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Commentary

UK government aims to combat fatherlessness with shared parenting law

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Canadian Barbara Kay writes about a positive development across the pond. (H/T Andrew)

Excerpt:

Two weeks ago the U.K. government announced its intention to amend the 1989 Children’s Act. Changes will include a “presumption of shared parenting” to ensure that children’s relationships with both parents continues after separation. Under the current adversarial system, as in Canada, legal custody battles almost invariably end with mothers gaining sole custody.

The decision was based more in pragmatism than compassion. Mounting sociological evidence confirms the terrible social costs of fatherlessness: triple the rates of truancy, teen pregnancies and drug abuse, to name a few.

Also proposed is a £10-million mediation fund. One spokesman enunciated what has become obvious to rational observers: “The courts are rarely the best place for resolving private disputes about the care of children.” In truth, no one but career stakeholders favours the status quo.

Let’s hope the U.K. example will hasten the inevitable arrival of equal shared parenting (ESP) as the default presumption, in the absence of abuse, in Canada. This is, after all, an idea whose time came decades ago. The 1978 Family Law reform Act interpreted the “best interests of the child” to mean: “where feasible, a child should have maximum access to both parents”; the “animosity of the parents should not interfere with this interest”; and the “needs of both parents should be considered.”

The in-depth 1998 Senate-House of Commons Joint Committee Report For the Sake of the Children also recommended ESP as a default presumption. But the report fell into a black political hole. Guided by feminism-inspired “social context” courses they take at the National Judicial Institute, unaccountable family-court judges with no expertise in children’s best emotional and psychological interests privilege mothers’ rights in hugely disproportionate numbers.

Indeed, fathers’ money is welcome, but the fathers themselves aren’t considered necessary to their children’s well-being at all, nor their children necessary to theirs. In 2003 justice minister Martin Cauchon stated, “Divorced fathers have no rights, only responsibilities.” He might well have added, “Divorced mothers have no responsibilities, only rights.” For fathers who fail to pay child support, even when they can’t pay, may spend more time in jail than a cocaine dealer and have their faces plastered on the Internet as “deadbeat dads”; but how many Canadian mothers have spent a night in jail for arbitrarily denying a father court-appointed time with his children?

Ideologues argue that fathers only demand equal parenting rights as a “patriarchal backlash” or to reduce their child support burdens or to punish their ex-mates. Some individual men are doubtless guilty of bad faith, just as some individual women seek sole custody for its material benefits or to punish their ex-mates.

Here’s an excellent lecture by Jennifer Roback Morse about the divorce issue.

If you don’t understand how divorce laws hurt fathers and their children, please read this excellent paper by Stephen Baskerville, published in Touchstone magazine, and this excellent paper from Touchstone magazine by Robbie Low, which explains how fathers are vital to passing on religion from parents to children. Every Christian should know as much about marriage as they know about abortion. Every Christian should have as much opposition to divorce as they have for abortion.  And every Christian should put as much effort into preparing to be convincing on the marriage issue as they are on the abortion issue. This matters.

Commentary

Does spending more money on public schools produce better students?

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Luis Woodhill in Forbes magazine.

Excerpt:

Accordingly, the “investment in education” that Obama wants more (and more, and more) of is actually “federal-government-directed investment in education”. When considering whether we really want more of this, it is important to remember that it was “federal-government-directed investment in energy” that gave us Solyndra, Ener1, and Beacon Power, and that it was “federal-government-directed investment in housing” that has cost taxpayers more than $150 billion in losses (thus far) at Fannie Mae and Freddie Mac.

So, how would we know if increased government “investment” in education was producing a return? We would see a steady rise in the ratio of GDP to “nonresidential produced assets” over time. Our GDP is produced by a combination of physical capital and human capital. Accordingly, if the economic value of our human capital were rising, the impact would show up in the numbers as increasing productivity of physical capital.

Now, here is the bad news. While total real ($2010) government spending on education increased almost 13-fold from 1951 to 2009, the measured GDP return on physical capital actually declined slightly, from 47.7% to 44.1%. This could not have happened if we were getting an appreciable economic return on our huge “investment” in education.

What follows is a “first approximation analysis”. The numbers could be done with more precision, but they are good enough to give us an idea of what the nation has been getting (actually, not getting) for its massive “investments” in education.

Assuming that about 25% of our total population is in school at any one time, average real (2010 dollars) government spending per student rose from $1,763 in 1951 to $12,209 in 2009. This is an increase of about 7 times. Assuming an average of 13 years of education per student (some go to college, some drop out of high school), this means that during this 58-year time period, we increased our real “investment” in the human capital represented by each student from $22,913 to $158,717.

Meanwhile, we have also been investing more in physical capital. Real nonresidential produced assets per worker increased from $79,278 in 1951 to $206,717 in 2009. So, each worker in 2009 had $127,439 more in physical capital and $135,804 more in educational “capital” to work with than he did in 1951.

Unfortunately, it is clear from the numbers that GDP tracks only physical assets, and not the sum of physical assets and educational “assets”. Excluding the GDP produced by the housing stock, the ratio of GDP to nonresidential produced assets has been essentially constant over the 59 years 1951–2009 (it has oscillated with the business cycle around a midpoint of 48.2%).

So, it appears that our massive “investments” in education have produced no measurable economic return. Should we be surprised by this? No. Average scores on standardized tests have not risen, despite the fact that we are “investing” seven times as much in real terms in each student than we did six decades ago. So, even by the measures used by the educational establishment, it is clear that the higher spending has not created any additional human capital.

The nation and its people would be much better off today if most of the additional “investment” in education that we have made over the past six decades had been used to create more nonresidential produced assets. GDP, real wages, and our standard of living would all be considerably higher.

Also, imagine if, instead of being given a 2009 education for $158,717, an average student were given a 1967-style education for about $58,000, and $100,000 in capital with which to start his working life. This would be sufficient to start any number of small businesses. Alternatively, if put in an IRA earning a real return of 6%, the $100,000 would grow to about $1.8 million over 50 years.

The huge government “investments” made in education over the past 50 years have produced little more than “Solyndras in the classroom”. They have enriched teachers unions and other rent-seekers, but have added little or nothing to the economic prospects of students. America does not need more such “investment”.

There is no reason to believe that having government spend our money will produce a better return than letting us keep our money and then letting us spending it on schools that actually perform.

Commentary

New paper on income inequality: Does taxing the rich hurt the middle class?

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Aparna Mathur (right)
Aparna Mathur (right)

Here’s an article by Indian economist Aparna Mathur.

She writes (in part):

In a recent paper that I co-authored with Kevin Hassett, we explored the effect of high corporate taxes on worker wages. The motivation for the paper came from the international tax literature (summarized by Roger Gordon and Jim Hines in a 2002 paper1) that suggested that mobile capital flows from high tax to low tax jurisdictions. In other words, in any set of competing countries, investment flows are determined by relative rates of taxation. The current U.S. headline rate of corporate tax is 35 percent. The combined federal and state statutory rate of 39 percent is second only to Japan in the OECD. With Japan set to lower its statutory rate later this year, the U.S. rate will soon be the highest in the OECD and one of the highest in the world. What effect do these high rates have on worker wages?

When capital flows out of a high tax country, such as the United States, it leads to lower domestic investment, as firms decide against adding a new machine or building a factory. The lower levels of investment affect the productivity of the American worker, because they may not have the best machines or enough machines to work with. This leads to lower wages, as there is a tight link between workers’ productivity and their pay. It could also lead to less demand for workers, since the firms have decided to carry out investment activities elsewhere.

Our paper was one of the first to explore the adverse effect of corporate taxes on worker wages. Using data on more than 100 countries, we found that higher corporate taxes lead to lower wages. In fact, workers shoulder a much larger share of the corporate tax burden (more than 100 percent) than had previously been assumed. The reason the incidence can be higher than 100 percent is neatly explained in a 2006 paper by the famous economist Arnold Harberger.2 Simply put, when taxes are imposed on a corporation, wages are lowered not only for the workers in that firm, but for all workers in the economy since otherwise competition would drive workers away from the low-wage firms. As a result, a $1 corporate income tax on a firm could lead to a $1 loss in wages for workers in that firm, but could also lead to more than a $1 loss overall when we look at the lower wages across all workers.

Following our paper, several academic economists substantiated our results, using different data sets and applying varied econometric modeling and techniques. Some examples of these studies include a 2007 paper by Mihir A. Desai and C. Fritz Foley of Harvard Business School and James Hines Jr. of Michigan University Law School, a 2007 paper by R. Alison Felix of the Federal Reserve Bank of Kansas City, a 2009 paper by Robert Carroll of The Tax Foundation, and a 2010 paper by Wiji Arulampalam of the University of Warwick and Michael Devereux and Giorgia Maffini of Oxford.3 A recent Tax Notes article that I co-authored summarizes these various studies and also the lessons from the theoretical literature on the topic. The general consensus from theory and empirical work is that while we may argue academically about the size of the effect, there is no disagreement among economists that a sizeable burden of the corporate income tax is disproportionately felt by working Americans. On average, a $1 increase in corporate tax revenues could lead to a dollar or more decline in the wage bill.

Conservatives and liberals have the same goal. We both want to help the poor. Liberals think that taking money from the rich and giving it to the poor helps, but all it does it cause the rich to move their capital and jobs elsewhere, leaving the poor poorer. Conservatives let the rich keep their money and encourage them to risk it trying to make more money by engaging in enterprises that create wealth – creating products and services from less valuable raw materials. In a socialist system, the rich get poorer, but so do the poor. In a capitalist system, the rich get very rich, but the poor also gain more wealth. That’s what happens when corporations like Apple make IPads out of junky raw materials. That’s how wealth is created – by letting people who want to make things keep more of what they earn. We all benefit from encouraging people to make new things and provide value for their neighbors.

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