A Free Way to Increase the Economic Well Being of Most Citizens and also Reverse the Decline in Birthrates ( 2.0 )
February 17, 2021
Avraam J. Dectis
trillionstrillions@outlook.com
The USA is a dying society.
Birthrates are well below replacement. This means a society with an increasing average age and decreasing vigour (1).
We have designed an economy that maximizes the wellbeing of the economy while making the continued existence of the people unviable.
There is now a wide consensus to provide a monthly financial benefit to parents to help reduce child poverty and to also make it easier to bear the financial burden of having children, which may inspire people to have more children (2).
Since it seems likely that the funds for that support will be allocated, for policy discussions, they can be considered an existing fixed cost.
The main question left is how to engineer the program for the maximum benefit to society.
It is likely that the current intent is to directly disburse a monthly stipend and that is an inadequate approach.
A better approach is to calculate the entire sum of monies that the parents would receive for the child, and give them that entire sum, wrapped in an account from which they could withdraw their monthly support.
These accounts will be referred to as Parent Accounts.
The sum in the Parent Account that they do not yet have access to could be invested however they saw fit, thus providing them with a retirement account, if they proceeded with wisdom.
This would be a significant long-term financial benefit to the bottom economic half of society, who generally have paltry savings. If they raised the children on their own earnings, as most parents have always done, and left the money invested in the stock market, they would likely have a very comfortable retirement.
As with any program, various constraints could be implemented to inspire virtuous and wise behaviour.
Some possible examples:
1) If the child died, the remaining money in the account would be forfeit. This would help to ensure the child’s welfare in the small number of cases where the child has the misfortune of having toxic parents.
2) The parents would not be able to invest the money in the stock market without viewing an extensive set of videos on how the stock market works and what pitfalls to avoid. It is likely that we could put together an inspiring set of online information from some well-regarded folks, who likely would be more than happy to help.
3) The remaining money in the account would not be given to the parents until the child graduated from a four year college or became thirty years old. This would help inspire people to be well educated, which is a great benefit to society.
4) Since we wish to support home ownership, we could allow the funds in the account to be used as security for a down payment on a house. For example, if they needed a sum for a down payment, they could merely pledge that money from the account without disbursing it or having to sell stock. Only upon foreclosure would they have to pay out of the account to cover their down payment.
It should be emphasized that if we assume that a monthly child benefit will be implemented, then all of the other benefits discussed here are free. We are merely restructuring money already to be given to provide a significant retirement fund to most parents at no extra cost.
Some might argue that by front loading the cost to the treasury that it does increase the cost. This is only in the first years of the program. Since the child benefit is considered a permanent program, if there were only direct monthly disbursements, then after a number of years, the monthly costs would be the same, since there would be monthly disbursements to every child throughout the age support range.
This is a free program that shares the wealth effect with all citizens who choose to be parents and which will provide a widespread significant boost to economic wellbeing.
All of the above benefits are powerful, important and free. But there is one additional benefit that may overshadow them all, and that is the psychology.
If you tell a prospective parent that if they have a child that they will receive a relatively insignificant monthly support of (X), that relatively small sum is unlikely to sway their decision.
If, instead, you tell them that if they have a child they will receive (X) times the number of months (Y) that they will receive the support — which at a minimum would be until 18 years or 216 months — then receiving a lump sum of ( X * Y ) to start their retirement account is much more likely to persuade them to have a child.
There is also the psychological support of having a sum in the stock market that can be used as security. This reduces stress.
If the prospective parents are thinking of having several children, for example 4, then the support of having (4 * X * Y ) in the stock market at a relatively young age might be even more motivating.
If These Parent Accounts do turn out to be an effective motivating enticement, they could reverse the declining and suboptimal birthrates to back above replacement. If that were to happen, we would have created an easily adjusted culture lever that we could use to dial in the birthrates needed to maintain a stable society.
For no cost at all, we would have a transformative result that increases economic and demographic wellbeing.
Footnotes:
1) 5.8 million fewer babies: America’s lost decade in fertility | American Enterprise Institute — AEI
