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> couldn’t we come up with a subsidy with less market distortion?

Yes. Universal childcare. Alternatively, payment for children (as a refundable tax credit or e.g. social security payment for one's first N years).

> Universal childcare. Alternatively, payment for children

These are the same, just different execution. A slot for your child or children if you want to go to work, a payment if you want to stay at home to provide childcare. The care is universal, the delta being who logistically is providing the care.

Edit: Agree with y'all it is both a marketing and execution story.

Similar to managed welfare vs UBI.

One is creating defined resources and using bureaucracy to divvy them out and force people into buckets they might not be happy with. e.g. here's your government cheese.

The other empowers individuals to make their own decisions with cash and lets the free market figure out how best to mine those dollars from the individuals receiving them.

I suspect which option a person thinks is right largely depends on how they view humanity. Either you want to trust people to make their own decisions as adults, suffering the consequences of their decisions, or you want to extend childhood deep into "adulthood" making sure they can't make the wrong choice, because the nanny state makes the choice for them.

I supposed in the case of managed welfare, only those who manage become independently wealthy get the privilege of making their own decisions.

I oppose UBI for unrelated reasons: giving everyone money (if it is actually a life-changing amount of money) is unaffordable. It's hugely wasteful to give money to wealthy people.

Instead, I would prefer a system where people receive payments relative to income, like a reverse tax system. This way, people in higher income brackets pay in (in the form of taxes) and people in lower income brackets get a pay out.

This is far more affordable than UBI, meaning we can actually do it, and also puts money where it is most needed.

That kind of taxation would just reduce upward mobility in the workplace though, wouldn’t it?

I wouldn’t accept a job role with more responsibility if it meant losing my low-income subsidies and being taxed instead.

Society needs workers to accept more responsibilities and progress in their careers otherwise there will be less creation of jobs for those at the entry level.

I’m not saying UBI is the right solution, but it would reduce the “cliffs” where people lose money for progressing in their careers.

Those two system are the same - or rather - can be the same depending on how you tweak the parameters.

Wealthy people will pay much more in taxes than what they receive in UBI and you can make this system have the exact same distribution of money as the negative income tax system.

> are the same, just different execution

Sure. But the branding matters. The former seems to provoke a vitriolic reaction in some people that, if widespread, could tank it in a way that the identical effect under the second's branding doesn't provoke.

Don't worry, from experience I can assure you people will have the same reaction to the latter as well. The typical argument is that "the poors" will have tons children just to cash out and we can't have that can we.

I believe (anecdotally) that the rate of unwanted pregnancies are not impacted significantly by economic measures, only by ease of access to free birth control measures and widespread sex education, but it's an unpopular opinion. Welfare from the state is always a hard sell unless it benefits a vocal, influential segment.

I'd also argue that execution matters.

How is universal childcare less market distorting? It seems to me that the larger the subsidy (or tariff for that matter), the more the distortion.

Universal childcare seems to me significantly less distorting than universal childcare for childcare workers. It’s larger subsidy yes but it corrects for an existing distortion (parents pay full price for childcare to raise children who then end up paying taxes to the state), and it does so in a way that it doesn’t break one specific labor market.

We do not do parents who aren’t already childcare workers a favor by skewing the market for their labor. For some parents, working in childcare is the right choice, but for many it won’t be, and when you artificially inflate short term wages only if they go into childcare, everyone loses.

But the entire childcare market is run on such tight margins that they all require a model of having a waiting list for children, meaning the market is massively underserved by design.

It would seem to me that this is only likely to result in more childcare workers, making it more accessible to all, no?

After how much time would the nonlinear effects of the subsidy be expected to be apparent?

What hypothetical effect would discontinuation of the subsidy have: while it's initially resulting in labor shortage reduction and then after time t?

Are counterfactuals helpful for this problem?

Not an economist, but I imagine that the job market for child care workers would be less distorted, even if the general service market for child care is more distorted.

Distortion is the desired effect, no?

Is payment for children not a world-wide established thing (except 3rd world I suppose)?

In the US, it's a $2,000 tax credit per kid, so you effectively only get paid if your household income is high enough to owe federal income tax, and low enough that the 5% phase-out doesn't eat up the whole benefit. Also, it comes off of your taxable income, so the net benefit to your pocket is (1.0 - marginal_tax_rate) * benefit.

While technically a market distortion, it is incredibly well-aligned with the human considerations. The people most likely to need childcare, are in many ways those well situated to be involved with providing childcare.

The early child-rearing years are hard, and trying to work during this time is hard. The incentives to just add some extra childcare to your life is possibly less difficult than lots of options for a lot of people.

Childcare is always going to be pushing up or near pushing up against Baumol's cost disease constraints.

The only way to make it at all "productive" is cheap dense housing, something that America currently sucks terribly at.

Additionally, the fact that it is a gazillion private providers rather than a simple public service like schools makes it messier.

My prediction is that eventually the housing stuff will be figured out, and also this stuff will be increasingly rolled into the public school system, and both of those will relieve the pressure.

Just be clear, the rise of childcare and restaurants are very clear evidence of the shifting boundary between the private and public spheres. But that shift cannot continue if it just hits more and more commute time constraints. It is like trying to do a faster integrated circuit without shrinking the scale.

Just as we bring the compute to the data, so we bring production closer to the home with mixed things, etc.

And in generally, people don't get what density can offer. For a silly example example, I've bought the clothes I will wear at an event while traveling to that event. Our suburban culture is not keeping up the material possibilities.

> only people with high childcare costs will work in the field.

I imagine that is kind of the point, as those people are often stay at home moms.

How do you increase the workforce without really increasing wages? Pay in a currency only valuable to a group currently not in the workforce.

When reading expressions like "market distortion" in the context of a topic like child care, I am a bit astonished. Children are our future, they will work when we retire. Investment pays off. In relation, I find the balance of how the subsidy is spread across the labour market is of a secondary order.

Please don't take this personally. I fairly wonder if the way of looking at these topics is a cultural or political thing.

> There’s a positive externality of readily available childcare: one adult to many children is more efficient than home care,

An externality [1] happens when there is some additional uncaptured aspect of a transaction, a "missing market". It seems implausible that there is a missing market in child care-- there are plenty of choices out there, different service levels and pricing. And when you put your child into child care and are now freed of child care responsibility for working hours, you can directly participate in the labor market, right?

Instead of externality maybe you could support intervention instead by arguing that there are facets of the child-care market that you don't like, resulting in the observed market outcome, such as capital overheads, barriers to entry, transportation barriers, or regulation.

[1]https://en.wikipedia.org/wiki/Externality

Sounds lovely

At this point in the political universe these are the only measures that get through. We are living in a post policy era of governance. Hopefully the wonks can find some way to get the upper hand again, but I’m not optimistic.

>>> We are living in a post policy era of governance

What do you mean by this?

No one in power is trying to design and put in place comprehensive plans to solve any particular problem. It’s all isolated one-offs, mostly involving dumping money instead of regulation, intended to improve a politician’s or party’s political standing.

The ACA and Dodd-Frank, whatever you think of them, were the last counter examples. That was more than a dozen years ago.

It's not my claim, but I'll take a stab at it.

The increasingly accessible and increasingly rapid outrage/feedback loop brought to us by 24/7 cable news, social media, etc. has made it harder to push forward on meaningful complicated legislation.

Something like the Voting Rights Act, Medicare, Social Security, or interstate highways would, I suspect, be strangled in the crib today by vested interests spreading misinformation about them.

On the plus side that marketing clearing will result in those with the most child care experience working in child care, which sounds nice.

That said it’s somewhat amusing to me to pay for someone’s kids to be watched so others can pay said someone to watch their kids instead.

Single income families are considerably more efficient in real terms, but child care only shows up as GDP and taxable economic activity if a stranger does it.

It reminds me of that joke about the two economists in the woods.

I'm a bit bias since I don't pay for childcare but I don't have an issue with childcare being expensive as long as the profit is going directly to the workers.

I have a hard time understanding why we don't want talented and ambitious people to raise our children.

> I have a hard time understanding why we don't want talented and ambitious people to raise our children.

I’ve had my kids in some of the best childcare centers in an expensive area so this made me spit up my drink.

If you educated yourself about the problem you'd understand that childcare workers are usually making very little money while the businesses are taking the profit. Clean up your drink

This is America. It doesn't matter whether a policy if objectively good or bad. It has to have some farcical fig leaf justification beyond making the world better. Making childcare free for all people would pay for itself in increased productivity, improve the financial security of poor families, and would lead to massive improvements in the wellbeing of poor children. But the effects in the real world don't matter, because in La-La Land it's communist and that means it's Stalinist and that means it's Satanist and that means they're going to give your gas stove a sex change and put 5G in your hydroxychloroquine.

American politics are stupid. This shouldn't be a surprise to you.

You know you've lost the plot when even child care is looked at through the lense of capitalistic markets.

Maybe fuck the markets and lets do what is best for the children and the parents. Or is that a radical idea nowadays?

Childcare is a market, the same way bread is. Like bread, family might provide it out of their own time and money, but otherwise, you have to pay someone.

Doing what is best for the children and parents is a market intervention, and ignoring how markets work when coming up with market interventions has a pretty bad track record.

Markets don't exist in a vacuum, they can involve the public sector: primary education is mainly provided through public funds and institutions, but it remains a market nonetheless. Throwing out what we know about market dynamics isn't a good way to do what's best for children and parents.

and if the state actors didn't supply their own police force, policing would also be a market.

the question isn't "is it a market", the question is "should it be a market"?

The issue here is the idea that the market is more important than the upbringing of a child.

Of course policing is a market, what on earth makes you think it isn't?

State funded, yes, but police departments are in a labor competition with other police forces, private security, and anything else a cop could be doing instead. If a department wants more police, or better ones, they have to pay for that.

The idea that the market is more or less important than the upbringing of a child is nonsensical, I have no idea what you mean by that, it's like asking if acceleration is more important than luminance.

Agreed!

I’ve noticed there are two kinds of policy advocates.

Agenda advocates: no matter the problem, they push their agenda. Anti tax people are in this category. Down economy? “Lower taxes!” They shout. Up exonomy? “Lower taxes to keep the momentum!”

Issue advocate: these people are creative and will propose the best solution given the day’s issue. The solutions they propose change over the years because conditions change and new solutions appear.

The comment you rape replying to is from the former. The world needs more of the latter.

> The comment you rape replying to is from the former. The world needs more of the latter.

Well that's a hell of a typo :P

I think the worst example of this I've seen on this site is when someone was advocating removing safety requirements from manufacturing plants because the rate hike in insurance would take care of making sure these companies were giving safe work conditions to their employees.

You know the people who advocate for that do so because they never expect anyone they care about to be working a manufacturing job.

What does that mean in practice though? That both parents should stay at home until the kids are 10?

Well if we can't have that then we the line definitely should be drawn at the other extreme where we just don't give a shit about parents spending time with children.

I'm an admirer of the working parents with child rearing by the grandparents. Didn't work out in our case.

When would that not have been a radical ideal?

The best for children and parents would probably be that none of the parents have to work at all until the child is some age when they should go to school. But if we implemented that system, there would be a labor shortage, which would reduce the number of teachers, plumbers, mechanics, accountants, software engineers, etc, so the rest of society would suffer. There is no magic wand we can wave to solve all our problems without any tradeoffs. Money distributes resources in a capitalist system, and there are many problems and distortions. If you built a command economy with no money you would still have to make choices about these tradeoffs.

> without any tradeoffs.

why did you interpret my comment as being extreme?

I sympathize with the underlying thought, but I think that it is worth using this as a model of when we should use the tool of socialism and when we should use the tool of capitalism... what should be the balance?

In this case the fundamental problem seems to be that not enough people want to work in childcare, for the money that those businesses are currently offering. Part of that problem is for some of the potential workers the barrier is that paying for childcare for their own children would cost enough to make working in the industry not worth the money for them.

So the two solutions proposed here are: make childcare free for those who provide childcare, and making childcare free for everyone. Both of these solutions solve the problem for potential workers whose main problem is the affordability of their own childcare.

Notably the "free for everyone" does not actually improve solving the one problem we are talking about: it does not unblock anyone else to enable more workers in this one industry. But conversely it would unblock those people from working in other industries, ones that already seem to pay more. So it would probably wind up with less people working in childcare than the more focused "childcare free for childcare workers".

The counter-point to this of course is that we are creating a huge market distortion, essentially "forcing" people into childcare work (not really, but...).

The pure capitalistic solution would be to leave it like it is: let the market decide how much childcare is worth, and that will sort itself out. The problem with this approach is that it winds up producing a less-than-optimal solution: people who would be more productive for society wind up at home doing individual child care, and there are vastly different outcomes for children of well-off families than those of the poor (so societal imbalance based on the birth lottery).

To me the only right solution is for some sort of wage stipend from the government (from tax monies) that goes directly to childcare workers. This would absolutely be the government putting its thumb on the scale to increase the supply of childcare workers, but form the government's perspective it is probably a good investment both to get more workers available in all categories, and to improve outcomes for the children of low-wage families (good both in a floats-all-boats perspective, and a social justice one).

The problem is, of course, that it is absolutely a socialist means of improving things, and those who have made capitalism a religion are going to go nuts about that.

"When all you have is a hammer, everything looks like a nail".

I've seen some pretty heinous opinions on this site, things such as safety regulations shouldn't exist just let the market decide. The companies insurance premiums will raise and so companies will naturally want to be safer!

As if that's more important than _preventing_ the loss of limbs.