Becker held that public spending crowds out families’ natural altruistic investment in children

Evidence

Becker had a very similar position to Friedman but as a microeconomist was always much more attentive to the intimate, domestic underpinnings of human capital investment and therefore has the merit of rendering explicit what remains unsaid in the work of the other neoliberals. Free public education, Becker argued, could be critiqued on the same grounds as the progressive income tax, which (in his words) “initially narrows inequality” but ends up raising the “equilibrium level of inequality … because families reduce their investments in descendants.” If we could only turn off the spigots of government spending, then families would spontaneously rediscover their natural altruism and start investing in their children again. The argument was improbable and at odds with the evidence but it enabled Becker to identify private credit markets as a logical alternative. In Becker’s ideal world, students would once again look to the family as a source of economic support, and yet the old stratifications of family wealth would simultaneously be deferred and elasticized by expanding opportunities for private debt. — Dieter Plehwe, Quinn Slobodian & Philip Mirowski (eds.), Nine Lives of Neoliberalism, 253

Categorization

• DEFINE: Renders explicit the family-as-financial-institution logic at the core of the human capital school.
• DEEPTHINKING: The paradox that expanding private debt simultaneously defers and elasticizes old stratifications of family wealth is rich and resists easy summary — the mechanism by which credit markets both reproduce and transform inherited inequality is worth sitting with.
• QUESTION: Worth chasing: what historical evidence contradicted Becker’s claim about government spending crowding out family investment? That he held a position ‘at odds with the evidence’ invites investigation into what the evidence actually showed.
• XREF: connects to: Becker saw welfare as destroying the family’s natural insurance function; Becker’s family-investment crowding-out argument inverted the business-focused deficit critique — Dieter Plehwe, Quinn Slobodian & Philip Mirowski (eds.), Nine Lives of Neoliberalism, 254

Broader Connections

• Becker’s family-investment crowding-out argument inverted the business-focused deficit critique #expands (0.85) — Dieter Plehwe, Quinn Slobodian & Philip Mirowski (eds.), Nine Lives of Neoliberalism, 254