Family

The Truth About the Free Market Family

Maxine Eichner's The Free-Market Family laments the bad public policy that makes it hard for parents to juggle work and child care, but often arrives at the wrong solutions.

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The Free-Market Family: How the Market Crushed the American Dream (and How It Can Be Restored), by Maxine Eichner, Oxford University Press, 334 pages, $29.95

There is an ambiguity, if not a bait and switch, at the heart of Maxine Eichner's The Free-Market Family. In her telling, the last 40 years of American public policy have left families to fend for themselves in the marketplace while providing little in the way of support for children and working parents. Filled with both broad data and specific anecdotes, the book argues that we are failing to raise healthy, well-adjusted children because market incentives and poor public policy make it hard for parents to juggle work and child care, even as growing economic inequality, driven by free markets, has made it harder for lower-income adults to find good jobs.

Eichner, a law professor at the University of North Carolina, proposes several comprehensive, European-style government programs to address these problems. What she does not consider is whether any of the challenges facing families can be traced to the ways the U.S. economy is not a free market, and whether we could do more good by removing counterproductive policies than by imitating Western Europe.

A genuinely free market family agenda could start with reforming tax laws to ease the burden on two-income families with children. As Edward McCaffery documented in his 1997 book Taxing Women, the U.S. tax code is biased against secondary earners, who are usually women. The secondary earner's first dollar is taxed at the same high rate as the primary earner's last dollar, because we don't allow true individual filing for married couples.

Allowing true individual filing would make it much easier for many couples to balance work and child care, because it would reduce the marginal tax rates on secondary earners, making the after-tax income from market work higher. Those extra dollars could ease the burden of child care expenses. This would be especially true if it were combined with making day care and work-related expenditures tax deductible. Deregulation of the day care market would help this process as well: Existing rules, such as zoning laws, limit entry and thereby limit competition, keeping prices needlessly high.

Greater competition in the provision of K-12 schooling would also help families balance work and child care, by offering them alternative educational structures.

Another useful set of reforms would be to eliminate a variety of labor regulations that largely serve to protect incumbent workers. Occupational licensure laws, for example, limit job opportunities for lower-income Americans. Similarly, by refusing to regulate gig-economy workers as employees, we can continue to create entry-level opportunities in those industries, whose jobs tend to offer the sorts of flexible hours that help couples juggle home and work. We could also eliminate a range of zoning laws and other regulations and fees that prevent people from opening home-based businesses, making it easier to care for children while earning a living.

A policy proposal that isn't often presented in the context of helping families would be to end the drug war (and to adopt criminal justice reforms more broadly). Eichner rightly notes a shortage of marriageable men among the poor, especially men of color. One factor contributing to this is mass incarceration.

One of the book's best chapters explores the benefits of marriage and decries falling marital rates among the poor. But it does not explore how tax and welfare policies that distort market signals help explain the rejection of marriage. For example, a couple who each earn $20,000 and are eligible for the Earned Income Tax Credit can get substantially more by remaining unmarried and filing two separate tax returns than by marrying and filing one. And because many welfare benefits are reduced as household income rises, there is a disincentive to live with the other biological parent of one's children. A simpler relief system, along the lines of a negative income tax or a universal basic income, could avoid many of those dysfunctions by providing benefits directly to individuals regardless of marital status or other demographics. But even that sort of reform, hardly a radical libertarian move, doesn't get discussed here.

Another set of questions Eichner ignores is the role played by civil society in helping families. The book is set up as a binary choice between "brutal market forces" and the helpful hand of the state. But what of everything from houses of worship to extended family to ethnic and neighborhood associations? Differential outcomes among U.S. immigrant groups are often ascribed to the strength of the institutions they build to help their own. Many poor immigrants have been able to raise healthy, well-adjusted children because they could draw on those community resources. The book leaves the subject unexamined.

Nor do we hear as much as we should about the potential drawbacks to the policies Eichner prefers. She frequently invokes Finland as a country that does more to mandate paid parental leave, subsidize day care, and limit weekly hours of paid work. She does not ask what the costs to Finnish society might be from such policies. For example, the Finnish unemployment rate over the last decade (before COVID-19) was roughly twice the U.S. average, falling only briefly below 6 percent and topping out at almost 12 percent in 2015. The female unemployment rate for 2009–19 averaged about 8 percent, compared to about 6 percent in the United States. In 2014, Reuters found that fewer women are in high management positions in the private sector in the Nordic countries than in the United States. There are two likely explanations for this. First, despite public policy geared toward equality, Nordic women still are disproportionately represented in occupations such as health care and education that are largely in the public sector. Second, parental leave laws still encourage more time off for mothers, and that time off can set women back when pursuing management tracks. The Financial Times recently reported a similar result looking specifically at Norway.

Perhaps these costs are worth the benefits, but to make that case you have to discuss the cost side of the equation. The Free-Market Family does not grapple with the evidence that virtually every federal social program in U.S. history has ended up costing far more than projected when it passed. Whatever Eichner imagines the costs of her preferred pro-family policies to be, we can reliably multiply that several times over to get the likely costs over time.

She does finally say something about costs in the final chapter. But even there we get only a few paragraphs of hand waving and the assurance that these programs will pay for themselves with greater productivity and female employment. And if they don't, well, we can just reallocate what we spend on the military and make the tax code more progressive. There is no discussion of the potential tradeoffs caused by higher marginal tax rates. (She points out that the U.S. economy grew when statutory rates were higher in the past, but this ignores the difference between statutory rates and the effective rates paid after avoidance and deductions. According to the Tax Foundation, the top 1 percent of earners in the 1950s paid an effective tax rate of about 42 percent, which is not that much different from the 36 percent effective rate today.)

Despite these omissions and flaws, The Free-Market Family does document some significant problems facing American families. As Eichner shows, the more we learn about the neuroscience of child development, the more we know about the material conditions under which children thrive. It is important to think through how best to ensure that parents can create those conditions, especially at a time when the prevailing policy assumptions tend to favor big-government interventions like the ones Eichner proposes.

NEXT: Humans of New York

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  2. Perhaps these costs are worth the benefits, but to make that case you have to discuss the cost side of the equation. The Free-Market Family does not grapple with the evidence that virtually every federal social program in U.S. history has ended up costing far more than projected when it passed. Whatever Eichner imagines the costs of her preferred pro-family policies to be, we can reliably multiply that several times over to get the likely costs over time.

    Where are we on the program to develop flying unicorns that shit gold nickels? I’m sure – as John Ossoff is busy endlessly pointing out – we would be much better off as a country if we could guarantee “affordable” housing and “affordable” healthcare and “affordable” education to everybody, but getting the government to pay for all this shit doesn’t make it “affordable”, it makes it all even less affordable because you add on an extra layer of middlemen who not only add to the cost but have no actual incentive to be efficient and suffer no personal consequences for their failures. Perhaps we need some sort of contractual government where failure to deliver what was promised results in fraud charges and long prison sentences.

    1. Or maybe just leave us alone.

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    2. Gold nickels would be pretty damned small. I think diarrhea is the right description, not shit, although making it a verb has its own problems.

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    4. “Perhaps we need some sort of contractual government where failure to deliver what was promised results in fraud charges and long prison sentences.”

      I think the Constitution is the contract.

  3. Want some top-down policies to promote family success?

    1. Require permits for having children, based largely on family finances.
    2. Proscribe education and training paths for students starting at age 12, designed to optimize their future earning potential.
    3. Instead of taxing intra-family gifts, including inheritance, provide tax incentives to promote building family wealth.

    1. 4. Eliminate the income tax and property taxes, so people can afford to send their kids to the best private schools.

      1. Only if the local Education and Career planning committee can decide on the school.

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    1. I think we’ve already solved the problem with a libertarian solution. Sure, families are burdened with high cost of living and low wages due to international competition and free trade but do Americans really need to have children for the country to succeed? With an open border immigration policy, we can import NEW Americans every day to fill the jobs and create the business that aren’t being created because of an absence of American-borne children. Immigration is the solution to low birthrates for American women because anyone can become an American, and that is a beautiful thing.

  5. Earned Income Tax Credit can get substantially more by remaining unmarried and filing two separate tax returns than by marrying and filing one.

    It’s my understanding that joint filing for married couples is optional, if a specific couple would be worse off by filing jointly, they can get married and still continue to file separately.

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    2. I’d be uncomfortable making any specific pronouncements without the advice of a tax lawyer.

  6. Same sad story as always. The solution to problems caused by government is more government. Some of the author’s prescriptions also involve more government, just a different method than the book he critiques.

    “reforming tax laws to ease the burden on two-income families with children”

    “making day care and work-related expenditures tax deductible”

    His other prescriptions remove regulations instead of just changing them, but it shows why nothing of the sort will ever happen: government meddling is so ingrained in most people’s psyches that the very concept of reducing it or (gasp!) eliminating it, even in little doses, is just about impossible to imagine, even when writing about that very topic.

    1. According to the Laffer curve, if the government reduces taxes to a fraction of a percent, the government’s revenue will be close to infinity. The solution to every societal problem is to cut taxes more! Why can you understand the curve?

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  7. And if taxes weren’t so high, and interest rates so artificially low, and new development stopped by zoning regulations, houses wouldn’t cost so much and families could survive on one income while one parent stays home when kids are young.

    1. Bingo…and all that is driven by the same cast of characters with the same background…

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  10. To start the problem is social engineering by govt which has created this issue. A 1950’s family the Dad worked and Mom raised the kids and perhaps had a part time job. But with our monetary and fiscal folies (deficit spending and money printing) we have stalled real wage growth while raising taxes and by promoting “single moms” just accelerated these govt schemes. Go back to the old days…moms can stay home till the kids are in say middle school, no need for full day K garten or day care anymore. Frown upon any single moms by canceling all welfare programs for that class. This Eichner represents the problem not the solution. Again a cultural marxist who wants to recreate America as the Central European “Intellectual” nirvana…man can’t these communists just be deported. Let Dads we men again…

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