So Herman Cain’s 9-9-9 plan is all the rage nowadays. Well, I have a different catchy-name plan: the 5-5-5 plan! And it has nothing to do with taxes but rather with social engineering, specifically bringing up birth rates in advanced economies where birth rates have been below replacement rate for decades. I propose that advanced economies should offer $500,000 in tax-exempt retirement funds to the parent of every child that goes to college (or trade schools and learns a trade). For every college graduate, the parent receives another $500,000 of tax-exempt retirement funds. And lastly, if both parents are still married by the time their kid graduates from college, they received another $500,000! Hence the 5-5-5 plan! (I also propose that the same deal can be repeated only for a second child).
Most population growth promoting scheme like the ones Canadian once instilled almost hundred years ago and the ones Japanese are thinking about today, only pays if babies are born. But it does nothing towards actually producing productive members of society and more importantly promoting coherent family units who give close attention to the care for their children. Given the fact that college grads earn better than high school drop-outs and the fact that 21st century belongs to even more highly educated, my plan essentially guarantees that parents have incentives to see their offspring become effective members in their own century.
I do admit that there are wrinkles in the plan. For instance, early child/birth care (prenatal and postnatal) is crucial and expensive. Given that many couples now marry late, to the child care, we need to even add fertility-assistance related expenses. So the money needs to be deposited gradually and perhaps with some cash up-front so that there are actually incentives to even “make” babies! Also, since life-spans are increasing and there’s dire need for continuing education, perhaps these retirement funds can be used after kids graduate from college for things like paying for parents going to college or starting a business. I leave the details to the lawmakers who are good at taking great ideas and making a mess out of them!
The 5-5-5 is not just a baby-making machine. It is designed to address one fundamental dilemma: why should people procreate? Aside from religious reasons and selfish motives (of course accidents), child bearing has become less of desired social activity in advanced economies for economic reasons. As Fred Pearce argues in his book, “The Coming Population Crash: and Our Planet’s Surprising Future
“, one of major reasons for below replacement rate of birth rates in advanced economies is the economic possibilities that women face which makes pursuing dreams other than motherhood much easier. This brings about a multitude of problems. Educated, successful, powerful women choose careers first and even when they desire to start a family is later in their life. So any scheme that is targeted towards enticing them to procreate needs to be as powerful as the economic motives they have otherwise. Sonia Arrison in her book “100 Plus: How the Coming Age of Longevity Will Change Everything, From Careers and Relationships to Family and Faith
” additionally argues that our ability to live very long, healthy lives produces great challenges to the notions of life planning, retirement, education and even careers. In my last post, I also argued that in addition to longer life-spans, the shorter technological half lives (e.g., not even 20 years after PC-era, now in the words of Steve Jobs, we’re in the post-PC era!), we are faced with a life that is too long and careers that too short. We will be forced to re-educate ourselves multiple times and change careers multiple times and work till very old age. In the old economic schools, the life-cycle planning would require mid-life careers to pay for early education and later retirement. But if we have to do education in multiphase and retirement per se may never come, then the reward to activities that helps the society most needs to pay more often and faster. In the ancient times, farmers made a lot of babies to overcome high birth death rates and to produce cheap labor. Of course later in life, these kids would become seocial security! But in the industrial age, workers produce babies mostly out of expectation for larger families and perhaps unknowingly for generating future tax payers who would pay for their social security retirement! With social security systems being bankrupt because of the demographics changes, it’s time to rethink our whole attitude towards life planning: child-rearing, child-care, education, career planning and retirement, The 5-5-5 plan is an answer to this age old problem.
And now the last bit of the surprise: who will pay for all of this? I am ardent believer that taxation is not just a revenue generation scheme but a mechanism for income smoothing and saving over very long run. More importantly, the progressive tax systems are necessary to allow for automatic dampening of economic fluctuations. Since the rich (individual or corporate) do benefit more from a highly educated workforce, they will pay a share of the scheme (and if they don’t like it, they can setup shop in all the other countries that don’t give hoot about education and advancement of technology!) Of course, if the plan works, then we would have a balance population which pays for itself, that is these new babies can pay the taxes that rewards their parents’ sacrifices! Now I call that the ultimate zero-sum game!