Children's Right to Their Parents, Sweden

This association's Bo C Pettersson's  letter to German newspapers in response to that country's Family Minister, Ursula von der Leyen's, proposal on Febr 9, 2007 to increase tax-funded childcare spaces by 500 000 to 750 000 over the next few years:

Don't copy Sweden

I read in the paper a few weeks ago that your Minister of Family Affairs, Ursula von der Leyen, proposes expansion of your tax-subsidized childcare system by 500 000 spaces over the next few years, obviously so inspired by Sweden.

The benefits of the proposed scheme are, according to Leyen, e.g.:

1) It will boost labour supply which in turn will reduce or eliminate the labour shortage envisaged in the future.

2) It will make it possible for German toddler parents to combine work with family life.

I, a Swede with a reasonable amount of parental experience, read this with sadness, realizing that the danger is great that Germany will follow Sweden' s bad example in childcare.

It seems as if the minister bases her seemingly attractive offer to German parents on the false premise that the tax money the scheme will require will be free, as if somebody else will be paying for the party. She and the rest of her fellow countrymen and -women should know that there is no such thing as a free lunch!

In fact, Germans will have to pay dearly, with living standards and jobs, for what initially looked like a free offer.

In my country, the average cost of looking after a toddler full time in a day nursery is EUR 15 000 a year. If that is anything to go by for Germany, the total bill would come to EUR 7.5 billion, not the EUR 3 billion I have seen the minister mentioning.

In addition, there is something economists call the Excess Burden of Taxation, which is a factor indicating the extent to which taxes reduce GNP (a factor the utility value of the public services the money is spent on, must compensate for). That factor must also be taken into account.

In Germany, with your average taxation level of approx 40 %, that factor is approx 1.5, meaning that the proposed childcare service must be worth at least EUR 15 000 × 1.5 = EUR 22 500 a child, a year, meaning in turn that the entire project will have to be worth EUR 22 500 × 500 000 = EUR 11.25 billion to German tax payers.

If those figures seem reasonable as measures of the expected utility value then Leyen has a case, if not, she is either an economic ignoramus or a confidence trickster, trying to feather her elitist friends' nests with her poorer voters' money.

I assume that you, the reader, will come to the conclusion that tax-subsidized childcare does not appear to be worth its cost. If, so, it is time to realize that the service will reduce affluence in your country and thereby also overall employment (for the simple reason that if overall income falls while the overall taxation rate rises, there will be less money around to hire people for, and fewer jobs will be profitable enough).

This means that tax-subsidized childcare will reduce overall employment, not increase it as the minister claims.

Another consequence of lower incomes, higher taxes and seemingly cheaper childcare will be that parents will find that they can no longer get by on a single income but have to bring in two, which in turn means that their toddlers must be handed over to day-care establishments. For reasons of her own, your minister prefers to present this loss of self-reliance and options, not as the loss of freedom it will be, but euphemistically as "an opportunity to combine work with family life".

Germans, like Swedes, elect their political representatives in the hope that these agents will take care of the common issues with wisdom - and pay them well for it - so that the people themselves can let go of those concerns and get on with their lives. Leyen's attempt at conning her voters into believing that tax-financed communal childcare will be another attractive option, when it in actual fact will be a poverty-inducing coercion, shows that the people must be far more on their guard.

Ask us Swedes! We have been through all that and have, these days, every reason to regret our gullibility. Since introduction of tax-subsidized communal childcare here, more than thirty years ago, we have fallen from fourth to fourteenth place on OECD's affluence list.

Bo C Pettersson, Business Consultant & Director of Children's Right to Their Parents, Sweden | E-mail: bo.pettersson@rb-teknik.se | Postal: Ormbergssvängen 19, SE-724 62 Västerås, Sweden | Phone: +46 21 134 157 | Fax: +46 21 136 692.

Phone: +46 220 331 23, +46 21 330 620 | E-mail: mailbox@barnensratt.se. Web: www.barnensratt.se/