Nancy Folbre: Investing in Julia - NYTimes.com

Nancy Folbre is an economics professor at the University of Massachusetts, Amherst.

?The Life of Julia,? a storybook advertisement recently released as part of President Obama?s re-election campaign, aimed to highlight government programs of particular benefit to women over the life cycle. Many conservatives heaped scorn on it.

Their vehement reactions dramatize the extent of partisan disagreement over the appropriate place in our society of both women and public assistance. They also demonstrate why liberals need to make a stronger case for collective investments in the development of human capital.

Consider the list of government benefits that Julia enjoys over her lifetime: She enters Head Start (a federally financed preschool program), attends a high school taking part in Race to the Top (a program to improve standards), garners a tax credit and a Pell Grant to help pay for college, remains covered by her parents? health insurance policy until age 26 (as a result of new federal rules), enters the work force confident of her legal right to equal pay (as a result of the Lilly Ledbetter Act), works as a Web designer and repays her student loans more easily because their interest rate has been capped.

As a worker, she benefits from health insurance that covers the cost of birth control, other preventive care and the costs of maternity checkups and prenatal care when she decides to have a baby. Her son Zachary benefits from kindergarten and better public schools. Julia starts her own Web design company with the help of the Small Business Administration and, as she grows old, enrolls in Medicare and begins to receive Social Security benefits.

Julia never receives any means-tested public assistance as an adult. She works hard, achieves economic success, becomes an entrepreneur and creates jobs. She is not dependent on the state; her story never mentions the father of her child, which implies that she is not dependent on a man, either.

Indeed, as William Bennett put it, she is ?not your typical all-American girl but an obviously independent yuppie liberal woman.? Jennifer Rubin of The Washington Post jumped to the conclusion that Julia must not have a husband.

Helping explain the panicky reaction, Virginia Heffernan at Yahoo News observed that Julia might be gay. Compounding the gender threat is the powerful welfare mom stereotype. The conservative blogger David Harsanyi asked, ?Who the hell is ?Julia,? and why am I paying for her whole life??

The New York Times columnist David Brooks described Julia?s story as the embodiment of ?government as a national Sugar Daddy.?

But why should we assume that Julia ? a model member of the business community ? is a drain on anyone?s pocketbook? As a successful employee and entrepreneur, she pays substantial taxes.

All the government benefits she enjoys are likely to increase her productivity, her income and, as a result, the taxes she pays. Raising a child also represents a significant long-term contribution to future tax revenues.

The Obama campaign should have made this clear. A more politically effective version of the Julia story would have highlighted the positive payoff to public investments in the development of productive capabilities.

Public expenditures on education represent a collective loan to the younger generation, which they pay back as they become working adults and pay taxes to help support and care for the older generation.

For much of our lives, taxes represent either a payback of what has been spent on us or a pay-forward of what we will receive upon retirement.

The terms of this payback need to be renegotiated as economic and demographic factors shift. Slower economic growth, spiraling health care costs and the increasing average age of the population are contributing to stress on this intergenerational contract.

But renegotiation does not require austerity-driven across-the-board cuts to social programs.

Many affluent members of our society would prefer to opt out of any responsibility for those less fortunate. They consider the costs of early-childhood education and college for people like Julia an encumbrance and think they can do better on their own.

But if we leave it up to families to invest in their own human capital, many of them won?t have access to the resources they need to do so effectively, a point that the economists Gary Becker and Kevin Murphy made long ago.

Also, as the economist Robert Shiller emphasizes in his new book, ?Finance and the Good Society,? we all face enormous unknowns. No one knows for sure what is likely to happen to wages, profits or housing prices over the long-term.

Sure, we could move toward an every-man-for-himself economy. But private insurers typically have a financial incentive to exclude those most at risk. And choosing to invest only in your own human capital is a lot like choosing to invest all your resources in one small company.

Most of us will do better with a diversified portfolio that includes both socially responsible commitments and protection against long-term uncertainty.

Those who want to opt out of the risk-sharing commitment known as citizenship can hand in their passports and move to Singapore. Julia and I are staying here.

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