Middle-Class Squeeze

A weekend Washington Post article laments the fact that "fewer Americans find themselves in the heart of the middle class with every passing year." The article is long on statistics, sociologists, and sad human examples to illustrate the problem, but short on the underlying causes of the problem and possible solutions to help the middle class. Perhaps we can offer one.

Sociologist Joseph Cohen makes two comments about the middle class squeeze worth pondering.

• “One of four biweekly checks can go to child care, if it’s done illegally,” he added. “If it’s done legally, it’s much more.”

Interestingly, child care was often a family, friend or neighborly endeavor forty years ago. One young mom often stayed home with her own children and chose to care for her neighbors' children to make a little extra money. It was a cost-effective beneficial solution for families, until government regulations in many states made these personal arrangements "illegal." Today a lot of families have only two "legal" choices: expensive professional nannies or state-certified child care centers.

• “America is a place where luxuries are cheap and necessities costly. A big-screen TV costs much less than it does in Europe, but health care will sink you.”

Cohen's choice of contrasts is ironic. With little government regulatory oversight, television innovation and manufacturing are largely a product of a more pure free-market system, and prices for TVs have continued to go down. In contrast, health care is a product of ever-expanding government central planning-and-control that began with government's Medicare program in 1965 and grows exponentially under Obamacare. Not surprisingly, health care prices are soaring.

WashPo writers seem to suggest that one solution to the middle class squeeze is for them to lower their expectations.

One factor behind the financial squeeze is that the middle class’s expectations — a house, music and dance lessons for the kids, the latest in home entertainment — have stayed the same or increased even as costs have soared.

Conservatives and libertarians might offer a more middle class-friendly solution: substantially reduce government's regulatory interference in consumer transactions like child care, health care, housing, and a host of other areas in which "costs have soared," and let the free-market do for the middle class in these areas what it has done for them in televisions.