Saturday, March 02, 2013

More Thoughts On Government, Services And Markets

Many thanks to the persons who have contributed to the child daycare debate, both here and on Gen Kanai’s Facebook page. It has allowed me to sharpen my arguments and have a better understanding of the issue.

So why the fascination?

I) because of the disconnect it reveals between the discussion about Japan and the situation in Japan

One of the presumed keys to a society's success or failure seems to be how a society treats its women members (I say presumed because there are societies such as China where measures of equality between men and women reportedly have declined even as society has undergone a positive economic and social transformation). In terms of participation rates in positions of power and authority (Link - for example), Japan finds itself down among the developing countries.

So how to improve women's participation representation in positions of power?

The answer, both in the domestic and international (Link) arenas has been "greater access to childcare."

The problem is that when one looks at access to child daycare in Japan, the situation is far from dire. In terms of the quality of public daycare, and, outside the very largest cities and Okinawa, access to public daycare, Japan is on a par with some of the best countries in Europe.

How then to explain the absence of women from positions of power? And why the dumping on Japan in an area where, in international comparisons, it stacks up rather well?

B) because of the hints it gives on other relationships between citizens and the government

Japan in the next few decades faces an explosion in the number of its citizens requiring eldercare and shelter in rest homes. The government has no choice but to provide guidance and funding for investment into eldercare, as the free market is unlikely to a) respond quickly enough to projected increases in demand and b) find a socially acceptable equilibrium between availability, quality and cost.

How then is the government to allocate resources in carrying out this project, where Japan has no models to follow because it in the vanguard, the leader because it has the most aged society on the planet?

It turns out that the Japanese government has been running a pilot project for the coming eldercare explosion – its child daycare program.

And it turns out the answer to "how much investment is enough" is damn difficult to pin down.

When the government improves access to low cost, high-quality services, demand for those services increases. Called the "woodwork effect" because increases in supply bring increases in demand, seemingly from out of nowhere -- it indicates that whatever governments do, the best that they hope for is a mildly upset, rather than rabidly upset, citizenry.

The crisis in the provision of childcare, where the number of children on waiting lists stubbornly refuses to come down even as 1) the total number of children has fallen dramatically and 2) the number of daycare spaces made available sets a new record every year, indicates that the coming eldercare crisis is going to be one where all reason is abandoned. If 25,000 children on waiting lists to get into daycare is a national calamity, suppressing Japan's international competitiveness, what will millions of seniors on waiting lists to get into care facilities be portrayed as? How will image and reality be distorted then, to what political or economic ends?


Anonymous said...

Your interest in daycare is welcome. I have one comment.
You mention the "woodwork" effect where as better, cheaper services become available more people use them. I think you may be right but there is another factor to the greater and greater use of daycare. Perhaps more and more families are becoming double income because they need the income? It may be, too the want the income?

Thank you,
call me Nesesom

John Campbell said...

I wonder if anyone knows why more high-quality private daycare hasn't developed in Tokyo. Given the high demand, I should think high fees could be charged, which would allow higher salaries and therefore an ample supply of good workers. Is there some regulatory barrier? The existence of notorious "baby hotels" would imply no, they need not be licensed.

Michael noted (in a message) that big private RR companies will be opening some soon. He also mentioned that some have been driven out of business near places where big new public facilities open. These points make sense, but still, all this demand for such a long time points to a substantial market failure.

Anonymous said...

We wondered the same. We have been through hell trying to get a place (as I mentioned on the initial thread).

We pay a lot of tax to the local office and are penalised by their weighting system. However, we do not mind paying for a good nursery suitable for the reasonably wealthy middle class. Can't seem to find any though - I guess we are moving in the wrong circles.

MTC said...

Nesesom -

The data does not show even a clear correlation in between increasing demand for child daycare and the economi need for two incomes. Your guess that the increase in demand might be a wish for two incomes is more likely... and would be a wonderful thing, if it were true.

The major puzzle is why is the annual growth in demand so incremental, and perversely steady -- almost always leaving 24,000 children on waiting lists every April 1? Why do the numbers on waiting lists not vary wildly, year-to-year?

MTC said...

Anonymous -

The low wages of childcare center workers and the waiting lists seem are not illogical consequences of a market where one gigantic, price-controlled provider (local government) drives down prices and wages for everyone. Waiting lists are thus not a bug but a feature of a system that is providing far more daycare spaces than any market-based system could.

The lack of prices as a signaling mechanism leaves local government grasping at straws as to what the demand will be any year. If a municipality tries to zero out its waiting lists, as Suginami-ku is doing, the likely result is families moving into Suginami-ku as a "family-friendly" place, swamping the system all over again. Why believe this? Because that is what happened the last time Suginami-ku zeroed out its waiting lists.