Becker’s family-investment crowding-out argument inverted the business-focused deficit critique

Evidence

Becker’s microeconomic perspective on human capital investment was a mirror image of the more familiar theories of the Chicago and Virginia School neoliberals, who famously argued that public deficit spending and the resulting national debt had the unfortunate effect of “crowding out” private credit markets and discouraging private investment. But whereas Friedman and James M. Buchanan were primarily referring to business investment, what Becker meant by private investment was intergenerational, family investment. If the government would only scale back on its investments in public goods, Becker surmised, then the family would resume its proper role of investing in children. Further than this, the family’s traditional economic responsibility in ensuring the welfare of its members would be greatly expanded by the stimulation of appropriate credit markets. With a little help from government, the old poor law tradition of family responsibility could be reinvented in the form of an infinitely elastic intergenerational debt. — Dieter Plehwe, Quinn Slobodian & Philip Mirowski (eds.), Nine Lives of Neoliberalism, 254

Categorization

• XREF: Connects to the Chicago/Virginia School distinction important in Austerity/Neoliberalism reading — the internal variety within the movement. — connects to: Becker held that public spending crowds out families’ natural altruistic investment in children — Dieter Plehwe, Quinn Slobodian & Philip Mirowski (eds.), Nine Lives of Neoliberalism, 253
• DEFINE: Clarifies Becker’s distinctive version of the crowding-out thesis as intergenerational family investment, distinct from Friedman/Buchanan’s business focus.