BilikFamily.com

I had mentioned that back in October I read Thomas Sowell's Applied Economics. It's subtitled "Thinking Beyond Stage One". When all is said and done, one comes away with a renewed interest in economics as if one was studying any other field of science. Economic principals are everywhere, like laws of physics, governing behavior all around us. Many times a well intentioned policy or law can have very negative repercussions. These secondary effects are rarely investigated up front, often due to political pressure to do what sounds most expedient or caring. As an engineer I often have to deal with design tradeoffs, so the ideal of the real world tradeoffs brought about because of economic realities intrigues me.

One of the things Sowell mentions a few times is a concept called the "broken windows fallacy". It refers to the false idea that if someone's window gets broken, it stimulates the local economy by bringing about revenue for the glass manufacturer, the installer, etc. Some people scale that concept up and apply it to disasters on a much larger scale, such as a surge in the construction industry following a hurricane. It doesn't look at the overall picture but only the immediate visible benefits.

One of the things I've thought about since moving was the impact on society as more and more mothers moved into the workforce. In the short term it certainly can help bring more money into the family. I had hypothesized that to some extent, perhaps having so many dual income families might be one of the root causes of high home prices, at least in areas that are more land locked. If a finite number of homes are available in a desirable area, yes, prices will go up to meet what the market will bear. However, if more couples are both working outside of the home, those couples tend to be able to trump the home bids of single income families. Prices float up even higher as a result. The bidding war gets intensified. It gets to the point where families almost have to have both spouses working to be able to afford a nice home.

Again, this is all my own ruminations on the subject. I have no studies to back it up. I just know that home prices have more than doubled in the past 10 years I've lived here. In our little neighborhood there are certainly a number of families where both spouses have to work in order to afford the mortgages of these homes. Anecdotal evidence, certainly. But something tells me that if most women were at home more households had one spouse at home, these home prices would have to come down, just as they do when the interest rates go up. Housing prices, in aggregate, follow what the market can reasonably bear.

I say this not because of any particular feelings towards mothers staying at home or juggling an outside job. Just observing and contemplating, meditating on the tradeoffs.

One of the weblogs I read daily is Jimmy Akin's weblog. He is also a fan of Thomas Sowell and his teachings on economics. He also has been thinking through the economic consequences of large percentages of women in the workplace. He writes about it here along with 32 potential economic consequences. If you start to read it, stay with it until the end. Like me he isn't trying to suggest women stay at home, but rather he says:

What it does do is point out that the idea that by having two-income households be the norm does not automatically benefit the economy. There are economic and other costs (the broken windows) associated with having a society with nuclear families where both parents work outside the home. How many of those costs a society should be willing to bear and thus what degree of two-income families there should be is an entirely separate question.

What it also does is point out that raising and educating children in the home is itself work! It is work that makes a valuable contribution to society and, if someone is not available in the home to do it then it has to be handled another way. That means that the advent of the two-income household is not simply an economic gain to the family or to the economy as a whole. It also has significant costs that have to be weighed in determining whether or not it should be pursued.

That calculus, of what benefits one is willing to pursue and at what costs, is what economics is all about.