The Liberal-NDP childcare policy: The state as malevolent troll

The Liberals and the NDP have recycled their promises of a national daycare program:

Liberal Leader Stéphane Dion said if elected, his party would scale up spending on child care spaces to reach $1.25 billion in four years time, money that he said would fund 165,000 new spaces...

NDP Leader Jack Layton made a similar promise, vowing to create 150,000 spaces across the country within the first year of a mandate at a cost of $1.4-billion.

Both parties offer the same choice to parents. Call it the Rumpelstiltskin model: they are willing to provide money, but you must surrender your child in return. I realise that it is unfair to compare the Liberals and the NDP to a villain of a fairy tale. Unfair to Rumpelstiltskin, that is: he at least brought something - his ability to spin gold from straw - to the table. The Liberal-NDP position is based on reallocating gold spun by taxpayers.

This is not an exaggeration. Remember Scott Reid's "beer and popcorn" crack in 2006? It was a gaffe in its purest form - the inadvertent revelation of the truth. And when I listened to Olivia Chow insist on 'publicly-provided, not publicly-funded' daycare, I wondered if it had ever occurred to ask herself why.

The awfulness of the Liberal-NDP position is not restricted to its unapologetic paternalism. (Will I get through this post without using the expression "nanny state"? Apparently not.) It is also inegalitarian, regressive and inefficient.

From an editorial in the Toronto Star:

The Harper government has taken creative licence to an extreme in dubbing the $100-a-month cheques it sends to families with young children a "universal child-care benefit."

It may be universal for children under age 6 (although the fact it is taxable means some families keep very little of it). But with a single day of infant care in some licensed daycare centres costing $70 or more, it doesn't even begin to cover the staggering child-care costs that burden many families.

Let's do a little back-of-the-envelope arithmetic. According to this editorial, the total cost of sending $100 cheques each month is $2.4b/yr; that works out to 2m children. The NDP program calls for $1.45b to finance 150,000 daycare places, which works out to about $800 per month. That's certainly an improvement over the existing $100/month - but only if you happen to be one of the 7.5% of families who will benefit. The other 92.5% will see nothing. This project is profoundly inegalitarian: it will create a small class of insiders who have generous access to public funds, and it will do absolutely nothing for everyone else.

If those 7.5% were families at the very bottom of the income distribution, that could be sold as a progressive policy. But it's not; it's being sold as a step towards a universal daycare program. If the aim of the policy is to help out low-income parents, our experience with the Quebec model isn't very encouraging. As explained in great detail over here, the average subsidy to families in the highest income quartile is more than twice that received by families in the lowest quartile.

And then there are efficiency considerations. It is well known that cash transfers are a better way of redistributing income than providing in-kind goods and services.

A lesson for the Liberals and the NDP: if you want to help low-income families, give them money. It really is that simple.

Comments

[SB]

So here is the next liberal excuse for the crisis -- it's the (external) fault of "poor people"!

What a sick joke, as if the thirty year war on wages and unions in the United States (and globally) by capital isn't the class foundation to ALL this bs. The financial crisis is merely amplifying the structural contradictions in American capitalism and world imperialism. The "fundamentals" are working fine; capitalism just f'n sucks.

But, "economists" wouldn't get this because it doesn't fit into their hypothetical deductive world.

The solution is socialized housing, democratic planning of production, workers control, and expropriation of the expropriators.

[Manny, in Moncton]

Stephen, if you want to help low-income families, don't take their money in the first place.

Sheeesh.

[Stephen Gordon]

Actually, low-income families pay very little in taxes, so tax cuts help them hardly at all. And what they pay is more than compensated by the transfers they receive.

[Bryan M]

So Stephen and Travis help me out here. I’m not an economist, but I’m not exactly Joe Six-pack either. The Tories $100 per month Universal Child-Care Benefit is nice, but I’m not sure why they had to setup a new process and add bureaucrats to give taxpayers back their money. Why not just give a tax credit?

But that’s not my point. $100 doesn’t begin to cover child-care costs, especially in a city like Toronto (where I live – benefits like this need to be indexed in some way to the cost of living in different locales). Further, this hasn’t seemed to create any more daycare spots (though my observations are anecdotal and not scientific). Wait times are just as long as before. Now maybe there’s a time-lag here, and maybe it takes time for the market to react to demand, but I’m not so sure. I think Travis has a point that the infrastructure just doesn’t exist. There are barriers to entry for good quality daycare since standards for them are quite stringent (and so they should be). There are no shortage of unlicensed home daycares (I suppose this is the market’s solution), but they are hit and miss – many of the people running them have no training, no emergency procedures etc. My wife and I have the money, and we’re willing to pay for top quality daycare, but the shortest wait we have is well over a year. We’ll probably go with a nanny, despite reservations (I guess that’s another one of the market’s solutions).

So, I feel the Liberals and NDP may do some good augmenting existing offerings with additional daycare spaces. Is the point of the program to help the poor or to meet a shortage of daycare spaces? Their programs would create the additional physical infrastructure, though they would also have to expand school programs for early childhood education to ensure there are enough workers to meet the demand. Such a program should be progressively carried out (unlike the Quebec system, as Stephen noted), with a sliding scale of fees depending on the income of the parents. The new program doesn’t have to be completely universal (and not free), all it has to do is help supply meet the demand.