A Modest Proposal to Increase Fertility Rates

In our underpopulated world, getting people to have more children is one of the biggest “free lunches” we have available to us. We’re underproducing new people mainly because the benefits of having more children accrue to the children themselves and the rest of society rather than the people who bear the costs of having more children: the parents. Indeed, despite what many people believe, people who have no children are happier than parents.

To solve this, I propose phasing out our existing system of social security and replacing it with a new system of tax-one-generation pay-another-generation, but instead of putting all the money from one generation into a pile and using it to pay another, it’s a direct transfer between children and their parents. This provides an incentive for parents to have more, if you have more now, you’ll receive more later. The system pays out as soon as the children begin paying taxes, meaning that two 23-year-olds could start seeing returns when they’re as young as 45. This is superior to a straight natalist policy because it only works if taxpayers are produced; produce a bunch of criminals and layabouts and you see nothing. At the same time, there is no bureaucracy making political decisions about which families are “best.”

Now, what prevents parents from simply refunding the money to their children? Well, the social security system is gone, so they gotta have some income stream. And people tend to see their “need” for income rise as their incomes rise. But so long as you make the right to receive the income is tradeable, this objection will not apply because the parents won’t be the ones receiving the income. These rights will have an inevitably de-humanizing name, I’ll just call them “H-bonds.” (Yes, I know they are more like equities than bonds.) The H-bond market effectively allows financial institutions to make investments in new people; they pay the parents upfront; the parents use the money to raise the child, and the child pays the financial institution back. These H-bonds will have risk if the person dies before or during their productive years, risk which can be balanced through life insurance.

The H-bond payments will need to be made until a person reaches a certain age, say, 52. And they will last regardless of whether or not the parent is alive or dead. If a parent dies and has only one child, his H-bond ceases to exist, if he has multiple children it would, if divided equally, act to redistribute income from the poorer siblings to the richer and from the younger siblings to the older. Suppose a parent has his first child at age 23 and last child at age 35. He’d start receiving money at 45 and stop receiving money at age 87. What if he lives for longer? Well, he could use the money he begins receiving at age 45 to buy an annuity that would cover him for his whole life, however long it may be.

Now, we shouldn’t think about H-bonds as children making payments to parents. Because that’s not how it would work. In the real world, people don’t hold much capital, the capitalist class holds capital and ordinary people cover their needs through insurance. And when ordinary people do hold capital, they are encouraged not to hold a single class of capital which has a lot of risk associate with it.* You’d hold them if you were convinced that you had a strategy that could produce children who would pay more in taxes than the market believes. Most people will sell them as soon as they create them. If they’re responsible they’d use the income to buy annuities and gradually build up a reserve so that by the time they reach retirement age they’ll have a guaranteed income stream. And once they have that reserve large enough, they could spend the money they receive and have that motivation to produce more children and more H-bonds.

About the annuities, you could have a system of forced purchasing of annuities that would apply to everyone including the childless. It would say, basically, that if you are at a certain age, say, 35, you have to have a certain amount of annuities in the bank. At age 50 the amount is larger, at by retirement age it is enough to guarantee you what the government considers to be the minimum necessary income. This is not recreating the social security system. A childless individual would have to pay to their own H-bond and buy annuities and later receive income from the annuities but would have no H-bonds to sell. The system is all very regressive, but this could be compensated by more redistribution elsewhere, as a universal income could be set up which would, for those with no income and not enough annuities in the bank, automatically go to buying annuities.

*By this I mean smart people don’t encourage the all-the-eggs in one basket strategy, our politicians on the other hand…

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