Anti-Malthusian Policy: Poland's 500+ Family Benefit and Demography

Starting in April 2016, Poland's government began to provide a monthly family benefit of 500 PLN (~US$130) for every child after the first-born. The ruling party's stated intention was to financially support large families, but also to encourage a higher birth rate. What are the ideological underpinnings of a such a generous program?

In the 1820s, the British preacher and political economist Thomas Malthus looked with disdain upon what he viewed as an overly generous welfare state. At that time, the destitute and desperate would receive aid in the form of food and money from their local governments, as laid out in the provisions of the Poor Laws. This minimal assistance staved off starvation for families suffering from the seasonability of work on farms, and the booms and busts of early industrialization. Malthus argued that monetary assistance would lead to large families of essentially lazy people, doomed to remain in the lower classes forever. According to Malthus and other critics, England's impoverished people were mere dependent baby making machines that would ultimately lead the country to a demographic catastrophe: overpopulation and starvation.

Malthus believed generous welfare made populations lazy and unproductive, Reagan and Thatcher then entrenched this conviction into neo-conservative ideology.

Socially and politically we've come a long way from Malthus, though perhaps there are glimpses of his position still available in the current discourse. But then as now political parties and pundits tend to fall somewhere along the spectrum between the "life is hard" camp and the "poor people are lazy" camp. The first expresses sympathy for the poor and posits that the less fortunate are that way because of social forces, not because of any fault of their own, but because the world is a tough place. The opposite position claims that the spectrum of wealth inequality is one determined by work ethic. Those who work the hardest have the most.

Over the past half-century or so, conservative political groups have tended to push the latter idea and thus reduce welfare programs or add uncomfortable caveats to their provision. Malthus himself wanted to dehumanize the poor who received assistance, pushing them into group homes with horrible conditions. Late 20th century conservatives such as Margaret Thatcher and Ronald Reagan added their own versions of the same.

However, the particular context of post-communist Europe has disrupted this traditional division, and it is the conservative parties that seem to be most generous with state funds. A prime example of this policy has been tried out since 2016 in Poland.

In October 2015, the conservative populist party Law and Justice (PiS) became the first party to win a parliamentary majority in the history of Poland. PiS won despite garnering only 37.6% of the vote, but their success derived partially from the promise of a child benefit, the so-called 500+ program. With a parliamentary majority secured, PiS had only to work out the details before launching the program in April 2016.

As they pointed out in campaign events, families with the most children tend to have the lowest household incomes. The welfare program gives 500PLN (approximately US$130) every month for the second child and beyond. This means that a family with four children receives 1500PLN per month; a family with 8 children - 3500PLN which is the median take home pay for Polish households.

500PLN/month for each child beyond the first

Since 500+ is not means tested, anyone at any income level can take advantage of it by simply filling out a form at the post office. In the first year 3.8 million children took part, with a total cost of 17 billion PLN or around 4% of that year's budget. By 2018 the number of participating families and costs had grown, and almost 50 billion PLN (12.5% of the 2018 budget). This number will likely grow and in the lead up the European Parliament elections in May 2019, PiS has promised to provide 500PLN/month to all children, regardless of whether they have siblings or not.

Though the amount in dollars may not seem tremendous, 500PLN per month could easily represent a 20% boost in monthly income for around 40% of households. For families with several children, 500+ has eliminated poverty.

Critics of the government immediately pointed out that such a program of wildly throwing money around would lead to inflation, deficits, alcoholism and an unwillingness to work. At this point it is hard to say what the exact effects have been. Certainly budget deficits have risen, but the moderate economist Marcin Piątkowski (author of Europe's Growth Champion [Oxford UP, 2018]) recently claimed that 500+ remains fiscally responsible. Studies have shown that hundreds of thousands of woman have already exited the workforce for good due to the program. It is up to the individual women to say if this is a positive change or a negative one. However, from a macroeconomic perspective, Poland needs as many people working as possible, partly to pay for its national pension and healthcare systems, but also because of its aging and disappearing population. And this, ironically, is partly why 500+ was created in the first place, to save the country from its looming demographic doomsday.

Is Europe headed towards a demographic apocalypse?

Europe in the early 21st century is changing in ways that Malthus might have never predicted. In the early 19th century, Malthus tied higher food production to a faster rate of population growth. Rather than seeing an overwhelming burst of births coincide with ample food supplies, we've seen the opposite over the past four decades. As Europe has become wealthier, its residents have tended towards fewer children. In the 1970s European countries on both sides of the Iron Curtain maintained annual fertility rates of over 2.0 (births per woman). Poland's fertility peaked in 1983 at 2.42, and has steadily declined since then; in 2018 the Polish birth rate was 1.32. All European countries have experienced a similar decline, but Poland ranks near the bottom with only Portugal and Moldavia with lower fertility. In post-communist countries, the problem has multiplied due to out-migration to other EU member states.

For countries that have experienced a relatively large immigration waves since the end of World War II, this decline in fertility has been described as the end of Western Civilization as we know it. There have been many prophets of doom since the 1990s. In France for example, many have claimed that the high birth rates among immigrants from Maghreb and west Africa, coupled with relatively low birth rates of white French, would lead to the "browning" of France and to its ultimate cultural destruction. So the feeling goes that France can no longer be France if there are so many people of color. This idea seems absurd to me, and is just thinly veiled racism. Things change. Such is life.

Immigration is necessary for the continuation of Europe, even if it changes its makeup along the way.

Alas the irony is that immigrants – from whatever place they may come – are absolutely necessary in order to ensure that France, Germany and other western European countries, can continue to afford the generous welfare states they've developed. In order to pay for the pensions of baby boomers and the educations of the next generation, tax revenues and wealth need to be generated by labor. That force is not currently present among the native born populations. Conservative populists in Europe fail to mention to their voters that the road that stands before them is to make the state much less generous – and the whole country poorer – or allow immigration to continue.

For Poland there has been massive and relatively speedy immigration, though this is rarely reported in English-language media. Ukrainians come to Poland in droves to work, mostly low-paying jobs as store clerks or construction. This is particularly ironic due to the ruling party's anti-immigrant rhetoric, but all signs point to hardly masked racism. That is: white immigration is OK, brown immigration not OK. Time will tell how long it takes before tensions will arise between Poles and Ukrainians living in Poland, but for now it seems that Ukrainians have taken the jobs that no longer made economic sense for Poles to take. This is not the case because of some rise in wages, or a rise in the cost of living. Rather it is likely because of 500+. Why should someone break their back at work if they can receive a similar low wage by simply staying home (and maybe having another kid or two)?

Poland's PiS represents a new kind of conservative party driven by ideologies of race and history, not economics.

Poland's ruling party PiS has landed in precisely the opposite camp of conservatives from time immemorial. Malthus would say that 500+ will train people to be lazy, reliant on aid. PiS seems to respond, "Yes, that's OK." The ideological assumption here – in its most generous form – is that people are not lazy, but rather worthy of help. And those who don't really need the extra cash can still benefit because they will spend more and spur on the consumer driven economy.

It may take years to finally untangle the effects of the 500+ program, but so far it has not effected the birth rate at all. In fact, the birth rate has continued to fall. We may say at this point though that this welfare program is brilliant politics (the program cannot be ceased) and short-sighted policy (precisely because it cannot be diminished or ceased). PiS and a large number of Poles are unconcerned about the potential economic and social consequences of such programs. They are much more concerned about the idea of having to invite immigrants with dark skin and foreign religions than they are about fiscal responsibility. PiS and other conservative parties around Europe have returned to a perspective prominent in the 1930s, one colored by concerns for racial health, the solidarity of the nation and a future for the proud heroic Poles.