Sunday, March 18, 2007

children: our future social security

My grandmother was the youngest of 5 children all of them were very close friends and remarkably lived their entire lives in the same neighborhood. Every Christmas for over 30 years the extended family has hosted a party and recorded the event with a group photo. It is amusing to look at how babies have grown and the changing of fashion trends. However, I noticed looking at the more recent photos that it mimics the social security crisis-there are lots of baby boomers and elderly folks, but few of my generation and even fewer of my children's. Over half of my parent's peers did not produce any offspring. I grew up with 1 brother and no cousins, and my children only have 1 cousin themselves. Part of my desire to have a large family is for my grandchildren to have what my grandmother experienced.
During this medical crisis with my mother how I wish there were more siblings and cousins to share the emotional burden and to hold her hand and give her our secret "I love you" squeezes. My stepfather and aunt have been magnificent taking turns being with her. I am only able to visit for short snatches of time, last night my visit was cut short because Timmy pulled a projectile vomit nightmare in the waiting room with Tim- it was all over both their clothes, the floor, and the furniture.
No goverment agency can substitute for a child holding their parent's hand at the end of their life. No check in the mail can take the place of a phone call that ends, "I love you soooo much." Children are a blessing, even when they throw up sweet potatoes all over your pants and you can't share an elevator with strangers because of the smell. I pray when I am feeble and need someone to keep me company I will have many hands to share the burden of my care and that these thousands of hours of reading aloud to my children will be reciprocated.
This mercator article prompted these thoughts and here are some snippets:
"There's a simple reason for plummeting fertility rates in the West: pension systems have replaced traditional families and penalised couples with kids.
According to recent research in economics, the most important reason is surprising yet mundane: fertility decline is the result of misguided pension policies. Public pay-as-you-go pension systems have discouraged fertility by replacing the traditional family system and penalising those who raise more children.

There are at least two reasons why public pension systems should affect fertility rates. The first reason is that they replace the traditional family as a source of old-age security. This is the "substitution effect" of compulsory pensions. When there is no compulsory PAYGO pension system, people have children not just for the fun of it, but also because children provide security in old age.
The traditional family is actually a kind of private PAYGO scheme. Parents procreate, nurture and educate their children, and in return children look after their elderly parents once they can no longer provide for themselves.
The family arrangement has its limits, of course. For one thing, it is prone to localised shocks such as illness, disability or unemployment. This is why in traditional societies, the norm is the extended family, not the nuclear family. The extended family is a risk-pooling mechanism.
The effect of pensions is not limited to the substitution effect. There is a more damaging aspect, which is that public PAYGO schemes make children an economic burden instead of a blessing. This is the "free-riding effect" of public pensions. From the point of view of fertility, a compulsory pension scheme externalises the value of children. Children can no longer support their parents in old age, because a chunk of their salary is forcefully taken away from them and distributed to the entire population of retirees. Individual parents no longer retain the economic benefit of having children, but they must still bear the bulk of the costs in terms of time and money spent. Everyone receives the same pension rights regardless of how many children they had, if any. Many are tempted to take a free-ride on the children of others.
In other words, the welfare state becomes a "forced family" that replaces the traditional family as a provider of social insurance. It is not only an alternative to the traditional family, but an option one is not allowed to refuse. Undoubtedly it provides some benefits, but it lacks the sense of common goals and reciprocity which is essential to real families. Because the participants in the welfare state system do not know each other and have no regular dealings with each other, there is a strong temptation to seek to maximise private benefits.

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