Children need someone to care; The Kid Business: How It Exploits the Children It Should Help, by Ronald B. Taylor. Boston: Houghton Mifflin Company. 288 pp. $12.95.

Before we can begin to solve any problem, we need someone to present all the facts, move us to compassion, and point the way to possible solutions.

Ronald B. Taylor does all this and more in ''The Kid Business: How It Exploits the Children It Should Help.'' He uses his skills as an investigative reporter (Los Angeles Times) to show that horror stories about the mistreatment of children in need are not isolated, but epidemic, and exist in all our backyards.

All too many, Taylor says, are placed in foster homes, group homes, jails, or institutions so barbaric that, if the children come out at all, they come out worse than when they went in.

He documents case after case of children who are beaten, caged, even chained. If the response of the children is anything but submissive, they risk being shipped out as ''problems'' to states where care is cheaper, standards lower, supervision nil.

Some children get lost in the system. Some die. Some are broken for life and must always be cared for by society because they cannot function or because they have become harmful to others and themselves as a result of their childhood suffering.

Taylor tells us about the people who run private facilities, hidden from public view and safe from any accountability, which exploit children for a profit - and the profits in ''the kid business'' can be very high, indeed. Inadequately trained themselves, they hire unskilled caretakers and skimp on food, care, and decent living conditions.

Taylor documents a system so fragmented that it cannot rescue children from the most abject conditions, because ''there is no place else to put them.'' Nor can it raise funds from an indifferent public. Current budget cuts are going to be catastrophic, the author says. He calls for a ''children's coalition'' of legal-services laywers and children's interest groups to counterattack on behalf of innocent ones who cannot lobby for themselves.

There are a few bright spots, and Taylor acknowledges them. Many dedicated people care for children with little financial assistance and no thanks. And there are programs that work, such as Boys' Republic in California and Brooklyn's Park Slope program.

Often the news media serve as a public conscience. It was, for example, Taylor's newspaper reporting of abuse at the Kate School in Clovis, Calif., which caused it to lose its license - five years later. Other reporters have not been so successful. Even after uncovering the most chilling incidents of brutality, nothing was done, nothing changed.

The tragedy, Taylor feels, is that there is no national child welfare policy in this country. He suggests Americans look at a country -- Sweden -- which turned around a similar situation 30 years ago and now has a humanitarian program that cares for its children.

Sweden has the lowest infant mortality rate in the world, and incidences of mental retardation are one-third those of the United States. When a child is born, either the father or mother can take a seven-month child-care leave at 90 percent pay. Child-care facilities are available from infancy through age 6, an important consideration for working women who have been in the majority in Sweden and are now in the majority in the US.

Subsidies and a full range of free services for the family are given to keep as many disabled children in the home as possible. When they must be institutionalized, it is in small homelike facilities with professionals present and an aide for every two children. Foster homes are strictly licensed, allowed only two children, and the foster parent receives one day a week off and a paid vacation annually.

Taylor does not claim the Swedish system is perfect, but he asks us to examine it and to realize change is possible.