I recently heard the term “market failure” on an NPR interview. Pundits Elaine Weiss and Gina Adams were commenting on a $1 million childcare investment proposed by the Trump administration’s budget. Ivanka Trump, who advanced the proposal, characterized the childcare market this way: “You have care providers who are working at below-poverty wages, you have parents who can’t afford the care and you don’t have a robust ecosystem of facilities because it’s a low-margin business with high liability. So, it’s like just a fundamentally flawed system.”
Weiss used “market failure” to describe the conundrums parents of special needs kids face. But the term, which was new to me, resonated and connected multiple personal experiences going back many years.
Ronald Reagan was a strong believer in Adam Smith’s “invisible hand” —the economic theory that a quest for individual profit would ultimately lead to market-based solutions for nearly every social problem. The “Reagan revolution” led to deregulated banking and airlines, to for-profit medicine and to cuts in public housing.
Since Reagan’s time, I have had some issues with the invisible hand. It seems to lack common sense.
I can remember when health care was about health — and when that changed. It was around the time of the Reagan revolution, about the time HMOs appeared. Around the time the mentally ill and homeless began to populate San Francisco’s Market Street.
Since then, across multiple cities and jobs, I found it tough to land a job that paid enough for healthcare, food and market-rate housing. Even though I have always worked, live modestly, have three university degrees and no kids, it was a continual juggling act.
Toward the end of my career in the Roaring Fork Valley, I scrambled through an exhausting rotation of six part-time and seasonal jobs. Nearly all my earnings went to pay for market-based medical coverage — which didn’t serve my actual needs. Not enough was left to pay for hearing, vision or dental care. In 2016, my husband and I faced a Hobson’s choice: replacing his decayed tooth or my malfunctioning hearing aid. (The aid won. I needed it to be able to work.)
Today, many young folks and families here can’t earn enough to pay for housing. That’s a local market failure, one that has lead our school district to build subsidized housing and prompted Carbondale Arts to explore nonprofit live-work spaces. In addition, local healthcare costs stagger small businesses, forcing owners to close shop or move away.
These are market failures, but failures that reach far beyond zipcode 81623.
In 2018, the National Low Income Housing Coalition calculated that, at federal minimum wage, a worker would need 2.5 jobs (a 99-hour workweek!) to afford a one-bedroom apartment in all but five U.S. states. (Colorado was one of the “affordable” ones.) Alissa Quart, author of “Squeezed: Why Our Families Can’t Afford America” noted recently in a New York Times piece on “side gigs” that “a full 30 percent of Americans do something else for pay in addition to their full-time jobs.”
Our local market failures are writ large in many other places. The Urban Institute calculates that nearly 40 percent of the U.S. population now struggles to pay for basic necessities! IMHO, that begs the question of purpose of the whole market endeavor! I wasn’t surprised to learn that a recent University of Chicago survey found that 45 percent of 18-to-34-year-old Americans hold a positive view of socialism.
I wouldn’t call myself a socialist, but I do subscribe to a maxim I learned in GE management training: “What gets measured gets managed.” By extension, what doesn’t get measured doesn’t count.
Economist Hazel Henderson pointed out that in the Gross National Product, the value of the earth counts as zero. All natural resources — from fossil fuel to air, water and farmland — are free for the taking. As President John F. Kennedy stated, GNP “counts air pollution and cigarette advertising and ambulances to clear our highways of carnage… yet it does not allow for the health of our children, the quality of their education … the beauty of our poetry … the intelligence of our public debate or the integrity of our public officials. It measures everything in short, except that which makes life worthwhile.”
Tragically, what’s not getting counted — by GDP, the market and most political discourse — is human well-being. In the era of climate change, that omission casts long shadows over future generations, over our civilization and perhaps even our survival. The unseen hand of the market regulates everything, it seems, except that which makes life livable.
Ironically enough, the Gipper himself would probably agree on that point. In his 1984 State of the Union Address, Regan stated, “Preservation of our environment is not a liberal or conservative challenge, it’s common sense.
Nicolette Toussaint is a Carbondale columnist and artist.