So How Many Kids Went to Federally Funded Daycare During World War II?


During his State of the Union Address, President Obama lauded federal programs to provide childcare during World War II:

During World War II, when men like my grandfather went off to war, having women like my grandmother in the workforce was a national security priority?—?so this country provided universal childcare. In today's economy, when having both parents in the workforce is an economic necessity for many families, we need affordable, high-quality childcare more than ever. It's not a nice-to-have?—?it's a must-have. It's time we stop treating childcare as a side issue, or a women's issue, and treat it like the national economic priority that it is for all of us.

Look, the reasoning goes, if we could afford to have the government pay for childcare during World War II, why not now, when it's really important and folks are really strapped?

As it turns out, the federal government provided daycare for a peak of 130,000 kids during 1944, according to the Congressional Research Service. The program ended in 1946. Given the millions of kids alive at the time, this hardly counts as universal. 

Perhaps more important, there's something deeply misguided in comparing today's America to World War II-era America. The Depression was not really over at the start of the war. And while stimulatarians claim that the military build-up led to prosperity by via a Keynesian multiplier effect, the fact is that wartime America was a nightmare of rationed goods, from butter to nylon to gasoline to rubber. As economist Russ Roberts has noted, increasing GDP through a single-minded focus on military arms shouldn't be confused with "prosperity," which came later and only after the government relaxed labor and production controls and cut spending massively.

There's a larger misstep in Obama's argument about federally subsidized child care, too: His solution to every rising price is to subsidize its purchase (this is true for health care, education, you name it). But when you subsidize something with tax dollars, you're likely to increase both aggregate spending on it and increase prices (this too is true for health care, education, you name it). And his nod towards "high-quality" child care suggests more rules and regulations on the practice, which also will like raise prices too.

This isn't Obama's failing alone, of course, but why do politicians rarely or ever talk about growing supply as a way of reducing prices? One of the most frustrating aspects of the Obamacare debate was that virtually no one on either side was talking about how to reduce prices by increasing supply. It was all about regulating prices by restricting or dampening demand.

That's an ass-backwards way of looking at things, but it makes politicial sense, I guess: You want to be the person cutting the check to a specific beneficiary rather than fading into the background after deregulating an industry and letting innovators come up with new, better, cheaper goods and services.