Monday, February 25, 2008

DIVORCE, DAVID CAMERON AND INCENTIVES IN BRITAIN

POSTED RESPONSE TO A COLUMN BY SONIA SODHA IN THE GUARDIAN

David Cameron, indeed, does not understand what drives the changes in marriage, or perhaps he does and is just playing to the crowd that does not understand.

As one reads Ms Sodha, it becomes clear that she is one of the crowd that does not understand the forces at work here.

If we go back about 500 years, it was impossible for ordinary people to divorce.

Yet, princes and other great lords always managed to divorce if that is what they wanted.

Gradually over the centuries, as the middle class grew, the ability to divorce became more widespread, just as the case with the franchise.

Today with a very large and affluent middle class, divorce has become the same kind of option it was for princes centuries ago.

When you have great cumulative economic growth, you always find change in social and political customs. Always.

The choice that people with great wealth exercised centuries ago is precisely the same choice middle class people embrace today.

No monetary incentive can possibly change this, unless that incentive is so great it amounts to a conditional inheritance, something clearly society cannot afford.

Saying otherwise is much like believing you can change modern women's fertility. Women have achieved freedom and control over reproduction, and they are not about to give it up for some small consideration.

Birth rates in every advanced country have dropped to the point where they cannot sustain their population without immigration. A modest bonus of some kind will never change this.

It is part of a basic principle of modern economics that fertility drops with affluence, at least up to a point. Truly great wealth causes the curve to rise, so only a bonus the size of a great inheritance can change this.

Just so people's freedom to divorce.