Freeman

ARTICLE

A Program the Borg Would Love

Canada Proposes National Child Care

FEBRUARY 01, 1999 by KAREN SELICK

Filed Under : Taxation

Karen Selick is a practicing attorney in Ontario and a columnist for Canadian Lawyer.

Ontario, Canada—Suppose you’re out for a stroll one evening. A scruffy-looking stranger approaches you and says, “Hand over all your valuables, and make it snappy.” “Is this a stickup?” you gasp, stupidly.

“Why, no,” says the stranger, “it’s merely the result of a cost-benefit analysis I just performed. I saw you come out of that nice-looking house over there, with the late-model car in the driveway. You’re pretty well dressed, and that’s a nice Rolex you’re wearing. By comparison, the rent’s overdue on my grungy apartment, my 12-year-old car needs its engine overhauled, my bank account’s overdrawn, and just look at these worn-out clothes I’m wearing. I estimate that the benefit to me of having your valuables outweighs the cost to you of losing them by at least two to one. So hand them over.”

If the robber’s logic wins any points with you, then I’ve got a new government program to sell you. It’s called national child care. Of course, it’s not really new, but with all the recent talk about the “fiscal dividend,” we can expect to see renewed hoopla over it in coming months.

An opening salvo was fired in March 1998 with the publication of a study titled “The Benefits and Costs of Good Child Care” by the University of Toronto’s Centre for Urban and Community Studies. This study made national headlines in Canada because of its dazzling cost-benefit analysis. An expenditure of $5.3 billion on child care, it said, would generate benefits to children and parents of $10.6 billion—exactly double. Such a program should therefore be looked upon not as an expense, but rather as an “investment.”

Misuse of Cost-Benefit Analysis

Unfortunately, the authors of the study make the same fundamental error as my fictitious robber. A cost-benefit analysis makes sense only when the costs are incurred and the benefits are received by the same person. If costs are inflicted on one person while benefits are reaped by someone else, it is simply impossible to say whether the world has been made a better place. For the person receiving the benefits, things have improved. For the person bearing the costs, things have deteriorated. But there is no way to measure the absolute quantity of either person’s happiness. Individuals can rank their preferences (having more money usually ranks higher than having less), but they can’t quantify them. There are no units of satisfaction or contentment. Using dollars as proxy measuring sticks doesn’t help, because each additional dollar a person acquires adds less to his well-being than the previous dollars. You can’t measure something when the measuring stick itself continually alters in size.

If you can’t measure one person’s quantity of happiness, it’s even more obvious that you can’t compare quantities of happiness between different people.

Economists have recognized these concepts for years, yet some people insist on fudging the issue by speaking of costs and benefits to “society,” as if we were the Borg of Star Trek fame, all controlled by a single communal brain, all willingly subordinating our individual personalities and goals to the will of the collective. We aren’t—at least, not yet. (One can’t help wondering, however, whether the push toward government control of the country’s children at ever younger ages reflects proponents’ desire to achieve a state of Borg-like submissiveness.)

The fact is, some people would be net beneficiaries of national child care—primarily families with young children in which both parents wish to work outside the home. Other people would be net payers—namely, childless taxpayers, families with older children, and families that prefer to have one parent provide care to preschoolers at home. There is no fair, just, or moral case to be made for harming the second group in order to indulge the first.

The Unseen Neglected

The study contains a second fundamental flaw. In computing the cost side of the balance sheet, the authors fail to include any estimate of the advantages that would accrue if the same $5.3 billion were spent on something other than child care. Somewhere out there, toiling away in some laboratory, there is undoubtedly someone who could make a plausible case for “investing” $5.3 billion on his own pet project—perhaps a cold fusion machine. If he were successful in inventing such a device, the benefits to mankind would be incalculable—far more than the paltry $10.6 billion that child care would supposedly produce.

There are always competing uses for any resource. In deciding how to invest resources, you don’t look just at the potential returns from a single alternative. You compare the expected returns from many different alternatives.

We don’t know what alternative uses taxpayers would find for their money if we simply gave it back and let them invest it themselves, instead of spending it collectively. We can’t calculate the benefits their myriad individual projects would generate. We do know, however, that taxpayers would probably prefer this to all other alternatives. Otherwise, we wouldn’t have to force them to pay their taxes on pain of imprisonment.

There are many other good reasons for opposing national child care. Suffice it to say that if it’s going to be as effectual as the public school system, let’s nip it in the bud.

ASSOCIATED ISSUE

February 1999

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