Green Eye-Shade Natalism

Yes, Money Matters

Natalcon is coming up and Hungary just lowered the number of children required to go tax-free. In this transmission we will talk natalism policy and why you should attend Natalcon, along with a key tool for Natalism in One Family.

Natalcon

If you read this, you should go. The best conference we have been to bar none. See you there.

LINK

More below on what you can get out of it.

Hungary, or Why Money Doesn’t Make a Difference to Natalism

Hungary just lowered the number of children a woman has to have to get a tax exemption. It used to be 4. Last week Orban announced he’s going to lower it to 2.

Hungary for a long time has waived all income taxes for working mothers of 4. It also offers couples a tax-free loan of around $36,000 that gets forgiven if the couple has three children.

The effects have been modestly positive, but more modest than positive.

Hungary’s tepid results are part of an emerging consensus among natalists that financial incentives don’t matter much for helping parents have children. Consequently don’t expect to hear a lot of discussion of how to better structure child tax credits at Natalcon.

Unless we bring them up, which we will. The emerging consensus is probably wrong.

Three Quick Reasons to Think that Money Matters

First, there is a body of research that car seat rules have reduced fertility by making parenthood more burdensome and more expensive, and that generous social insurance pension schemes have reduced fertility by making adults worry less about who will take care of them in their old age.

Car seat rules means that having a third kid means you have to by a bigger car. Bigger cars are pricy. So “I want a third child too, honey, but maybe next year.” See the Nickerson and Solomon paper for example. The effect isn’t huge but it is measurable.

Likewise with pension data.

Second, despite a thousand solemn redditors solemnly chanting that correlation is not causation, we think it is highly suspicious that birth rates have been dropping at the same time the American population (and most of the western world) has been losing ground economically.

Let’s take a simple contrast between a family of 5 in the 1950s versus a family of 5 in 2024. The average household income then was around $3,500 - $4000, but the average house was around $8,000. Just over double. Today the average married household income is $110-120k and the average house is around $400k, just short of quadruple (the figures look worse if we use the average household income of $80k, instead of the average married household income).

Tax reductions were also better than. In the 1950s, there was a $600 exemption per man, woman, and child. Today there is a $2,000 credit per child and an increased standard deduction for married households filing jointly. Tax credits and tax exemptions don’t compare directly, but we can still get an idea of how family-friendly the tax code is by calculating the tax difference between a single man with the average income and a vanilla tax profile and a household of 5 with the average income and a vanilla tax profile.

A man of average income who went from being a bachelor to being a married father of three would have got the equivalent of a 15% pay raise. That is significant. In the meantime, his grandson today would have got the equivalent of an 8% pay raise. About half.

Put in other terms, in the 1950s a man with a family got enough extra money every year to pay more than 10% of the value of a house. In 2024, the man with a family got enough back to pay a hair over 2% of the value of a house. We think that matters.

A 1950s father got tax incentives worth 1/10th the cost of his house. The 2020s father got 1/45th.

Third, all the failed national experiments in offering incentives to have children are like Hungary in that the incentives have been so small. They have offered so very, very little. Both in proportion to the cost of having a child in a two-income world and in proportion to the scale of the crisis, the incentives involved have been so exceedingly tiny in almost every instance. One imagines Victor Orban like a sort of natalist Scrooge, bidding a teary farewell to every single forint.

A tax exemption for mothers of four? How many mothers of 4 work? While the new policy might be more generous, the old one was essentially a pretty gesture affecting practically no one. The loans and allowances, on the other hand, are real, substantial even, but still modest—per child, for example, the Hungarian loans equate to a one-time payment of about half the average salary. There is a cheese-paring air of economy about the whole thing.

When what is needed is SHOCK and AWE.

Natalism Boom

Feel free to argue the point with us at Natalcon. Natal policy in in the air and the discussions in Austin next month might be influencing national policy by the end of the year and for decades to come.

Natalism in One Family

While changing the course of a nation is hard, doing so in one family is easy. You just have to value children yourself and have a happy, rewarding home with a distinct family identity. You also need to manage your family’s media diet. But the absence of anti-natalist meming isn’t enough. You also need to expose children to pro-natalist memes.

While old books where familes and children are cherished help, they usually aren’t explicitly pro-natal. In a still generally hostile culture, you cannot let the natalist assumptions go unsaid. You must say the quiet part out loud. You must tell stories and create culture that is explicitly pro-natalist.

To that end, may we remind you that we made the first ever natalist kids’ book for you? Order the paper version for the full experience.

While you can create culture in just one family, it’s a lift. Meeting with likeminded intelligent fun people will help the culture emerge naturally. It also helps with the one hard part of Natalism in One Family—the marriage problem for your kids. That problem’s solution starts with fostering a culture or subculture with sound values and ties to each other.

We hope to hear from you soon.