Tuesday, May 23, 2017

Family structure as the origin of partisan policy differences

From President Trump Is the Enemy of Their Enemies by Thomas B. Edsall

Edsall is making an entirely different argument but in his essay, he includes this chart.
Click to enlarge

The NYT is awkward in their expression of what this graph shows. On the left of the chart are states with more traditional family structures and values. People marry younger, have more children, are less likely to divorce, are less likely to cohabitate, are less likely to have children out-of-wedlock. On the right are states with more postmodernist familial structures: later marriages, fewer children, more cohabitation, more divorce, more out-of-wedlock children.

Edsall does not mention it but these two patterns of family formation have dramatically different demographic consequences. Those who self-identify as strong liberals (the family pattern on the right of the chart) have a Total Fertility Rate (TFR) of 1.6, well below the replacement rate of 2.1. Those self-identifying as strongly conservative have a TFR of 2.6, well above the replacement rate.

Many conservatives have long taken solace in demographic inevitability. Demographics is destiny. They view the wins and losses of the quotidian political struggle with greater equanimity, confident that because of the difference in TFR, conservative sentiments will replace liberal.

Maybe. But simplistic demographic projections don't ever seem to turn out the way anyone expects. Democrats have long been much more enthusiastic about generous immigration than Republicans, in part because of their belief that immigrants will be more liberal and will vote Democrat. And while that has to some extent been marginally true so far, it hasn't helped Democrats locally or nationally. I suspect that this is principally because immigrants often locate into areas already heavily Democrat; they are adding votes but are not changing the outcomes.

Expansive immigration policies have often harmed Democrats' own base of blue collar workers and African American communities leading to defections. In addition, not all immigrant groups remain solidly Democrat affiliated once they have integrated within the community. The point is that demography is destiny, but not always in ways that we can anticipate.

However, I wonder if there isn't a different TFR dynamic going on that might tend towards the same outcome as expected by conservatives but by a different mechanism than simple displacement.

To make the point, I'll use extreme examples. Reality is much more shaded. However, the marginal differences will show up, just in the longer term.

I suspect groups (in developed countries) with high TFR probably differ materially in at least three existential ways from groups with low TFR and that it is these existential differences which actually drive displacement rather than simply outbreeding. The three existential differences would be:
Tragic View over Rationalist View
Main Street View over Wall Street View
Long Term View over Short Term View
Tragic View versus Rationalist View

Having multiple children will almost always force several realizations on a person that differ from someone who has no children or only one.
There are things beyond your control. Each child is their own person, regardless of your preferences.

There is variability among children outside your control. Three children raised in the same family, of the same parents,
and as equally as feasible, will still turn out quite differently from one another and from their parents.
If you have no children or only one, it is possible to sustain the conceit that all matters can be resolved rationally and amicably. Everything becomes simply a matter of planning, engineering and communication. It fosters a deterministic view.

If you have multiple children, it forces a degree of humility and acceptance. Regardless of what you want, there are others who have to be taken into account and those others can be highly variant from you. You either learn tolerance for variability or you suffer constant contention.

Main Street versus Wall Street

If you have no children, planning and managing your life arc entails a different financial perspective and a different risk sensitivity. You generate value financially and you manage your income statements (costs and expenses) and your balance sheets (accumulated capital). It is not so much how well is the economy doing which interests you as it is how well are your investments doing? You can be very charitable to others but it always under your control, subject to your personal finances. This is very much a Wall Street view. You also tend to have much more latitude for discretionary spending.

If you have multiple children, the pressures on you are much more extreme and force you to make more, and harder, trade-off decisions. You have to mind your personal income and balance sheets closer but you also have to take a much more holistic view to ensure coverage for spouse and dependents. Can you, do you, invest in private school education K-12 or University or both? How much do you restrict your own consumption to ensure that there is a rainy day nest egg for a much larger range of contingencies? How much longer do you put up with a difficult employment circumstance in order to ensure income continuity given all your dependents, etc.? Given the tightness of budgets and absence of discretionary income, you become much more sensitive to tax rates.

In the midst of all this, with children, you are forced to confront that there are value calculations that cannot easily be translated into financial terms. Your value calculations become more complex and more nuanced.

As your children mature into adulthood, you are not just interested in how well your financial returns are accumulating (Wall Street), you are as interested, or more, in how well real business is doing, whether there are jobs for your children (Main Street). A Wall Street mindset pursues one set of policies, a Main Street mindset another.

Long Term versus Short Term

With many children, you tend towards a thirty and sixty year time horizon with a much lower temporal discount rate. You are keeping in mind how what you do today might affect your children and grandchildren in the future. You are also probably more risk averse in terms of policy. You don't undertake longterm, consequential policies unless there is a deep knowledge base to support it. You are risk adverse because managing a five person unit through major change is inherently more challenging than managing a one or two person unit.

The upshot of this train of speculation is that familial structure might be driving more of the division between left and right than is being acknowledged.

Policy differences between conservatives and liberals may be less about partisan differences than it might be as a consequence of the differences in world view being generated because of the difference in their familial traditions.

Under this scenario, because of their families, conservatives are more tolerant of variance among people, more focused on values (and less on money), more focused on the long term and less on the short, more focused on the economy and less on the financial markets, more aware of constraints, more accepting of trade-off decisions or of accepting the least bad of two bad options, etc. And of course, liberals are, because of their family choices, correspondingly the mirror of the above attributes: more consumption and less saving, more present oriented than future oriented, more focused on excellence than on the optimal, less accustomed to compromise, more likely to rely on abstract rationality than on human calculation, less aware of human system complexity and fragility, etc.

I think this is an interesting train of thought but I am reluctant to put too great a store by it. I suspect something of this order is happening at the margin but that it likely has cumulative consequence.

Here are several examples where this difference likely has significant impact based on family considerations over and above partisanship or ideology per se. Take two families earning exactly the same amount of household income but one family has five persons and the other only three.
Tax rates - If you are a five person family, your finances are both constrained and you need to cover a broader range of risk scenarios. You simply do not have the leeway in your budget to accommodate higher taxes compared to the three person family. Any rise in taxes is necessarily going to come at the expense of reduced consumption or saving. You would expect states with more and larger families to have lower tax rates, and that is what you see in Edsall's chart above. States with high taxation also have smaller families.

Inheritance taxes - If you are a five person family, you almost certainly have a higher probability of wanting to pass along accumulated savings untouched by inheritance taxes. If you pass early, you want to ensure that your young adult children have the benefit of your estate. If you pass later, likely the same equation with grandchildren. With three children, you also are more likely to have one with health, behavioral, or other issues that you wish to shelter with money even after you are gone. The net impact is that states with many larger families are likely to have no or fewer estate taxes. I am not as informed in this area, but eyeballing the states in the chart, I think that is also what we see.

Global Warming - If you are a five person family, you likely are more skeptical of the trade-offs implied under climate change policies. Not because you are unconcerned about the climate but because the uncertainty surrounding the models, the forecasts, and the necessary reduction in the economy implied by the various climate change policies. With a higher risk aversion and a longer time horizon, there is likely greater aversion to climate change advocates. Again, that is what we see in the chart above.

Public Finance - The five person family is likely much less tolerant of lax public finances. They themselves are having to manage against many demands, risks and contingencies, they expect their public finances to also be closely managed. You would forecast that states with more, larger families would have more balanced state budgets, more fully funded state pension plans, less deficit spending, less public spending, and fewer municipal and state level bankruptcies or financial disruptions. Again, that is exactly what you see in the chart above. The states to the right, with much smaller families, also have more deficit spending, more municipal bankruptcies, more underfunded state pensions, etc.
I don't want to over invest in this train of speculation, but once you start thinking in this fashion, it does seem to explain a lot. The implication is that we have overweighted the importance of partisan differences (Democrat versus Republican) and maybe even overweighted the importance of political differences (Liberal versus Conservative). Perhaps the more important variable is familial structure.

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