From Taxes to Territory, What the Singapore Law of 2029 Could Become
The recent BCA Research report by Peter Berezin stops at taxes, with Singapore in 2029 paying parents a share of what their children will later pay to the treasury, but I want to follow the logic one step further than the report goes, and that step is mine. If a state is willing to pay parents for the taxes a child will generate, nothing in the logic prevents it from paying parents for any other return the child will generate, and the largest return states have ever collected from their young people came from war, in the form of territory, resources, tribute and the prosperity that followed. Governments have done this before, since Rome settled veterans on conquered land and young republics paid their soldiers with land grants, and a state with a shrinking army and a growing fear of rival populations could revive the old bargain in modern language, with parents sharing in the gains won by the children they raised.
I find the idea useful as a warning because of what it does to incentives. Actually, it’s a terrible scenario. Parents who are paid from the results of a war become stakeholders in that war, so a public that once debated conflict as a cost would begin to count it as a dividend, and the resistance that usually restrains aggression, which comes largely from families who fear for their children, would turn into a lobby. History gives the investor a sober counterweight, since most modern conquests cost the winner more than they yielded once occupation, reconstruction and lost trade were counted, and a security that pays on victory prices a rare outcome as if it were routine. The decisive line is that a claim on a child’s war results pays more as aggression grows and collapses with defeat, which makes it a bet on the very events everyone else is trying to avoid, and that is why I treat it as a risk to price and why the rest of this article returns to the tax version that the report actually describes.
The tax version rests on an economic logic that is simple and hard to argue with, because a child creates a positive fiscal externality, with parents paying for the upbringing while the treasury collects taxes and pension contributions for decades. Cash grants had already failed, since studies show that payments to new parents change the timing of births and barely the total, and childcare costs fell across rich countries while fertility kept sliding. Paying parents a slice of the future return costs the state a promise instead of cash today, and in the scenario it raised fertility modestly and spread to other governments within a few years. The twist came from finance, because parents wanted their money earlier, so banks bought the claims, pooled them into securities and sold them to institutions, which gave the world baby-backed securities. Once such a claim has a price, the price depends on the expected lifetime earnings of the child, so banks paid more for embryos with high polygenic scores, and a subsidy meant to raise the number of children ended up rewarding a particular kind of child.
The countries where this could be copied are the ones with the weakest birth rates, meaning South Korea with a fertility rate below 1, Japan, Italy, Spain, Germany and China, and they share ageing electorates, pension systems paid by today’s workers and heavy public debt. In each of them the state already treats the future earnings of children as the collateral behind promises made to the old, so the Singapore idea only makes the hidden claim explicit. Constitutions, privacy law and public discomfort will slow Europe far more than Asia, which is why I would expect fast and centralised states to move first and slower democracies to follow with milder versions.
The same countries sit closest to the security risks that governments are preparing for right now. Tensions between Tokyo and Beijing have escalated. In Germany a military service law took effect at the start of 2026 requiring every man turning 18 to complete a questionnaire, with parliament allowed to return to demand-based or even mandatory conscription if voluntary recruitment falls short. South Korea already lives with universal male conscription on a peninsula that has never known a lasting peace. A country that fears for its security and also fears for its headcount has two reasons to subsidise births, and a government that reaches for the war dividend described above would find the idea politically easier in exactly these places.
By the way, war cuts into fertility through several channels at the same time, and the damage reaches far beyond the soldiers who die. Young men leave for the front or leave the country, couples postpone families because they cannot plan, women flee with their children, and the economy that would have supported a larger family shrinks or stalls. History adds a counterweight that investors should respect, since births often rebound strongly once peace and income return, as the baby booms after the Second World War in the United States, Germany and Japan showed, and demographers expect a possible recovery in Ukraine after the war as well. The decline therefore lasts as long as the instability lasts, and the price of that lag is paid by whoever holds long dated claims on the next generation.
A baby-backed security is a claim on the taxes of a child who must survive, stay in the country and build a career in a functioning economy for forty years, which makes it a bet on peace as much as on talent. A government that subsidises births to fill its army and its tax base creates a child who is at once an asset, a taxpayer and a future conscript, and the event that kills or displaces a generation also defaults the securities built on it. The spreads on such paper would carry a geopolitical risk premium that no ordinary sovereign bond contains, and anyone who could read that premium early would learn what the market really thinks about a Taiwan Strait crisis or a Baltic escalation long before the headlines do.
The report offers a scenario, so I read it as a map of incentives and take no dates from it. The first place to look for an edge is the gap between a market that treats demography as slow and predictable and a political reality in which fear can change policy within a single legislative session. The second is the link between reproductive technology, state backed securitisation and defence spending, because the same governments would fund all three from the same shrinking base of young workers, and the third is the temptation to extend the bargain from taxes to territory. Whenever a state runs out of money based answers to a problem it cannot ignore, it designs a market, and markets reward whatever can be measured, including the one thing no investor wants to measure, which is how much a generation is worth when the world turns dangerous.