Opinion and Economic Analysis

HICKS: Is family composition an economic issue?

October 20, 2012

Indiana gubernatorial candidate Mike Pence recently raised some eyebrows by arguing that the condition of families was an economic issue. This is a tough matter to discuss, so it is best to begin with fiscal issues and poverty.

Over their lifetimes, perhaps half of Americans spend some time in the formal definition of poverty. Most of it, like my decade, is fairly benign and caused by short-term job losses, college and other common vicissitudes of life.

For those in long-term poverty, there are two causes: physical or mental illness or some form of failing families. The latter of these is far and away the bigger problem, manifesting itself not only in our economic performance, but also in local, state and federal budgets.

It bears wading through the babble about the economic causes of poverty to simply acknowledge that the proximal causes of poverty—dropping out of school (one in five kids) and single parenthood (two in five kids)—are best described as failures of families.

Federal spending on Medicaid and welfare alone exceeds the defense budget. Add to that housing, human services and sundry spending at the departments of energy, agriculture and education, and the entirety of the federal deficit in its worst year is consumed by programs to mitigate long-term poverty.

Of course, it isn’t fair to lay all the blame at the feet of failed families—they are only 75 percent of the poverty problem.

At the state level, the size of the problem is relatively worse. We spend $2.5 billion annually on Medicaid match, and another half-billion dollars through the Department of Child Services. That is more than $1,078 per Hoosier household in state tax dollars spent to remedy the ills of broken families—about one in four state tax dollars.

Throw in the entirety of the K-12 funding formulary adjustment, our prison budget and a few hundred thousand dollars in township poor relief, and one thing should be clear: Broken and failing families aren’t merely an economic issue, they are the economic issue.

So, if something like a third of all tax dollars is spent mitigating the ill effects of families who cannot stay together, make socially or privately rational choices about reproduction, or inconvenience themselves to read to their kids, why don’t we do something about it? The answer is simple.

First, to be truly free, one must be able not only to excel, but also to fail. So, in a free nation, limiting the reproductive choices of a teenage dropout cannot devolve to government. Rather it remains the purview of a culture and society to inhibit poor choices. Second, much familial failure is beyond the scope of policy intervention, even in totalitarian regimes. And finally, the matter has become paralytically politicized around peripheral issues.

As a mature and healthy society, we must have a frank and meaningful conversation about ways to strengthen families—or ignore it and continue to pay the hefty price.•

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Hicks is director of the Center for Business and Economic Research at Ball State University. His column appears weekly. He can be reached at cber@bsu.edu.
 

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