Home' Policy Magazine : Policy Vol 33 - No 3 Contents 25
POLICY • Vol. 33 No. 3 • Spring 2017
Such a view of entitlement for families with
children was opposed as unjustifiable by the
distinguished American economist, Herbert
Simon, who argued that having children is a free
voluntary choice—especially in conditions of
reliable and cheap contraception—with foreseeable
consequences, and that having a child therefore
constitutes a private benefit or ‘consumer good’.
Implicitly, Simon therefore believed that having a
child was neither a ‘public good’ as defined above,
nor a ‘positive externality’ and, accordingly, that the
parents should be wholly responsible for its care if
they had the capacity to do so and had no legitimate
claim on government support or tax recognition.
This is a straightforward and plausible view. It
is notably ‘individualist’ and robust in dismissing
the kind of argument expressed by Henry Ergas.
But does it take full account of considerations that
might be relevant?
The institutional character and functions of
marriage and family
The first duties of government are the defence
and preservation of the nation and care for the
institutions which advance and strengthen it.
Prominent in achieving those ends is the institution
of marriage and family. Marriage is not a ‘right’
but rather a conditional status available for all men
and women who meet those conditions as spelt
out in family law and legislation. Their objective
is to foster justice, stability and cooperation within
the marriage and to protect appropriate care for
dependent children. We might conjecture that there
is a broader civil purpose implicitly in mind here to
maximise the potential of the marriage relationship
to achieve certain disciplines, to promote division
of labour, cooperation, various forms of production
and wealth creation and, above all perhaps, to have
the children who will contribute to the defence,
preservation and continuity of the nation.
The crucial question is whether the public
interests mentioned above would be as well achieved
in the absence of the institution of marriage-and-
family and the environment it creates for various
forms of productivity and wealth creation. We have
a body of social science evidence that indicates
that it would not. The substantial achievement of
these ends through marriage-and-family (granting
a quantum of failures) would constitute the ‘public
good’, ‘positive externality’ and ‘benefit’ required to
justify specific governmental support.
From this institutional perspective, rather than
the ‘individualist’ approach of Herbert Simon,
the family is a wealth contributor in securing, at
considerable cost, the development of its children
to become producers-at-large. This function (and
legal duty) requires recognition by the welfare and
taxation systems and should be treated accordingly.
The family as a productive, civilising ‘farm’ is not a
ridiculous image. Let us look at a less-than-perfect
analogy, but a useful one.
When a farmer’s cow gives birth to a calf and
the calf is raised to adulthood and sold, the farmer
makes a gross profit. He has made a contribution to
national wealth and his profit is then taxed. But the
tax is calculated after the farmer has been allowed by
the state to deduct the legitimate costs involved in
raising the calf against the sale price. This particular
farmer may be ten times richer than his calf-raising-
and-selling neighbour, but both are allowed to
subtract the costs of raising and selling their stock
in exactly the same way. The financial situation of
the two producers may be unequal but both have
been treated equally and fairly by the taxation
system (with the very wealthy farmer paying more
income tax) and the society concerned is better off.
A ‘positive externality’ has been achieved.
Is a human child less valuable, and an economic
non-entity, in comparison with a calf?
1 This article was first published as a ‘Perpective’ in Simon
Cowan’s Occasional Paper Welfare Reform: Beyond
Decades of Dependence, ‘Dole Bludgers’ and ‘Double Dipping’
2 Henry Ergas, ‘ Taxes Put Bite on Middle-Class Families’,
The Australian (27 May 2013).
The family is a wealth contributor in securing,
at considerable cost, the development of its
children to become producers-at-large. This
function (and legal duty) requires recognition
by the welfare and taxation systems and
should be treated accordingly.
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