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What Some Conservatives Call Kids Now: "Human Capital"

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How should we support families with children? That question is sure to be a major campaign issue in the 2016 presidential election and beyond. Republican Senator Mike Lee’s expanded child tax credit proposal, which would return up to $2,500 per child to parents, has caused some debate; it’s favored by so-called Reformicons, self-styled reform conservatives. But to make the juicy kid-centered tax credit palatable to fellow conservatives, Reformicons have had to give what is inarguably a welfare program a free-market makeover. To accomplish this, they have decided to re-imagine kids as economic commodities: "human capital."

Human capital is one of the more odious terms in the capitalist lexicon. The phrase advances a couple of key confusions: First, that human value arises from an ability to produce wealth; second, that there is no distinction between labor (the work that humans do) and capital (sources of wealth that passively generate income). Economist Branko Milanovic explains:

If “human capital” and “real” capital are the same thing, how can there be a conflict between labor and capital?  If profits and wages are the same thing, why should we fight about distribution? You have your form of capital (which just happens to look like labor), and I have mine, which just happens to look like T-bills and stocks.

So the term is politically confused and confusing. And Reformicons—those stewards of a compassionate conservatism that has the moral fortitude to do more than slash welfare and look smug about it—seem bent on adding another confusion to the term’s venerable powers of anti-clarity. In order to justify handing out cash to parents without stepping on any delicate capitalist toes, they have defended an expanded child tax credit as a kind of investment in "human capital."

Jim Pethokoukis, a columnist at the American Enterprise Institute, defended the Reformicon child tax credit’s supply-side bona fides by arguing that “a younger society with a higher birth rate, enabled by a tax code that offsets anti-family government policy, would be more dynamic, creative, and entrepreneurial. It’s a human capital gains tax cut.”  That is, if you imagine having children to be akin to investing some cash. In a post at The Week, Pascal-Emmanuel Gobry echoed Pethokoukis, proclaiming, “The child tax credit is merely a recognition that having children is also an investment in capital—human capital—one which is ultimately the most important kind of investment.”

The new confusion Reformicons are introducing: The idea that giving children resources via cash transfers to their parents is a form of investing in capital, and that, like capital, children will become more productive in the future thanks to the investment. It’s a nice way of fitting a welfare program into a supposedly conservative agenda, but at the same time it transforms everything positive about the moral commitments that should underpin a child benefit program into gross money-grubbery. In the style of government conservatives prefer, pro-capitalist phrasing is probably required to push any kind of legislation; if Reformicons are happy to appease this sentiment, then they're less about reform than rank-and-file conservatism.

The reality: Some children will grow up to be productive adults and some children will not; some kids will be more productive as the result of having greater access to resources, and some will not. The vicissitudes of the economy, the fragility of health, and the perils of everyday life mean that at least some children will not make it to adulthood—and, out of those that do, not all will grow up to be paragons of productivity. Do we really need to justify giving them necessities with the language of capitalism?

In a riff on Rudy Giuliani’s recent remarks about President Barack Obama not loving the United States, National Review Online writer Jim Geraghty concluded today that “liberals don’t love America as it is, but they love what it could be someday,” and then questioned “whether that really fits the definition of love”. He goes on to suggest that we try such a definition with “spouse[s], family, children or close friends and see how they react.” It seems in the case of children that Reformicons are taking him up on his challenge by rendering resources to children based on what goods they might produce in a future economy, rather than the infinite value each child has in the here and now.