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There is nothing more natural than having babies. Sitting at a desk in a public library, I watched about 30 of the next generation wobble uncertainly on the grass, shaded by tall trees. “You put your left foot out…,” they sang, a young parents’ group from the look of it or, more accurately, mostly a young mother’s group since there was just one man.
Biden’s latest infrastructure plan contains provisions that, in essence, make it easier to have babies and work. What economists call women’s “labor force participation” is lower in the US than in other rich countries, as the chart from Rose Technology shows below. While the bill is portrayed in the media as a left and right dog fight, when I look at what information exists, the proposals look terribly unambitious if the goal is to raise more resilient, productive children.
I write from the perspective of both a parent and investor. As an investor, a key thing is to size your bets. You can have a great idea but if you only put a tiny amount of money on it, the bet doesn’t meaningfully impact the final result. For perspective, the US Federal Budget was $6.6 trillion in 2020. For every $1 the US Federal government spent, about 10 cents went to the military and 11 cents to medical insurance for older people. Biden’s family plan would get less than half a cent.
Since leaving Wall Street last year, one of the most surprising things I’ve discovered is what I will describe as a women’s world. In finance, women in senior ranks were rare. When I was there, I never wondered where the women were. Now that I spend my time writing in coffee shops, beaches, libraries, New York City parks and surf breaks I found out––many are taking care of kids.
I had assumed women weren’t in senior roles because the men who played a role in selecting executive cadres were biased. I still think that’s true, even if the bias is subtle. The terms I suspect many associate, in a cartoonish way, with a senior finance professional––like “gravitas,” “seasoned,” or “workhorse”––perhaps attach more readily to the image of a middle-aged guy with a paunch than a younger woman with an emerging baby bump. A number of the senior women I saw up close who had families also happened to be amateur endurance athletes, which was instructive given how much they were juggling.
That said, I now suspect additional forces are at work. One of them is the window dictated by fertility and the desire of many women to spend time with their children, particularly when they are young, though exactly how much and in what configuration is highly individual. I also look at kids playing with a parent through the prism I shared in my book Raising a Thief. The seeds of curiosity, resilience and conscience are planted in the very earliest years (0-3) and are highly contingent on a child having an firm bond with their primary caregiver, a concept called attachment. When this bond is fractured, chaos ensues that can be impossible to repair.
Larry Summers, the former President of Harvard, lost his post for suggesting that something in addition to sexism may be at work in women’s professional status. “The data will, I am confident, reveal that Catholics are substantially underrepresented in investment banking … that white men are very substantially underrepresented in the National Basketball Association; and that Jews are very substantially underrepresented in farming…”). Yet, in the speech Summers never explicitly spoke about the very human, perhaps the most human, desire to have a baby.
Biden’s “infrastructure” bill attempts to shift this dynamic. The bill is indeed about traditional infrastructure (see my post The Case for US Infrastructure for more about the state of our bridges, which are literally falling down). But there is also a plan to allocate money to families. Given that Bernie Sanders is chair of the Senate budget committee, I suspect many independents and Republicans might think something radical is afoot. As far as I can discern, the basic idea is to a) guarantee a certain amount of paid time off to new parents b) guarantee quality, universal child-care when the parents go back to work and c) make sure kids have enough to eat.
Specifically, the plan guarantees new parents 12 weeks off after a kid is born. Three months is hardly socialism. In Germany, by contrast, a mother can take up to three years off, which, while it may sound radical to an American, makes much more sense in terms of a child’s attachment. To be sure, such a shift does bring the US closer to global norms, as you can see below.
The US does sometimes make big bets. Trying to export Democracy to Iraq and Afghanistan cost $6 trillion. In retrospect, a terrible bet. Now the pendulum is swinging hard the other direction, toward bridges and babies. But the Administration’s scaling of these bets seems off. The program I know that seems most reasonable and tested at shifting children's outcomes is the Harlem Children’s Zone run by Geoffrey Canada. My back of the envelop calculations (which are not precise) suggest that if the US were to apply his model more broadly it would cost more like $1 trillion over 10 years, 5x what Biden is proposing.
In terms of investing, I have increased my exposure to risky assets in recent weeks and have reduced the size of my hedges to Fed tightening given that the Delta variant now means the hazy period of Covid hangover will last for longer than I had thought a few months ago. I think it is possible that we get another severe Covid spike in the fourth-quarter as evidence emerges that the efficacy of vaccines fades, so I am as worried about Fed tightening as I am new restrictions on movement and have added hedges in my portfolio for that risk as well (though this is NOT investment advice). The central trend though is a fiscal fueled reflation and that’s where the bulk of my risk is.
Note, I will be taking most of August off. Still Press has also recorded season #3 of our podcasts, which we look forward to sharing with you in the fall.
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Sources:
https://www.pbs.org/newshour/science/science-jan-june05-summersremarks_2-22
https://www.cbo.gov/publication/57170
https://www.theatlantic.com/magazine/archive/2012/07/why-women-still-cant-have-it-all/309020/
https://www.nytimes.com/article/biden-rescue-family-plan.html
https://www.mckinsey.com/featured-insights/diversity-and-inclusion/seven-charts-that-show-covid-19s-impact-on-womens-employment#
https://www.nytimes.com/2006/02/22/education/22harvard.html
https://www.bbc.com/worklife/article/20210624-why-doesnt-the-us-have-mandated-paid-maternity-leave