“Clinton economist trusts government too much”

Being a reticent fellow myself, I enjoyed that Bloomberg-given headline.  That is for my latest column, on the recent book and ideas of Heather Boushey.  She wishes government to take a much larger hand in sick paid leave, parental leave, and care for the elderly, among other issues.  Here is one excerpt:

Most likely, there is a big difference between short-run and long-run effects. For instance, employers value the workers they have, and are reluctant to fire them when labor costs go up. A lot of “pro-worker” policies thus seem to be a kind of magical free lunch. Over time, however, as a generation of workers turns over and is replaced, mandatory benefits represent a real added cost, evaluated anew, and employers will respond accordingly. They will cut the paid dollar wage, cut other job benefits, require more hard work, automate more, or cut back on plans for growing the business. The downward-sloping demand curve is the best established empirical regularity in all of economics, and in this context that means some laborers — maybe most laborers — will pay a price for their new benefits, one way or another.

Note that if firms have better bargaining power than do workers, workers can in the short run claw some of that back through the law.  Yet that superior bargaining power simply will be reestablished one generation of workers later, albeit with jobs at a new higher-mandated-benefit, lower-something-else equilibrium.  Hardly anyone gets that.  And:

Boushey doesn’t estimate or indicate the expense of her proposed mandatory benefits, although she does suggest on page 1 that the cost would be “very small.” She is developing a new kind of supply-side economics, this time on the left, but like her right-wing counterparts she is running the risk of excess optimism about how much her suggested improvements will boost productivity in the system.

Give them cash I say, do read the whole thing.

Here is Heather Boushey’s new book from Harvard University Press, Finding Time: The Economics of Work-Life Conflict.  I disagree with it fundamentally, but still many of you will find it of considerable value.  She is also the chief economist for Hillary Clinton’s transition team, and I would trust her with nuclear weapons.

Comments

Bloomberg observation- McArdle attracts a much better quality of commenters than Cowen. (TC is new there, so maybe it will get better)

I will grant you that McArdle's board has effectively squashed the liberals, which is pleasant. However, what was required to get rid of the infestation was rather toxic, which is sad.

TC is new and he has generally stuck to the statist side of the fence which is preferred by Bloomerg, so he hasn't generated the rather rabid fan base McArdle has over the years. We will have to see how this develops.

As to the article and Boushey's laughable contentions, it is sad that due to Trump we are about to enact her policies. Sigh.

Today's vibe:

Voting Republican all your life, and complaining that Democrats still won't solve all your problems.

It is all rather hopeless, and springs from the deep knowledge that Republicans don't even try. A trust in the invisible hand has given way to no faith, and jealousy.

'She wishes government to take a much larger hand in sick paid leave, parental leave, and care for the elderly, among other issues.'

Because that has worked out so poorly for the socialist hellhole that is Germany. What is the English word for the 20 year old 'Pflegeversicherung' program? (German only - https://de.wikipedia.org/wiki/Pflegeversicherung_(Deutschland) - definitions here - http://dict.leo.org/dictQuery/m-vocab/ende/de.html?searchLoc=0&lp=ende&lang=de&directN=0&rmWords=off&search=Pflegeversicherung&resultOrder=basic&multiwordShowSingle=on )

'The downward-sloping demand curve is the best established empirical regularity in all of economics, and in this context that means some laborers — maybe most laborers — will pay a price for their new benefits, one way or another.'

Well, we certainly wouldn't want a typical shareholder or CEO getting paid less than the maximum they can possibly plunder - strange how that downward slope never seems to empirically apply to the rich getting richer.

The shareholders don't plunder - it's their company. The executives certainly do plunder. That they are allowed to plunder so much, so conspicuously, points to defects in company governance law.

No, it points to the US and other western developed countries ability and desire to eat their seed corn. There is lots of wealth to plunder and in those circles the results have been pretty good.

Can't it point to both? I know plenty of "better mousetrap" rich...and also plenty of "game the system" rich.

Obviously, Germany is not a hellhole. But in large part, that's due to the effect of the Hartz reforms:

http://voxeu.org/article/german-labour-reforms-unpopular-success

But why pick cherry-pick Germany? Germany is an outlier in the regulation-loving EU. What effect have all those worker-protections had on aspiring young workers?

"Overall, the EU youth-unemployment rate is about 20%. However, the countries with the highest rates — Greece, Spain, Croatia, and Italy — are all in the stunningly high 40% to 50% zone. "

http://www.businessinsider.com/youth-unemployment-in-europe-2016-7

40-50% youth unemployment? That's starting to get into 'hellhole' territory, no?

So...a quote from your first link which partly refutes your thesis about the stifling impact of the "regulation-loving EU."

"For example, in our study we find that a Hartz-type reform of the unemployment insurance system in France or Spain would have relatively modest effects on the French or Spanish unemployment rate. The reason for this finding is simple. The benefits paid to the long-term unemployed are already low in France and very low in Spain, and reducing these unemployment benefits to even lower levels is not likely to have large incentive effects."

Yes, Spain, for one, has a massive youth unemployment problem despite offering stingy unemployment benefits. To think of such a thing!

Germany, moreover, is not particularly an outlier in the EU. Denmark and Norway have unemployment rates that are about the same as Germany's. The UK is only slightly higher. Switzerland is a little lower. The Netherlands and Sweden are within a few percentage points. (Source - it's Wikipedia but it's pretty well-cited: https://en.wikipedia.org/wiki/List_of_sovereign_states_in_Europe_by_unemployment_rate)

Many European countries, likewise, do not have youth unemployment emergencies. Germany, Switzerland, Norway, Austria Denmark and the Netherlands have lower youth unemployment than the US. The Czech Republic and the UK are higher than the US, but around the OECD average. The only European countries where youth unemployment exceeds 25% are Slovakia, Portugal, Italy, Span and Greece. France comes close. (Source: https://data.oecd.org/unemp/youth-unemployment-rate.htm)

I mention this because the problem here is not regulation in and of itself. The problem is the KIND of regulation.

Countries like Germany are a good analogue for the US - better than Italy, France or Spain - because the US lacks the main reason why Italy/France/Spain have an unemployment problem, and a youth unemployment problem in particular. The issue is labor contracts. It is difficult-bordering-on-impossible to fire or lay off workers in France and Italy, for example. This makes companies reluctant to hire, leading to high youth unemployment (and persistently high unemployment generally), and creating a two-tired labor market where many new hires on "temporary" contracts with very few protections.

I believe the Hartz reforms, which you cite, ended this in Germany, making it much easier for companies to hire and fire workers. However, they did not dismantle the entire German welfare state. Germany still has very generous leave policies, including maternity/paternity leave and sick leave, and a generally strong welfare state. But it has a flexible labor market.

"Strong welfare state + flexible labor market" seems like a pretty good formula for having a successful economy with a strong middle class and a good lifestyle for the average person. Many of the northern European nations (such as Denmark and the Netherlands) which have enjoyed similar recent success as Germany have also adopted this formula. Many of these countries also score quite highly on measures of individual and social well-being. They're not perfect, of course, and surely these policies do have downsides. But in general they seem to work.

Crucially for this discussion, literally NO ONE - not Tyler, not Heather Boushey, not Hillary Clinton, no one - is proposing that the US adopt the stringent rules that constrain labor mobility and create youth unemployment in countries like Italy, France and Spain. Germany is a reasonable analogue for the US, because if the US adopted some of the policies Boushey proposes - and strengthened its welfare state more generally - it would probably look more like Germany than, say, Italy. Because, again, nobody is proposing that the US do the thing that is really driving the youth unemployment crisis in countries such as Italy.

"Crucially for this discussion, literally NO ONE – not Tyler, not Heather Boushey, not Hillary Clinton, no one – is proposing that the US adopt the stringent rules that constrain labor mobility..."

No, not exactly. But nor are they proposing an expanded, government-provided safety net (which would require significant tax increases -- such as the imposition of a VAT -- that are not politically feasible in the U.S.) So what they are proposing instead is additional employer benefit mandates which do seem likely to negatively impact the willingness to hire full-time workers with benefits (as the Obamacare mandate has already done):

https://fee.org/articles/even-left-leaning-econ-writers-are-impoverished-by-obamacare/

Some points, here:

-I was specifically rebutting your point that Germany is an outlier in the EU and therefore not a good analogue for US policy. My point was essentially that a) Germany is not an outlier, as many other EU countries have similar unemployment statistics, b) there is a strong and rather specific reason why one group of countries in Europe does well on unemployment, and another group doesn't, and c) the former group, including Germany, is a better analogue for the US in these discussions than the latter group, as the specific reason why the latter group performs poorly is not under discussion here.

-Point taken on the political infeasibility of significant tax increases in the US. We probably could raise some taxes, and I would contend that the policies Boushey espouses, in particular, are quite small-bore and would not require very large tax increases. But in general, yes, creating even a German-style welfare state in the US would require tax increases that are politically impossible right now (although this could change in the future).

-You are citing one example. It is an anecdote. It is not evidence that the Obamacare mandate has had a significant negative impact on the employment market (I am open to the idea that it did, but this does not constitute evidence).

-That said, even anecdotally, I certainly have heard of employers capping hours in such a way as to avoid needing to pay for benefits. However, this practice predates Obamacare.

-The existence of this practice is, if anything, an argument against creating arbitrary thresholds for employee benefits. But, obviously, requiring that all businesses, even the newest and smallest businesses, pay full benefits, could have significant adverse impacts. It seems reasonable to believe that this would stifle the creation of new businesses.

-So, what to do? I would argue two things. First, where possible, you take the employer out of it. There's no reason why employers should provide health insurance, for example; the fact that this is common in the US is an historical accident. Either go full single-payer or create some kind of a regulated market (probably with subsidies) where people can purchase their own portable insurance policies, completely divorced of their employers. But, second, sometimes it's not possible to take the employer out of it. You can't really create a leave policy that does not involve employers. So, you do the best you can to mitigate the downside risk while accepting that there will be some trade-offs.

-So, are the trade-offs worth it? Obviously, it depends. In the case of leave - as a married man in his early 30s thinking of starting a family in a few years - I say absolutely yes. I'm open to being convinced otherwise. But, one of the big headaches of starting a family is figuring out childcare, especially in the early years, in a world where both parents need to (or even want to!) work and employers are generally not forgiving about work-life balance. Part of this issue is cultural, but the government can help push things in the right direction and leaving it to employment bargains, as Tyler suggests, strikes me as naive and ignorant of how the labor market actually works for most people.

-Finally, I am generally inclined to agree with Tyler about cash transfers, but I don't really think that's the solution here, for a variety of reasons, most of which are non-economic (and which I won't go into here because this post is already too long).

"I was specifically rebutting your point that Germany is an outlier in the EU "

Look at chart #1 here -- Germany certainly looks like an outlier to me:

http://www.businessinsider.com/youth-unemployment-in-europe-2016-7

"That said, even anecdotally, I certainly have heard of employers capping hours in such a way as to avoid needing to pay for benefits. However, this practice predates Obamacare."

Yes, of course it does. But the more mandated benefits that are piled on, the greater the effect. How could it be otherwise?

"There’s no reason why employers should provide health insurance, for example"

Agreed. But Obamacare has had the inadvertent effect of tightening that relationship. That's because now, post Obamacare, if you don't have employer benefits but you're not poor enough to qualify for subsidies, you are truly screwed -- you're going to be one of the unlucky few who are supposed to make the exchanges financially sound.

"In the case of leave – as a married man in his early 30s thinking of starting a family in a few years – I say absolutely yes. I’m open to being convinced otherwise. "

Just like women, men in the U.S. are already permitted family and medical leave for a new baby. So plan ahead -- save enough money that you can afford it when the time comes (and I'm not just blowing smoke -- both my wife and I worked part time for a few months when our kids were born).

If you like Obama's weak economy, you'll love Hillary's (unexpectedly) slower economic growth.

Dan Mitchell: "Each year has had a similar GDP dip, and growth has never exceeded 2.5% (2010). The American economy hasn’t grown by more than 3% since 2005 (3.3%), the longest such stretch of malaise that we can find in the Bureau of Economic analysis tables going back to 1930. …Faster growth is possible, but it will take better policies."

"This would place his (Obama's) presidency fourth from the bottom of the list of 39*, above only those of Herbert Hoover (-5.65%), Andrew Johnson (-0.70%) and Theodore Roosevelt (1.41%)."

Off Topic: Attention people toiling to avoid the next financial crisis: in the 00's the indicators were there for all to see, e.g., rapid housing price increases in the face of comparatively lower economic growth, and stagnating disposable incomes: "hasn’t grown by more than 3% since 2005 (3.3%),"

Cowen would trust Heather Boushey with nuclear weapons? How is that related to anything

It is a way of saying she is rational, even though he doesn't agree with her. It is derived from what many people say about Donald Trump.

someone from The New School leading HC's economic team???!!! What happened to the Larry Summer's rehabilitation tour

I expect it means that Tyler believes she would never, ever use nuclear weapons under any circumstances.

Which means she is not someone you want in charge of nuclear weapons.

"Which means she is not someone you want in charge of nuclear weapons."

+1

Tyler's not a complete moron. It's difficult to believe he thinks that.

I agree with you more generally; I don't want someone who can't think anywhere near the button. That's the kind of person who'll get us all killed in something that should just be a standoff.

I suppose it's possible this is analogous to his immigration thinking: Their lives are just as valuable as our lives. In which case I don't want that person in any power over me whatsoever. When I hire someone for a government role, I want to know 100% for sure that they are on my team.

It's just Tyler virtue-signalling.

I thought the article was good but it kind of misses the point in its solution of giving people more cash. The real purpose of all this "work-family balance" stuff is to transfer resources from men to women. If you give everyone more money, men get the benefit as well.

"The real purpose of all this “work-family balance” stuff is to transfer resources from men to women."

Very interesting, can you explain more?

I am not an economist, but would guess that the same arguments could have been used when the workers had almost no benefits and worked in sweatshops. The demand curve has probably not changed its slope for a long time.

Yes! The future economy of China and the rest of Asia, India, South America, Africa Europe depend on it!

Full Employment for Everyone else!

I can't quite understand the blindness here. We are all in competition with billions of people who will work harder for far less. The effects on the working class are already apparent.

Oh well. In a short time, shorter than you can imagine, those other countries will develop a middle manager class that is far more effective and less expensive. I remember in the 80's when large numbers of well paid and eagerly sought positions simply disappeared.

I'd suggest keeping yourself affordable.

Ten years ago that would have been the invisible hand at work, and part of the free market, Republican vision.

The source of Clinton hate is in the knowledge that this is what the invisible hand wrought. Hate her because Progressives might have been right.

It is indeed the 'invisible hand', a series of decisions by independent actors that end up with a result. If you increase the costs vs your competition, you will lose. In this case, someone is increasing the costs of someone else, and it isn't the ones making the decisions that are losing.

This isn't a new phenomena, it has simply become apparent. The ability of the american consumer to borrow made the initial influx of cheap goods seem a great thing, but even at low interest rates that well has run dry. Now the lack of comparative advantage of much of the economy is causing serious social problems.

Clinton is proposing something that will add costs. She is as stupid and venal as the last politician who added costs.

I think you just claimed that low interest rates caused all labor disruption in the US?

First, I don't think so. Second the global downtrend in real interest rate is not something the US Fed can stop. It is bigger than us.

And it goes without saying, Trump, because he embodies hate of a system without solutions. Hate for the system, with handwaving.

Because again, solutions might just be Progressive.

Indeed they did -- but that doesn't mean what you think it does. Benefits are not free. When productivity is low and workers are poor, they need and want their salary in the form of cash, not benefits (which they cannot use to buy food, shelter, and other essentials) -- and that's true regardless of whether or not those benefits are mandated by government. Imagine, say, an 'enlightened' Indonesian t-shirt manufacturer who decided to match current western style employment benefits and reduce salaries by the amount those benefits cost. Do you imagine this would be popular among the workers? After the cost of benefits, would there be *any* money left at all to pay the workers cash? The answer is no. Last year in the U.S. the average cost of one benefit, employer-provided family health insurance, was $17.5K -- a number higher than the median household income everywhere but about the 30 richest countries in the world:

http://www.gallup.com/poll/166211/worldwide-median-household-income-000.aspx

The cost of an employer-provided family health care policy in the U.S. is about the median household income in Greece and more than the median in Portugal.

I would note that businesses are constantly calling on government to fix the problems that businesses created for themselves.

Given the slashing of labor costs by corporations, corporations should be prepared for lower consumer spending because labor cost is what puts money in consumer pockets to spend.

Businesses have wanted less government and lower taxes, but then they complain that government has failed to create the trained workers businesses wants to hire.

Businesses started treating workers like commodities, so workers started treating businesses as heartless commodities and happily buy imports and put US businesses into bankruptcy because US businesses put millions of workers and lots of communities into bankruptcy. And then businesses blame government for their failures.

Businesses now find that hiring workers cost them 100% out of profits because they got tax cuts to the point they pay no taxes so they can't reduce taxes hiring workers. So now businesses call for government to pay part of their worker labor costs.

And businesses need government to give their customers cash because their customers are paid such low wages they have too little money to spend on anything beyond utility bills and rents - Walmart profits depend on SNAP benefits being huge.

And businesses are complaining about the transportation system failing them, but they wanted tax cuts and cuts in government spending because businesses can invest more wisely than government. But apparently not invest in transportation assets. Especially when government puts business in charge of big complicated projects, businesses blame government for their failures to deliver better and cheaper than government because government won't let them destroy other people's property.

Consumer spending must be less than labor costs, but businesses want consumer spending to be twice labor costs....

TANSTAAFL

economics is zero sum - every input must equal an output.

TANSTAAFL doesn't mean what you think it means. It means everything has a cost. Sometimes the cost is a bargain. For example, seed corn. You can eat one kernel of corn OR you can spend it to get an entire cob of corn next year. Please mulp, if economics is a zero sum game then we are still living in caves fighting for subsistence walking to our forage-grounds, more so now that we have 7 billion people, not 100 million.

Once upon a time, Marx (well, someone pointed it out to him but he acknowledged it) used his brain and realized his labor theory of economics failed to address technology or trade. You're smarter than he was, so I expect better from you.

"You’re smarter than he was, so I expect better from you."

?

It is a low bar, granted. Still, I've seen some insightful stuff from mulp, even in the I Disagree But You Have A Point category.

The value of many people's work is not known - that is, the financial benefits of the work to the company are too difficult for most companies to be bothered to work out. If companies are under a lot of cost pressure, management will try something to save money that doesn't involve sacking the people they like. That's as far as wage control goes.

Most wages are set by a mix of social precedent and personal favouritism. If laws skew the conventions one way or another it can have a lasting effect. This becomes clear when you work in different countries and are exposed to varying pay conventions for varying occupations.

Conventions and habits also effect the way money is spent. Provision of wages in kind can effect how workers value their job. Cash is not king.

Massive corporate profits not going to the bottom 99.9 per cent of society but in need of advocates for their retention. Solve for the equilibrium, as they say.

Class agitators electing the most privileged woman in the world with the highest ratio of profit/value added in the entire world. Solve.

Regarding long term effects of paid sick leave, on the demand side, the following paper could be of interest.

The Spirit of the Welfare State? Adaptation in the Demand for Social Insurance

"Young generations demand substantially more social insurance than older generations, although program rules have been constant for decades. [...] The analysis suggests that behavioral responses estimated by natural experiments could strongly underestimate the true long-run elasticities relevant for the fiscal sustainability of the welfare state."

http://www.jstor.org/stable/10.1086/667723

Why shouldn't she trust the government? It's worked well so far, for her!

And now you see how the bubble is formed.

Could the answer be that worker conditions are heterogeneous? Auto workers have benefits that make their business non-competitive but, bureaucrats have cozy benefits beyond the value some of them generate, but there are other workers with zero benefits. So, the discussion should be instead which workers have too much and which ones almost nothing.

What stands out about Cowen's post at Bloomberg is how small-bore Ms. Boushey's proposals actually are. No, she isn't proposing 50% or 70% tax rates on high earners, she isn't proposing government ownership of business, she is proposing parental and sick leave, subsidies for child care, and better care for the elderly, proposals that are closer to the social gospel than the socialist gospel. Cowen, to his credit as an academic, uses the exact opposite technique as the technique McArdle employs so well at Bloomberg: while Cowen starts with small-bore policies supported by the left and then magnifies their potential significance, McArdle starts with outlandish policies that nobody with any influence supports and then warns of the economic Hell that will follow if Clinton and the Democrats win the election. McArdle honed her technique years ago in dialogues with Jonathan Chait on Bloggingheads.tv. She would start with an outlandish statement and then observe Chait's reaction. If Chait's eye brows merged with the hair on his head, that was her signal that she had hit a home run. It's the same technique as that employed by Donald Trump, only somewhat kinder and gentler. She is popular with a certain set (the Fox News set) because she knows how to push their buttons. Cowen, on the other hand, has a reputation (as an academic) to protect, so he will never have the following that McArdle does at Bloomberg. The difference between the two was emphasized when they were interviewed several years ago about McArdle's book, the Upside of Down. When asked why the book omitted any discussion of bankers (it was soon after the financial crisis), Cowen waved off the question. McArdle, on the other hand, gave a long-winded answer, with sentences and subjects and verbs, but was nothing more than word salad.

On the other hand, we underestimate IMO the value of having and raising children and as a result get fewer kids than we probably should. If society collectively lowered the cost of having and raising kids we'd have a slightly more balanced fertility weight.

Say you agree with that concept, what would be most economical method be? In the 50's perhaps it was to pay men a premium so housewives could stay at home (don't lay off Jim, he has a family at home!). But that imposed a supply side cost as it deprived us of the output of many women who were equal or better than male workers.

Another method might be raising taxes and creating a benefit of some type that families could use for childcare and other issues. This gets into a messy area where the gov't is both taxing and also trying to supply something.

Paid time off, promoting more flexible policies in general may impose a cost on employers but in the long run it might be the least costly way of increasing the incentive to maintain family life. the cost might indeed be more than it seems at first glance but then so might the benefits.

Childcare costs should be broadly deductible. An easy way to do this is to greatly expand the child tax credit so that it better approximates the actual costs of raising children.

Why not municipal child care? We trust schools with kids. We know that the "babysitting" aspect of k-12 supports a workforce. So why not?

Because we have decided that state care below age 5 is socialist? Or even Progressive?

Every live somewhere that had that? Would you want to again?

Besides, a major advantage of the tax credit approach is that it also works for families that want a parent to stay at home. State child care centers effectively mandate both parents work in order to receive benefits.

The tax credit works for the middle class and upward, who can float the cost until tax time.

The target should be the "childcare or food" segment, not those who can wait for a kickback.

The target should be those who can just manage to drop off kids before starting a minimum wage shift.

Put another way, you don't want state child care centers because they are likely to be expensive and low quality and because it denies parents a choice they can and should be making for themselves. We don't need to mandate the choice.

"The tax credit works for the middle class and upward, who can float the cost until tax time."

Although you can argue about refundable credits, yeah, for sure you don't want them to be refundable. You strictly want to be encouraging having children among people who can basically afford to do so and you want to discourage it among those who can't.

You are not helping the minimum wage earner by encouraging her to have kids now, and you sure aren't helping society by encouraging her to do so. It's like 2006 when we were doing all we could to get poor people into mortgages they could barely afford. When you get the government to drive someone into a financial decision they can barely afford, you aren't doing them a favor.

And you sir, are saying screw the kids that exist now in homes which cannot float child care.

Giving people a bonus for making a bad decision that hurts them and hurts the rest of us and hurts a child seems like a pretty bad policy. That seems obvious.

"The target should be the “childcare or food” segment, not those who can wait for a kickback.

The target should be those who can just manage to drop off kids before starting a minimum wage shift."

Make America Dysgenic Again!

A major benefit of government daycare is that progressives can start social engineering earlier. Five years in to government daycare, Boonton and anon and B. Rosser would be here defending discrimination against white and male toddlers to correct the systemic racism and sexism in our society.

Who is actually programmed, conditioned, here?

The person who takes childcare at face value, or the people who see it as a "dysgenic" or socialist plot?

(Cue angry Trump. To vaguely make things great.)

That might work, but then you are talking about increasing taxes since revenue neutral tax deductions would mean higher taxes on businesses and workers in general.

There might also be a cultural element at play here too. Paid time off as a norm makes child raising more of a norm for more people, including higher status 'career couples'. Tax deductions simply mean your cost for paying others for childcare is 25% less or so. Discounts are nice but there does seem something wrong that our society views having kids as some type of eccentric hobby an individual may engage in (like racing sail boats) rather than a partial service to the rest of society. I'm not saying people should be given free houses and food just for having a kid but then if they were would that be so horrible given every other week has some article about the 'problems of an aging society'? Is it better to give a million people houses and food to fight pointless wars trying to make Iraq a nice place, for example?

FWIW, I've long argued that having all costs associated with children fully deductible is what a neutral policy would actually look like. What we have is a tax policy that heavily penalizes having children because all the associated expenses must go through the income tax.

If you want an off the wall suggestion, I'd suggest restructuring the various preferences that exist for women in school and the workplace to be preferences for mothers (or possibly parents more broadly). As far as I can tell, childless women don't really experience anything worse than men, but women with children have it rough.

I'm not averse to parental leave. If you wanted to pick one important area for regulatory intervention into labor markets, pro-child policies might be the one.

It seems pretty inflexible to view motherhood as a full time lifetime job rather than something women do in addition to other things just. It seems to me to be not very disruptive at all for women (and/or men) to be able to take off a serious amount of time (6 months even a full year) with the birth of a new child and come back to where they more or less left off after and have generous childcare accommodations after they return to work.

If I'm reading your off the wall suggestion correctly you're proposing an alternative career track earlier in school based on the full time housewife model for women...does that work in the modern world? I'm not sure it does and I'm not sure it's economically efficient either.

I was thinking more of preferences that would allow work and encourage the promotion of parents. I'm not strongly in favor of the stay at home model to the exclusion of everything else. In fact, when I look around the world I notice that societies that overly constrain the choices of mothers one way of the other seem to have lower birthrates. Reasonably, when women see having a child as an irreversible choice down a particular life path (I'll never work again, or I'll be stuck without advancement in my career, or I'll need to work forever to pay for this, for example) they may be reluctant to proceed.

Raising children as a partial service to society? Perhaps, but is every parent who has children doing a "service to society?" Or are some of them just creating another juvenile delinquent for whom they'll collect welfare?

The rationale for human existence, like that of all life forms, is reproduction. Without reproduction, there's no point in existing in the first place. If procreation is to depend on economic theories and circumstances, continuation of the species, at least in that social setting, is in doubt.

Juvenile delinquency is a pretty minor cost to our economy. And there's no magic 'welfare check' that automatically shows up as soon as someone has a baby.

Having a child is always a gamble. We don't know in advance who will turn out OK and who will not.

Childless, breeder-mocking progressives are now natalists because they've been told to be.

Shorter: "positive externalities don't exist, or if they do, we assume government can't figure out a proper adjustment." I would support cash transfer experiments if we could find politicians who would do it without looking for a backdoor to cut overall support.

I'm certainly a fan of the 'give them cash' instead of a lot of benefits, but paid sick leave and paternal leave are two examples where cash is a very poor substitute. 'Capitalism for resources, socialism for time' might be good slogan as time has very poor fungibility.

The US government could reimburse companies for the cost of sick and paternal leave and pay for it by raising FICA taxes. That keeps the cost from making American less competitive, but still provides the benefits.

I agree this sort of thing should be a socialized benefit, not something employers have to bear on their own (which tends to penalize small companies, and companies that employ low wage labor-- and ultimately their employees).

"...but paid sick leave and paternal leave are two examples where cash is a very poor substitute"

I'm a consultant, with no paid sick days at all provided by my 'employer'. I suppose I could run out and buy a short-term disability policy, but I find it cheaper and easier to simply maintain savings to cover any unpaid sick days. Why is this a very poor substitute?

If you don't give people sick days, they'll come to work sick. And they act like they are doing the world a favor by doing it. I've tried to explain to them that you stay home when your sick so you don't get others sick, but it just goes in one ear and out the other.

But if you *do* give them sick days, then they'll feel like they're getting ripped off if they don't take them all when their colleagues do. So they start taking taking 'mental health' days. To combat that problem, you can combine vacation and sick time into one PTO pool (as many employers have done). But then, of course, people come to work sick because they don't want to 'waste' their vacation time. And so it goes.

I don't really care if they're paid. I want them out of my office or penalized for coming in. We've got an expensive telecommuting capability: use it!

Is it really so bad that people take an occasional "mental health" day?

"And what works in California may not be well-suited to Mississippi."

That's ok, the Left is confident that no one in Mississippi is competent to make decisions for themselves. So, it's up to the Federal government to provide the good intentions backed up by the necessary intelligence.

"The left". Oh man, you need to get out more!

Whatever her views on paid family leave, you'd be a fool to trust her with nuclear weapons.

Tyler,

This is fine but please no complaining that the birth rates are falling. Do not lament the smaller family size either. Poorer workers with no negotiation position have little bargaining power over hours and wages.

All nations are going the direction of Singapore and having smaller families!

Good article, Tyler!

"She is also the chief economist for Hillary Clinton’s transition team, and I would trust her with nuclear weapons."

this anti-trump line is absurd. trump is actively against neoconservatism and wants good relations with russia, the 2nd biggest nuclear power. clinton is an unabashed neocon, who has decided to antagonism russia.

how one comes to the conclusion that clinton is the safe choice is bizarre.

Let's note that while all Progressive solutions are off the table for one reason or another (actually just one reason), the only modern Republican solution is a trade war.

Does anyone pretend that a wall and tarriffs (but other than THAT an invisible hand) will result in good jobs (and childcare) for the left behind?

I don't understand why economists can't come up with the political savvy to describe things like paid-leave requirements as "forcing companies to pay people for not working". You do not need to have mastered econometrics to understand why there are limits to how much of that is feasible, the inherent inefficiency involved, and that there's something mildly absurd about it. Long stretches of paid leave only work in the context of 5+ years of employment tenure. That's fine for stodgy companies like utilities, but in general employment turnover is too high for that to work out. Mostly, if a company can afford to pay you to not work for a year, you're either massively underpaid or massively overpaid to begin with.

Getting something for nothing is simply wealth redistribution. Paid sick leave or paid maternity leave mandates are a way of accomplishing that without having that wealth make a pitstop in government coffers first.

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