11/22/2012 02:40 pm ET Updated Jan 22, 2013

Unfunded Bundles of Joy

As the debate about the deficit heats up, we are sure to be inundated with references to the many "unfunded liabilities" lurking about, ready to destroy our hope for future prosperity and happiness.

Opponents of social programs frequently use the total projected costs of these "liabilities" over long periods of time, ignoring the fact that they are not paid out in lump sums but rather involve annual outlays at a fraction of the total ultimate cost. (Why nobody mentions the unfunded future costs of, say, equipping and maintaining our large military is another story.)

And consider: despite some truly creative efforts to construe it as such, the decision to bring a child into the world is generally not an economic matter. But if it were, in general, it could be explained by overwhelming evidence in modern human experience that, on average, bringing children into the world of the United States over the long haul adds to the size of the economy. Now, any particular child may or may not be a good proposition from the standpoint of future GDP. No one knows whether the kid will turn out to be another Mother Teresa or Bill Gates or even another Larry Flint. But the bottom line in economic terms is that it seems a chance society (not to mention the parents) consider worth taking. In short, the economy is better off with these new citizens; they will end up giving more than they cost. Society tends to get more out of new children in general than the economic goods they "use up."

Therefore it is kind of curious to start talking about them as unfunded liabilities. That is clearly the implication when one talks about future payments for Social Security or Medicare as unfunded liabilities. Why not start much earlier when a child is born? Isn't their schooling an unfunded liability? Aren't their polio shots an unfounded liability? Isn't their housing and future food consumption an unfounded liability? Unless one is prepared to put them to death at some point, all these liabilities pile up. Now, there is an assumption that they will also go to work and add something to the economy, although I doubt that many people make that calculus day-to-day when dealing with six or seven-year olds, let alone fifty-six or seven-year olds in their own families. Nonetheless, one could do so with regard to the society as a whole. But would that take us anyplace? That after all, is the question.

Growing the economy as a strategy has worked rather nicely for the United States, all the way from when the early colonies had a population of about 3 million to the over 300 million we have today (Wow, those unfunded liabilities must have been piling up along the way!).