By Martin Hutchinson
Published 5/3/2004 1:01 PM

WASHINGTON, May 3 (UPI) -- Phillip Longman, author of "The Empty Cradle" (Perseus Books, 2004) is worried by declining birth rates worldwide, but particularly in the United States. His problem isn't really a problem, but one particular variant on his solution could have other uses.

Longman, in a meeting at the New America Foundation last week, pointed out that, even though world population is increasing by 75 million in 2004, the rate of increase peaked as long ago as 1975 and that in an increasing number of countries, in particular India and China, the population is aging rapidly. Whereas in the United States the median population age will increase by 2050 from 35 today to just under 40, in Mexico it will increase from 20 to more than 40, and in other countries such as Egypt and Algeria the rate of aging is four times that in the United States.

While "aging four times as fast as in the United States" sounds spooky, like the episode of Star Trek in which Captain Kirk and Lieutenant Spock are rendered senile by a mysterious disease, the truth is much more mundane. The population in these countries exploded in the last half century as infant mortality rates dropped while birth rates didn't; now, at last, birth rates are dropping towards or below replacement level and there is some chance that these countries' populations will cease their inexorable increase. Only in Africa does population growth remain apparently uncontrollable and there, of course, the tragedy of AIDS may have a considerable effect.

"How much the greatest event it is that this ever happened in the world! and how much the best!" wrote Charles James Fox on hearing of the storming of the Bastille in Paris in 1789. Fox's words were wrong and silly for the French Revolution, but they make a great deal of sense when applied to the commencement of marked decline in the world's birth rates.

If global warming was a problem at the time of the Kyoto treaty in 1998, it will be much more of a problem by 2030, when China's 1.3 billion people and India's 1 billion have joined the mere 800 million in those Western and East Asian countries most of whose inhabitants were in 1998 rich enough to drive automobiles. Kyoto provided little solution to the global warming problem, if real, mandating huge costs and bringing minimal long term environmental benefits. Thus if global warming is real, only a sharp reduction in the world's population, maybe to around 1 billion or so by 2150, will allow the world to preserve a current "Western" standard of living, automobiles (electric or otherwise) and all, without being forced to pay ludicrous amounts of its income in unproductive environmental cleanup costs. If the world's birthrates are declining to a level at which such a reduction begins to seem possible, Longman's carping at the birth dearth's effect on social security systems and entrepreneurship misses the point.

There is however a more localized problem, to which Longman devotes the majority of his analysis: the birth rates well below replacement levels, and impending sharp declines in population, in the non-immigrant communities of Western Europe, Japan and the United States.

If you accept the view that world population needs to diminish, this complaint is, seen in some lights, highly politically incorrect. Indo-European writers, such as Longman and indeed myself, should be cautious of complaining too much, if our own "tribes" are simply leading the world in a necessary population decline, however secretly unhappy we may be that the proportion of "people like us" will decrease. Certainly the plan to "solve" the actuarial difficulties in Medicare and Social Security, caused by the U.S. domestic population's aging and subsequent decline, by allowing unrestricted immigration of younger foreigners, all of whom will then be expected to support us in our old age, is mere moonshine, designed to provide a spurious rationale for the high-immigration lobby.

However, in examining the causes of the U.S. birth rate decline, Longman identifies a very interesting one, the economic cost of child rearing. He points out that not only is the direct cost of rearing a child (excluding college costs) in the United States around $200,000, but the indirect cost, particularly in lost lifetime earnings for the child's mother, is around $800,000 (presumably the latter figure is lower for the second and subsequent children, since most lost earnings costs will already have been incurred.) These costs are higher for couples in which both spouses are productive members of the workforce, and lower for single parent families on welfare.

On the other hand, parents today get almost no economic benefit from successful child rearing.

Just as improvements in medicine have reduced the need to produce several children to replace those who die in infancy, so too lifestyle changes, in particular urbanization, higher education, state provision for old age and, surprisingly, television, have reduced birth rates (Longman cited a study showing that in Brazil, as each state received television coverage for the first time, its birth rate dropped sharply.)

Longman proposes that economic incentives be partially reversed, by compensating people for child rearing. To achieve this, he proposes to rebate a portion of social security payments to the parents until the child turns 18, perhaps one third for each child, with benefits at retirement being granted as though the payments had been made in full.

This is fine as far as it goes, but it provides no incentive for devoting additional resources to child rearing beyond those legally mandated, and it favors working mothers over those who stay home to care for children (and who therefore don't make social security payments.)

Much better would be a system whereby some percentage, maybe one third, of income taxes paid by a child once it joined the workforce would be rebated to the mother, while she lived. The child's income tax payments would not thereby be increased -- we all have parents, after all -- the money would simply reduce government resources available for other needs, effectively giving the mothers a "commission" on the government income they had through their fertility and child-rearing efforts produced. Other forms of social spending would then be reduced, to pay for the change. A reduction in ordinary social security or Medicare, for example, would together with this system form a net subsidy from the childless (who are presumably more able to save for retirement) to mothers of children, thus balancing the economic incentives otherwise in place.

In order to allow people to plan for the change, it should be brought in gradually. Five percent of the income taxes paid by offspring over 20 would be rebateable immediately to their mothers. Additionally, there would be a provision for 10 percent to be rebateable for children currently 15 years-old or over reaching adulthood; 15 percent for children 10 and over; 20 percent for children 5 and over; 25 percent for children already born; 30 percent for children to be born within the next five years and the full 33 percent only for children born after 2010 (if the system was introduced in 2005).

This would allow a gradual phasing-in of social and fiscal changes.

Such a system would have a number of advantages. It would recognize the mother's primary role in child rearing, and provide a mother who stayed home during the children's early years with a pension provision not otherwise available to her. It would provide a disincentive to the "trade her in for a newer model" syndrome for fathers of families, since such fathers would be abandoning a wife with a substantial likely pension provision from her children's earnings. Correspondingly, it would raise the attractiveness of women with children as marriage partners.

It would remove the economic disincentive to child rearing, and provide a positive incentive towards large families, which would benefit from scale economies in their costs, while increasing the future benefits from the children's income tax payments. "Cheaper by the Dozen," Frank B. and Ernestine Gilbreth's 1949 account of their upbringing in the large family of industrial engineer Frank Gilbreth, would once again become not a fantasy but a livable reality.

The most important effect of such a system would be to provide a major incentive towards dedicated child rearing. On the whole, the more resources devoted to raising the child, whether financial or simply in terms of time and attention, the greater and more certain would be the financial return to the mother in old age. Of course, children would be encouraged by their mothers to become lawyers and investment bankers rather than artists, but a certain discouragement of the "take a year off to find myself" syndrome would be no bad thing for society as a whole.

Finally, this system would address the tendency in modern urban welfare state societies for the professional classes to have fewer children than the underclass. While one should reject discrimination on the basis of race or national origin, it is impossible not to observe that, since informed opinion believes that intelligence (however defined) is between 30 percent and 70 percent hereditary, a society that encourages the more intelligent to have fewer children than the less intelligent, is doomed to eventual intellectual decline. Longman does not recognize this as a problem; but in the long term it poses far greater dangers than a declining birthrate, whose overall benefits outweigh its costs.

The rebate system described above would reverse that incentive; indeed it would reverse it most strongly for parents of exceptional intelligence but limited financial means, those most strongly deterred from child rearing by the current system.

Reversing the genetic erosion inherent in modern Western society is an objective that has appeared in the past impossible to achieve without unacceptable intrusion into private life. The reform outlined above, while perhaps sold to the electorate as reversing the birth dearth, would in reality have its chief value in addressing this far more important goal.

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(The Bear's Lair is a weekly column that is intended to appear each Monday, an appropriately gloomy day of the week. Its rationale is that, in the long '90s boom, the proportion of "sell" recommendations put out by Wall Street houses declined from 9 percent of all research reports to 1 percent and has only modestly rebounded since. Accordingly, investors have an excess of positive information and very little negative information. The column thus takes the ursine view of life and the market, in the hope that it may be usefully different from what investors see elsewhere.)

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Martin Hutchinson is the author of "Great Conservatives" (Academica Press, June 2004) -- details can be found on the Web site greatconservatives.com.