14 December 2023

Should the government buy babies?

By Ben Cope

Fertility rates are cratering around the world. Last week, South Korea recorded a historic low of 0.7 births per woman (2.1 is required for a stable native population). In just four generations, that would reduce a population of 100 to 4. The rest of the world is following suit. The UK’s fertility rate has slumped to 1.58, and even India has fallen below the 2.1 baseline.

It seems no one has the solution to the global baby bust. The Right’s focus on fostering a ‘natalist culture’ is patently unrealistic, while no monetary incentive scheme has delivered meaningful results. But a new blog by Robin Hanson argues that much higher fertility incentives could turn the tide. It’s surely worth a trial.

Low and falling fertility rates create problems, namely ageing populations and high age dependency ratios. In the UK, over 65s already make up 18.6% of the population, a proportion that is expected to reach one in four by 2050. If this trend continues, politics will continue to be skewed towards the grey vote, and demographics will remain a drag on growth and innovation.

Some tout immigration as a stop gap. But given current concerns about migration, it appears unlikely Britons would accept a population maintained entirely by it. For instance, the government’s own modelling suggests 50% of the population could be born abroad by 2080. And given fertility collapse is a global problem, it could only ever be a medium-term solution. Just as socialists run out of other people’s money, those pro-immigration would eventually run out of other people’s babies.

Pro-natalists claim that modern culture is antithetical to babies. Whether it’s the rise of individualism, capitalism, secularism or women’s rights, pro-natalists like Miriam Cates MP believe falling fertility rates are symptomatic of a ‘societal malaise’. Their solution is invariably to go ‘back’ to some golden age, magicking a ‘pro-natalist’ culture into existence.

But as pro-natalists are discovering, creating culture is difficult. Last year, pro-natalist demographer Paul Morland attracted ridicule for his suggestion that we tax the childless, while his idea of families with three children receiving a telegram from the monarch was understandably compared to the Nazi’s Cross of Honour of the German Mother. Unpopular and unworkable, fighting fertility with culture makes you seem like a fanatic from Gilead.

Of course, the reason Cates and Morland have stepped into the culture wars is because the easy solution to falling fertility rates – fiscal incentives – have supposedly failed. Cates points to happy Finland – a country of generous childcare – where fertility rates are a dismal 1.3. Similarly, despite Hungary’s offer of lifetime tax exemptions to women with four or more children, and loans of $36,000 which get written off for couples that have at least three children, the country’s fertility rate has tracked others in Eastern Europe.

And yet in a new blog, Hanson claims that money can create culture – if the price is right. For Hanson, the figure is $300,000 (roughly the average total cost of raising a child in the UK). Payments to that sum, spread over many years (and tied to certain outcomes to encourage good parenting), would supposedly compensate adults enough to consider parenthood. The quantities Finland and Hungary are offering simply don’t cut it. Fiscal incentives could work – but they’ve never been tried.

This policy would, of course, be ruinously expensive. If parents received the equivalent of $300,000, it would cost approximately £2.8tn if granted to every child in the UK right now. But we live in a capitalist society with capitalist values. And for many couples, the costs of having children simply don’t add up.

The government should therefore trial whether offering these significant sums could persuade would-be parents. At the same time, cost-benefit analysis should be conducted to calculate the economic impact of additional children. This would determine whether such a policy could be viable in the long run (i.e. if more children generate more economic value, then it makes sense to pay anything up to that point to achieve it).

Such a trial would no doubt face intense opposition. Some would claim it to be racist, anti-feminist or inappropriate in an age of global warming. This simply highlights that any natalist policy must form part of a broader strategy that both wins the argument (that more children are a good thing), and, as Cates argues, makes society nicer to have children in (through better housing, childcare and flexible work).

The global baby bust is one of the most significant – and certainly under-acknowledged – problems facing the world. Britain should lead the way in developing policy that fights back.

Click here to subscribe to our daily briefing – the best pieces from CapX and across the web.

CapX depends on the generosity of its readers. If you value what we do, please consider making a donation.

Ben Cope is a political commentator and communications professional.

Columns are the author's own opinion and do not necessarily reflect the views of CapX.