Lest you think free market economists give no thought to fairness — or have little compassion for underinsured Americans — Harvard Economist Greg Mankiw recently worried that purchasers of individual health insurance can no longer choose to forgo the luxury of health insurance coverage for pregnancy and childbirth (Is Community Rating Fair? Nov. 11, 2013). Emory University Law Professor Martha Fineman thoroughly takes apart his faulty assumptions in an essay in the Guardian, Dec. 1, 2013, excerpted below:
..Republican outrage over the inclusion of mandatory maternity coverage in the Affordable Care Act (ACA) continues. Greg Mankiw, ….wrote on his blog Random Observations for Students of Economics:
People who drive a new Porsche pay more for car insurance than those who drive an old Chevy. We consider that fair because which car you drive is a choice. Why isn’t having children viewed in the same way?
His use of this analogy reveals the simplistic mindset behind the “free market” criticism of ACA’s maternity care mandate.
First, while Mankiw concedes that the “goal is to spread the risk of childbirth among the larger community”, he conveniently fails to note that the maternity coverage mandate serves to eliminate price disparities between the insurance premiums for men and women prevalent before ACA. From a policy perspective, even if an individual woman can choose whether or not to have a baby, the prior system placed the costs for childbearing exclusively on women.
Second, … Cars are not equivalent to children. Children are human beings, a fact that distinguishes the choice to have a child from the whims of the auto enthusiast. ….
But, putting aside these vital points, let’s analyze Mankiw’s analogy on his own terms: is it unfair to treat a choice to have a child differently from any other consumer decision, specifically the preference for a Porsche? …. Republicans have made their preference on this type of policy question very clear: if you can afford a Porsche or to have a child, fine, but don’t expect the rest of us to chip in.
In considering the justness of this analogy, we might first ask whether parents should only be viewed as consumers of children. For the sake of an accurate analogy they should also be thought of as producers of children.
… The production costs for the producers of Porsches and other consumer goods are subsidized – heavily, through regulatory measures such as tariff and tax policy and lax labor laws disfavoring unions. It’s also done directly through incentives such as when communities bid for location of plants or lawmakers slash taxes and make infrastructure investments facilitating distribution of goods, or provide other services designed to entice businesses interested in lower production costs and higher corporate profits…..
Of course, society also subsidizes child production, but in doing so relies primarily on the concepts of the “private family” and “individual responsibility” in which public provision of benefits is not considered investment, but stigmatized as connoting dependency. Even public provision of education is under attack by fiscal conservatives and those who would privatize anything that could be turned into individual profit. The business of child rearing simply does not evoke the largesse afforded to the business of car (or many other forms of) manufacturing, and what subsidies currently exist are subject to constant scrutiny and cost-cutting measures….
One could analogize a different comparison between consumers of Porsches and consumers of the next generation. Reaping the benefits, but not sharing in the costs of the reproduction of society is the equivalent of the state and market institutions stealing lovingly created and skillfully constructed Porsches. At a minimum, the term “freeloaders” seems applicable here.
Mankiw’s simplistic resort to analogy to address serious and complex social issues obscures the substantially unfair ways parents and children are treated in our society. A cavalier “let them drive Porsches” response to the needs of parents trying to raise children in a country with growing poverty, increasing food insecurity, failing public schools, diminished opportunity and access should make us angry.
Children deserve our investment in terms of both money and effort. This is an obligation we collectively owe, not only to our own children, but to all children. The growth in inequality that has resulted from our losing sight of this fundamental principle of social justice profoundly undermines the future possibilities for our nation’s children and, therefore, the future of the nation itself.”