A Deposit-Refund Population Control Policy - Private or Public?
A Deposit-Refund Population Control Policy - Private or Public?
Ganga Prasad Rao
http://myprofile.cos.com/gangar
It has turned in to a quaint political ritual of its own. Procrastinate on those environmental issues for weeks, even months at a time, but back down just a bit and just in time for the World Environment Day. Yes, it is politically astute to recognize that ‘green’ too is part of the ‘VIBGYOR’ we seek! Now, population isn’t exactly ‘environment’; it is a bigger, all-encompassing issue that straddles the environment, the economy, and all future generations – in fact the future of the nation. It is a lesson in history and socio-economics that almost every populous nation continues, to this day, to be a ‘developing’ third-world nation. Population growth is ‘numero-uno’ of the various problems that bedevil social scientists.
So, when it is World Population Day, our democratically-elected leaders give pause and faithfully mouth policy statements meant to assuage the voting public that their leaders are indeed conscious of the magnitude of the problem and even acting on it. Perhaps the truth is dark and sinister, and in fact just the opposite of official policy statements? Truth be revealed, Western capitalists and Indian industrialists have turned in to strange bedfellows who abet the unholy agenda of those elected to power on the back of populist vote-gathering policies. Together, they conspired to delay population control and create a subsidy-funded growth economy fed by, and in turn dependent on population growth. In fact, population growth has, perversely, served the interests of capitalists who have the mass-producing automation necessary to feed and profit off the starving millions in a per-capita subsidy economy. For the government to stand, the industry and the stock market must flourish. For the industry to flourish, there must be demand growth... and that implies population growth! Now, who would kill the goose that lays the golden egg in the stock market? And who will bell the cat….. Our elected politicians and their bankrollers/sponsors?
I hardly need list the policy initiatives that successive governments have taken on the population front – from Sanjay Gandhi’s forced ‘castration’ to the famous ‘Father-Mother-Child Triangle’ ‘emblem’ with the ‘hum do hamara ek’ message that has since shrunk to ‘naangu erundu namathu onnu’ (Me ain’t no native tamil, but you get the message nonetheless). Free condom-dispensing machines and pills notwithstanding, our population continues to surge, and by official estimates is set to cross China’s within a decade. Wow! What an achievement for a country only 65 years old! Care to peep in to our 200th Republic Day?
Too crowded to even stick your neck out, heh? Exactly. So what do we do about it – short of awaiting the infamous Surat plague or an AIDS epidemic contracted from hip-swinging gals and guys on the local news channel?! A policy that preserves our personal freedom to choose the timing of the holy knot and the number and spacing of children; a policy that is discriminating of income (and child gender) differences and its impacts on family formation, and yet cognizant of the population externality that each additional birth brings about, indeed a policy that is both equitable and quasi-efficient? I motivate my proposal (while laying no claim to originality) in the policies of the recently elected TN government. While the world talks of population control and sustainability, the TN government has proposed, wait a minute, a ‘marriage bonus’ – a lumpsum reward on marriage day! It could be that the government values public morality among the NextGen more than environmental disaster, or that the ‘home-builder’s-cum-home loan provider’ lobby has, for mysterious reasons, special access to the CM’s office. But it sure sets a poor precedent and a wrong message to international organizations that have a stake in our economy and stock markets. Shouldn’t we be taxing married couples if not for the population externalities engendered by early marriages and unwanted pregnancies, but as a test of their ‘conjugal’ commitment and their financial sustainability given the distractions of the modern day?
A marriage registration tax is already in place in every state in India. It takes but trivial effort to upgrade the tax in to an effective population control policy. The policy, at the core, is rather simple – a deposit-refund system. Every couple at the altar pays in a substantial sum as marriage registration fee (the 'Deposit'). The fee varies by female age and the income tax slab of the couple. It earns interest and accumulates over a 20 year period. The birth of a child, whether 1st or 2nd, draws it down – a quarter of the original amount in the case of the first, and a third or half for the second. The amount accrued at maturity (the 'Refund') is returned with a 100% bonus if the couple chooses to stop with two children; the couple forfeits all monies if it chooses a third live birth. (The government could seek the participation of the employer or even the PF Authority in doubling the payoff at maturity.) A marriage tax deposit-refund system implicitly doubles as a 'birth tax' and flexibly induces delayed marriage, delayed first birth and spacing of second birth. A 'Double or Lose it all' strategy sharpens the incentives, thus ensuring against proliferation of family size. These incentives at the personal level are expressed in the population as delayed marriages (less number of marriages in any given period), and a sharply lower birth rate, particularly for the second birth – an outcome (not even measured and perhaps) not obtained as fast by other voluntary population control instruments. A lower birth rate, ceteris paribus, implies a slower rate of population growth, an early stabilization or even a reversal of population growth.
In the figure, a female/couple 1 in a higher tax bracket faces a ‘Marriage Registration Deposit’ schedule denoted by MRD2. Paying a much higher deposit, k, to start with, the couple receives 2B by limiting themselves to one child. A second child causes a deeper loss, reducing their payoff at maturity to 2F. The same couple would have paid a much smaller MRD of ‘m’ had they married a few years later to start with. A poorer couple, 2, that paid ‘l’ as MRD would stand to gain 2E with one child, but only 2G with the second.
There is an option to fine tune the interest rate before and after the birth of the first child. A reduction in interest rate following the birth of the first child matters less to the rich and more to the poor. Therefore the rich will not defer their second as much as the poor. Thus the ‘interest rate stepdown option’ has the potential to induce differential spacing of the second birth across couples in different income slabs.
There is much to commend this system of 'private incentives'. It discriminates by age of the bride and income slab. By increasing the marriage registration fee for younger brides, the policy discourages too early a marriage; yet does not forbid it for those who well-off, those successful at an early age, or those strongly desirous of early marriage. By income discrimination, it ensures the tax is neither too harsh upon the poor nor too frivolous on the rich. It does not mandate the number or spacing of births. To the contrary, it forces couples to consider the long-term cost of their family planning decisions and thus internalizes the externality they cause to the nation with unplanned, too early, or two many births. Correctly benchmarked, the policy has the potential to induce each couple to plan the timing of marriage, and the number and spacing of infants optimally – both privately and for the national good.
Much the same outcome of the 'Private' approach can be obtained with a 'public' government program that credits to each couple at the altar a lumpsum toward a 'Family Provident Fund', a variable sum that vests with the couple after 20 years subject to drawdowns after the first (and the second) birth. Apart from the source of the initial lumpsum, the proposal is much the same. If tailored appropriately, this program could achieve results similar to that in the 'private' approach. This option is particularly attractive to the oil-rich muslim nations grappling with a population crisis.
With the mechanics of the proposal laid bare, the focus moves to ‘who will foot the initial bill’?. Will the proposal reduce to worsen the burden on the bride’s family. Will it substitute and therefore lessen the scourge of dowry? Wouldn’t it increase abortions? .... But the couple does not plan its size on marriage day.... What about the 'income' and the 'price' effect? Shouldn’t the maturity bonus vary with income slab? How do you measure ‘income’ among those already subsidized with ‘roti, kapda, and makaan’? What about….?
And if you ask our politicians, they just might just encourage you to mail in your proposals and fund each one of those questions with a research grant.
Care to apply?
Ganga Prasad Rao
http://myprofile.cos.com/gangar
It has turned in to a quaint political ritual of its own. Procrastinate on those environmental issues for weeks, even months at a time, but back down just a bit and just in time for the World Environment Day. Yes, it is politically astute to recognize that ‘green’ too is part of the ‘VIBGYOR’ we seek! Now, population isn’t exactly ‘environment’; it is a bigger, all-encompassing issue that straddles the environment, the economy, and all future generations – in fact the future of the nation. It is a lesson in history and socio-economics that almost every populous nation continues, to this day, to be a ‘developing’ third-world nation. Population growth is ‘numero-uno’ of the various problems that bedevil social scientists.
So, when it is World Population Day, our democratically-elected leaders give pause and faithfully mouth policy statements meant to assuage the voting public that their leaders are indeed conscious of the magnitude of the problem and even acting on it. Perhaps the truth is dark and sinister, and in fact just the opposite of official policy statements? Truth be revealed, Western capitalists and Indian industrialists have turned in to strange bedfellows who abet the unholy agenda of those elected to power on the back of populist vote-gathering policies. Together, they conspired to delay population control and create a subsidy-funded growth economy fed by, and in turn dependent on population growth. In fact, population growth has, perversely, served the interests of capitalists who have the mass-producing automation necessary to feed and profit off the starving millions in a per-capita subsidy economy. For the government to stand, the industry and the stock market must flourish. For the industry to flourish, there must be demand growth... and that implies population growth! Now, who would kill the goose that lays the golden egg in the stock market? And who will bell the cat….. Our elected politicians and their bankrollers/sponsors?
I hardly need list the policy initiatives that successive governments have taken on the population front – from Sanjay Gandhi’s forced ‘castration’ to the famous ‘Father-Mother-Child Triangle’ ‘emblem’ with the ‘hum do hamara ek’ message that has since shrunk to ‘naangu erundu namathu onnu’ (Me ain’t no native tamil, but you get the message nonetheless). Free condom-dispensing machines and pills notwithstanding, our population continues to surge, and by official estimates is set to cross China’s within a decade. Wow! What an achievement for a country only 65 years old! Care to peep in to our 200th Republic Day?
Too crowded to even stick your neck out, heh? Exactly. So what do we do about it – short of awaiting the infamous Surat plague or an AIDS epidemic contracted from hip-swinging gals and guys on the local news channel?! A policy that preserves our personal freedom to choose the timing of the holy knot and the number and spacing of children; a policy that is discriminating of income (and child gender) differences and its impacts on family formation, and yet cognizant of the population externality that each additional birth brings about, indeed a policy that is both equitable and quasi-efficient? I motivate my proposal (while laying no claim to originality) in the policies of the recently elected TN government. While the world talks of population control and sustainability, the TN government has proposed, wait a minute, a ‘marriage bonus’ – a lumpsum reward on marriage day! It could be that the government values public morality among the NextGen more than environmental disaster, or that the ‘home-builder’s-cum-home loan provider’ lobby has, for mysterious reasons, special access to the CM’s office. But it sure sets a poor precedent and a wrong message to international organizations that have a stake in our economy and stock markets. Shouldn’t we be taxing married couples if not for the population externalities engendered by early marriages and unwanted pregnancies, but as a test of their ‘conjugal’ commitment and their financial sustainability given the distractions of the modern day?
A marriage registration tax is already in place in every state in India. It takes but trivial effort to upgrade the tax in to an effective population control policy. The policy, at the core, is rather simple – a deposit-refund system. Every couple at the altar pays in a substantial sum as marriage registration fee (the 'Deposit'). The fee varies by female age and the income tax slab of the couple. It earns interest and accumulates over a 20 year period. The birth of a child, whether 1st or 2nd, draws it down – a quarter of the original amount in the case of the first, and a third or half for the second. The amount accrued at maturity (the 'Refund') is returned with a 100% bonus if the couple chooses to stop with two children; the couple forfeits all monies if it chooses a third live birth. (The government could seek the participation of the employer or even the PF Authority in doubling the payoff at maturity.) A marriage tax deposit-refund system implicitly doubles as a 'birth tax' and flexibly induces delayed marriage, delayed first birth and spacing of second birth. A 'Double or Lose it all' strategy sharpens the incentives, thus ensuring against proliferation of family size. These incentives at the personal level are expressed in the population as delayed marriages (less number of marriages in any given period), and a sharply lower birth rate, particularly for the second birth – an outcome (not even measured and perhaps) not obtained as fast by other voluntary population control instruments. A lower birth rate, ceteris paribus, implies a slower rate of population growth, an early stabilization or even a reversal of population growth.
In the figure, a female/couple 1 in a higher tax bracket faces a ‘Marriage Registration Deposit’ schedule denoted by MRD2. Paying a much higher deposit, k, to start with, the couple receives 2B by limiting themselves to one child. A second child causes a deeper loss, reducing their payoff at maturity to 2F. The same couple would have paid a much smaller MRD of ‘m’ had they married a few years later to start with. A poorer couple, 2, that paid ‘l’ as MRD would stand to gain 2E with one child, but only 2G with the second.
There is an option to fine tune the interest rate before and after the birth of the first child. A reduction in interest rate following the birth of the first child matters less to the rich and more to the poor. Therefore the rich will not defer their second as much as the poor. Thus the ‘interest rate stepdown option’ has the potential to induce differential spacing of the second birth across couples in different income slabs.
There is much to commend this system of 'private incentives'. It discriminates by age of the bride and income slab. By increasing the marriage registration fee for younger brides, the policy discourages too early a marriage; yet does not forbid it for those who well-off, those successful at an early age, or those strongly desirous of early marriage. By income discrimination, it ensures the tax is neither too harsh upon the poor nor too frivolous on the rich. It does not mandate the number or spacing of births. To the contrary, it forces couples to consider the long-term cost of their family planning decisions and thus internalizes the externality they cause to the nation with unplanned, too early, or two many births. Correctly benchmarked, the policy has the potential to induce each couple to plan the timing of marriage, and the number and spacing of infants optimally – both privately and for the national good.
Much the same outcome of the 'Private' approach can be obtained with a 'public' government program that credits to each couple at the altar a lumpsum toward a 'Family Provident Fund', a variable sum that vests with the couple after 20 years subject to drawdowns after the first (and the second) birth. Apart from the source of the initial lumpsum, the proposal is much the same. If tailored appropriately, this program could achieve results similar to that in the 'private' approach. This option is particularly attractive to the oil-rich muslim nations grappling with a population crisis.
With the mechanics of the proposal laid bare, the focus moves to ‘who will foot the initial bill’?. Will the proposal reduce to worsen the burden on the bride’s family. Will it substitute and therefore lessen the scourge of dowry? Wouldn’t it increase abortions? .... But the couple does not plan its size on marriage day.... What about the 'income' and the 'price' effect? Shouldn’t the maturity bonus vary with income slab? How do you measure ‘income’ among those already subsidized with ‘roti, kapda, and makaan’? What about….?
And if you ask our politicians, they just might just encourage you to mail in your proposals and fund each one of those questions with a research grant.
Care to apply?
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