Babysitters’ clubs are not immune to the harsh reality of economics

John FitzGerald: Capitol Hill babysitting co-op’s fate offers a lesson on quantitative easing

‘Our babysitting club was a great way to build community and make friends on our estate.’ File photograph: Getty Images

‘Our babysitting club was a great way to build community and make friends on our estate.’ File photograph: Getty Images

 

Having relied for many years on grandparents, siblings, nephews and nieces to babysit our own children, we now, happily, find ourselves as grandparents providing kid-sitting services. While the supply of our services is potentially quite elastic, it does involve the export of such services, as our grandchildren live in the US.

Distance acts as a barrier to “trade”. Fortunately for us, the current US administration is not yet planning tariffs on the provision of free babysitting services within the family (although they may put tariffs on the planes to get us there).

For those with grandchildren in the UK, the agreement on maintaining the Common Travel Area, even in the event of a hard Brexit, should ensure no new barriers to their providing similar cross-border services. However, at a distance, such services can only be a backstop.

With an increasingly diverse population in Ireland, for many it’s not an option to rely on extended family to babysit for a night out. And paying for a babysitter is not always an option – either because of lack of availability of reliable sitters, or cost.

Babysitting clubs, where local parents babysit for each other, have evolved in places like Canberra in Australia and Washington, DC, where most young parents are from out of town and few have family resources to draw on.

The Capitol Hill babysitting co-op established in Washington in the 1960s, a bright idea that ran into problems, has now spawned an economic literature. Essentially, the members swapped babysitting hours with one another. Families built up credits when they babysat for others, and debits when they drew on the service themselves. Babysitting at weekends had a premium value.

While this sounds straightforward, the rules ran to seven pages, single spaced. Despite the high level of bureaucracy, it worked well initially.

But the rules were drafted by lawyers who did not understand monetary policy. As the Journal of Money, Credit and Banking points out, the latter is a vital issue for any babysitting co-op.

When the US economy hit recession in the early 1970s, co-op members stopped going out. This meant that there was an excess supply of babysitters who wanted to build up credits they could use when they could again afford a night out, and a shortage of demand for their services. The problem was solved through quantitative easing. Those who were owed babysitting hours had their credits doubled. The result was that they were less interested in building up more credit and more disposed to go out for a night.

Problems for the future

But this fix stored up problems for the future in this babysitting market, especially when the economy picked up and everyone wanted to go out on a Saturday night. People who had built up babysitting credits in the recession found a shortage of willing babysitters in the boom, although they were owed babysitting hours.

The obvious solution would have been to reduce the supply of babysitting credit. However, in the absence of a Central Bank to effect this, the co-op was unable to agree on the necessary tightening of its “currency” of babysitting credits.

Unfortunately, the economic literature is silent on how the Washington babysitting co-op’s inflationary crisis was eventually resolved. In the absence of an appropriate intervention, the long-run solution may have been for the children to grow up.

In the 1970s, neighbours who had lived abroad for a year brought back the babysitting club idea to our housing estate in south Dublin. I’m not sure whether or not the fact that our estate adjoins the Central Bank’s currency centre had any bearing on the matter, but our club was a success and didn’t suffer from excess demand or become paralysed by liquidity preference.

While it had a number of parents without close family nearby, there were some Dubliners like ourselves who also joined. As we had family babysitters as an alternative source if we were stuck, our supply and demand for babysitting services was elastic. However, if anyone else was desperate for a sitter, we were in a position to oblige.

There were a range of other benefits to our babysitting club that are not easily described in the language of monetary policy. It was a great way to build community and make friends on our estate, friendships that have survived long after all our children have grown up. We have enjoyed following the fortunes of those children we minded 40 years ago as they have spread their wings and built lives and families of their own.

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