A MODEST PRoPosa ‘ro DEREGUL~&nINFANT ADOPTIONSDonald J. Boudreaux

In his famous satire, JonathanSwift “modestly”proposed slaughter-ing babIes and feedIng them to hungry Irish folk, flanks to Swift’smasterful lampoon, any proposal for modestly changing public policyaffecting children risks being brandeda satire. So I proclaim up frontmy sincerItyIn proposIngthat pregnantwomen, and women who havejust gIven bIrth, be allowed to contract freelywIth adoptive parents atmutually agreeableprIces forthesaleofparental rights In their infants.

The proposal Is not original. RIchard Posner has long championedthe cause of a liberalized adoption market.’ But most replies to hisproposal have been crItIcal, too often falling to rise above InvectIve.’Such negative reactIon belles both the modesty and the worthinessofPosner’s proposal. Theproposal Is modest becauseItmerely extendsto birth mothers a liberty now enjoyed by many adoptIon agencies:the liberty to sell parental rights to adoptIve parents at mutuallyagreeable prices. Theproposal Is worthwhile becauseIt promIsesgainsto all relevant parties to adoptIons—birth mothers, couples wi~hing

OpposItion to birth mothers’ voluntary sales of parental rights Isfounded on faulty reasoning. I use basIc economics to l’ilpjillght thebenefits of liberalized adoption and to address some of the mostcommon objections raised by those who Insist that children or societywould be harmed by the free exchange of parental rights in infants.

Cow Journal, Vol. 15, No. 1 (Spring’Summer 1996). Coç~,rIght0 Cato Institute. AlldØfls wsrnwt

The author Is Associate Professor of Law and Economics at Clemson University. Fortheir Incisive comments, he thuS Clint BoII& Karol Ceplo, Conan Craig. Mike DeBt,.,,Bill Field, D’Anne Hancock, Randall Kennedy. Dwight Lee, Roger Mothers, Em O’Hara,Richard Posner, Adam Pritchard, Marie Reilly, Jennifer Robacli, Henry Sanbom, GeorgeSelgIn, Donna Tingle, and Bruce Yandle.‘See Landes and Poster (1978) and Poster (1981).‘See, e.g.. Cohen (1987).

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Some preliminaries are in order. First, I refer throughout to the“sale ofparental rights” rather than to “baby selling.” When a birthmother gives a child up for adoption, she legallytransfers her parentalrights to the adoptive parents; the adoptive parents gain all thoserights, but only those rights, that the birth mother possessed beforethe adoption. Such rights are those that all non-derelict parents haveIn their children. The rights donot include license to abuse the childor to use him or her as a slave, Parents who purchase their parentalrights from birth mothers would have precisely the same rights, andonly those rights, that they would have If their children were theirbiological offsprIng(Landes and Posner 1978:344). BrandIng the saleof parental rights “baby sellIng” (Baker 1978; Fox 1993) provokespeople reflexively but wrongly to assume that some horror akIn toslavery Is being advocated.

Second, I dealhere only with the sale of parental rights In Infants(say, children nine months old oryounger). Theproposal mayor maynot be suitable for olderSldren I leave InvestIgation of that Issuefor another time.

Third, I assume that only adult birth mothers have Initial parentalrights In children. The caseI have In mindIs the all-too-commononeIn which an unmarried woman has, or Is having, an unwanted childand thefather either is unknownor hasIgnored his parental responsi-bIlities. Cases in which the birth mother Is married or the fatherknows and cares abouthis child, or in which the birth mother herselfIs stIll a child, are more complex. Perhaps the law should give thosefathers, or the parents of minorbirth mothers, some sayIn adoptiondecisions. I do not, however, explore in this paper the desirablespecIfics ofthose fatherhood rights orofthe rights ofparentsof minorbirth mothers.

Fourth, I assume that the law prohibits resales of parental rightsby adoptive parents. Once a final decree of adoption Is Issued for aparticular child, that chIld’s adoptive parents may not resell theirparental rights In this child.

The Baby ShortageAll agree that adoptable healthy white Infants are In short supply

today. The National Committee for Adoption (1989) estImates thatin the United States 20 couples are willing to— for every availableInfant,Various reasons areoffered fortheshortage. Low-cost methodsof birth control and legalized abortion arguably reduce the absolute

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A MODEST Pmopow.w Dn~wuL4rsINFANT ADo~rroNs

number ofchildren born to women who do not wIsh to raIse them.3

The availability of Increasedwelfarepayments makes unwedmothersmore likely to keep their chIldren. In addition, the fact that womenincreasIngly pursue professional careers before starting a famIlyraIsesthe demand for adoptable Infants. A woman’s ability to conceive andsuccessfully carrya child to term decreases as she ages.Consequently,as morewomendelay having children, thenumber ofcouples sufferingInfertility problems rises, causIng more to seek adoption.

Althoug~hmedical, legal, and demographic changes affect both thesupply of, and demand for, parental rigirts, such changes alone areInsufficient to cause a baby shortage. Supplies and demands for allsorts of— change frequently without creatIng lasting shortages.For a shortage to persIst,— paid to suppliers must somehow beheldbelow market-clearIng levels. And so It Iswith the current babyshortage. No market-clearing price for parental rights emergesbecause birth mothers cannot contract freely with adoptIve parents.

Adoption In theUnited States Is governedprincipally by state laws.Currently, birth mothers In all states and the District of Columbiaare barredfrom selling theirparental rights (Medoff1993:60). BIrthmothers can give the rights away, but they cannot receive monetarypayments in return. Monetary compensation Is allowed only for out-of-pocketmedical expenses for theprenatal careand birthofchildren.(In some cases, these expenses Include psychological counseling forbirth mothers). But the amounts are limited to ensure that bIrthmothers do not profit by offering theIr children for adoption.

State regulations also obstruct efforts bybirthmothersandprospec-tive adoptive parents to learn about, and to contact, each other. Themost restrictivestates simplyban “independent” adoptions: adoptionsIn which adoption agencies are not IntermedIaries. Other restrictionsInclude criminal proiribitions against advertising by prospective adop-tive parents, prohIbitions on out-of-statecouples applyInghradoptionwithinastate, andrequirements thatIndependent (though not agency)

3Pteme and VRIHo (1991) lIst the co.nincs4dS demographic andlegalacts thatallegedlycame the babyshortage~without ever mentionIng that the priceofparental sights Is cappedat an artificially l~level by prohibitions at birth-mother contracting. It Is httereathsg tonote that the absolute number of adoptions began to ~H In the United States two >earsbejbr. the Supreme Court declared uncontthsflonat all legislative restrIctIons on first-trimester abortions In Ron Wad. (1913). See Pierce and vitillo (1991: 133). Mao notethat greater availability of birth control and abort will act necessarily decrease theabsolute number ofunwanted pregnancies. PosnerexplaIns (1992s 415) ths~although easyaccess tobirth control and abortion will reduce the frequency of unwanted pregnanciesrelative to the fiequesrq’ of sexual h*tercca the amount of sexual Intercourse mightIncrease to such a large extent (In maponse tothe layer risk ofpregnancy) that the absolutenumber ofunwanted pregnancies actually rises,

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adoptions be “open”—that Is, that adoptive parents give their lullnames and addresses to birth mothers.4

Proponents ofsuch restrictions argue that the baby shortage canbe reduced byIncreased adoption awareness and, perhaps, by govern-mentsubsidies for adoption. Buteven If suchpolicies fall to allevIatethe shortage, these proponents InsIst that birth mothers never beallowed to sell parental rights for a profit.

Let Birth Mothers Keep the Pmfits from theTransfer of Parental Rights

Birth mothers should be allowed to contract freely with adoptiveparents for the sale of parental rights In Infants at whatever pricesthey find mutually agreeable. Allowing such contracting does notnecessitate abandonment of other regulations on adoption. Courtswill still have to sign offon each adoption, allowing Judges to ensurethe suitability of adoptive parents. Indeed, all prospective adoptiveparents could be required (as they are now) to pass home studiesbefore being eligible to contract with birth mothers. Finally, all con-tracts between birth mothers and adoptive parents will be subject tothe same checks on fraud, duress, and other abuses that traditionallylimit contractual commitments.

The most obvious consequence ofgreater freedom ofcontract forbirth mothers Is that thebaby shortagewill end. The supply ofadopt-able infants will increase as birth mothers seek to sell their parentalrights for a profit. The price birth mothers receive for parental rightswill rise until the supply ofthose rights expands sufficiently to meetdemand. Importantly, greater numbers of adoptable Infants meansthat fewer couples must remaIn childless. That benefit Is Immensefor those suffering the agony ofunwanted childlessness.

A second effect will be greater wealth for bIrth mothers.ThIrd, therewill be fewerabortions. Mlowlngwonren tosellparental

rights In their Infantsat market prices transforms previously unwantedfetuses into valuable capital assets. If parental rights In infants canbe sold profitably by birt~rmothers, women will be far more reluctantto abort their fetuses. Just as a car owner sells rather than destroysan automobile when he decides that he no longer wants the car, apregnantwoman with transferable parental rights Is much more likelyto carry her pregnancy to term and thenoffer the baby for adoption

4RonaJ4 70 percent ofall U.S. adoptions are administered by licensed adcptlost agencies.The remaIning 30 percent of adoptIons are Independent (See NatIonal Committee forAdoptIon 1989,)

A MODEST PrioposAl. m DEREGULATE INFANT AnornoNs

ratherthan abort the fetus. Allowing women with unwanted pregnan-cies to sell their parental rights for a profit will Increase the cost ofabortion to those women and, hence, reduce Its Incidence.5

Fourth, theaveragehealth ofinfantswill Improve. Because parentalrights in healthy Infants will command higher prices thanwill parentalrights In unhealthyones,pregnantwomenwIllhave stronger Incentivesto seek prenatal care oftheirfetuses and to avoid harmfulhabits suchas alcohol and drug abuse.

Fifth, the Incidence ofchild abusewill decline. Becausethe currentwelfare ~tem rewards women for keeping their children (Medoff1993: 66), many children who are only marginally wanted by theirbirth mothers are keptby thewomen. Such children are surely moresubjectto neglect and abuse than theywould be Iftheywere adoptedby loving parents. Ability to receive payment for parental rIghts willcause manysuch children to be put up for adoption.

Sixth, and relatedly, fewer children will be placed In foster care,Itself a dysfunctional Institution (Pelton 1991). BIrth mothers whonow choose not to keep their children are more likely to place thosechildren in foster care ratherthan make them available for adoption(Landes and Posner 1978: 338).According to Conna Craig, presidentof the Institute for Children, 4 percent ofthe 35,000 children nowIn foster carewho are eligible foradoption are infants.°BIrth-motherability to keep the profits from the transfer ofparental rights raisesthe likelihood that birth mothers will both learn about, and takeadvantage of, the adoption option.

Seventh, the price of Infertility treatments might fall. Infertilitytreatments and adoption are substitute methodsofsecuring parentalrights. Thus, an increase in the supplyofadoptable Infants will reducethe demand for Infertility treatments. The price of infertility treat-ments will likely fall as a consequence?

Currentadoption law thus createsavoidable heartache and expensefor all parties interested in Infant adoptions. LIberalizing birth-mothercontracting will Improve adoptive-parents’ chances of adopting the

‘in his useful— ofthe economic determinants of adoption under ounent law, Medoff(1993: 66) finds that Aid to Families with Dependent Children payments make “poorwomen reganiadoption as a less desirable alternative than keeping the childor hSng anabortion.” Medofi’s data also show that single women, as well as working women, withunwantedpregnancies are “mote hlmb. to choose an abortion relative to adoption.” Thatpattern will hke~— with a freer— market.‘Ithrniadn from— cowespondmaIfsub Secononilesofscalecharacterize the operation ofInfatlityclinics andInfertility

research, It Is possible that a reduction In the demand for Infertility treatments will result

rather than loner, prices of auth treatments. Thus the use In the text of the

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child (or children) of their dreams, while allowing birth mothers toacquire greater wealth. The policy change mlgjrt also allow couplessuffering Infertility problems to pay lower costs for Infertility treat-ments. Most Important, many children who would otherwise not beborn, or who would be born with birth defects, will be blessed withhealthylives. Noparty to theadoption process loses—savefor abortionclinics as well as adoption agencies and state bureaucracies that willlose some oftheir business to private arrangements.’

Ifall parties to thewluntazyagreementsbenefit, those whomorallyobject to such agreements are obliged to explain why theirobjectionsshould tnrmp a proposal yielding widespread benefits with little orno evident costs. Michael Trebllcock (1993: 29), In his discussion oflegal restrictions on market transactions, correctly Insists that when‘we axe contemplating prohibitions or constraints on exchange rela-tionships that partiesthereto would in theabsenceofsuchprohibitionsor constraints, apparentlywish to enterInto, ultimately some Justifica-tion Is required for this form ofpaternalism.”

Justifications are offered, but none Is persuasive. Here are themostcommonly encountered reasons for denying freedom of contract tobirth mothers.

“Economic Motives Are Inappropriate for FamilialMatters such as Adoption”

Among the most oft-repeated objection to greater contractual flee-dom forbirthmothers Is theclaim thathuman life Is not an appropriateobject ofeconomic calculation economic motives should not intrudeinto such personal decisions as whetheror not to adopta child or togive a child up for adoption. According to Martha Field (199th 30),“There are some types ofthings that oursociety does not want mea-sured in terms ofmoney. Society may want to do what It can to helppeople keep these in a personal sphere that Is distinct from thecommercial.”

This claim Is ladenwith both emotion and vagueness. Dependingon what Is meant ~ terms such as “commercial” and expressionssuch as “economic motives” or “measurement in terms of money,”such claims are either trivially true or factually Incorrect. On one

‘Adoptlona~dessencton~,fieedounof contact t7cwbirthmothers,butevenIndepen-dent adoptIon (Pierce and V0i110 1991: 141). Of coarse, birth mothers who choose theIndependent route are cunentby not permitted to sell their parental rights at market-— —‘Pethapsthe moststrident opponentofthe “objectification” thatallegedh,r attendscoinmer-clal transactions Is Margaret Jane Radin. See Radln (1981, 1991).

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AM0DEsrPao~osaTo Dni~cuianINFANT ADop’noNs

hand, if what the speakeror listener has In mind is that slavery shouldnot be reinstated (slaves, after all, were humans whose lives weremeasured “In terms of money”), then no sane person disagrees. Asexplained above, allowing birth mothers to sell their parental rightsvoluntarily to adoptive parents in noway connotesa return to slavery.On the other hand, if the speaker or listener really believes thateconomic considerations should — no role In familial matters, thenhe or shehas not thought through the full Implications ofthis belief, Infact, familymatters, including child-rearingand adoption, are routinelyobjects ofeconomic calculatlon.’°Economic considerations axe ines-capable in the teeth ofscarcity(although manypeople remain incogni-zant of the pervasiveness ofsuch Influences).

For example, many people—and responsible persons especially—make explicit economic decisions about whether or not to have chil-dren and, if so, when. Children are costly in monetary as well asnonmonetaiy ways. Raising them requires sacrifice. The things sacri-ficed—be theyEuropeanvacations, nicerautomobiles, additional edu-cation, more quiet time, orwhatever—are what parents pay for chil-dren. These costs are not always out-of-pocket cash expena butform should not blind us to substance: they are genuine economiccosts, and they are regularly considered when people make familydecisions. Young nes4veds with no savings might delay starting afamily to establish firmerfinancial grounds for raisingchildren. Othercouples might choose (say, for career reasons) never to have children.The costs an benefitsofhavlngchildrenare inevltablywelghedagainsteach other, and decisions made accordingly. Surely such decisions arenot Immoral, unethical, or Impersonal because they are made witheconomic concerns In mind. Indeed, we properly denounce peoplewho have childrenwithout adequatelyconsidering theeconomic con-sequences of doing so.

Inaddition to theeconomic considerations mentioned above, medi-cal treatmentsforfertilityproblems areundertaken In lightoffinancialconstraints, Those treatments are expensive, costing patients hun-dreds—and often several thousands—of dollars monthly. DecisIonson whether or not to pursue such treatments and, if so, choosingwhich particular treatments to pursue and forhow long, are inevitablymade in the face ofresource constraints. Similarly, birth motherswho

WTheclassic tart on the economicsofthe thn4’ Is Becker (1991). Indeed, eventhebehaviorof yowtg chIldren canuseã4’ be ana~rziedwith the rational-action assumptions of moderneconort See Anderson and TollIson (1991). Margaret BrinIg (199k, 1994b), and InBilnIgand Mess., (1996), creativehjuses economics toesplore ~ questions, althoughshe admits that economics presents o4’ a pastlal picture” (1994t 1573).

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put their children up for adoptIon under current law usually do sofor economIc reasons: they cannot afford to raise their children.

Those who argue that economicconsiderations ought not Influencedecisions regarding children and child bearing must, forconsistency’ssake, argue that unwanted babies should not be given away, and thatcouples and single women should not hesitate because of “mere”financial reasons to have children, Consistency also demands thatopponentsofa deregulated market in parental rights support bansonmoneypayments for infertility treatments. Yetthere Is nowidespreadopposition to unregulated prices for fertility treatments, or to peoplemaking decisIons to bear or to keep children in light ofexplicit eco-nomic concerns, These facts dispel claims that societygenerally disap-proves ofrational economic calculations in the realmofchild bearingand child rearing.

“Babies Should Not Be Traded Commercially”Some opposition to a freer market In parental rights stems not so

much from the belief that It Is unethical to ground family decisionson cost-benefit analysis as from the conviction that babies ought notbe objects of commercIal exchange.”

This argument also proves toomuch; It suggests that doctors,nurses,and clinics specializing in medical treatment for people sufferingfertility problems should not be allowed to sell their services for aprofit. On the supply side, medical infertility specialists employ theirknowledge to Improve infertile couples’ chances of conceiving andsuccessfully carrying children to term. These physicians and techni-cians profit by selling their child-creation services. On the demandside, infertility patients spend money to pwvhase parental rights ininfants. Acouple spending $5,000 monthly for artificial Insemination,in Sm fertilization, or other treatments for infertility, uses moneyto pursue a child no less so than does a couple who spends moneyto purchase parental rights in adoptIve Infants.

It may be countered that physicians working to Improve couples’chances ofhaving babies do not really sell parental rIghts In children:physicians sell skilled services that Improve couples’ chances ofhavingtheIr ownbiological children. Might we not, though, recastwhat birth

““Judge Posner’s model also makes babies hingible. smoothing overthe Intangiblequalitiesthat make each chIld unique. If a baWs value can be expressed In dollars, then a baL~rcan be compared to a ear, a dress, a year’s tuition, or a trip toBennuda. There are alrea~rtoo many parents to whom a child’s use value Is less than satlsfrlng without encouragjngsuch dissatisfaction by supp~4nga competing exchange value” (Franlel and MIller 1987:102). See also Radlri (1987: 1850).

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mothers sell as their child-creation servIces? Even though the law— birth mothers initial ownershIp of parental rights in whateverchildren theyblrth. whydenywomen the liberty to profit from theIrabilities to produce babies that othercouples earnestly want and arewilling to pay for? And why denyInfertilecouples the right tocontractveluntarllywith birth mothers?Adoption maywell be less costly thaninfertility treatments for many couples. Not only will prIces chargedby birth mothers likely be lower than the costs of adopting throughadoption agencies (see below), but adoption avoIdsthe risksofmedicalcomplications that attend theuse ofdrugs and Intrusive surgesyoftenntailedbyinfertilitytreatments. These risks Includeharm to infertility

patients as well as to the children born as a result ofthesetreatments(Prlchard 1984:343).

More significant, however, Is the law’s failure to truly prohibitcommerce Inparental rights. Thelawpreventsonlyunlicensed, privateindividuals—most notably, birth mothers—from profiting from suchcommerce. Adoption agencies today (some of whom are far-profitfirms) legally sell parental rights in Infants at profitable prices. Notall states regulate the prices that adoption agencies charge for theIrservices.’2 Fees charged by far-profitagencies run as high as $30,000per adoptIon,while fees charged by nonprofit agencies reach$25,000(Sullivan and Schultz 1990: 39-41). And often, agency fees dependon adoptive parents’ income: lower-income adoptive parents pay lessthan higher-Income parents (CIlman 1992: 33). In economIc tenns,adoption agencIes price discriminate, a practice that Increases theirrevenues.

Of course, agencies do not list Infant” or “parental rights” onItemized bIHs, But, again, form should not camouflage substance:adoption agencies sell parental rights at prices kept artificiallyhigh bylaws prohibitingbirth mothers from contracting directly with adoptiveparents. FIgure 1 depIcts the economic consequences of denyingfreedom of contract to birth mothers.

S represents the supply ofparental rights in Infants. Quantity sup-plied Increases astheprice receivedbybirth mothers rises? D repre-sents thedemandforparental rights to adoptive children. As the priceofparental rights rises, fewer are demanded. WIthno restrictions onthe abilities of birth mothers to contract with adoptIve parents, theequilibrium quantity of children adopted per period of time would

“While seine states set ceilings on the fees that agencies can —. others do neC(Cihuan 199k 33-34).“Because aome women will wish to put their babies up for adoption even at a zero price.the sup* curve Intersects the quantity axis at a positive quantity (Qw).

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FIGURE 1THE MARKET FOR PARENTAL EIGHTS

PflceofPamntS R~W

$

P\A

~ Ow Os O~ OuaityciPwen~R~S

be Qii the equilibrium price would be P~.BabIes would not be inshort supply.

But existing prohibitions on free contracting keep artificially lowthe prices that birth mothers may legally receIve for their parentalrights. In FIgure 1, bIrth mothers can legally receIve no price higherthan PL. The lawallows small payments to birth mothers as compensa-tion for out-of-pocket medical expenses connectedwith prenatalcareand birthing. But ~L Is substantiallybelow Pg; thus, a “bIy shortage”(QD—Qs)Is createdby restrictingtheprices that birthmothers receivefor their parental rights.

Importantly, though, the full price — by adoptive parents forparental rights Is not limited to PL. Whenquantity suppliedIs limitedto Q~,the marginal valueofparental rights in adoptive children Is P5.That Is, laws that have the effect of limiting the supply of parental

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rights in adoptive children to less than Q, ensure that each “unit” ofthose rights Is valued by adoptive parents at some prIce higher notonly than the parents are allowed to pay to birth mothers,but higheralso than P5. ArtificIal excess value (“rent”) Is created, and birthmothers cannotlegally receive that excess value. But legal prohibitionson birth mothers’ abilities to collect those rents do not make the rentsdisappear. Because adoptive parentswill pay up to Ps foreach of theavaIlable Qs ‘unIts’ ofparental rIghts, competition among adoptivepatents raises the hill prIces — for parental rights. The amountsthat adoptive parents pay to adoption agencIes as fees and expensesare bid up to reflect the artificial scarcity ofparental rights. Adoptionagencies ratherthanbirth mothers reap the financialfruits ofcompeti-tion among prospective adoptive parents for the parental rIghts thatare in shortsupply. Agencies’ practiceoflabelingtheircharges “servicefees” or ‘thome study fees” aces not alter the &ct that the fees aredetermIned by the forces of demand and supply, and that they reflectthe artificially created scarcity ofparental rights in adoptable Infants.

To be sure, the average pecunlaty price — by adoptive parentsto adoption agencies Is not bid all the way up to P5. If It were, therewould be no queues—I.e., long waiting lists—of would-be parentswishing to adopt healthywhite Infants (Landes and Posner 1978:326).Why adoption agencies do not raise their average fee to Ps Is notclear. One reason may be that; if adoptive couples — In dollars anaverage ofP8 to agencies, too manybIrth mothers would be attractedinto the black market As birth mothers shift away from agencies andto the black market; agencies’ supply of adoptable Infants falls. Thus,gIven the high costs of eliminating black markets, adoption-agencyprofits are maximIzed at some price less than Ps.

Queuing, of course, Is a real cost borne by prospective adoptIveparents. The monetaiy value of the time spent waIting as well as theanxiety caused by queuIng, combined with thepecunlaty fees chargedby agencies, will be equal at the margin to P5 (Barzel 1989:16-19).But because adoption agencies do not receive the full Ps per child,birth mothers are not as tempted to sell their parental rights in ablack market as they would be If they witnessed adoption agenciestaking on average P5 per child.

The problem with this explanation Is that It leaves unexplainedwhy the queuing Itself Is not more fully exploIted by black-marketentrepreneurs. Eptrepreneurs willing to risk criminal and cIvilpenal-ties should be able to transform some of the queuing costs intomoneta,y payments by adoptive parents.’4

“A defenderof the esplanatlon inlajit respond, following Hayel?s discussion ofprices ssguides to market opportunIties (1945), that queuing sends out oak. terriW distorted and

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An alternatIve explanation for whyadoption agencies fail to convertthe entire area PSABPL Into pecunlaty payments by adoptive parentsIs suggested by Sam Peltzman’s (1976) theoty ofregulation. Peltzmanpointed out that Interest groups often compete in the legislative arenaagainst opposing Interestgroups, aswell as against thepublIc interest.If Peltzman Is correct, adoptIon agencies may fear that chai~ngpecu-nlaiy fees equal to Ps would result in regulation more adverse toagencies’ Interests.

Nevertheless, regardless of the form in which adoptive parents payP5. those who succeed in securing a child pay more than P~whIchIs the amount they would pay If birth mothers could sell parentalrights outright, If the ban on birth-mother contracting were lifted,the full cost to adoptive parents ofadopthga childwould fall althoughpayments receIved by birth mothers would rlse.m

“Only the Rich Will Benefit, while the Poor Will BeExploited”

While studyIng lawat theUnIversItyofVirginia,Iregularly proposeda free market in parental rights to fellow law students. A largemajorityobjected by asserting that only the rIch will benefit

A valid response to this objection Is “So what?” Suppose that Itwere In fact tnie that only the rich will benefit If birth mothers areallowed to sell theirparental rights. This factwould not justII~currentrestrIctions on the abilities of birth mothers to contract. As long asno one Is harmed bysuch sales, It Is malIce borne of envy (or, in thecase ofmany ofmy fellowstudents, ofmIsdirected guilt) to deny therich opportunities to use their assets in ways that result in loving

~eak signals to potential black-maSt rivals of adoption agent Thus, because much ofthe price— by adoptiveparents In aqueue Is bi&len from potential black-market rivals,the rivals do notexert mucheffort to lute birth mothers awsq from legal adoption agentqi~nonprofit status of most adoptIon agencies does not mean that the managers andstaffof the agencies do not benefit from charging higher prices. In the United States, anonprofit firm Is a firm not lIable for taxes on Income derived from thestated charitablepuq~osesof the firm. Such finns have no owners In the conventional sea That 1s theyhaveno residual claImants who can transfer to themselves, In the form ofcash, anyexcessof revenuesovercoats. Nevertheless, the staffof nonprofit organIzations— to theextentthat their a~mdes’revenues exceed t wages and salaries, expense accoumts. andworking conditIons andother perquisites all Improve ~ith higher revenues. A substantialbo4 ofwork liyeconomists shows that the motive to maximizepersonal gain Is verymuchalive among people working In the nonprofit sector (Welsbrod 1988),

Regarding adoption agencies whose fees are regulated, such regulation often Is basedon agency average costs (Cadson 1994:214), thus allowing agency managers to dIsguisemonopoly rents as costs. In addItion, a recent writer noted “states’ relative lndlfferenoetowardagency salaries” (Carlson 1994: 214).

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familIes for children. Thefact that only the rich purchase Mercedes-Benz automobiles, cases ofChateau Haut Brlon, and summerhomeson Newport Beach Is no reason to outlaw the sale of such Items.(Incidentally, only the relatIvely wealthy can now afford InfertIlItytreatments. Should such treatments be outlawed because poor peoplecannot take advantage ofthem?)

But It Is not tnie that only the rich wIll benefit Inevely voluntatyexchange,both parties aremadebetter off. Moreover, the nonwealthywill be better able to — chIldren whenbirth mothers are allowedto freelysell parental rights. First, adoption agencIes underthecurrentlegal regime favor well-to-do adoptIve parents: the poor tend to bedIscrImInated against even If they are willing to spend as much astheir wealthIer rivals to acquire parental rI~1ts.t0Second, becausepolitIcalconnections and abIlIty to grease— thins regulatoiy thIck-ets, poor people are disadvantaged by the current system. Third, asexplained above, the hill price of adopting a healthy Infant Is todayactu* quite high. Not only Is the walt long and agonizing, butadoption-agency fees and other out-of-pocket expenses are higherthan necessary because the market Is controlled. As argued earlier,allowingbirth mothers to selldirectly to adoptive parentswill Increasethe quantity ofadoptable Infants supplIedfor adoption while reducingthe role of adoption agencies as mIddlemen. Market prices paId byadoptive parents for parental rights will fall as a consequence, evenas prices received by birth mothers rise. As the prIce of acquiringparental rIghtsIn infants falls, people ofmodest means arebetter ableto adopt

Nor will poor women be exploIted by beIng forced Into “a newoppressedand undignifiedoccupation” (Shalev198th 159). Nowomanwill be coerced Into supplying parental rIghts. And bIrth mothers—most ofwhom, presumably, wIll be nonwealthy—canprofit from theirsales ofparental rights. GIven this abIlity to profit and the voluntarynatureof the transactions, to say that greater contractual freedom forbirth motherswould lead to the exploItatIon or “demeaning” ofbirthmothers Is curious.’1 In a freer market, birth mothers would continueto enjoy all the options they have now, — the addItIonal option ofselling their parental rights.

1The “best Interest of the child” standard that Is central to modern U.S. adoption lawallows agencies, when deciding which would-be parents will be granted rights to adoptchildren, to weigh hea4’ andpositively the wealihofprospective adoptive parents.17P$erce and WIllo (1991: 142) are representative of a large class of commentators whoassert that allowing women to choose voluntarily to sell their parental rights “demeans— mt”

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Opponents of liberalIzed adoptions might respond that It Isunseemly for the poor to be the sole supplier of adoptable Infants tothe nonpoor. Even granting that the suppliers of parental rights wIlloverwhelmingly be low-Incomewomen, thIs Is no argument toprohibitthesewomen from contracting voluntarily with adoptive parents. Pro-hibiting poorwomen from bargaining with wealthier adoptive parentsfor prices that those women find profitable Is a peculiar way to safe-guard them fitm exploitation—anda selfish andharmful way to shieldthe sensibIlities of the ethically hyperenlightened from “unseemly,”If beneficial, market transactions.

Another argument supporting the exploitation claim Is that poorwomen are generally unable to make sound decisions regardIng thedisposition oftheir parental rights. Their Immediate need for moneycauses them to pursue short-term pecunIary gain at the expense oflong-term woe. In thewords of one commentator, “financial benefitsurged upon anoften Indigentnatural motherbyababy-brokerbecomea source ofcoercion to her to force her to give up her baby” (Katz1986: 13). QuIte simply, a poor birth motherwho sells her parentalrights todaymight regret that decIsion a month or a year or 10 yearsfrom now.

Ofcourse, a woman might err In her assessment ofthe costs andbenefits ofselllngherparental rIghts,and maylaterregrether decision.But so, too, might a woman who under current law chooses to giveher parental rights away freeofcharge,as might awoman who choosesabortion or who chooses never to become pregnant. Indeed, any partyto any contract may later regret his or her contractual commitment.Such is the nature of uncoerced choice.

Women who, under existing law, give theirchildren up for adoptiontypically do so because of their immediate financial predicaments;theIr need for current liquidity makes it prudent for them not toundertake—or to delay undertaking—the role of mother. It Is truethat the additional financIal Incentives under a freer adoption marketto give children up for adoption wIll cause some women who wouldotherwise choose to keep their children, or to abort, to decide Insteadto sell their parental rights. But allowing birth mothers to bargainfor profitable prices with adoptive parents does not create financialIncentives for adoption where none existed before. Such IncentivesexIst under current law.

A more fundamental question,however, Is why society puts so littletrust In birth mothers to make rational decisions regarding adoptionoftheirchIldrenunder a regime ofvoluntarycontract.That paternalIs-tic lack of trust Is bIzarre given that the same women are trusted tomake abortion decisions, adoption decisions InvolvIng no cash pay-

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ments, and decisionsto keep andto rearchildren. Ifgovernment doesnot assume the right to second-guess those decIsions, the burden ofproofIs on those who advocate a policy of second-guessing women’sdecisions to sell their parental rights.

“Free-Market Adoption Will Spawn a BabyIndustry”

Another argument against greater freedom of birth mothers tocontract with adoptive parents Is that the lure ofprofits will Inducewomen to become pregnant for the sole purpose of selling theirparental rights to adoptive couples. Wbile many women will stillbecome pregnant accidentally, otherswIll do so Intentionally In searchofprofits. Such actions create life for all the wrong motives.

Intentional births by profit-seeldng birth mothers are a possibility,but It Is difficult to see why this outcome Is undesirable. The marketpriceofparental rights will reflect adoptive parents’ demand for suchrights. Willingness to supply parental rights (and hence willingnessto become pregnant solely to sell parental rIghts) will vary with themarket price. Ifdemand for parental rights falls, so too will the priceofthese rights, leading fewer women to offer theirparental rights forsale. Likewise, an Increased supply of babIes lowers the price ofparental rights, thereby Increasing thewillingness ofpeople to adoptAt market-clearing prices for parental rights, bIrth mothers’ supplyof these rights will equal adoptive parents’ demand for these rights.Anyexcess suppliesof,ordemands for,parental rightswlll be correctedby decreases or increases in market prices. Only women who findmarket prices attractive will become pregnant for the purpose ofprofiting from the sale oftheIr parental rights. There Is no reason tosuppose that the pricingmechanismwill fail to keep markets cleared.

To be sure, the market will not work flawlessly, Instantaneouslymatchingdemandwith supply, Whathappenswhenawoman becomespregnantbelievingthat shecansellherbabyprofitablyonlyto discover,nine months later, that the marketprice for parental rights has fallen?Ifthe woman has no Interest In raising the child herself, she will sellher parental rights at the lower price. Her profits wIll be lower thanshe expected whenshebecamepregnant,but that Isariskshe assumedwhenshechose tobecome pregnant.Womencontemplating becomingpregnant to profit from selling their parental rights wIll account forthe risk that the market price nine months hence might fall.~

“Surrogate-mother contracts can shift S risk of price declines from birth mothers toadoptive patents. By contracting before conception Ma known prlce~asun’ogate motherno longer risks having to sell her paternal rights Ma priceshe regards ss too low.

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In contrast, women who decide that the current market price Istoo low will not sell theIr rights. These women keep their children.Of course, women who decide only after becoming pregnant to keeptheirchildren retain all parental rights and responsibilities, just as dotoday’s motherswho choose to keep unplanned children. There Is noreason to believe that one kind of unplanned chIld wIll be treatedless well than the other.

“liberalized Birth-Mother ContractIn~WillEngender Exploitation by Middlemen

Lifting the ban on birth-mother contracting rouses fears ofruthlessexploitationofbirth mothers and ofadoptive parentsbymiddlemen—specWlsts In brInging birth mothers and adoptive parents together.(See, e.g., Katz 1986: 7—18.)

Such fears are unfounded. Although horror stories are told ofhowcorrupt middlemen prey on vulnerable birth mothers and adoptiveparents,” the problems highlighted by the stories are an artifact ofthe law’s refusal to legalize birth-mother contracting. Just as thegang-sterlsh conduct of bootleggers during the 1920s was not indicativeofthe conduct ofAnheuser-Busch, Seagram’s, and other legitimateparticipants in today’s legal market foralcohol, currentunscrupulousactionsof“babybrokers”Inno wayportendthat legitimateparticipantsin a legalIzed market forparental rights will behave unethically.

There are at least two reasons participants in a liberalized marketfor parental rights will perform honorably and In the best interest ofall parties Involved. First, legalized birth-mother contracting wouldgiveall market participants eaay recourse to the courts for redress ofuntoward treatment. Liars, swindlers, and scoundrels under the cur-rent legal regIme have little fear ofbeing hauled Into civIl court bytheirvictIms. Second, legalized birth-mother contractingwill subjectto open competition all market participants. Middlemen who fleeceand defraud theirclients will, in addition to the threat of legal action,lose busIness to honest middlemen. Competition can be open only ifIt Is legal, and—as In most markets—open competition is the bestguarantee that all parties to the adoption process will behave, and betreated, properly.

In contrast,the current legal regime actuallypromotes exploitationby middlemen ofbirth mothers and adoptIve parents.Adoption agen-cies are middlemen who profit from artificially high fees on the saleof parental rights—fees that birth mothers today are banned legally

“For sample, see Baker (1978).

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from earning. GivIng birth mothers and adoptive parents the legalrighto contract with each other for the sale ofparental rights willend exploitation not only by Illegal “baby brokers” but by adoptionagencies as well.

Of course, It is not clear that liberalized birth-mother contractingwillcreate ademandformiddlemen. legallyprotectIngbIrth-mothers’options ofdealing directlywith adoptive parents ensures that middle-men will survive only If theyperform useful services. As long as themarket for the services of middlemen Is competitive, their existenceand their actions are to be applauded rather than feared?

Conclusion: Liberalize the Rules against Birth-Mother Contracting

Giving birth mothers the legal right to contract voluntarIly withadoptive parents for the sale ofparental rights in Infents will not solveall theproblems that todayafflict child care andfamilies. The surplusofolder children, disabled children, and nonwhite children will notbe allevIated by afreer market in adoptions. Norwill the dysfunctionalU.S. foster care system be repaired. Many Infertile couples will stIllnot wish to adqpt, and many pregnant women will stIll choose toabort. Nevertheless, a freer market In parental rights does promisegreat gains to adoptive parents, birth mothers, and children. Thesegains ought not be forsaken merely because the market cannot cureeveiyevil or because we are uncomfortable with use ofthe languageofeconomics and of commerce to explaIn how a liberalized marketin parental rights will function.

Implementing sucha market would not entail a greatlegal change.All that Is required is that birth mothers and adoptive parents heallowed to contract with each other for the sale ofparental rights InInfants at mutually agreeable prices. Laws prohibiting birth mothersfrom dealing directly with adoptive parents and from selling theirparental rights at mutually agreeable prices would be repealed, aswould restrictions on birth-mother and adoptive-parent advertIsIng.Current government-mandated screening ofadoptive parents canberetaIned. Courts—which still wIll be requIred to Issue a final decreeof adoption In each case—can ensure that no one adopts without

“In reviewing an earliervenlon of thepaper, Hen,~’Sanborn con’ectb’noted that a freemaSt %r parental rights will came proupective adoptive parents to become much moreselective ab~ntheelsacterlaticaofadopteddifidren. Theml. ofmiddlemen might expandto Scilitate this selectivity. Intermediaries might also specialize In monitoring theprenatalcamandhabits otprospectlve bhth mothers—manyofwhom might ~ theirreturn,threugh association with Intennedlaries of— repute.

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havIngfirst passedahomestudy ofthekindcurrently— to adoptiveparents. Moreover, courts willlceepwhatever abIlIties theynowpossessto Invalidate adoptionswhen adoptive parents turn out to be derelictorabusive. CoolIng-offperiods are also consistent with a freer marketIn parental rIghts: a birth mother can be given the right to reclaImher parental rIghts withIn, say, one week after InitIally turning herchIld over to the adoptive parents.

Indeed, nearly all regulations that todaygovern Infant adoptions IntheUnited States can be retainedIfbirth mothers are grantedfreedomof contract. Reasonable people wIll disagree (as they do now) aboutwhich regulations are worthwhIle and which are harmful. All that Ipropose is that bIrth mothersbe allowedto contract freely with adop-live parents, with no restrictIons on theprices paid for parental rightsIn infants, but subject to whatever othercontrols legislaturesorJudgesdeem approprIate. This modest change will yIeld enormous netbenefits.

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