Angry in the Great White North

[Originally posted on January 24, 2005]

[Update: A much better and more in-depth article at TechCentralStation that touches on the same themes.]

[Thematically, this is a follow-up to my post about the insiduous thinking behind nationalized daycare. In both, I examine how when socialists prevail in having the government take over jobs that were once left to families, families start to disappear.]

One the issues that faces most Western countries is the cost of government-sponsored pensions. For most countries, there is a real concern that the next wave of retirees may drain much from the plans, while the shrinking work force will be forced to pay in much more as a result. In the worst case, there are worries that these plans may become insolvent.

But frankly, this cannot come as a surprise. And the reason is simple -- thanks to socialized universal pension plans, children have no value.

This might seem a bit of a leap, so let me explain. Children cost money. I know -- I have four of them, three still in diapers. We're always running out of something. There is an entire shelf in the cold room just for cans of powdered baby formula [update: the little ones are off the formula]. A big box of diapers every other week. Four-liter bags of milk bought six or eight at a time [update: now 12 or more at a time], with a fridge in the basement dedicated to storing milk and nothing else.

But people had even larger families before. Why? Because as much as children cost money when they are young, they have monetary value when they are older. That value is realized when you retire and the children take on the responsibility of taking care of you.

In the old days, people didn't have pensions and RRSPs. They had children.

But someone came up with the idea of socialized pensions. Everyone pays higher taxes, and that money goes into a pool, managed by the government, invested by bureaucrats (usually in government bonds, surprise), and eventually doled back out to you when you retire. In fact, all they did was take over the intra-generational redistribution of wealth that was taking place when children took care of their parents.

But now you've got higher taxes. You have to pay for that. What expense can you cut back on? What is there that you can you do less with, now that your discretionary income has been curtailed?

Of course, kids. I mean, they aren't actually worth anything now, right? And so you see a crash in the birthrate. Of course, what did you think would happen?

Someone could argue that you still need to have kids to support the tax base. Sure, but you have to pay higher taxes for the government scheme, which works against supporting too many kids. The other problem is cheating. If I know all my fellow citizens are going to foot the bill for my retirement through the taxes they pay, then why take on the strain of raising children? I know I should for the health of the nation, but since it won't directly affect my pension if I don't have kids (I get my pension regardless), I'm personally better off not taking on the cost and responsibility, and leaving it to everyone else. In the end, what difference will it make if I don't have kids -- there are plenty of other folks taking up the slack.

And so that self-centered approach becomes the norm, as everyone looks to everyone else to worry about having expensive kids to support the tax base, and the overall birth rate crashes. The drop in birth rates started in earnest in the 1960s, and to be sure, there are many reasons for it. But does it come as a surprise that this was the time when many countries began to implement socialized pension plans (West Germany and the Netherlands 1957, Sweden 1960, the UK 1964, Norway and Canada 1966, France 1968)?

It's no surprise to me.

[end of post]

Well, we've got four kids, so we're doing our bit.