We have entered an era of rising inequalities. The Gini coefficient for market incomes has risen in just about all OECD countries. Only a handful of welfare states have managed to stem this tide via more redistribution – basically Scandinavia, together with France and the Netherlands. The new inegalitarian thrust is worrisome because it coincides with a sharp shift in the distribution of social risks across citizens’ lifecourse, from the old to the young and, most problematic of all, to families with children.
Postindustrial society seems to play havoc with Rowntree’s classical model of life cycle poverty, a model that depicted huge concentrations of poverty among older people (because of lack of work income) and among families with children (because they were very large). Older people are generally no longer at risk and, as we know, contemporary families with children are not exactly numerous. So why this novel appearance of child poverty in the advanced nations? Many point to the ominous threat of globalisation but, in reality, the causes are endogenous to our society. Families with children face growing risks in part because the new labour market is unkind to young workers and, in part, because families are less stable and often economically vulnerable. Increasingly, two earners are needed to ensure against poverty and want.
The great policy challenge we face is not simply that latter-day children are vulnerable to deprivation, but that the second-order consequences of poverty and need in childhood are ever more severe. As several chapters in this book show, economic hardship in childhood can have very troublesome ripple-effects throughout life, affecting school completion, earnings and career prospects later in life and, ultimately, well-being in retirement. Poverty and insecurity in childhood can overdetermine life chances. Research from the US shows that child poverty is associated with, perhaps, two years less education, with sharply lower wages as an adult and, worst of all, with a substantial likelihood of becoming a poor parent – thus reproducing the poverty syndrome from one generation to the next. Gregg and Machin’s chapter find similar, if less devastating, effects for Britain.
It is important, however, to remember that money is only one of several catalysts of problematic life chances. Research shows that family instability, unemployment or alcoholism among parents yield similarly negative (p.viii) consequences. In any case, the life-chance penalty of a problematic childhood is probably rising for one simple reason, namely that knowledge-intensive economies ‘up the ante’ in terms of the human capital resources needed for a good life. Inadequate cognitive skills and educational qualifications will increasingly doom a citizen to a life of precarious employment, low wages, and spells of unemployment. In other words, the seeds of social exclusion are planted in early childhood. Hence, if we seriously want to avoid a two thirds society tomorrow we need to invest in children today. It is very well established that remedial programmes later in life are ineffective and costly, far more costly than it would be to eradicate child poverty here and now.
I use the term investing in children deliberately. For policy makers it is vital to recognise that public expenditures are investments – and not simply current consumption – when they yield an identifiable positive return, not just to the individuals concerned, but also to the collectivity. The well-being of today’s children will have positive externalities decades hence, in part because the main competitive base of advanced economies lies in their human capital, in part because the coming cohorts will be small indeed. I, as one of the many baby-boomers, will retire in the coming decades and must therefore put my faith in the productivity and resourcefulness of tomorrow’s workers (who happen to be today’s children). In many OECD countries, 20 or 25% of youth fail to complete the equivalent of secondary education, and a sometimes alarming percentage possess insufficient cognitive abilities. This population, some decades down the line, is very likely to produce little, but will consume many welfare benefits.
The case in favour of public policy is usually made with reference to market failures. The presence of identifiable positive or negative externalities related to child well-being is therefore a very sound basis for concerted policy to combat poverty and need in childhood. Much of the evidence that is presented in this book points to the urgency of also considering widespread ‘family failure’. Most contemporary welfare states, the Anglo Saxon and the Continental European in particular, continue to assume a family model that is, for all purposes, becoming extinct. We can no longer assume stable, lifelong partnerships; the male breadwinner can no longer guarantee adequate welfare for his kin; the full-time housewife is rapidly disappearing; and ever fewer children will grow up with both their parents throughout childhood. Yet, welfare policy continues to assume that families will internalise most welfare (p.ix) responsibilities. We witness proliferating family failure because more and more families lack the resources to internalise such responsibilities.
In other words, family policy remains by and large a residual in many contemporary welfare states. Residual in the sense that income support is modest or even non-existing; residual in the sense that it is too often assistential in nature, targeted to abject failures; and residual in the sense that the welfare state refrains from filling the caring gap that ensues when mothers are employed. It may appear paradoxical, but at this very historical moment, when families are small and children all the time fewer, we need more than ever an active and concerted family policy. Children may be a private good, but healthy and resourceful children are also a public good, without which our future economy will perform sub-optimally, and without which my future pension cheque will be miserably small.
The case in favour of an active investment strategy for children is easy to make on efficiency and welfare grounds. It should be obvious that it can also be made on equity grounds. If today’s children are tomorrow’s collective good, all will benefit from the investment. But the childless will benefit as free-riders on those who were parents. A just policy must, in other words, subsidise the cost of children by redistributing from the childless to families with children.
Children are obviously also becoming a very scarse good. The European Union, South East Asia, and Eastern Europe are all sliding towards a low-fertility equilibrium. This is not because latter-day adults embrace some kind of post-modern values that disfavour children. On the contrary, we have substantial evidence that adults in all countries desire, on average, 2.2–2.4 children. In Southern and Eastern Europe, they obtain roughly half of the desired number; in some regions, barely a third. Parenthood seems to be increasingly a utopia and I propose that we interpret contemporary fertility gaps as manifest welfare deficits. We pretty well know the underlying causes: delayed first births, the incompatibilities that women face, the lack of affordable day care. In large measure, the common denominator has to do with the changing cost-calculus of having children. Both the direct, and also the more indirect opportunity costs associated with parenthood are rising from the point of view of prospective parents. Societal welfare requires that we resolve the low-fertility equilibrium and, once again, this inevitably means that the collectivity must socialise part of the cost of children.
Social scientists have, in recent years, awakened to the disturbing trends that families with children now face. The book that Koen Vleminckx and Timothy Smeeding have put together here constitutes a scholarly (p.x) climax, not only because it gives us the most exhaustive and systematic evidence so far presented, but also because it compels us to think quite radically about which kind of family policy and what kind of welfare state we will need if we seriously desire to live in a good society.
Barcelona, April 2003