What’s an Economy For?

This chapter describes how US policymakers would regulate the economy if they became serious about supporting the American Dream. Legislators would stop making an ever-higher GDP the ultimate economic goal and instead focus on ensuring that every American gets the resources they need to thrive. Since thriving Americans require healthy families, this would require ensuring that families, too, receive the resources they need to thrive. To serve these goals, markets must be put in their proper place in the larger economy, alongside both families and government. When it comes to ensuring that families get the resources they need, the state has five critical functions to fill. These are: (1) partnering with parents to provide the conditions young children need at home; (2) investing in excellent daycare and prekindergarten programs; (3) regulating the economy to reduce economic inequality and insecurity; (4) constructing a strong social safety net; and (5) regulating the workplace to allow workers to reconcile work with family. The chapter closes by describing the public programs that would support each of these five functions.

The Death of the Welfare State and the Rise of Free-Market Family Policy

This chapter shows how, in the last decades of the twentieth century, the United States abandoned its view that insulating families from harm by market forces was a basic function of government. This shift began in the early 1970s. At that time, it had looked like the government would move further toward protecting families by enacting two proposed pieces of legislation: a guaranteed income plan for families with children and universal daycare. Both plans ultimately failed, however. Their failure was partly a product of happenstance, but two other forces were also at work. The first of these was the growing—but false—belief that government support for families weakened them, whereas markets made them strong. The second was the rising racist—and equally false—belief that the majority of government benefits were going to undeserving African Americans. These forces coalesced in the passage of welfare reform in 1996 and gave rise to the free-market family policy we have today.

How We Fail Our Children Part I—The Caretaking Young Children Need

A question for any thriving society is how to ensure that children have the things they need to do their best. Two different approaches, pro-family policy and free-market family policy, claim to satisfy children’s needs well. Countries with pro-family policy go out of their way to make it easy for parents to spend time with their children when kids most need it, as well as to provide them high-quality caretaking while parents work, and generous material support. In contrast, under free-market family policy, the United States expects parents to negotiate these conditions on their own, privately arranging for time off from work, reasonable work hours, caregiving while they work, and enough cash to support their kids. This chapter uses recent research on early childhood development to construct a list of the caretaking conditions that help young children thrive. It then considers the extent to which children receive these conditions under free-market family policy versus pro-family policy. Ultimately, it turns out that by far the biggest casualties of free-market family policy are our children.

What Went Wrong with the American Dream?

This chapter considers a number of indicators relating to the well-being of American children and adults in order to examine the extent to which the American Dream is fulfilling its promise. For children, it considers levels of happiness, academic achievement, mental health, and economic mobility. For adults, it considers happiness, mental health, and life expectancy (including the rise of “deaths of despair”). All these indicators show that the United States is failing radically with respect to both children’s and adults’ well-being. These results are not surprising, the last section of the chapter shows, when we take into account the health of the nation’s families. Neither adults nor children can thrive without sound family ties. Yet indicators show that American families are in bad shape, and in considerably worse shape than families in other countries.

America’s Free-Market Family Policy

This chapter contrasts two models of the role that government can play with respect to families. Free-market family policy, which the United States has adopted, is premised on the view that all government needs to do to support sound families is to support strong markets, which will in turn benefit families. In contrast, pro-family policy, which other countries have adopted, is based on the idea that families do better when the government actively supports them. Pro-family policy considers markets an important tool for distributing the resources that families need, but it regulates them to reduce economic inequality and insecurity and institutes programs like paid family leave, paid vacation, universal childcare, and child benefits. Of the two types of policies, free-market policy leaves families more vulnerable to market forces. That creates devastating problems for families when economic inequality and insecurity increase, as they have in the United States.

Outcomes for Children in the Free-Market Family System

This chapter considers how US free-market family policy drags children’s outcomes down in a number of different areas, including happiness, academic achievement, mental health, and economic mobility. That’s partly because few children in this system get what they need in their critical first years. And after that, in our profoundly unequal economy, almost all children must contend with the recognition that other families have far more access to material wealth and the opportunities it brings than their own. And as they mature, American youth face the stress of preparing themselves for adulthood in increasingly insecure and unequal economic circumstances. The result is that, no matter where they stand on the economic ladder, US children wind up doing considerably worse than past US children on an array of indicators, as well as far worse than children in countries with pro-family policy.

Toward Thriving Families

This chapter addresses three concerns that might arise when considering whether to adopt pro-family policies. First, it assesses whether adopting pro-family programs will make our economy less competitive. In answer, it demonstrates that countries that have adopted pro-family policies have experienced as much or more growth in GDP per hour worked in the last decades as the United States has. Furthermore, the employment rates in countries that have adopted pro-family policy are actually higher than our own. Second, the chapter considers whether the costs of pro-family programs, including paid parental leave, child benefits, and universal daycare and prekindergarten, would be prohibitively high. It demonstrates that the additional costs of pro-family programs could be readily absorbed either simply by shifting existing total social welfare spending to spend more on children publicly without paying a penny more overall or by raising taxes in a manner that placed no added burden on middle- and low-income families. Third and finally, the chapter considers whether pro-family policy would stifle Americans’ freedom. Free-market proponents who equate unregulated capitalism with freedom, this section shows, overlook the many ways that market pressures are increasingly constraining Americans’ lives.

How We Fail Our Children Part II—Young Children from Poor and Low-Income Families

Free-market family policy puts most American families in a difficult position when it comes to the trade-off between earning income to support a family and making sure young children get the caretaking that suits them best, but it clearly puts poor and low-income families in the toughest positions. This chapter considers the extent to which poor and low-income US families can privately provide the conditions that help young children thrive: adequate material support, a parent at home for up to the first year, good daycare and prekindergarten after that, and time with a nurturing parent. It also compares the likelihood that young children will receive this support in the United States under free-market family policy and in countries with pro-family policy.

The Overworked American Parent

This chapter asks why Americans work such long hours and have so much difficulty balancing work and family lives. The answer, it asserts, lies in our lawmakers’ choice to favor markets over families. Families in the United States have to strike the balance between work and family on their own, with no help from the government. They must do so in an economy characterized by pervasive inequality and insecurity. Other countries help families strike this balance through a range of measures, including limits on mandatory work hours and paid parental leave. They have also intervened to reduce economic inequality and insecurity. In the United States, the result of half a century of failing to regulate markets to support families is that adults wind up working long hours in order to provide for their families. Even workers who succeed in the brutal economic competition that our economy incentivizes do so at significant cost to their family lives. When they get home, these same economic pressures cause parents to spend long hours intensively parenting their kids in efforts to ensure that they too can succeed in the economic competition once they become adults.

Insulating Families from Market Forces—The Rise of the Welfare State

This chapter shows that the constant in America’s relationship with markets hasn’t been the acceptance of a free-market economy, but rather the belief that the economy should serve the interests of families. The nineteenth-century rise of the market economy in the United States, it demonstrates, was accompanied by the rise of a set of beliefs that historians call the “ideology of separate spheres.” This ideology sold Americans on the market economy by claiming that it would help families thrive. By the end of the nineteenth century, though, it became clear that the market was failing to deliver on this promise for working-class families. Reformers then called for the government to step in to use regulation to support the promise that the market would protect families. The New Deal arose out of that view of the government’s role. For much of the twentieth century, the government’s responsibility to safeguard the well-being of families against harmful market forces was a fundamental part of our nation’s social contract.