fair that society make the financial investment, and not the family. It makes sense to do this in a way that rewards people for raising the right kind of children, that is those who will become productive citizens.
I am proposing then a system which does just that. This system would avoid charges of elitism that a certain group of people are superior and therefore make better parents. It would instead be based upon that actual performance of parents. This is a system which keeps track of the family connections of income earners. When a coupleââ¬â¢s children reach adulthood and start their own jobs, the government would pay the parents of those children a sum of money which is a percentage of the income of the childrenââ¬â¢s new family unit. Letââ¬â¢s say, hypothetically speaking, that this might be about 10%. So if a family had 2 children, a boy and a girl, they would get 10% per year of the income of each. If the children were married, the parents would get 10% of the average income of each child and their spouse. If the daughter decided to take a few years off to have children of her own, the daughterââ¬â¢s parents would still receive 5% of her husbandââ¬â¢s salary. If one of the children ended up in jail or on welfare, the cost of supporting this child to the government would be subtracted from the income the parents received, although this total value would never go below zero. Maximum limits might be imposed in order to prevent low income families from putting all their bets on a son becoming an NBA star or to prevent the parents of someone like Bill Gates from receiving excessive amounts of money. In general, the amount of money received would have to be adjusted over time until the desired birth rate were achieved. I would suggest that this rate be set to produce a slow positive growth.
With this system, people might once again start to take renewed interest in their childââ¬â¢s behavior and education. Welfare recipients would encourage their children to prepare themselves for the workplace instead being dependent upon the state. The idea is to treat the state as if it were a giant corporation, like Weyerhauser, planting seedlings and investing in a selective way to see that those seedlings grow to be a valuable resource.
This is a concept only and needs to have much more input including the means of payment to develop the optimal approach. Clearly there are a lot of details that need to be worked out. However, hopefully by promoting this concept, we can start a dialog of how to preserve our national and cultural future and to produce a population in the numbers and quality required to compete. We can then turn our attention to controlling immigration.
2005-08-29 16:56 | User Profile
The best idea I've heard is to make the number of children a household has a significant factor in determining Social Security taxes and benefits.
So, for example, a breadwinner could reduce his or her SS taxes by 10% for each child under 18. 10 kids and you no longer pay taxes.
On the benefits side, a household could get a percentage increase in taxes for every kid raised o 18, say 10% per kid. Again, 10 kids, you get double benefits.
I think that overall, this will not be much of an incentive for blacks and others with very short time horizons, since the benefits will only be received decades after childbearing age.
I would also remove the upward income limit for SS taxes. This will really hit the Sex and the City type of career woman who makes tons of money and spends it on $500 shoes and thinks nothing of the future of the nation.
One may object to SS on libertarian grounds, and I'm sympathetic to that, but the fact is that SS is a permanent fixture and going noplace. We might as well arrange it to suit our interests.