TCS Daily

Engineering Children

By Meelis Kitsing - April 1, 2003 12:00 AM

On a recent visit to the European Parliament building in Brussels, a tour guide offered me his own perspective on EU enlargement. "Imagine, Estonian -spoken by less than one million people - will become an official language." Illustrating the impact of new undertakings in the translation services, he added that all EU documents and meetings should be made equally accessible to Estonian speakers and to tens of millions of speakers of the other official languages.

In the short term, the number of people who master Estonian in the enlarged EU can continue to be used by tour guides as a punch line of linguistic "égalité." However, in the long term such amusing symbolism may disappear. A recent study by Professor Martin Ehala shows that more than half of Estonia's 2,000 high school students would be happy to give up their language in favor of English if it were economically profitable. One-third of these future parents said they would enroll their children in English-speaking nurseries and schools. Sixty percent of the students believe the Estonian state should finance secondary education in the English language and 85 percent believe the state should finance English language-based university education. So much for French fears of an "anglo-saxon conspiracy".

The effect of such a "conspiracy" is even more significant when considering a recent United Nations report projecting that Estonia will lose a staggering 52 percent of its population by 2050. Add to both studies the current demographic portrait - in which one-third of the total population of 1.4 million is made up of Russian speakers - and it doesn't take much artistry to see the picture of a rapidly diminishing language and nation. In fact, the Estonia of the future will be inhabited by less than a half million Estonians, and the vast majority of them will speak English.

Such a scenario has forced local politicians from top to bottom to offer an eclectic summary of policy ideas encouraging people to become parents or motivating parents to raise more children. Some of the proposals have caused amusement abroad, not to mention honest concern and controversial debate at home. In the president's annual New Year's address, he warned Estonians that in a decade the number of them welcoming in the New Year will be 20 percent less than today and implied that maybe they should get busy doing something about it. This made for sensational copy in a number of news publications, and the story soon found its way into The Guardian under the headline "Sex Appeal."

Catchy headlines aside, most politicians focus on concrete economic incentives for increasing the birth rate. Ideas currently range from increasing direct payments for the birth of each child and for raising a child, to establishing a salary for parents staying at home and raising children, to offering a larger variety of tax breaks to families with kids.

The most targeted interventionist measure came from Estonia's newest political party, Res Publica, which proposed student loans be fully or partially compensated by the state for "girls" who give birth before the age of 24 and then graduate from universities. The party, which won the general elections in March and is the leading force in forming the new coalition, pushed to include such a policy measure in the new coalition agreement of the Estonian government.

Ironically, the fiercest reaction against the idea came from Res Publica's own distinguished member and former party chairman, who stepped down last summer. Dr. Rein Taagepera, a professor at the University of California and an instrumental figure in transforming Res Publica from what was once a loose association of youthful libertarians and conservatives into a populist law and order party, openly attacked the policy proposal. Taagepera bluntly stated that the problem lies not in "girls below the age of 24" but with "boys" who behave irresponsibly and fail to make strong commitments, drawing the purposely controversial conclusion that "all the boys aged 27 should get married."

For insiders, the target was obvious. Even if the public face of Res Publica has been made to seem more mature by more senior figures, the four philosopher-kings who have orchestrated the party build-up are all around the age of 27. None of them has married. Indeed, some grandfatherly lessons from a liberal California professor are needed to define the limits of political intervention when inexperienced social engineers run amok; sadly, this holds true even in a country that owes much of its recent success to youthful free-marketers.

However, the hypocrisy so typical of the academic establishment of liberal America could not help but show its face as well. On one hand, Taagepera pointed to the policy referring to women under age 24 as "girls" as sexist by Western standards. On the other hand, he himself made an eyebrow-raising reference, writing that although Estonian men are keen to liken themselves to men in the Nordic welfare states, their irresponsible behavior is in fact more comparable with that of black men in the United States.

Hence, it is politics as usual. Leaders ask you to follow their words, not their actions, pointing to everyone's wrongs and shortcomings but their own. Not only is the dominant economic approach to tackling a declining population problem weak in terms of its politics, it is bad economics stemming from a failure to see the forest for the trees.

Gary Becker, a Nobel Prize-winner in economics, is well known for his discussion of children as a type of investment decision. In his book "A Treatise on the Family", Becker writes that certain commodities cannot be purchased in the marketplace but are both produced and consumed by households using market purchases, own time and various environmental inputs. "These commodities include children," writes Becker.

He goes on to categorize commodities as time-intensive or goods-intensive. Increase in the wage rate decreases the ratio of time to goods spent on each commodity, thus leading to a decrease in the output of time-intensive commodities relative to goods-intensive commodities in the households. There is no doubt that children are time-intensive, and many functions of the family cannot be outsourced simply by purchasing services offered on the market.

Most importantly, even if Becker's approach is often seen as narrow, a trait so typically associated with dismal science, his insight is actually much wider than policy measures that focus on the simple income effect that would change the relative price of having children. He points out various environmental inputs and other dynamics, such as wage rate, that have an effect on the decision to have children.

Hence, the unintended consequence of a public policy that aims to boost the growth of future generations by targeted income effect may actually be just subsidization of those who have decided to have children anyway - without making the prospect of having children significantly more attractive to others. In other words, the opportunity cost for a well-educated mother to give birth combined with the prospective of single motherhood instead of a well-paid job and career prospects may be too high to be compensated by any kind of government payments, direct or indirect.

As the government policy to force people into marriage may be considered totalitarian in a liberal Estonia, another idea from Becker might be worth considering: he argues that polygamy is good for women because increased demand improves their bargaining position.

Meelis Kitsing is an International Policy Fellow at the Center for Policy Studies of the Central European University in Budapest.

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