Monday, December 12, 2005

The case for a national, public childcare investment

Even with the "beer and popcorn" gaffes, its turning out that the debate over a national childcare programme is becoming a main issue in this election.

And now that the NDP has issued their childcare policy, the debate has become much more interesting. As reported elsewhere, the NDP proposes a policy that recognizes the need for a public system, like the Liberals, while still giving parents some no-strings-attached money, like the Conservatives.

Most of this debate centres on how to implement the system, but there are still a few of my conservative friends who don't see the need for a system at all. I won't delve into the routine reasons - helping working parents make ends meet, giving real choices to them for childcare - but make the case for a national child care investment based on economics.

Simply, an investment in childcare is good for the economy as a whole. It increases our productivity and competitiveness. This according to a 2003 study by University of Toronto Economists Gordon Cleveland and Michael Krashinsky.

Krashinsky and Cleveland debunk a great many myths about childcare and early childhood education, but in particular they put to rest the entire idea that "it costs too much" quite handily. According to the study, they estimate that mothers of young children currently in the labour force account for 5% of our GDP.

"...we estimated the contribution to G.D.P. of mothers with young children
now in the labour force at about $53 billion, about 5% of G.D.P. When we further
considered the reduction in investment in the long run in a now smaller economy,
the estimate of the loss was $83 billion , or about 7.5% of G.D.P. Put another
way, a large part of Canada’s global competitiveness is due to the productivity of its working parents
. It “costs too much” not to have these parents working."
[emphasis mine]


Both men, in a "Freakonmics-esque" twist, considered the money spent on daycare to be an investment in human capital and infrastructure rather than as a cost or consumption. Their research shows that for every $1 spent by governments results in $2 in benefit realized (see above, page 58). That is a great return on investment, by any measure. They propose a system like the one in Quebec:

"Finally, it should be emphasized that while the $6.3 billion annual price
tag on our proposal (not all of that is new money,of course) is certainly
significant,it is hardly extraordinary. The figure is roughly 1/2 of 1 percent of
Canada’s G.D.P. (and G.D.P. itself would rise as more parents enter the labour
force). Many OECD countries spend more than that on child care and early
education."



So, a federal govenment investment in childcare pays untold dividends for all Canaidans, in enhanced competitiveness and a greater GDP, as well as for those working Canadians who will use it. For their significant contribution to the economy, they get decent childcare as well as more mney in their pocket. This will in turn be good for the economy as well.

Given that, then, I think it is clear that the NDP's childcare plan is the best. It provides funding to create and maintain over 200 000 daycare spaces in the first year alone, in the most economical fashion - non-profit centres. It sets standards and invests the money directly to daycare programs, with accountability that it will be spent on childcare. It also gives parents an extra $1000 in discretionary funds for each child through the child tax credit - only $1 per day less than the CPC plan.

Once again, the NDP stands up for Canadians and provides a sound economic vision of the future.

41 Comments:

At 3:05 AM, Blogger Nastyboy said...

hey Mike,

I love the blog as usual.

Keep on doing these kinds of posts. I lean to the right, slightly, but if you keep doing intelligent posts like these I might have to become a dipper.

I hate it when logic, reason and a beleif in social justice get in the way of ideology.

Damn you and your common sense!

 
At 1:42 PM, Blogger Idealistic Pragmatist said...

I was hoping you'd expand on your comment in my blog--glad to see you did! People need to hear this.

 
At 6:32 PM, Blogger John Murney said...

We need daycare in Canada, and the New Democrats have put forward a very good proposal.

 
At 8:00 PM, Blogger Mike said...

You can't go wrong when you base your policies on sound research, rather than ideology. It's one of the things that draws me to the NDP - principled in their goals, pragmatic in their approach.

 
At 2:17 PM, Blogger Nastyboy said...

Pricipal goes a long way in my book. That's why I doubt I'll ever vote Liberal again.

 
At 2:43 PM, Blogger FLY said...

Canada - A care free socialist utopia where everyone loves each other.

 
At 2:49 PM, Blogger Mike said...

Fly,

:|

Uh, yes. You have a problem with that?

 
At 6:00 PM, Blogger Nastyboy said...

The FLY said...

Canada - A care free socialist utopia where everyone loves each other.


You forgot about the rivers of chocolate, gumdrop mountains and lolipop trees.

 
At 8:37 PM, Blogger DazzlinDino said...

Good post Mike, but there is still a huge flaw. Any non-profit will not operate for reasonable hours. What about those that don't live in urban settings, or don't do the 9-5 shtick, they're screwed. Take a look at any bar, pub, or nightclub, these girls would hardly benifit from either the NDP or the Liberal plan. I'm not saying Harpers plan is the beat all end all either though....

 
At 9:32 PM, Blogger Mike said...

That's not nesessarily so. Since I don't use them, I don't know if any daycare centres operate at strange hours, non-profit or for-profit. I do know the Gymboree near me closes at 5 PM.

It may be a flaw in all the plans in so much as the hours of operation are not specifically addressed. A great deal of women would benefit from the NDP or Liberal plan. More would benefit from the NDP plan because it also includes the cash for families like the Conservatives plan.

Of course, it still means that there is a need for a daycare plan. I think the problem here really may be that there is some confusion as to the problem. As wonderdog has stated a few times, the real problem is that many more women want to work but can't because of a lack of daycare, than there are working women who want to stay home. There are also a great number of working women who entrust their kids to substandard or incredibly expensive daycare who could use the financial relief of good daycare. The NDP and to a lesser extent the Liberals try to address all of these to varying degrees, while the CPC simply wants to help women stay home.

 
At 12:07 AM, Blogger DazzlinDino said...

How about the fact that Stephens plan does in fact also create more daycare spaces, by 125,000 I think, as well as help those who prefer in home or such type of daycare? That's one part that keeps getting left out, especailly by Martin, as he knows the lack-luster policy he is putting out is lame. Harpers plan actually spends more money than Martins on the problem, and Martin knows it....

 
At 9:56 AM, Blogger Mike said...

Dazz,

The problem is that the funding for those 125 000 spots is via tax breaks rather than direct investment. For all the talk of having that plank there to help synogogues, churches and community centre build new spots, you have to have the money to build the daycare first. If churches synogogues and community centres had the money, we'd see the spots already. This will enourage corporations like "Gymboree" or others to build, making that part of it a corporate tax break of sorts.

I realize that you mis-trust government bureaucracies, but I distrust corporate bureaucracies even more. Since niether the Tory or Liberal plan talk about national standards, we may well see on Province or city with good daycare, but still costly while another has affordable daycare, but makes its money by hiring unqualified people, hiring fewer of them and taking in a few more kids than they can handle to maximize profit. Hey, if we were talking about a coffee shop or a shoe store, that would be a wise business move, but not when it comes to daycare.

When that happens, you kid gets forgotten about and locked in the daycare unitl 8 pm...

:|

The CPC plan has some good points - the NDP has nearly matched the $1200 in discretionary funds for parents - but just doesn't go far enough to actually solve the problems its supposed to be addressing.

 
At 2:00 PM, Anonymous Jeff said...

So the NDP will just use more of our money....basically. Our money meaning taxes. Meaning higher taxes.....again.

 
At 3:37 PM, Blogger Mike said...

No jeff, the money will come from the same place as the CPC money - the surpluses. The government takes in enough money to do its job, it just needs to pe allocated better. In fact, the NDP has promised to do this Childcare plan and have a $23.4 Billion personal tax cut, as outlined in our tax plan a few weeks ago.

No new taxes, just wiser spending. Our child care plan will actually create spaces and only costs slightly more than the CPC and the Liberal plans. (the CPC plan actually is 1/2 billion more than the Liberal plan).

Nice try though.

 
At 5:15 PM, Blogger ali said...

"I realize that you mis-trust government bureaucracies, but I distrust corporate bureaucracies even more."

Words of wisdom, dude. Childcare isn't exactly an issue near and/or dear to my heart, but it is an excellent bellwether of conservative and liberal tendencies, respectively (Liberal in the ideological sense, rather than the party sense). Conservatives don't oppose government-funded childcare because they worry about bureaucratic waste, they oppose it because the interests they truly represent want a slice of the pie. Furthermore, it is inherently conservative to decry a policy which serves broad social goals over specific interests. Sure, Harper's plan allows parents to 'choose' their child-care. It also allows the stupidly wealthy to 'choose' not to support the common good and instead fund their own high-quality, exclusive, exorbitantly-priced institutions. It's the same story as health care, public education, and essentially every other institution that serves society as a whole, rather than the specific interests of the aristocracy.

In any case, nice blog.

 
At 7:09 PM, Blogger Adam said...

Thank you for linking to the Cleveland & Krashinsky report. I found it useful in helping me understand the reasons why some people want a government child-care plan.

The only argument in the report that sounds interesting to me, from the point of view of evaluating the idea of having a government child-care plan, is number 3 (the "families should pay for their own children" argument). I don't understand the report's counter-argument. It seems to be that investing in a child doesn't just benefit the child and the parents; it also benefits "society." (I never really know what anybody means when they say that something "benefits society," but I assume that in this case the authors mean that I should be in favour of investing in other people's children because it will benefit me.) But that doesn't sound to me like a complete answer. Saying that it'll benefit me is only half the issue; the other half is how much the best alternative will benefit me. Given all the various things I could be spending my money on, how much does investing in another person's child benefit me, compared to investing my money in my own children or other things that I value?

My guess is that investing a dollar in other people's children will just never be as valuable to me as investing that dollar in my own children, or in my own business, or in paying down my mortgage, or in my retirement savings plan, or things like that. (At least when the other children are young. For older children, we see scholarships and things like that for the best students, because people can be more discriminating and make sure the money tends to go to the most worthwhile kids.) So I'm not sure exactly why the authors of the report think that there's a market failure here. It seems to me like they've only addressed half the question. (But maybe I missed the part where they address the other half?)

Another point made by the report is that a big chunk of the "benefits to society" are in the higher taxes that the child will grow up to pay, and the higher taxes that a working parent will pay. The report also points out that the parents' decision about whether to work or stay at home will be skewed by stuff like taxes and welfare - the more taxes working parents pay, and the more welfare non-working parents receive, the more likely a parent is to choose to stay at home rather than work. That makes sense to me as a reason why there might be a market failure here - and it suggests to me that another way of solving the market failure would be to eliminate a bunch of the tax-funded programs. (I think it's interesting and kinda scary to watch these tax-funded programs pile up. The more we have, the more we end up needing.)

Anyway, I wouldn't call myself a conservative, but you can count me among the people who don't see the need for a tax-funded child-care system at all. So far the report hasn't been very convincing for me.

 
At 8:37 PM, Blogger Mike said...

Adam,

Check out "The Efficient Society" by Joseph Heath for a better overview of the economics of this. Basically its a market failure becasue the market does not provide the childcare at the right price - despite a great demand, the market has not provided childcare at affordable prices. In a situation of market failure, the government can often supply the good or service more efficiently, and more cheaply than the market. This is one of those situations.

Those benefits are "positive externalities" in economic terms. By investing in providing more quality childcare, women who are currently on welfare (and that's 80% of the welfare rolls in Ontario) will be able to get off welfare or go to school. They will make higher wages and spend more. This is good because it reduces the wefare roles at the same time as it grows the economy. That 5% of GDP gets larger.

The children from these mothers will live better lives, and themselves become contributors to society. That means lower crime rates, meaning lower costs to society. You have a direct benefit from this in that you are safer, and enjoy a booming economy. And you need to help pay for this in order that you are not a "free-rider".Your share is minimal compared to the benfit you derive from it.

Trust me, if the market could deliver these service, it already would be, since we have a completely free market in chldcare now and it isn't working.

The point of welfare skewing the results is that women on welfare MUST stay home, especially single mothers. They have no choice. Those parents that work now, making up 5% of our GDP, have no choice - they must work in order to live (or end up on welfare).

I'm not sure how something that will give parents that work real choice, that will reduce welfare rolls and costs and will strengthen and grow the economy is a bad thing. Since the market hasn't or can't provide this valuable service, it is logical that the government should because it benefits everyone, even those that do not use the system and those that don't like it.

And a 2:1 return on investment is still pretty good. If the government said it would take your money, invest it and be able to doulbe it, would you think that was a good idea? That's what is happening here, from an overall economic standpoint.

 
At 8:40 PM, Blogger Mike said...

BTW, its not just about getting women off welfare either.

"My guess is that investing a dollar in other people's children will just never be as valuable to me as investing that dollar in my own children, or in my own business, or in paying down my mortgage, or in my retirement savings plan, or things like that."

In fact, econoimically, investing in a childcare program IS more valuable - you will infact see the dividends from this investment. And you are also investing in your own children when you do this.

 
At 2:36 AM, Blogger Adam said...

Mike,

I remember reading some of The Efficient Society, and not being particularly impressed. I can't tell you anything more specific than that, though - my memory is pretty vague about it. I'd be willing to give it another shot if you could give me a good example of something that you learned from it that made sense to you.

You're saying that making this investment in other people's children would give me a 2:1 return over... what period of time? And these are benefits for me? The report said that investing $5.3 billion would yield $4.3 billion in increased future productivity for the children (over what time period?), and $6.2 billion in increased productivity for the mothers (over what time period?), and that some of that increased productivity would sorta trickle back to the taxpayers in the form of "a stronger economy" or "fewer people on welfare" or things like that. Are you saying that you understood their $10.5 billion figure to be the return to the taxpayers, rather than (as I understood it) just the increased future earnings of the recipients? (It seems to me like the report is kinda equivocal about this point.)

 
At 8:25 AM, Blogger Mike said...

Those benefits to you are the "positive externalities" of a daycare system and yes, they would benefit you.

For instance, while a small part of your taxes would go to pay for the program (and parents, BTW, are still expected to pay about 20% of the cost) the kinds of benefits you would realize are these:

1. Lower cost (to the province and municipalities) of welfare, since a large portion of those on welfare would be able to work (single mothers, remember) or train for work. This would likely translate into either lower taxes (provincial or municipal property taxes) or greater quality of public goods provided by those levels of government - healthcare, roads or public transit, for instance.

2. Stronger, growing economy. Currently, about 5% of our GDP is thanks to working parents. Additional childcare will allow greater numbers of women who want to work to do so (including, but certainly not limited to, the women mentioned above). This will grow our GDP and economy - businesses will have more workers and be able to expand, these women will earn more than social assistance and be net contributors to the economy rather than drains. They will spend more, increasing economic activity. They will save more, increasing capital investment. You will directly benefit from a strong growing economy by having more customers for your business or by having your company make more money so you can get a raise. You cannot deny that you would not benefit directly from a stronger economy as a whole.

3. Lower crime. The children of the working poor and of "welfare mothers" are dispropotionatly more likey to become criminals. The gang problems plaguing Toronto this year is an example of this. After years of steady declines in violent crime, including murder and just a year after gun crimes had been half of what they were in 2002 and just two years away from a 35 year low in the murder rate, we see a significant jump in the those crimes. It is no coincidence that this happened almost exactly 10 years after the massive, indescriminate cuts to social programs and welfare by Mike Harris. Poverty breeds crime (the book "Freakonomics" details this quite nicely as well, with a great deal of data). The children of that depravation are now turning into the teen-aged gangbangers shooting up the city. So, any program that reduces the number of people on welfare, reduces poverty by allowing mothers to have good jobs and delivers high quality childcare will improve the lot of these children and make them significantly less likely to become criminals. You benefit directly by having a lower crime rate. As Linda McQuaig said in the star the other day, having extra cash in your pocket from tax cuts means little if you are too afraid to walk the streets and go shopping.

Another side benefit of #3 is that the cost of the early intervention pays for itself by avoiding greater costs later. During the 90's I lived in Toronto and worked in social services with disturbed children. All were from welfare mothers and from the poverty stricken areas of the city. The cost per day to treat and helop these kids and their families was about $300 per day. The cost to incarcerate them as criminals in either a YOA facility or regular prison was between $700 and $800 per day - and this does not include the cost of police and courts to investigate an prosecute in the first place. Again, you benefit by having less people in jails and the criminal justice system. A small investment upfront pays big dividends later.

All of this to say that you do benefit directly from this kind of program, even if you don't realize it, because of the positive externalities it generates. Now some of these savings may not be immediate, but as my example shows, it could take about 10 years. Name and RRSP that can double your money in 10 years.

While it may seem like it is in your self interest to keep your money and invest it in yourself, it puts you in a classic prisoner's dilemna - by doing this you create a "race to the bottom" where everyone does it. That creates a negative externality of keeping women on welfare, driving up costs,w hich may lead to higher taxation. This increases the crime rate, which makes you less safe, causing you to either pay higher taxes or invest in security devices. In general, doing what you think is in your best interest actually has the perverse outcome of not being in anybodies best interest in the end.

 
At 4:50 PM, Blogger Adam said...

Mike,

Where in the report did you see it say that the $10.5 billion figure is their estimate of the positive externalities? On page 58, the second full paragraph talks about benefits to the children, and it says that those benefits add up to $4.3 billion. It doesn't sound to me like they're talking about the return to the taxpayers of those benefits to the children; it sounds to me like they're just talking about the benefit to the children themselves. And then there's a similar thing two paragraphs later where they talk about benefits to the mothers adding up to $6.2 billion - it sounds like they're talking about increased future earnings of the mothers, rather than the return to the taxpayers. But I agree that earlier in the chapter they talk about "rate of return" as if they're talking about the return to the taxpayers, above and beyond whatever benefits the children and parents receive. It seems to me like the authors of the report are (maybe deliberately, maybe not) blurring the line between benefits to the people who paid the money and benefits to the people who received it. (I understand that increasing the future productivity of the children and mothers will benefit me in various ways, but if this article is trying to quantify that benefit, it would be more convincing to me if it were clearer about which of their numbers applies to whom.)

Every time I try to write a response to the rest of what you said, I end up opening huge cans of worms. I understand that you expect that offering mostly-free child care will cause those three future benefits that you mentioned (fewer people on welfare, stronger economy, less poverty); I don't agree that it will, and I also think that there will be drawbacks that the report doesn't mention, and so I don't agree that this is like the prisoner's dilemma. But those are huge issues, and I was hoping that my involvement in this thread could be limited to just getting a better understanding of Cleveland & Krashinsky's report (which (except for this confusion over what they intended their numbers to mean) I think I've mostly gotten - thank you).

 
At 7:51 AM, Blogger Mike said...

http://www.childcarecanada.org/pubs/other/FF/index.html

Adam,

I think you have missed some of the other chapters. Go here to the index and read the rest. The chapter I link to directly refers back to these on occassion and this may the point of your confusion.

 
At 3:29 PM, Blogger Adam said...

When I first saw your post, I looked at the table of contents and decided that argument 3 was the only one that seemed relevant to me, for the purpose of trying to decide whether I want a publically-funded child-care system. Arguments 1, 2, 6, 7, and 8 all sounded to me like stuff that the individual parents should think about and investigate and decide for themselves. Argument 5 sounded interesting but not as important to me as argument 3. And argument 4 sounded like the kind of "people are stupid" argument that I tend to just completely dismiss.

So originally I just quickly glanced at the other chapters, and only really read chapter 3. Later, when you said that chapter 8 said I'd get a 2:1 return, I read chapter 8 too, but it seemed to me like it wasn't actually saying what you said it was saying. Now I've gone back and read the other chapters a bit more thoroughly, and I feel like my original impression was about right. I still don't see anywhere in the report where they clearly say how big they expect the return to the taxpayers to be. I see lots of places where they talk about how they think that the benefits to the children and parents will help everybody else too, and I see that place in chapter 8 where they say (as best I can interpret it - it really seems equivocal to me) that they expect the benefits to the children and parents to be about twice the cost to the taxpayers. But I don't know how big they expect the benefits to the taxpayers to be. Maybe I missed it, but I didn't find anywhere where they clearly stated it. Do you think I've interpreted their words in chapter 8 wrong, or is there another place in the report where they say this stuff more clearly, or what? Why do you believe that they said the return to the taxpayers would be 2:1 over however-many years?

 
At 3:41 PM, Blogger Mike said...

Adam,

From page 58

"It is worth reviewing the source of the benefits that we identified. There are two distinct benefits.First,the quality of the
early educational experience of almost all children in this age range would improve dramatically. Children whose mothers
are currently employed would move into higher-quality publicly-funded child care.Even children already in child care
centres or in supervised home care would see the quality of their care rise in most cases.However, the biggest gains would
be for children currently cared for in a haphazard way by low-paid underqualified and unregulated caregivers. Children
whose mothers are not currently employed would also receive early educational programs. The largest benefits would
accrue to children who do not currently participate in such programs. When we added up these benefits in 1998, they
totalled roughly $4.3 billion.
It is important to emphasize that these benefits are difficult to estimate. We used several methods to come up with these
numbers, but the real value of the benefits is likely to be somewhat different. However, because our estimates were
extremely cautious, we would expect the true value of the benefits to be significantly higher than what we put in the 1998
report.
The second set of benefits revolved around the increases in employment among mothers now eligible for publicly funded
child care.The high cost of child care—even the low quality care provided by unregulated neighbourhood caregivers—
is a significant barrier to the entry of mothers with young children into the labour force. That so many mothers are
employed despite these barriers is testimony to the significant benefits to families and children to be had from the
incomes earned by those mothers.More public funding for child care would increase labour force participation by mothers.
Some of those now at home full time would choose to enter the labour force;some of those employed part time would
choose to increase their hours. We derived numbers for these changes based on a number of existing studies which estimated
the effect of a reduction in the cost of child care on labour force participation. The increases in hours worked can
be valued using the wages earned by employed mothers.We then increased these wages to take into account the increases
in future productivity derived from the additional experience and on-the-job training received by these mothers.When
we added up these benefits in 1998,they totalled roughly $6.2 billion.
The total cost to the government of the child care program would have come to $7.9 billion in 1998.We assumed that
parents would pay roughly 20% of the cost of the program. This number came from the 1993 Liberal election platform,
which used this percentage to compute the cost of their child care proposals. Again, we chose a more conservative
approach in assessing the costing of the program to the government. Subtracting 20% from $7.9 billion leaves a public
cost of $6.3 billion. Since governments in 1998 were already spending roughly $1 billion on child care,this is how we came
up with the net figure of $5.3 billion new public exp enditures on child care. These new funds ne ed not all appear in the
first year. The Quebec child care p rogram was phased in one year at a time, allowing for a mo re gradual ramping up of
expenditures.
The total increase in b enefits totalled $4.3 billion plus $6.2 billion, or about $10.5 billion. Comparing this with the $5.3
billion in new public money, we derived our figure of $2 in benefits for every $1 in new costs."

They also seem to reference another study they did in 1998, but most of the figures and assumptions are there. Essentially they state that it may take a few years, but not as long as 10.

 
At 5:17 PM, Blogger Adam said...

Mike,

I've read the stuff that you quoted. I referenced it in one of my earlier comments. What I've been trying to say is that it sounds to me like they're saying that those numbers are their estimates of the benefits to the children and the parents. When they talk about how the quality of care for the children would improve, and then they say, "The largest benefits would accrue to children who do not currently participate in such programs. When we added up these benefits in 1998, they totalled roughly $4.3 billion," that sounds to me like they're saying that the benefits to the children would total $4.3 billion, not that the return to the taxpayers (as a result of those benefits to the children) would be $4.3 billion. When they say, "The increases in hours worked can be valued using the wages earned by employed mothers. We then increased these wages to take into account the increases in future productivity derived from the additional experience and on-the-job training received by these mothers. When we added up these benefits in 1998, they totalled roughly $6.2 billion," that sounds to me like they're saying that the increase in the future wages earned by the mothers would be $6.2 billion, not that the return to the taxpayers (as a result of those increased wages) would be $6.2 billion. Are you interpreting their words differently?

Am I not phrasing my question clearly?

 
At 6:54 PM, Blogger Mike said...

Adam, that's right but I think you are missing the point that those benefits - $10.5 billion - goes to the parents and the children and result in a gain to the GDP of Canada and the economy as whole. Hence my harping on the positive externalities of this - that's $10.5 billion in created wealth, spending power and savings that does not currently exist. That represents a growth in the economy, even if you aren't one of those parents or kids. You would benefit by that growth, from better government services and\or lower taxes (depending on who is in power ;-) ), more profits and opportunity for your own business and more tax revenue for all levels of government. Lower crime and a better educated work force (which would drive further growth and innovation) are more benefits further down the road.

I guess I'm having trouble understanding why you don't think you will receive a benefit from a $10.5 billion dollar yearly boost in the economy, even if its not you directly. And the authors (both economists) state that the $10.5 billion is conservative - its likely higher. And on an investment of $5 billion. Would we be having this conversation if it were a $5 billion corporate tax cut? I assume you would not directly benefit from that either (since you are not a corporation).

Bottom line is that I think they show that rather than being a drag on the economy, a childcare program is an investment in the economy that we all benefit from, even if we do not use the system.

 
At 2:45 PM, Blogger Adam said...

OK. So can we just be clear on this? It sounds to me like you're now withdrawing your claim that the report says that there'll be a 2:1 benefit to me. Now it sounds like you're saying (and I agree) that the report says that if taxpayers pay $5.5 billion, the increase in future earnings of the children and their parents will be $10.5 billion, and that this will result in a not-yet-quantified benefit to the taxpayers. Is that correct?

Assuming that's correct, we're back to my original objection: I'd expect that the benefit to me (which isn't quantified in the report) will, in the long run, end up being much less than the benefit to me of investing in my own stuff.

Here's where the can-of-worms part happens. I really don't want to get into a big discussion of this stuff right now. This goes way beyond child-care - everything in politics seems to be connected to everything else. :) But it sounds like you want to know why I don't think I'll benefit from this plan, so here's a brief description of why I'm not convinced yet:

- I expect that distorting the costs of raising children will have unintended consequences that weren't mentioned in the report.

- I'm not convinced that even the first-order benefits described by the report would actually be realized, because they depend on the child-care being of high quality, and I doubt that it will be, in the long run.

- I think that reducing welfare and social programs and taxes would be a better solution to some of the issues described by the report (like how welfare and taxes distort the parents' decisions about whether to work or not, and how some of the benefits of this program would be reduced welfare rolls and more people supporting Canada's social programs), but I didn't see anywhere in the report where they discuss that option.

- It seems to me that investing in my own stuff will also benefit "the economy" to some extent (by creating jobs and so forth), as well as having the obvious direct benefits for me.

 
At 2:59 PM, Blogger Mike said...

$10.5 billion benefit to the economy, which I expect will have larger far reaching effect. I'm sorry if I implied a direct 2:1 benefit to YOU, but clearly investing $5 billion and creating $10.5 billion in growth (tho use their numbers) is good. I mean, the Conservatives use this logical all the time to give away corporate tax breaks - "it will benefit the economy".

I think they made a pretty good argument that the program will be good, and probably better than you investing on your own.

We'll have to agree to disagree. It was nice to have a relatively sane, intelligent debate on this. Read the entire report and let me know what you think some time.

One last thing, slashing the welfare and social programs was waht Mike Harris did and that didn't work out very well - we have poor infastructure, long wait times and now young gang-bangers running around Toronto. Wefare provides next to nothing but at least it isn't nothing. Slashing it and other social programs more will simply drive up crime. Perhaps providing a program like this to allow for employment first will allow the programs to then be cut.

 
At 3:36 PM, Blogger Adam said...

I won't defend the Conservatives. In general I find that it's usually counter-productive to use abstractions like "the economy" or "society" or "the public good"; I've found that talking about individual people tends to be wordier but clearer. My perception has been that the Conservatives use abstractions like those a lot, and so do the others, and it's one of the reasons why I'm not so impressed with any of them.

 
At 1:02 AM, Blogger Nicole said...

Sadly, I fear families are all screwed, regardless of who gets in........ parents raising their children and tagteam parenting should NEVER be compared with government regulated care. I have said it before and will say it again, it is like comparing apples and oranges by a bunch of NUTS!!! At least Harpers plan recognizes parents choices, which is a first and a start.

 
At 9:11 AM, Blogger Mike said...

prarie,

Actually, if you read the report I linked to and the book "Freakonomics", there actually is no difference to the child between the parents and a good daycare. "Freakonomics" has litterally scads of data to back this up. Sorry if that isn't what you believe but the evidence is pretty solid.

But even if you accept that parents raising kids is better, that does not make daycare bad, but rather the next best thing.

Harper's plan recognizes nothing. It is woefully in adequete at helping parents with either of our versions of daycare. $1200 per year is not enough to help working parents pay for daycare, which costs about $750 month. And if they are working, they get taxed on that $1200, so they actually get less. $1200 is nowhere near enough to allow one working parent to stay home. The only people that will really benefit from the CPC plan are parents who already have a parent staying at home and who, by that very definition, don't NEED daycare. So its a middle class tax cut not a child care plan.

Harper's plan will help neither those working parents that desparately need a good daycare system nor the parent's who wish to stay at home, but currently can't. And those very poor people who want to work, but need daycare to do so are also left out in the cold.

Should parent's be able to stay at home to raise their kids? Absolutley. But that utopian vision cannot happen under our current economic system and our current economic reality. To achieve it, you must be able to somehow raise wages so that a single breadwinner can support a family, and\or lower the price for housing and shelter so that costs for families are affordable. You must be willing to take a 5% to 7.5% drop in our GDP. Even the NDP wouldn't advocate that much interference in the market, let alone the Conservatives. The impact on the economy would be devestating.

We haven't lived a world like that in 35 years. The Conservatives can't bring back those days either, but they will happily let you think they can. At least the NDP and to a much lesser extent the Liberals, are trying to deal with the reality of our society and ecomony, not pandering to you and trying to convince you of they can deliver on your utopian vision without tremendous, devastaing changes to our country.

 
At 4:09 PM, Blogger Adam said...

Mike,

You wrote: "$1200 per year is not enough to help working parents pay for daycare, which costs about $750 month."

I don't understand what you meant by this statement. You believe that the $1200 wouldn't help? Why? It wouldn't pay for the entire cost of child care, but why do you believe it wouldn't help? I would have expected you to say something like, "For the parents who'd receive more from Harper's program than they pay (in taxes) to support it, the extra money will enable only a small number of them to switch from working to staying-at-home; for the rest of them, it'll just be a little bit of extra money in their pockets." That is, whether the extra money is enough to let them make a lifestyle switch or not, I would have expected you to believe that the extra money would help them. And I would have expected you to believe that the $1200 will help "poor" people more than "middle-class" people (since less of the tax money comes from them, and each extra dollar makes more of a difference to them), so I'm surprised that you said it's a "middle class tax cut." So either you misspoke or else I've got something to learn about your beliefs.

I'm also curious about what you mean by some of the statements you make in your second-last paragraph. It seems obvious to me that a single breadwinner "can" support a family, since some manage to do it. And that some families have found housing and shelter that is affordable to them. So I'm guessing that what you meant was something like, "Lots of families are currently in a situation where one parent's current income isn't enough to support the number of children they've chosen to have." Is that an accurate description of your position? If so, I'd ask questions like: For how many of the parents is it true that there are choices they could make now, or could have made earlier in their lives, to increase their income or to lower their expenses? What reasons did each set of parents have for choosing to have the number of children that they have?

 
At 9:26 PM, Anonymous Anonymous said...

Viewing "the money spent on daycare to be an investment in human capital and infrastructure rather than as a cost or consumption" is absolutely valid in any legitimate theory of economics. In particular freeing mothers' time and increasing peer contact means less emotional problems for kids and thus less expense for deliquents.

Only mindless trash could believe otherwise.

 
At 10:05 PM, Blogger Mike said...

Adam,

$1200 per year works out to about $5 per day. In most urban areas that's bus fare (albeit round trip bus fare) and in rural areas that's lunch. In a market with an average of $38 per day, that hardly makes a dent and is hardly plan. It also doesn't do anything to create space. Even the tax incentives have been panned as usless for creating spaces by the people in the induxtry - Mike Harris tried the same thing and it didn't work.

It helps the middle class more because first, they are more likely to make enough money to afford for one parent to stay at home. Despite the fact that some do it, most do not - stay at home parents are the exception not the rule these days (whether I thin that's a good idea or not is irrelevant - its the way it is). Secondly, the $1200 is taxable income, meaning if you work, you will not get the whole thing because you will be taxed on it. The non-working spouse in the middle class couple will not. Therefore, the middle class person will receive the more of the benefit. Thus, this is more of a middle class tax cut than a chidlcare plan.

"Lots of families are currently in a situation where one parent's current income isn't enough to support the number of children they've chosen to have."

No, it is not really relevant to the number of children, although that is part of it. It is the cost of shelter. have a read of "The Dark Age Ahead" by Jane Jacobs. She explains quite clearly what has happened in both the rental and real estate market in the last 40 years. Through shelter alone, many people can't afford but to have both spouses working. Just to pay the mortgage or rent, plus the household expenses. In Ottawa, where I live, the average house price is over $300 000 and that price has risen dramatically because of our housing boom. A lot of people, encouraged by a very tight rental market and very low interst rates and the need to have only 5% down, bought houses like mad. Most used the income of two people. Now you can't move to smaller house to "make ends meet". Our parents could do it because with good salaries from life long jobs and a house was about 2.5 times your soalary. Now the average is 6 times the average salary, usually requiring 2 bread winners. I don't know how you choose how many kids you have, but pricing and income usually don't figure high in the equations (even if they should).

Anon,

You can make a point without the rudeness. People who disagree with that are not "mindless trash," but rather people who hold a different opinion than yours or mine. That perspective is as valid as ours. We can rebute them and debate without the rudeness.

 
At 11:36 PM, Blogger Adam said...

I'm not entirely sure, but it sounds like what you're saying is that you believe the $1200 will help a little bit, but not as much as you'd like. That would make sense to me.

I think I understand now why you expect Harper's plan to benefit single-income households more than dual-income households. Thanks.

My understanding of your position on the costs stuff is, "Housing has gotten more expensive in some places, which has had the consequence that many couples need two incomes in order to support themselves if they want to keep living in those places. The cost of each child that they choose to have is significant but still small compared to the cost of housing." Does that sound like an accurate statement of your position?

I'm not quite sure I understand what you mean when you say, "I don't know how you choose how many kids you have, but pricing and income usually don't figure high in the equations (even if they should)." It sounds like you're asserting that most people don't pay much attention, when they're deciding whether or not to have another child, to whether they'll be able to support that child or not. Is that correct? I don't know whether that assertion is true or not (though I wouldn't be surprised if it is), but if it is, I would take that as a reason not to pay for some of the costs of rearing other people's children.

 
At 7:51 PM, Blogger Sara said...

Mike how much do you get right now for daycare from the Liberals?

 
At 7:57 PM, Blogger Mike said...

Sara,

$0. I don't need to use daycare. Other who need daycare may get some spaces.

My wife would get an extra $1000 per year per child under the NDP plan as part of the child tax credit. Others who need daycare (dual income working parents) would also get the spaces they need at a lower cost

My wife would get $1200 per year under the CPC plan. Other people who need daycare spaces would get $1200 per year, less the income tax paid on that (since they work) and still have no spaces.

See why I like the NDP plan now? Best of both worlds.

 
At 11:11 PM, Blogger Meg said...

Mike your wife is working, and if the gov't is going to give money unless its JUST to subsidized families then they have to fund the child and give it to all to make their choice. Also were you aware that the University of Toronto just came out with a study that proves the plan for more spaces and longer hours will give children more behaviour problems and parents will be more stressed out. If you and your wife have made the choice to stay home why are you getting penalized for that. That is your choice for childcare so your working from home wife should receive the same as a woman working outside the home. Were you offended that the libs have stated (back to beer and popcorn) that you are not smart enough to put any money received from the gov't towards childcare. This country bitches that our birth rate is down but do they help families to stay at home with their children with tax breaks. NO
I am very amused the above person would not put their name. What the hell do they mean freeing mothers time giving children less problems. Mike I hope you do not agree with that dribble, the less time children spend with their parents the MORE likely there will be problems. "Mindless trash" is that person insane or perhaps they had a Sybil for a mother.

 
At 11:19 PM, Blogger Meg said...

Mike in regards to you telling Prairievoiceforchoice. There seems to be scads of data in everyway one book certainly won't convince anyone.

 
At 9:12 AM, Blogger Mike said...

Meg,

I'd like a link to that study please. Most of the studies I have read, including a huge multi-year study from the United States (one of about 6 quoted in "Freakonomics" - the U of T link I provided above links to more) show that there is no real difference to the child, positive or negative, of daycare versus being with the parent. So if you have another, please link it. Also, as a former social worker working with disturbed kids in Toronto for 6 years, I can tell you from experience that isn't true.

"If you and your wife have made the choice to stay home why are you getting penalized for that. That is your choice for childcare so your working from home wife should receive the same as a woman working outside the home"

Apparently you need to read my stuff again. We choose for one of us to stay at home because we could afford it, because I make enough money on my own to pay for mortgage, car, phone, utilities etc on my own with out my wife having to work outside the home. In other words, we COULD make that choice. Most Canadians don't have that choice. Had we stayed in Toronto, that would not have been the case for us either - we would have no choice but for her to work to allow us to live. We are not being penalized, we are lucky. We think its ok that we don't get money for a service we don't need or use - daycare. Why would I take money for a service I don't need?

"Were you offended that the libs have stated (back to beer and popcorn) that you are not smart enough to put any money received from the gov't towards childcare. This country bitches that our birth rate is down but do they help families to stay at home with their children with tax breaks. NO"

No I was not offended. Scott Reid is an idiot and must have been drinking. But I took from it that given that $1200/year is no where near enough to pay for daycare and no where near enough to allow most working mothers to decide to stay home, that they would have not choice but to spend it on other things. CBC radio did some streeters after the announcement and there were women who said they would put the extra money into RRSPs, clothes etc, but not daycare. And a Conservative Party that prides itself on accountability wants to create a program to give out billions of dollars with no means of accountablitity seems a bit odd. The same people that thought it was a good idea for Mike Harris to do drug testing on welfare recipients to ensure they were spending their welfare cheques properly doesn't have means to ensure that this money is spent on childcare. That is a middle class tax cut, not a child care plan - a good tax cut mind you, but not a childcare plan. All the fake moral indignation about beer and popcorn, no matter how insensitive that remark was, does not change that fact.

And if you think a paltry $5 per day will suddenly make hordes of women stay at home, you are simply dreaming. The economic reality in this country is that most families need a lot more than $1200 per year to afford one spouse to stay at home. And since they will get taxed on it, it won't help them pay for the daycare they need either. So only those who can already afford to have a spouse stay at home (top 20% of income earners) will benefit, and it won't allow any more parents to stay at home, as you clearly would like. In short its a bad plan that won't achieve the aims you would like, and won't give any choice to parents, no matter what the Conservatives say.

"Mike I hope you do not agree with that dribble, the less time children spend with their parents the MORE likely there will be problems. "

As I stated above, the studies and my personal experience show there is no difference. I have been to bad daycares and have worked with people that shouldn't be allowed to drive a car, let alone be a parent. There are plenty of good and bad examples on both sides. Generally kids need a good, loving, stimulating environment in order to thrive and grow - whether that environment is provided by a parent at home or a good daycare is irrelevant.

This is not about who is the best parent for your kids, its about offering real choices to working parents who currently have none. Its about offering a service that the market cannot for working parents that need it. We can't do the wholesale changes to the economy needed to ensure that one parent can stay home (raising average wages and or lowering the cost of shelter and living, somehting no amount of tax cuts can do). That kind of social engeneering just won't work. That would remove 7.5 % of our GDP and wreck our economy (which is why the Conservatives aren't doing it and not giving away very much money). That's the sad reality of our world. If we can't change it, we can at least minimize the impact on those most affected - working parents.

I can't say enough how this is not about who is a better parent, this is about offering a service, available to all parents should they choose it, for the benefit of those that need or choose it. It has the economic benefits to all that I mention above as well as the effect of providng providing a good environment for children when he parents can't, becasue they have to or choose to work. So for the life of me, I don't see what is wrong with that.

 
At 5:01 PM, Blogger Sara said...

It comes down to equality. By offering funds to daycare and not funding stay-at-home parents the government are supporting only daycare. The Liberals are listening to die hard womans activist, they believe all woman can only be respected as an equal as if they work. I don't need to prove myself as a mans equal I AM ONE... By daycare constantly being funded and parents not, stay-at-home parents are being selectively slapped in the face... Yes, you can pay a stay-at-home parent, you do it now by funding daycare. It is not impossible. If you believe in financially then you would see our point of view. There are many ways, subsidization, split income, tax breaks etc... You can't give one and ignore the other.

 

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