The U.S. national debt is now officially $33T, but add in promises to pay social security, medicare, etc, and I find estimates of $100T, $147T, and $245T for what the U.S. has promised to pay out somehow via future taxes. Divide these by the current U.S. population to get a debt per citizen ranging from $300K to $730K. We should thus be willing to pay up to these huge amounts to induce the birth and raising to adulthood of a single child who would then pay average levels of future taxes to repay this debt.
Clearly such big rewards could induce big changes in fertility, maybe inducing a cultural change multiplier effect, which tougher might get us up past replacement fertility levels, and thus preventing my default dark scenario. My main reason to keep that as my default is that this winning strategy has been possible worldwide for many decades without any nations even considering rewards this large. But still, we can hope; hence this post.
My other nextbigfuture plan was to start paying $300,000 per baby no win places like Korea, China and Japan with big shortages of babies. The countries would start checking in 9 months to immediately see if every month there was no longer a shortage of babies. In Japan the number of babies every month is 70,000 but they need 120,000 each month to be at replacement. China is at 800,000 babies per month but they need at least 1.4-1.5 million per month.
I would suggest adding the monthly verification component into the Hanson fertility debt and tax-free plan.
Japan is facing a population collapse. Japan has national debt of US$9.2 trillion but a GDP of only $4.4 trillion. Japan has 122 million people but 74 million people of working age and 68 million people with employment. Japan population is on track to drop to 100 million in 2050 with 57 million working age. Japan’s population will decline to about 70 million in 2100 working age population would be 37 million.
Today in 2023, the share of national debt per working age person is $134,000.
Japan is running about US$270 billion per year deficits.
In 2050, Japan national debt will be about $17 trillion in todays dollars.
In 2050, the share of national debt per working age person will be $300,000 per person.
In 2100, Japan national debt will be about $37 trillion in todays dollars.
In 2100, the share of national debt per working age person will be $1 million per person.
If the tax free and debt share plan stopped the decline of population then the per working age person debt for 80 million working age people in 2050 and 2100.
In 2050, the share of national debt per working age person will be $200,000 per person.
In 2100, the share of national debt per working age person will be $500,000 per person.
The financial situation would be even better because it would be tougher to sustain a tax base with rapidly declining population.
Details of the Plan
1. you’d need to withhold some of the payment until a kid reaches adulthood, to incentivize process completion, but also give some rewards early on to help parents cover expenses.
2. if you paid this same amount to everyone, poorer folks would probably respond more strongly, though their kids would on average later pay below average amounts of taxes. This is why Bryan Caplan suggests payment be of the form excusing parents from N years of taxes . He suggested N=1, but dividing $300K by average federal tax bill of $13.4K would give N>22. However this seems to overpay rich folks due to regression to the mean in kid incomes. So some intermediate schedule seems best.
3. this scheme would end up paying some parents to raise kids that they would have raised anyway even without these rewards. To ensure a net financial gain to the nation, you’d want to correct for this via estimates of the fraction of births induced by these rewards. This shouldn’t be too hard, especially if the program started with a big reward burst at random times across different geographic areas or population types.
4. some faction of kids induced this way would leave the nation to go elsewhere. But if this fraction is the same as the fraction for kids not induced this way, they still end up paying the same average fraction of national debt. So no correction is needed for this.
5. there’s a chance that the national debt won’t be paid, either due to debt default or due to unexpectedly high inflation. But both of these effects should be included in market prices paid for such debt. So as long as market prices are used to estimate the present value of national “unfunded liabilities”, no correction is needed for this either.
6. if future population declines, each kid would owe and pay a larger faction of the national debt, raising the value of making such kids.
7. if the investors who now buy national debt can be convinced of the soundness of this investment in kids, they will be willing to buy more national debt in order to fund these big fertility rewards. Thus the nation and its citizens need not actually take the risk of making this financial investment.
And that’s the plan. Paying no net cost and taking no risk, nations could pay large fertility rewards to those who have and raise kids,
Brian Wang is a Futurist Thought Leader and a popular Science blogger with 1 million readers per month. His blog Nextbigfuture.com is ranked #1 Science News Blog. It covers many disruptive technology and trends including Space, Robotics, Artificial Intelligence, Medicine, Anti-aging Biotechnology, and Nanotechnology.
Known for identifying cutting edge technologies, he is currently a Co-Founder of a startup and fundraiser for high potential early-stage companies. He is the Head of Research for Allocations for deep technology investments and an Angel Investor at Space Angels.
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When looking financial solutions to having or not having children I believe it is important to consider the following.
Most people are not going to decide to have children just because it will give them a big tax break.
People decide not to have children because they don’t know how they can manage it. The infertility clinics (potentially) expenses, the pregnancy and childbirth related medical expenses, the children’s medical expenses (especially if the child is born as special needs child and, potentially, a lifetime needs disabled person), the amount of time off from work required to have the child and get its life started, the cost of childcare when they go back to work, the nightmares of what to do when a child is sick and they have to go to work. What to do when the kids go to school and it lets out hours before the adult can get off of work (and that assumes the adult is not locked into shift work). This last one hits close to home as my sister quit her high-end restaurant management job to become a “lunch lady” at her kids’ school to solve this (but even the willingness and ability to make that sacrifice won’t work for everyone).
These are all huge uncertainties for people considering having children. Really, it’s amazing as many children are still born as it is.
We can shrug and say these are all personal choices, personal problems, and personal decisions, but if birth rate is a problem for society, then it is society’s problem and, funny as it sounds, government is intended to the tool by which society solves its problems and implements its will.
So the real questions start with basic ones. Is the birth rate a problem for society? If it is, then can society afford to address it it? And, if it can, will it?
The huge problem with this proposal comes from the assumption that all people are a financial gain to the system. The reality is that there are huge demographic groups that are overall financial burdens to the government. I have seen estimates that blacks on average cost $750,000 more than they pay in taxes over a lifetime. Should we exclude them from these incentives? Should we pay $300,000 for someone to be born who will probably cost an additional $750,000 in expenses?
If you understand that people aren’t cogs that can be transferred equally from one situation to another then these proposals look utterly ridiculous.
Increasing consumer demand and reducing labor costs with higher birth rates won’t do the economy any good if the planet burns.
Boost all tax bracket rates and increase both marriage and per-child tax benefits proportionally so at “married with 2 kids” you break even, normal credit for kids over that.
Yes, kids born into rich families would be ‘worth more’ in absolute dollars.
It either fixes the national debt, or we get more kids – I suspect the latter.
Replace the 16th Amendment with a tax on net assets at the interest rate on the national debt and replace the welfare state with a citizen’s dividend paid out only to military aged men who have been citizens for 18 years.
So doesn’t that end up just being a UBI+graduation gift for children, and a mix of temporary and permanent tax reductions on completion for parents?
Taking the immediate cost burden off of couples for child rearing would be a huge incentive, but only if there is a full government pipeline for preschool-12th grade AND full health coverage.
The funny part is, with robotaxi’s, getting them to school becomes massively easier as well, along with secure return home.
I say forget about it. Put the money into developing anti-aging life extension.
All the birth dearth means to me is that it eliminates the single biggest reason (overpopulation) for opposing anti-aging life extension.
Or alternatively, allow anyone with a college degree to immigrate to the US (likely over a million people from China and India alone would do this).
It is a global population crisis.
So… I am well aware that what follows is almost certainly “not common knowledge” or even popular prudence, in evaluating what “the national debt” is, and what its “purpose” is overall.
Popularly, talking heads in The Media, in Politics and in Economics decry the size and scariness of The National Debt, using similes of the reader’s personal debt by comparison. You know the schtick: “The National Debt is now at 33 TRILLION clams! The pay-down is burdened on our Children, and our Children’s children!! It is evil and untenable, it is immoral, lining the pockets of The Rich to forever deepen the servitude of The Common Citizen to pay it off!!!”
Something along those lines, I’ve heard hundreds if not thousands of times in the last 50 years of my reckoning.
Thing is, what is never mentioned in this litany is that NATIONAL debt is a far-sight different than personal or corporate or even regional (“states, provinces, cities, counties…”) debt. Why? Because servicing this NATIONAL debt (paying quarterly interest payments) is the ONLY avenue our Bretton-Woods II bound treasury has to actually create NEW money in an inherently negative feedback (self-regulating, anti-inflationary) basis.
If you made it though that last chestnut, you are probably saying “but wait, Goat! Governments can just print whatever money they need to buy whatever they want, yah, yah, regulated by Congress or Parliament, to keep the harbinger of inflation at bay!” Right? Not so, not so.
The Treasury debt is an astoundingly brilliant mechanism for creating money that must intrinsically have lasting value, albeit at a nominally slow, plodding pace. Your credit cards are exactly the opposite. They’re the opiate that allows you to spend monies you don’t have today (worse, “yesterday”) to buy stuff, then spend 10% to 50% more than those purchases in future for the luxury. The Treasury national debt instead has a powerful secondary purpose: by paying its interest coupons in NEW (never-before issued) money, the necessary growth of the money supply is ever-so-slowly regulated, one quarterly coupon at a time. Can’t do that with one’s credit cards!
Chew on an example: Congress appropriates enormous bags of money to fund all sorts of congressional stuff. You know, build bridges, pay military wages, insure pensions, run all those infernal government offices, regulate the oil, mining, forestry, jurisprudence, medical, social engineering industries. All that stuff. They spend a gazillion bucks, all totally pölïtically supercharged, every last year on all the things that keep politicians in office, that make “their constituency” remembering to vote for ’em. And, with very few exceptions, Congress spends more every year than taxes take in to pay for it all.
Those deficit years in turn must be paid for somehow! Ah-hah! Treasury notes. The Treasury is authorized by legislate acts to gin up (print) big ol’ honking pieces of paper called “Treasury Bonds” (and “Treasury Notes”). They’re like big pieces of fiduciary “money”: the stack of new bonds is brought to the Tuesday Auction at each Federal Reserve bank, and is listerally auctioned off to the highest bidders. Hundreds of billions are sold every week. Provided you or I can with a wheel-barrel large enough to pay for our play, any of us could participate.
The million dollar bonds are auctioned clear and free of any set price! The actual notes say that yah, the big face value coupon is paid at the end (“term”) for a million clams, months to decades from today. Also attached are little itty-bitty coupons, which are the interest paid by The Treasury for the privilege of borrowing YOUR money for the bonds’ maturity term. You bought the giant sheet of paper for say 90% of a million ($900,000). It matures in 10 years, and has a printed interest rate of 2.4%. Each of the coupons though is based on the full million. 0.6% of $1,000,000 or $6,000 per coupon, each with a PRINTED date. You clip ’em off, take ’em to a bank, and they are treated exactly like CASH.
Thing is, the way it works, those coupons are not cash. Might as well be, sure. But what next happens is that the various banks collect the coupons and bring them to their regional Treasury bank, and have them converted into piles of actual physical money. This is the ONLY money entering the economy which is previously uncirculated, or “new” money. Later — years later typically — the “note” itself reaches maturity. Unlike the interest coupons however, the note needs to be taken directly to a Federal Reserve Treasury bank; there, using “old money”, your bond is redeemed. Used to be physically, but these days, just bits-and-bytes passing between them and your bank. In any case, this is non-inflationary, since the Bretton Woods covenants prevent using “new money” to pay out the bonds at maturity.
Because you bought the example note for $900,000, and received $6,000 per quarter interest payments for what, 10 years? and at maturity, you receive $1,000,000 back too, the effective interest rate is HIGHER than the rate printed on the face of the thing. It is a complicated formula, but in round-about terms, your $900,000 has an effective interest rate of 2.75% intead of 2.4%.
YOU CONTROLLED THAT at the auction!
Seriously, how cool is that?
Meanwhile, the aggregate of the quarterly coupon payments (10 years, 4 per year, $6,000 each = $240,000) was ever-so-slowly trickled into the economy. And with “the multiplier effect” (where each dollar created results in something between 7× to over 40× of combined economic activity), the new money is fully “envalued” by the consumer base itself.
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I (almost) apologize for the length of that. Yet, without understading it, it is far too easy to say bûllshít about how goverments are wasting our children’s lives to paying out this burden.
Well … it is NOT a burden: it is a finely tuned, tightly controlled, mind numbingly prudent mechanism for (1) paying for Congressional appropriations above the yearly tax receipts, and (2) creating NEW money and broadly distributing it into the economy at the same time. It also has a (3) third effect: to take money OUT of the large holders “today” and keep it “hostage” for each bond’s maturity term. Keeping “faith” in the whole enchilada. YOUR money is actually out-of-reach for the term of each bond you invest in. You only have those infernal interest coupons, and to wait until the bond matures to get paid back “in full”.
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So.
Babies and National Debts.
I must ask, “Is this a problem, really?” Is it a problem for civilizations to reach a point of not feeling the need to have 2.1 babies per woman, but a rather smaller number? I do not think so! If most people become happy not being burdened with children for their lives, and find instead reasonably fulfilling purpose in “consuming” what The Civilization has created, working to make money to do so, and saving enough money to “retire” with some degree of security, well so be it. Gone are the dark days (pre birth-control) of 13 child Irish families.
Instead, and especially with background music playing the Happiness Waltz that enshrines small-ness, thriftiness, muted consumption, long-term planning … in that, many people become quite adept at fitting their square pegs into square holes. Tiny houses or apartments, itsy-bitsy (e-)cars, both-spouse career workers, modest spending, cherished vacations, nice “stuff”, but not over the top. Japan (and city-China, Korea, Italy, Spain, Germany and much of Europe) in a nutshell! No space for babies. The Waltz drones on in life, in school, in university, in popular parlance and young people hear the message, and adopt their virtuous “small living” ideal. Babies? Are you kidding?
So demographically, civilizations that enshrine the Happiness-is-small Waltz then go on to shrink. Even that fits into the Waltz’s philosophical message: a future, smaller society will consume LESS stuff, and be BETTER for the planet, and in turn, better for all people remaining. Any limit? No, so long as the ideals of The Waltz remain available, and people continue to reasonably find purpose therein.
See? Again I find myself asking, “is this lack-of-babies thing REALLY a problem?”
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In other comments, I (and many others) have countered along the lines of, “but, but, but the FUTURE will have gazillions of humanoid Robots, doing all sorts of things we humans do mundanely. Who REALLY wants to work in sweat-shops? Who REALLY wants to dig trenches, climb power poles, scurry around in big dangerous factories and dig minerals?”
Right? Its kind of true. It doesn’t take much imagination to see that the now-near future is going to have all kinds of robotic enhancement, of all sorts of things. Already, there are robots in no fewer than 4 of my town’s Chinese Fusion restaurants, bussing tables, taking orders, having no sense of humor, and delivering yummy foods quickly to the table. Already! And these aren’t even remotely humanoid!
Robotics — for sure — is going to break the demographic-fear-of-implosion cycle. You don’t NEED so many babies in order to have so many youngsters, to eventually enter the workforce, when your Robot factories can churn out a gazillion ‘bots to fill “employment” needs. It might be vaguely de-humanizing, but the very same was said about calculators, computers and smart-phones. As vapid as all her conversations are, my daughter’s expertise on that itsy-bitsy keyboard of her smart phone produces astounding results when she’s actually using it to find things, keep up with trends, and generally be an annoying nuisance. So? Is civilization “lost” because she’s not jetting around to visit all her friends, all the time? I don’t think so.
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THEREFORE I stake a claim that the “basis argument” is false.
Now I could sign off, or alternately evaluate it anyway. The proposal, to use National Debt to pay for a flush of new babies.
I’ll try to be brief: This is just another incarnation of UBI, or universal basic income. Keynes (a particularly widely celebrated economist) fans will see it as a “drop money from helicopters” approach at stimulating a future economy. I see it less abstractly. To me the questions are, would such payouts even be remotely fair, wouldn’t such payouts be directly contributing to massive systemic inflation, wouldn’t the future National Debt “new money” windfall undermine almost every avenue of conventional fiduciary prudence, and doesn’t the repurposing of The National Treasury Debt remove Congress from its primary role of statutory oversight of monetary spending ethics?
Just think of each of those questions in turn.
Couples who are childless by biological shortcomings. Couples where the man is infertile. NON-couples wishing to have kids, as unfair as that can be to the kids statistically. People past their childbearing age. What about non-citizens participation in The Program. What about all the goverment programs that have to take significant cuts “cuz the Treasury Monies are being spent elsewhere? ”
APART from the “but again, why do we need this?” question, is it really so sanguine to gloss over these ridiculously complicated Civic Moral questions?
I think not. I think ginning up a plausible sounding “Léts spend and pay for it again on the future kids earnings” argument is pretty thin. Or, just fine, if hyperinflation isn’t a worry.
Sheesh.
⋅-⋅-⋅ Just saying, ⋅-⋅-⋅
⋅-=≡ GoatGuy ✓ ≡=-⋅
“Again I find myself asking, “is this lack-of-babies thing REALLY a problem?””
I think we have to distinguish between a fertility rate of ~2 or slightly below, where population just very gradually declines while maintaining the same age distribution, and a fertility rate ~1, or lower, where population rapidly declines, and the age distribution gets seriously skewed towards the elderly.
1.9 is not a big deal, you can go on that way for several centuries and nothing drastic happens. Sure, EVENTUALLY you’ve got to get it back up to replacement, eventually, or else extinction, but there’s no hurry.
1? That’s a big deal, because society ends up top heavy with elderly people, who still consume, but don’t produce, and their consumption is skewed towards medical services. And solving this becomes hard in a democracy, because with so few people having children, having children starts to be viewed as more of a hobby than a normal life activity, and we don’t devote public resources to enabling hobbies, now, do we?
Unfortunately, reviewing the fertility rates by country, I see that much of the world is at 1.5 and rapidly dropping, getting into territory where you get severe demographic distortions if it continues. So, yeah, it’s more in the “emergency” territory than the “eh, we’ll get around to it” territory.
In theory, of course, sufficient automation would make the skewed demographics a lot more tolerable, and you’d just be looking at a relatively rapid reduction in population, maybe not terrible if you had reason to think it would stop in time. But, we don’t have that sufficient automation yet.
It strikes me that maybe you want to pull the plane out of it’s current power dive, and put it into more of a gentle glide, even if you do think you’re going to invent a parachute before it augers in. What if it takes longer than you expect?
I don’t think you get systemic inflation, assuming you mean ever increasing prices, so long as you don’t make the UBI COLA adjusted. There’d be an inflationary impulse, then it’d settle out.
I’m unclear how you spend the national debt on anything; It’s a “debt”, which is to say that the money has already been spent, and needs to be repaid.
Ok, it’s just an odd way of phrasing things, the idea is, “Spend more money now producing kids whose taxes will pay down the debt.”
It sort of sounds workable, except that, if government were capable of this sort of thing, we wouldn’t have the huge debt to begin with. We have a huge debt because, no matter how much revenue comes in, government ALWAYS spends more.
Produce more kids to pay more taxes, and you’ll still get a growing debt, only at higher spending levels.
That said, yes, a massive tax exemption for having kids would certainly work. There’s one already, of course, it’s just too small by maybe a factor of 10, to get the job done. You actually need one large enough that a middle class family could get by on one income with a stay at home parent.
Or just change zoning and permitting to enable more housing construction to lower housing costs. Texas builds far more housing than California despite a smaller population and lower new house values. If you think water access is slowing California construction, that’s mostly an excuse. There are dozens of desalination projects in Texas.
When housing is lower cost, it is easier for families to afford one adult to take a few years off work to raise young children.
Reducing permitting barriers is wildly unpopular at the local level, but politically possible for states and countries.
Easing permitting is an essentially free way to reduce population decline risks.
I would add to this a gramma grampa bonus to incentivize the gramps to help out with child rearing and prod them to make more. It’s also better for grandparents health and safety to be in a multi-gen family. Otherwise they just do dumb boomer stuff with higher carbon foot print. And this is also an opportunity to find more money for climate solutions.