Economic Issues in Child-Care Policy

There are four important, interrelated issues in child-care policy, on which economists can make contributions. One is the adequacy of the supply of "affordable" child care. A second is the proper role of government, if any, in providing or paying for child care. A third is whether the public could afford to have the government provide child care, assuming that such provision was deemed appropriate and desirable. A fourth is the standards of quality that should be mandated by the government for federal or private-sector child-care facilities. The standard literature tends to be scant on all of these topics.1,2 Economists are seldom unanimous in their opinions, and they certainly do not agree on child-care issues. The now-sizeable school of economists led by Milton Friedman, whose members have staffed the administrations of the last two US presidents, believe that, with very few exceptions, government interventions into the economic functioning of the citizens and their businesses are pernicious. Economists faithful to this tradition argue that parents should buy child care out of their own incomes from nongovernmental providers and that those providers should be regulated minimally if at all. An opposing point of view is that child care is different in important ways from such commodities as shoes and strawberries. Children are the direct consumers of child care, and government intervention in protection of their interests is justified because they lack abilities that can be assumed to reside in the usual participants in the economy. Further, child care provided by or subsidized by government is an indispensable ingredient of any program aimed at bringing about the rescue of the 20% of American children who are officially designated as poor, who are living in conditions that should not be tolerated by a rich and civilized country.1