Sunday, March 23, 2008

Maternity economics

In advance of the Productivity Commission report being released Melbourne’s Pravda has come out strongly in support of paid maternity leave for all ‘working’ women with a front-page editorial (it could never be mistaken for a news-story) written by two concerned sensitive femmes and, luckily for them, a supportive article by Pru Goward who is miffed previous governments did not endorse her scheme, a backup story on two struggling mums and a mainstream editorial further on. Pravda takes its role of educating the ignorant masses of Victoria seriously although perhaps here with a certain amount of overkill.

The concerned femmes reject waiting for the PC report on the grounds that: ‘Disappointed women's equity activists [they don’t specify who these are] see this as a delaying tactic’.

This is trash journalism at its worst. Indeed the story itself points out the complexity of the PC inquiry:
‘The terms of reference include exploring what employers now pay; it will also identify pay models and their interaction with social welfare systems; assess the cost and benefits to business; examine women's workforce participation, employment and earnings; investigate post-birth health of the mother and development of children from newborns to two years; and analyse financial pressures on families’.
Pravda seems (I am unsure) to want extended leave provision funded from the public purse at some fixed percentage of salary and they don’t like the baby bonus (BB). It is a bit non-specific since when it comes to details they are, well, vague.

If this is Pravda’s advocated policy it is not a self-evidently good thing at all. I think we should wait before the PC inquiry reports before making up our minds. First, it seems to me that, as a matter of course, parents should save to provide a decent environment for their newly-born while one parent takes unpaid leave. The government has already taken over our task of saving for our old age by compulsory superannuation and now is being urged to take away from us any need to save for large consumption and income-depleting events such as having a child. It is the nanny-state gone bananas.

The chorus from the fruitcake left will in unison say – ‘what about the poor and ‘working families’’(to use a treasured Ruddism). Well economic theory is clear on this. Give them income if they need income but don’t meet their income needs through paid maternity leave.

Second, while the current baby bonus is regressive the scheme proposed by Pravda is even more so. With a fixed proportional payout per worker a lawyer earning $200,000 per year who gives birth would get 5 times the benefits a factory worker taking home $40,000 who does the same. Do the rich sheila’s kids provide more social externalities than the battler? I don’t see it.

Third, one can ask, why the payment? The editorial thunders:
‘First, it is not about who pays — clearly, it should not be a direct cost to employers, but accepted as a national responsibility. Taxpayers who paid for maternity leave would ultimately benefit because they would retain vital members of the workforce and allow them to produce the next generation of Australians at a time when fertility rates are low. It makes sense to subsidise women to have families, rather than to penalise them for what comes naturally. If a generation of working women sacrifice motherhood to preserve jobs and careers, it will cost us all’.

This suggests that, giving birth provides an external benefit to the community. But if that is the case then why restrict the payment to working women? Why not give a baby bonus type payment to all women including stay-at-home mums. An enhanced baby bonus, perhaps means tested and perhaps coupled with the right to unpaid leave for working mothers, seems a better suggestion than Pravda’s suggested policy. (By the way I disbelieve the proposition that enhancing the bonus would lead to significant costs of mothers delaying delivery as Joshua Gans and Andrew Leigh apparently do).

These articles and policy recommendations are, as I say, trash journalism from what is becoming Australia’s worst daily newspaper. Pravda has no hesitation in pushing any daft fashionable leftwing political causes its nitwit journalists believe in but is short on analysis of the consequences of its endorsements.


conrad said...

I agree with you on this one on this, except that most Australian newspapers are aweful. Its not like Janet Albrechtson et al. are offering intelligent perspectives from the other side of politics.

I think the reason many of these people want paid maternity leave is that they surely really want BOTH the baby bonus and maternity leave (and probably a bunch of diamonds too...) -- thats why the ctiticisms of the BB are always so muted. Otherwise the argument simply doesn't make sense (IMHO), excluding for further legislation that would hold positions open without the employer paying.

Perhaps the solution to shut them up would be for the government to suggest deleting the BB in favor of such legislation which would then pay the BB only to previously working mothers in small installments (say, $250 per week for 20 weeks). They should be clear then that the BB would be completely deleted. Of course, as you point out, that would completely discriminate against non-working mothers, but then at least they'd have to compare the BB with paid maternity leave properly, which is not what I think is being done seriously now (I imagine most people think it will stay due to it being so hard to take freebies away).

Mark Richardson said...

It's an attack on the traditional family.

Women right now can be supported to stay at home with their children by their husbands, or, failing that, through the baby bonus.

This doesn't fit the modernist ideal of autonomous womanhood, in which women are supposed to be economically independent of men and to be able to choose to form a family with or without men.

BTW, introducing paid maternity leave isn't the last step in all this. In Scandinavia they're already up to part where penalties are applied if men don't take half of the leave.

It's social engineering to create a new kind of modernist family.

hc said...

Mark, My view is that the leftwing elites in Labor resent the whole notion of a family. If one suggests that it might be close to ideal for mothers to raise children themselves rather than using childcare centres one is viewed as being hopelessly reactionary and pursuing a 'white-picket fence' view of society.

You are right. This maternity leave measure subsidises the child-bearing decisions of women who work and does zero for stay at home mums. It shows exactly where cthe preferences of these ideologues lie.

Anonymous said...

As a woman, I think they should get rid of the baby bonus - and develop more sophisticated social policies where by parents can managed work/life - Mark comments on scandanavia - they have options for parents to stay at home for 3 years, payments for some or a child care place - its providing choice. I have a problem with the Right side of politics because they do not want to provide choice - Howard screwed the tax system against working mothers - it was social engineering in the opposite direction but yet no comment is made on this - making a correction to that by supporting working parents- well, most people would see that as "good" social engineering. And Labor women are not anti-family - its just that the Right have only a traditional view of the family - no other choice is supported.