ADOPTION MARKETS

  1. INTRODUCTION

The purpose of this paper is to present the primary economics argument for and philosophical argument against adoption markets (“baby selling”). In section two I shall detail the economic argument for adoption markets. In section three I shall review the evidence that, despite the formal prohibition of “baby selling” around the world, a global adoption market already exists. In section four, I shall evaluate the most common objection (the anti-commodification argument) to the legalization of adoption markets. In the fifth and final section of this paper, I shall summarize the preceding sections.

 

  1. THE ECONOMIC ARGUMENT FOR ADOPTION MARKETS

Unsurprisingly, the scholars who have most persuasively explicated the argument for “baby selling” have been Ph.D. economists. In section 2A, I shall analyze a 1978 Elisabeth Landes and Richard Posner paper titled “The Economics of the Baby Shortage” [Elisabeth Landes and Richard Posner, The Economics of the Baby Shortage, 7 Journal of Legal Studies (1978), pp. 323-348]. In section 2B, I shall evaluate a 1995 Donald J. Boudreaux essay titled “A Modest Proposal to Deregulate Infant Adoptions” [Donald Boudreaux, A Modest Proposal to Deregulate Infant Adoptions, 15 (1) Cato Journal (Spring/Summer 1995), pp. 117-135].

2A. “THE ECONOMICS OF THE BABY SHORTAGE”

Utilizing an economic model of the adoption market and American State regulations active through1978, Landes and Posner explain that the relevant regulations create a “baby shortage” (page 381):

The principal suppliers of babies for adoption are adoption agencies. Restrictive regulations governing nonagency adoption have given agencies a monopoly (though not a complete one) of the supply of children for adoption. However, while agencies charge fees for adoption, usually based on the income of the adoptive parents, they do not charge a market-clearing (let alone a monopoly-profit-maximizing) price. This is shown by the fact that prospective adoptive parents applying to an agency face waiting periods of three to seven years. And the (visible) queue understates the shortage, since by tightening the criteria of eligibility to adopt a child, the agencies can shorten the apparent queue without increasing the supply of babies. Thus some demanders in this market must wait for years to obtain a baby, others never obtain one, and still others are discouraged by knowledge of the queue from even trying.

To summarize in non-economic language, persons who wish to legally adopt must utilize highly regulated adoption agencies that under-compensate mothers who relinquish their babies, which inevitably leads to a long waiting list (a “baby shortage”).

Landes and Posner then spell out how the relevant regulations also cause the emergence of a “baby glut” (pages 381-382):

Just as a buyer’s queue is a symptom of a shortage, a seller’s queue is a symptom of a glut. The thousands of children in foster care … are comparable to an unsold inventory stored in a warehouse. … some children are placed in foster care as infants and remain there until they are no longer appealing to prospective adoptive parents. … the large number of children is foster care is … a manifestation of a regulatory pattern that (1) combines restrictions on the sale of babies with the effective monopolization of the adoption market by adoptive agencies, and (2) fails to provide effectively for the termination of the natural parents’ rights.

To again summarize in non-economic language, persons who wish to legally adopt have subjective personal preferences about the characteristics of the babies they wish to adopt which, in combination with an extensive web of State regulations that prohibit adoption agencies and other private parties from utilizing standard business techniques to address this subjectivity, inevitably leads to a large number of “unadoptable” children in various forms of low-quality foster care (a “baby glut”).

Finally, Landes and Posner demonstrate that the “baby shortage” results in the development of a black market (pages 382-383):

Some fraction—we do not know what—of the 17,000 independent [nonagency] adoptions are indeed black-market adoptions in the sense that the compensation paid either the natural parents or the middlemen, or both, exceeds the lawful limits. However, the potent criminal and professional sanctions for the individuals involved in baby selling not only drive up the costs and hence the price of babies (and so reduce demand) but necessarily imply a clandestine mode of operation. This imposes significant information costs on both buyers and sellers in the market, which further raise the (real) price of black-market babies to buyers and reduce the net price to sellers.

To per routine summarize in layperson’s terms, persons who wish to legally adopt often cannot, due to the “baby shortage” described previously, adopt a baby with the characteristics they desire, so some of these unfortunate persons seek such babies on the black market, which is characterized by the typical black market problems including elevated prices, criminal activity (aggression to obtain the babies), and lower-quality “products” (babies more likely than usual to suffer from physical, emotional, and mental disabilities).

2B. “A MODEST PROPOSAL TO DEREGULATE INFANT ADOPTIONS”

In his article, Donald Boudreaux concurs with Landes and Posner’s economic conclusions that State regulation of the adoption market creates a “baby shortage”, a “baby glut”, and a black market. While Landes and Posner recommend limited pilot studies to experimentally test a free market in adoption rights, Boudreaux proposes a more radical solution (page 117):

So I proclaim up front my sincerity in proposing that pregnant women, and women who have just given birth, be allowed to contract freely with adoptive parents at mutually agreeable prices for the sale of parental rights in their infants. … The proposal is modest because it merely extends to birth mothers a liberty now enjoyed by many adoption agencies: the liberty to sell parental rights to adoptive parents at mutually agreeable prices.

Boudreaux argues that implementation of his proposal would necessarily result in multiple positive economic and social consequences. These include the following:

  1. The “baby shortage” will end as biological females enter the market to sell the guardianship rights to children they cannot or do not wish to parent.
  2. Birth mothers will accrue greater wealth as they profit from the sale of their parental rights.
  3. There will be fewer abortions as biological females experiencing unplanned and/or unwanted pregnancies learn that carrying the baby to term then selling the parental rights is much more financially profitable than undergoing an abortion.
  4. The average health of infants will improve for birth mothers planning to sell their parental rights will be incentivized to seek high-quality prenatal care and eliminate dangerous behaviors because parental rights for a healthy child will be sold for more than the parental rights for an unhealthy child.
  5. The incidence of child abuse will decline because abusive and neglectful birth mothers (and fathers) will be financially incentivized to sell their parental rights to their unwanted children (to persons who actually want these children and therefore are less likely to engage in abuse or neglect).
  6. Fewer children will be placed in the notoriously dysfunctional foster care system because birth mothers will be incentivized to sell their parental rights rather than abandon their unwanted children.
  7. All other things being equal, the price of infertility treatments will fall because the demand for fertility treatments will decrease as adoptions increase.

After detailing the positive benefits of an adoption free market, Boudreaux (page 122) challenges opponents of a legal adoption market “to explain why their objections should trump a proposal yielding widespread benefits with little or no evident costs.” He then evaluates the most common objections and finds them non-persuasive, as I do in section four of this paper.

 

  1. A LEGAL BABY TRADE ALREADY EXISTS

Opponents of “baby selling” argue vigorously against legalization of a baby market. If it can be shown, however, that a legal baby market already exists, then a pillar of the anti-“baby selling” philosophical edifice will have been demolished. Kimberly Krawiec, in her 2009 book titled Baby Markets: Money, Morals, and the Neopolitics of Choice, accomplishes this feat. In a chapter named “Price and Pretense in the Baby Market”, Krawiec lists the following facts and thereby conclusively demonstrates that a legal baby market already exists (page 6):

Despite formal bans on baby selling, in the United States alone in 2001, roughly 41,000 children were born through assisted reproduction, 6,000 of whom were created through the use of “donated” eggs, and 600 of whom were carried by surrogates. In 2003, Americans adopted 21,616 children through international adoptions, and gave birth to 30,000 babies using commercially purchased sperm. Each of these children was purchased, usually at great cost.

After proving the existence of a legal baby market, Krawiec persuasively speculates about the true purpose (loot-seeking, more commonly referred to as rent-seeking) of formal legal prohibitions on “baby selling” (pages 15-16):

The notion that the government’s power to regulate may be used to provide private benefits by restricting market entry, policing cartels, and legitimizing price-fixing tactics is a phenomenon well documented in other industries. In fact, Stigler argues that every industry with sufficient political power to harness the state’s coercive machinery will seek to use that authority to: (1) control market entry by new competitors and (2) police cartels and price fixing agreements. Baby-selling restrictions arguably serve both of these goals. … a wide array of fertility specialists, agents, brokers, facilitators, lawyers, and other middlemen (hereafter, “Baby Market Intermediaries”) legally profit handsomely from the baby market. As public choice theory would predict, these Baby Market Intermediaries are more economically and politically powerful than those suppliers of babies and baby-making components whose market access is legally restricted. Not coincidentally, Baby Market Intermediaries also have agitated actively for legal and industry restrictions that impede the ability of birth parents, gestational surrogates, and egg donors (hereafter, “Baby Market Competitors”) — quite literally, the “mom and pop” producers of this industry — from collecting the market clearing price for their services, thus reducing competition and capping the price of their required inputs.

In other words, though many opponents of “baby-selling” support legal bans on adoption free markets due to abstract philosophical concerns, the actual reason legal bans on adoption rights markets have been implemented by States is practical “crony capitalism”.

 

  1. OBJECTIONS TO “BABY SELLING”

Opponents of markets in adoption rights rarely challenge the pro-legalization economic arguments due to their strong logical and empirical foundations. Instead, they attack the concept of “baby selling” via moral objections. The most common and successful objections are variants of the anti-“commodification” argument, which is the moral claim that certain things (parental/guardianship rights in this scenario) should not be bought or sold for money. Well-known anti-commodification theorists include Michael Sandel, Debra Satz, and Margaret Jane Radin.

In Markets Without Limits: Moral Virtues and Commercial Interests, philosophers Jason Brennan and Peter Jaworski classify anti-commodification arguments into the following seven categories (pages 19-21):

  1. Rights Violations: Markets in some goods or services might violate people’s rights.”
  2. Harm to Others: Markets in some goods or services might lead to greater violence or might cause harm to innocent bystanders.”
  3. Exploitation: Markets in some goods or services might encourage the strong to exploit (to take unjust advantage of) the vulnerable.”
  4. Misallocation: Markets in certain goods or services might cause those goods to be allocated unjustly.”
  5. Paternalism: Markets in some goods or services might cause people to make self-destructive choices.”
  6. Corruption: Participating in certain markets might tend to cause us to develop defective preferences or character traits.”
  7. Semiotic: Participating in markets can express or communication certain negative attitudes, or is incompatible with holding certain positive attitudes.”

Objections in the exploitation, misallocation, and semiotic categories are most applicable to the market in adoption rights debate.

Adherents of the exploitation category of objections flood promoters of markets in adoption rights with a nearly endless stream of concerns that evaporate to the claim that “baby selling” is morally wrong because it involves unjust exploitation. But, such legitimate concerns are not really fundamental objections to the selling of adoption rights; rather, these objections are really about how adoption rights might be sold. Such how problems can always be solved by modifications/reforms of the adoption rights market proper. For example, if opponent X claims that desperately poor people will be taken advantage of in an adoption rights market, proponent Y can respond by asserting that the adoption rights market can be modified to require “baby sellers” to earn a certain minimum income to be eligible to sell their children. Or if opponent X claims that “baby sellers” won’t understand the psychological harm they will cause themselves or the relevant child, then proponent Y can respond by asserting that the adoption rights market can be modified to require “baby sellers” to pass a comprehensive course describing such dangers in brutal detail. And so forth.

Afficionados of the misallocation category of objections to adoption rights markets claim that such markets will not distribute the risks and benefits of social cooperation fairly. Thus, opponent X might claim that only rich persons will be able to purchase babies in an adoption rights market. The appropriate answer by proponent Y is to note that this complaint is again not a fundamental objection to the selling of adoption rights, but rather an objection to how adoptions rights might be sold. Proponent Y can then assert that the adoption rights market can be modified to allow charities or other private entities to subsidize adoption rights market vouchers for poor persons who wish to purchase children.

The most intuitively powerful objection to adoption rights markets, however, is a member of the semiotic category.   In What Money Can’t Buy: The Moral Limits of Markets, Harvard philosophy professor Michael Sandel delivers a classic example of this objection (page 10):

Even if buyers did not mistreat the children they purchased, a market in children would express and promote the wrong way of valuing them. Children are not properly regarded as consumer goods but as beings worthy of love and care.

Brennan and Jaworski refer to this argument as the “Wrong Signal Objection” (page 60). In reference to the adoption rights market debate, opponent X of adoption rights markets using the Wrong Signal Objection (WSO) claims that buying and selling children tends to express morally despicable attitudes OR tends to fail to express proper respect for children AND this expression occurs independently of any attitudes the persons buying and selling children may have AND therefore, buying and selling children is wrong. Proponent Y, however, can quickly debunk this objection by referencing extensive anthropological and sociological evidence — Brennan and Jaworski review much of the relevant literature in their book — demonstrating that the meaning of money or market exchanges is a contingent, culturally-relative, social construct. To illustrate, suppose that on planet Mars buying and selling a child expresses (or means or communicates) cruel ageist bigotry toward children and is almost universally condemned as a disrespectful, thoughtless, and shameful act. However, also imagine that on planet Jupiter buying and selling a child expresses (or means or communicates) an unconditional love for children and is almost universally praised as a respectful, thoughtful, and shameless act. Which society views buying and selling a child the “right” way? The current best answer is that there is no answer to this query, for, first, in the absence of aggression or the threat of aggression, there is no known objective moral theory to use as a plumbline to judge the “right” meaning of any market exchange and, second, the available literature on the meaning of any market exchange reveals such meanings are fluid and arbitrary. Brennan and Jaworksi, however, offer a challenge to the current best answer by making the following provocative consequentialist claim (page 62):

Our basic response … will be to argue that … the consequences of commodification set the main standard by which we should judge our culture’s semiotics. … If certain markets express disrespect or selfish motives, in light of a culture’s socially-constructed semiotics, but if those markets do or would lead to good outcomes (or if prohibiting those markets leads to bad outcomes), then (pro tanto) people in that culture should revise their social practices governing what counts as expressing disrespect or selfishness. Failure to do so — that is, taking our cultural practices for granted when they impose great costs — is itself morally misguided. We will further argue that if it’s not possible or too difficult to revise the culture’s social practices, individuals may conscientiously choose to reject their culture’s social practices and instead participate in those contested markets. They will express disrespect or selfishness, but they will be justified, not merely excused, in doing so.

Thus, it seems Brennan and Jaworski believe, based on utilitarian grounds, that U.S. persons are morally justified to sell their parental rights, even though such actions are legally prohibited in the United States in 2016. A critique of this intriguing must wait for another paper yet, in the interim, my three children are pleased I advocate a rationalist deontological-consequentialist hybrid rights theory instead.

 

  1. SUMMARY

In conclusion, the current American State prohibition of “baby selling”, as detailed by economists Elisabeth Landes and Richard Posner, causes a healthy “baby shortage”, an unhealthy “baby glut”, and the development of a dangerous black market. As explained by Donald Boudreaux, elimination of the prohibition would necessarily lead to many positive economic and social consequences. Legalization of “baby selling” would not be as radical a policy shift as opponents assert, for attorney Kimberly Krawiec’s work proves that an adoption rights market already exists. Anti-commodification objections to “baby selling”, dissected by philosophers Jason Brennan and Peter Jaworksi, also fail. In short, “baby selling” should be legalized posthaste.