The libertarian case for family policy

As someone who spends a good deal of time writing and talking about the need to improve American family policy, people are often surprised to learn that, for most of my adult life, I considered myself a libertarian. I don't really traffic in political labels anymore, so I don't much care whether I still properly qualify for the title. But for the sake of those libertarians who may be conflicted about policies like paid parental leave or the refundable child tax credit, which were just passed by the House as part of President Biden's sprawling social spending bill, it's worth explaining why I think family policy and libertarianism are compatible.

Whether other libertarians agree with me will likely depend on what brought them to libertarianism in the first place. For me, that was economics, which I studied in college. To this day, I believe the self-regulating competitive mechanisms of the market should be kept as free as possible. But, the anarchist wing of the movement aside, even libertarians admit there are goods and services the free market is poorly equipped to provide (though they may draw the line between the provinces of state and market in slightly different places). And from my perspective, the standard rationale for libertarian opposition to government meddling in free enterprise makes a stronger case for family policy than against it.

If libertarianism were as simple as not wanting the government to exist, I wouldn't bother writing this article — but it isn't. Most libertarians agree the government has a role to play in society: to protect our rights to life, liberty, and property.

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That's why, although libertarians have long called for a massive downsizing of America's military reach, a reversal of police militarization, and a curtailing of laws that protect police officers from accountability, they're not usually the ones crusading to abolish these institutions entirely. "Most libertarians argue that police, courts, and military are legitimate functions of government," as libertarian pundit John Stossel once put it. "But few freedoms are more basic than being able to sleep securely in your bed without armored men bursting through your door." With the exception of anarcho-capitalists, libertarians generally agree the state should fill these protective roles, albeit differently than it does now.

Crucially, it's not simply the importance of justice and defense that makes them worthy of government involvement. Libertarians often oppose government involvement in matters — food, for example — precisely because they are too important to allow the state to muck up. Rather, libertarians acknowledge the government has unique attributes suited for providing these services. The benefits are irreducibly collective, so the provision must be, too. (No one makes this case better than libertarian darling John Locke in his Second Treatise of Government.)

National defense offers the clearest example here. Theoretically, a huge private company could establish an army fit to defend the United States (or even just one state), but how would it turn a profit? There'd be little incentive for any individual person to subscribe when they could freeride on others' subscriptions. The company could try to only protect subscribers, but how do you fight a war while checking to see if each house you're defending paid their last bill? Oh, the Smiths missed a payment; let them bomb that one. The logistics of national defense just don't work without taxes. It's not divisible into different market services.

The benefit children provide to a society is similarly difficult to parcel out. All of us will depend, in one way or another, on the generation of workers and taxpayers and innovators and entrepreneurs that come after us. Businesses will need new workers and clients. The elderly will need someone to look after them as they age. Those hoping to retire will need an economy to keep their pensions — whether public or private — afloat.

We all benefit from children's future taxes, income, and labor whether we contribute to their upbringing or not. This too can be a type of freeriding. As economists Nancy Folbre and Paula England explain in their 1999 article, The Cost of Caring, "Mothers cannot demand a fee from employers who hire their adult children and benefit from their children's discipline. They cannot send a bill to their children's spouses for the extra qualities provided because of their many years of good parenting."

Given the immense cost of child rearing, the ease of freeriding on parental labor gives everyone a pretty good reason to minimize the number of children they have. Employers have little reason to accommodate an employee's parental responsibilities, which helps to explain the scarcity of access to paid parental leave in the United States, particularly among low-skill workers who are relatively easy to replace. Left to its own profit-maximizing devices, the market doesn't orient itself around the needs of children or their caregivers — despite the fact that everyone will benefit from them in the long run. Let others do the work and incur the expenses while you reap the benefits of society's continued existence.

It's true, as libertarians especially will be inclined to point out, that some of the ease of this freeriding is a byproduct of public programs like Social Security and Medicare, which give everyone a legal claim on the income of the next generation whether they help raise that generation or not. But the reality is anyone who will benefit from that generation's labor, ingenuity, or income does so partly at the cost of present-day parents—who are less able to save for their own retirement because they are spending to care for their children now. Parents subsidize the future of child-free adults.

You don't need to take my word for it. "If the first commandment of retirement planning is to start early, then having as few dependents as possible is #1a," declares Investopedia. This is one reason so many members of the Financial Independence/Retire Early (FIRE) movement don't have or want children: If the goal is to maximize your slice of tomorrow's economy, the rational choice is to not have children today.

But that choice is also like standing up at a baseball game to get a better view: The strategy only works if a few people do it. It's only successful when it's unfair.

You don't need to be a socialist to question the sustainability of a system in which those who bear the steepest costs of raising the next generation have the least to show for it. If we were discussing anything else — bread, for instance — and someone proposed an arrangement in which the person who purchased a storefront, bought the flour, and baked the bread was given the smallest share of its sales revenue, libertarians would be the first to predict a bread shortage. This exact argument forms the basis of libertarian opposition to policies aimed at the redistribution of wealth.

Yet the American system for building human capital — our most valuable asset — suffers from the same perverse incentives. And under the circumstances, dwindling (or as an economist would say, suboptimal) fertility is exactly what economic theory would predict. "Most economists ridicule the utopian socialist vision of a society based entirely on altruism," Folbre warned in 1994. "Is a utopian vision of a family sustained by love alone any more realistic?" Persistent declines in fertility in rich countries the world over suggest perhaps not. The market incentives libertarians rightly perceive elsewhere are at work in fertility, too.

Whether or not we have the resources to properly account for the massive externalities of modern-day childrearing remains to be seen, and there's a legitimate discussion to be had about what libertarian (or, to loop in other free-marketers, a limited-government) family policy would look like. I myself go back and forth on this point. Sometimes I think we should just give parents a ton of cash. Then again, there's a case to be made that moderate labor market accommodations and paid parental leave are in fact more efficient means of lowering the opportunity cost of parenting than, say, replacing the wages people stand to lose by having kids.

But I digress. My point here is only that if you're willing to admit there are some things that the free market is poorly equipped to provide, I invite you to consider that the next generation is one of them.