The Truth About the Free Market Family

HERE IS AN ambiguity, if not a bait and switch, at the heart of Maxine Eichner’s The FreeMarket 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.

STEVEN HORWITZ

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.