2018-08-17

Updated: Chinese Scholar Lights Up Social Media With Maternity Fund Idea

Update: An article with more detail on the policy proposal is posted at the bottom.

A Chinese scholar has come up with a fertility enhancing policy. Force everyone to have a savings account for children, but it can only be unlocked if you have a second child.

iFeng: 央视严批倡设生育基金“砖家”:少打群众的歪主意!
Original title: "Establishing a maternity fund system" is a ridiculous suggestion
What is ridiculous is family leave. Who pays for it? The company pays for it because the government simply mandates time off for workers. Do companies pay the full cost? No. They adjust their hiring practices to reduce the risk of paying family leave: hire fewer women of child bearing age. Family leave policies penalize the people they're trying to help.

Family leave is a perfect example of voters (in democratic countries) wanting something for free. Neo-Socialism is built around the idea of mandating actions, but not paying for it. Obamacare is an example of Neo-Socialism, albeit an extremely ineffective one that was instead designed to loot middle class Americans. Force everyone to buy insurance. The cost falls on the individual, not government. Family leave is another one. Force companies to bear the cost of the policy. Forcing everyone to have a savings account to finance family leave puts skin in the game.
Recently, some media published a signed article on "Improving Fertility: A New Task for China's Population Development in the New Era." Among them, the "establishment of a maternity fund system" triggered a strong rebound in public opinion, and social media was slamming.

First look at the expert's specific recommendations: the establishment of a maternity fund system, try to achieve the self-operation of the two-child birth subsidy. It is stipulated that citizens under the age of 40, regardless of gender, must pay a maternity fund at a certain percentage of their salary each year and enter their personal accounts.

The expert further pointed out that when a child has a second child or more, he or she can apply for a maternity fund and receive a maternity allowance to compensate women and their families for short-term income losses caused by the interruption of labor during the reproductive period. If the citizen has not given birth to two children, the account funds will be taken out when they are retired. The maternity fund adopts the pay-as-you-go system, that is, the maternity fund that has been paid by the individual but has not been taken out, and can be used for the government to pay the maternity subsidy to other families, and the insufficient part is subsidized by the state.
It would be more effective to confiscate the accounts after age 40 and use the funds to pay for the maternity leave. [Update: see below, this is in the proposal.] The state could see how behavior changes and could set the tax much lower assuming most people still only have one child. That's how China should carry it if it wants to maximize fertility because nudging works. Neo-socialism is often effective at changing behavior (even if it creates more problems down the road). Leaving the money in the account makes sense because people with fewer or no children need it for retirement, but as long as the state is providing pensions, confiscating it and making it a pure tax will lead to higher fertility.
These so-called suggestions give people a feeling of "suddenly separated from the world". If it is not in black and white, it can't be believed, even though we have seen many experts in these years.

First of all, fertility is the basic right of human beings. It is the freedom of individuals and families to live or not. We can encourage fertility through propaganda, or we can formulate incentives to guide fertility, but we cannot punish those who are not born or have fewer families in the name of “establishing a maternity fund”. This kind of suggestion is unfounded, unreasonable, and inconsistent. It is contrary to common sense and exposes the lack of professionalism of researchers.
Anyone who uses a system such as Social Security and doesn't have children is effectively taxing families. A person with children must pay for their own children, plus retired people. Social Security is a ponzi scheme based on rising population. If you do not have children, you are "stealing" from the fund. That's not hyperbole. There's no savings in the fund. Your retirement is paid by younger workers. If you don't add new workers to the pool, you're "stealing" from the fund.

This is how things work in socialist systems. Personal responsibility and incentives get lost in the complexity and the rearranging of social relationship. If there's no social security, then people understand the incentive to have children for old age. If they don't want or can't have children, they know to save all that money they would have spent on children for retirement, to pay someone else's children to take care of them. Social security creates free riders who do not have children and do not pay into the system.
Secondly, if you don’t want to beat the masses, don’t move. In recent years, with the rapid economic growth, the people's living standards have improved significantly, but at the same time we have to see that the burden on housing, education, medical care, etc. is still very heavy, and the level of Chinese household debt has remained high for a long time. According to a report just released by the Institute, as of 2017, the ratio of household debt to disposable income in China is as high as 107.2%, which has exceeded the current level of the United States.

The reason why China's current fertility rate is not high, in addition to economic and social development, women's labor participation and other objective reasons, the sharp rise in the cost of raising children is an important reason, this is the consensus of the community. Some young people want to have children, but they are really under pressure. The cure for the right medicine is to solve the reality and worries of people's births through a series of effective preferential fertility policies and public investment in real money, rather than the opposite. In fact, the wool from the people, it seems to be a national worry, but it is a high-level black. This is also the key to why such a proposal will be unanimously criticized by public opinion.
People always want free stuff.
Moreover, China's economy is in a critical period of transformation. Faced with the uncertainty of foreign trade and the diminishing marginal effect of investment, the role of domestic demand in economic development has become more apparent. We must do everything possible to reduce the taxation, reduce fees, improve social security and other policy measures, enhance the momentum of domestic demand, and promote the transformation and upgrading of consumption, rather than the so-called "fertility fund" to increase the burden on the masses. Therefore, whether it is from the improvement of people's lives or from the long-term consideration of healthy economic development, we should try our best to let the masses' wallets bulge, instead of squatting.
The critics are right about the tight finances of Chinese consumers. People don't have spare capacity to be paying into a maternity fund. It's also true that lowering home prices would be a more effective policy. Where family formation is affordable, people have more children. (A big reason why mass migration costs are under estimated is the pressure it puts on real estate prices. Migration policies are annihilating living standards in many Western countries. China's urbanization policy is driving its GDP and also crushing its fertility.) However, China struggles with lowering real estate prices and instead comes up with policies to correct the problems caused by planning, or more fundamentally from having an atheist-materialist value system at the core of the CCP.

The best policy is do nothing. Don't create socialist systems that destroy civilization from the ground up and people will deal with the problems in organic, sustainable ways. A maternity fund only looks like a bad idea because the family leave and social security are very stupid ideas that create massive unintended/unseen costs. Institutionalized stupidity is expensive and socialism is a low intelligence system down to its dysgenic effect on fertility. Stupid people also don't understand how socialism inevitably leads to totalitarian systems or collapse because they don't work. Government increasingly becomes involved with healthcare, education, even fertility, because its own policies creating massive contradictions in the society.

When it comes to fertility, it's not only socialism destroying the society. It's also capitalism. As some have put it, the cities are "IQ shredders" that maximize current GDP, but will eventually collapse future GDP because the people producing high levels of GDP leave few to no heirs. An extreme example of eating your seed corn. Until policymakers understand the fundamental flaws of their systems, unlikely because they are ideologically and even morally opposed, the countries they "manage" are headed for extreme downward adjustments. They have a massive turkey problem that is playing out on multi-generational time scales. The benefits are collected by those living today and the costs will be borne by future generations.

Update: In the post, I said the proposed fertility-boosting policy would work better as a tax. The article I read didn't fully explain how it would work. It turns out, the scholar did propose it as a pay-as-you-go system where the money would be taxed from people with one or fewer children, to pay for maternal leave of people with two (or more?) children. The money would be replaced when they are in retirement, in a roundabout way by the children the policy is designed to help.

提高生育率: 新时代中国人口发展的新任务
Establish a maternity fund system and try to achieve the self-operation of the two-child birth subsidy. It is stipulated that citizens under the age of 40, regardless of gender, must pay a maternity fund at a certain percentage of their salary each year and enter their personal accounts. When the family has a second child or above, they can apply for the withdrawal of the maternity fund and receive a maternity allowance to compensate the short-term income loss caused by the interruption of labor during the growing period of women and their families. If the citizen has not given birth to two children, the account funds will be taken out when they are retired. The maternity fund adopts the pay-as-you-go system, that is, the maternity fund that has been paid by the individual but has not been taken out, and can be used for the government to pay the maternity subsidy to other families, and the insufficient part is subsidized by the state.

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