24 September 2007

Money and the ethnic vote: part 2 of 3

Ineffective policy

At its simplest level, the Progressive Conservatives pronatalist policy is aimed at increasing family size within Newfoundland and Labrador. Women will receive a bonus of each child delivered or adopted.

The pronatalist policy should be rejected since it does not work and therefore is a waste of scarce public money. Experience across the globe over the past 30 years demonstrates that cash incentives do not change fertility levels to an appreciable degree. The average number of children born per couple of child bearing age remains generally the same. The policy may produce some temporary fluctuations but overall, fertility rates in major industrialized countries remain the same after pronatalist policies as before.

In jurisdictions where pronatalist policies have been tried, they tend to be very expensive. Quebec's decade long cash-bonus program cost an average of $15,000 per child but was abandoned because it was ineffective. Where policies did affect the birth rate modestly,they include measures inconsistent with a modern democracy. Franco's Spain banned birth control, for example. However, once the dictatorial methods disappeared with the move to democracy in countries such as Poland or the former German Democratic republic, birth rates moved in directions experienced in other democratic countries. Overall, the policies simply do not work.

On another level, the cash incentive policy is touted as a way of dealing with a declining population size; more people are leaving Newfoundland and Labrador either through emigration or death than are immigrating or being born.

Migration is driven primarily by economic considerations – people leave to find work or come to take advantage of opportunities. Paying a cash bonus of any size will not affect that simple motive, either for new immigrants or as a way of attracting former residents to return. Family size is driven by complex factors, centred mostly on individual choice about lifestyle. None of these factors are affected by the limited policy announced by the Progressive Conservatives and certainly none are affected by the $1000 bounty placed on a set of diapers.

Randy Simms and others have pointed out these inherent flaws in the policy as a policy aimed at addressing demographic issues facing Newfoundland and Labrador in the decades ahead. Their criticisms are well-founded. However, they have ignored other aspects of the policy which make it not merely ineffective but socially and politically regressive.

There are two aspects to the demographic problem facing Newfoundland and Labrador. One is the declining population which reduces the available workforce. This can be addressed, most effectively by increased immigration. Workers will be needed now. We have already arrived at the start of the worker crunch and this situation – fewer workers – will only increase in the years immediately in front of us, if present trends continue. A cash bonus for children - even if we imagine that it will be effective here where it has failed everywhere else - will not produce new productive members of the economy for the better part of two decades.

The second aspect of the demographic problem is the changed makeup of the population. The dependent portion of our society increases as the population increases. That is, where once there were more people employed people than children and seniors, we are already in the state of having more children and seniors than wage workers.

This has an obvious economic consequence in that each worker must produce - on average - more revenue for the treasury so that the existing public services can be maintained. Paying a bonus for having children does nothing to increase productivity or increase average wages.

Part of the flaw in the proposed policy is the emphasis on the declining population size. The adverse implications of the demographic changes taking place in Newfoundland and Labrador do not flow from the size of the population alone. In the fishery, for example, it is well established that the industry will have to change from its labour intensive production in order to remain competitive. Fewer people will be needed. it is possible to have a vibrant, viable economy with a smaller population or even one with a high rate of dependency - more non-workers than workers - than currently exists in Newfoundland and Labrador.

Ignoring the evidence

That said, it is instructive to look at Danny Williams' comments to reporters:

We've had some lengthy discussions on this in caucus and at cabinet... and what we've done is we've looked at the jurisdictions across Canada, to the best of our ability, and as quickly as we could in advance of the election, government had started to do this process, but it's a very detailed process, and we want to make sure we follow through.

We're also looking at some precedent in Europe, and other modern countries, trying to encourage young families to have children. It's a clear problem, and it's an economic problem... This government is open to suggestions, and good suggestions... It's probably one of the key points in our platform, that we feel very strongly about. It's something we'd certainly like to implement as soon as possible. It hasn't been budgeted. One of the best jurisdictions and one of the most successful, of course, was Quebec. And they have found it to be one of the most successful initiatives. But I'd be remiss in [not] saying that we're still preliminary on this. [Emphasis added]

The policy was obviously hastily assembled. It is also obvious that the claim that Quebec's program was successful fly in the face of evidence. The current administration clearly appreciates that the demographic issue is an economic problem.

In the last part of this commentary, we'll look at possible explanations for the pronatal policy that defies the obvious reasons not to pursue it.