Bad parents in a libertarian society

As a libertarian, hobby economist, and foster parent, I’ve been thinking about how to protect children – or put another way, how to prevent bad parenting – without the physical coercion employed now by most governments. For purposes of this post, I’m assuming a society that wishes to minimize coercion, preserve parental authority, and protect children’s rights. Also, when I use the term “bad parents”, I mean people for whom the suffering of their children is not a strong incentive to improve themselves. The term “poor parents” is too easily confused with economic status, but “sub-par parents” is awkward and too broad.

My proposal is to pay bad parents – in cash – to improve their parenting, and if that fails, to pay them to contractually give up some or all of their parental authority to other adults.

The first objection to this is that bad parenting should be punished, and this sounds like a reward system. But imagine that sociologists discovered a previously-unknown people group deep in the jungle somewhere, and that these people had horrifying parenting norms, even up to the point of child sacrifice. What would be most helpful for these people: have a government arrest every adult and place every child in the custody of an enlightened but totally foreign family, or work to improve the parenting skills and morality of those people? From the perspective of the children, do we make them orphans in an alien world or try to improve the parents they know and love?

My guess is most people would prefer the latter (though I may be projecting my biases onto people). So why don’t we think of bad parents within our own culture in a similar way? The parents who have their children taken by the state usually have been themselves raised very differently from the typical middle-class voter or state employee. Even in the current system, most agencies attempt to mitigate the harm to children, and only resort to the foster system in the most extreme cases. We’re already trying to give bad parents incentives, but we’re using the proverbial stick of threatening to take away their children. We should be using the carrot of cash. If you were a manager you wouldn’t get your employees to work harder by threatening to kidnap their children if they don’t; you would offer to pay them more for doing well. That’s all I’m proposing we do for bad parents.

A more nuanced critique is that such a scheme creates a moral hazard – that on the margin, there are people who will be more likely to mistreat their children, knowing that they will be paid to improve. I imagine that any payments to bad parents would be contingent on monitoring, counseling, training, or other goals, which would add to the “cost” for marginal parents. And if you suspect that someone is really more interested in the money than their child’s welfare, offer them a lump sum to turn over their parental authority to decide what’s best for the child to someone else. I think that the incentive effects of this solution are ambiguous enough to warrant empirical research.

I think paying people to be better parents is a win for everyone. Compared to the current system of threatening to remove their children, the parents have less reason to be resentful or feel like they’re being treated as less than adults. The state may save money when you consider the amount spent on social workers, police, courts, and foster parents involved in all these cases; religious and charity organizations and individuals may even take it on themselves to arrange some of these contracts if the state makes them explicitly legal. And most importantly the children are better off because they are more likely to stay with their parents while at the same time receiving better care or a better home environment.

More Evidence Against the FDA’s Practices

From Tyler Cowen comes a pointer to a New York Times article by Eduardo Porter about the lack of innovation in antibiotics and other mass-market drugs. I wasn’t surprised that the conclusion of the article is anti-market – “the market isn’t delivering the innovation we need” – this being the NY Times, after all. But I was glad that they point out the faulty incentives from both the patent regime and Food and Drug Administration (FDA) trial processes. According to the piece, cancer drugs and therapies for rare (a.k.a. “orphan”) diseases are much more attractive to drug developers. Orphan drugs get fast-track approval through the FDA; and within the FDA, the division that approves cancer treatments has a much better record than most of the other divisions.

It seems to me, then, that what is most needed is to reform the FDA process. My proposal is to remove the agency’s power to disapprove drugs. That is, it should be a certifying, not permission-granting, authority. The case for the FDA is that the public should know that the drugs it takes are safe. However, the FDA itself has perverse incentives that lead it to overvalue safety rather than take a balanced cost-benefit approach. No bureaucrat wants to be the one who approves a drug that later proves to be harmful to a large number of people. There are many instances where the agency has been slow to approve potentially life-saving or pain-relieving drugs while patients who want to use those drugs die or live in agony.

If the FDA were relegated to only studying the safety and efficacy of drugs after the fact, it could focus on educating the public on the benefits and drawbacks of a given drug. Patients may choose to use only the sanctioned drugs, or they may take it upon themselves, with advice from professionals, to risk using newer drugs. I think states would do well to recognize strong forms of waivers that release doctors from liability when informed patients request the less-studied drugs.

Additionally, the cost of the studies should be borne by taxpayers rather than the drug companies (and indirectly by the patients and insurance companies that need them). This would give the FDA incentive to find the most cost-effective means of approving drugs, such as accepting clinical trials from other countries or studying results of patients who voluntarily take the new medications.

Would this speed the development of all types of drugs? I think Porter makes a good point about antibiotics: “[A]ny new breakthrough antibiotic is likely to be jealously guarded … and used only as a drug of last resort to prevent bacteria from developing resistance. By the time it became a mass-market drug, companies fear, it could be already off patent and subject to competition from generics …” He doesn’t quote any professionals in the field on this point, so I’m not sure who he means by “companies”, but this seems to be a unique concern for antibiotics, where using the latest and greatest merely speeds the adaptation of the thing it’s meant to fight. Maybe this concern can be helped by modifying the patent rules, such as by allowing companies not to “release” an antibiotic and start the patent term until a certain demand or consensus from the doctors in the field is met. I have my doubts about the efficacy of patents in pharmaceutical (see here and here for more thorough explanations) and the ability of more stringent patent law to actually boost drug innovation. It may also be the case that future breakthroughs, such as artificial viruses or genetically-modified microorganisms, may eliminate the need for antibiotics altogether.

Regardless, the interference of the FDA seems to be doing more harm by slowing the release of important medications or making them too costly to develop than any good it does to try to ensure safety and efficacy prior to a drug going to market. If the public demands that the government to study pharmaceuticals, the public should bear the costs, not the inventors, manufacturers, patients, and insurers. Moving to after-the-fact, publicly-funded trials also helps to keep the FDA independent from the pharmaceutical companies and somewhat more shielded from perverse incentives. And it promotes the freedom of drug makers and drug takers to decide on what best fit their unique situations, about which they know more than the FDA ever could.