To be fair, it’s not fair

From the Washington Post, philosopher Kwame Anthony Appiah on “fairness” and policy:

In the 1970s, the Nobel Prize-winning economist Thomas Schelling used to put some questions to his students at Harvard when he wanted to show how people’s ethical preferences on public policy can be turned around. Suppose, he said, that you were designing a tax code and wanted to provide a credit — a rebate, in effect — for couples with children. (I’m simplifying a bit.) In a progressive tax system such as ours, we try to ease the burden on the less well off, so it might make sense to adjust the child credit accordingly. Would it be fair, do you think, to give poor parents a bigger credit than rich parents? Schelling’s students were inclined to think so. If the credit was going to vary with income, it seemed fair to award struggling families the bigger tax break. It would certainly be unfair, they agreed, for richer families to get a bigger one.

Then Schelling asked his students to think about things in a different way. Instead of giving families with children a credit, you’d impose a surcharge on couples with no children. Now then: Would it be fair to make the childless rich pay a bigger surcharge than the childless poor? Schelling’s students thought so.

But — hang on a sec — a bonus for those who have a child amounts to a penalty for those who don’t have one. (Saying that those with children should be taxed less than the childless is another way of saying that the childless should be taxed more than those with children.) So when poor parents receive a smaller credit than rich ones, that is, in effect, the same as the childless poor paying a smaller surcharge than the childless rich. To many, the first deal sounds unfair and the second sounds fair — but they’re the very same tax scheme.

Somehow this seems very relevant to current discussions of government-sponsored maternity and paternity leave (and probably for a ton else). Let’s face it, any payments for this are a redistribution from households without children (or who have already had them) to households about to have them. [It is exactly like the baby bonus that way]. However, it is also a means of allowing non-market equations to enter into decisions both to have children and how to care for them initially. In that respect, requirements that employers provide such entitlements are no different from requirements for any kind of leave. (I have written about what that means here).

And then, finally, that debate also involves consideration that maternity and paternity leave requirements or payments to those on high income should be less than those on low income; even though this directly conflicts with the baseline idea of a goal of parental involvement, initially, in child rearing.

I am going to have to come back to this issue — I haven’t thought about it enough to be either concrete or coherent yet and it seems that it is too bound up with taxation and employment policy perhaps to ever be so. But, if the goal is to subsidise by more than market incentives parental involvement in the first year of a child’s life, (that is a big ‘if’) then to ensure that this subsidy is of maximal effect (although that might not be reasonable), then the starting principle would have to be that each child comes with them a dollar payment, contingent on parental involvement (and the degree of it) for the first year of life. Fairness considerations would need to take a back seat. And if you focus on what is fair to the child rather than fair to the family, things might be easier to sort out.

3 thoughts on “To be fair, it’s not fair”

  1. Isn’t Schelling’s comparison specious? The first question is about who gets the money, the second is about who pays. You can answer ‘the poor’ for the first question and ‘the rich’ for the second without any inconsistency.

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  2. Perhaps another question could be asked – who do we want to encourage to have kids? The unemployed? Those earning $200Kpa? Who makes better breeding stock? And do we really want anyone of working age dropping out of the workforce, when we can get this good (children) from innumerable suppliers worldwide at cut prices?

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