Is the American dream real for middle-class Americans? | Opinion
The rising generation is losing faith in the American dream. The thriving middle class that many of our fathers had is fading away. Consider the past decade or so. Health care-related discounts rose at eight times Wage rate. Housing prices soar More than 6% annually. Total student debt is more than credit card debt. Tuition fees have gone up More than double the rate overall inflation.
Rising costs have become a brick wall to this generation’s financial freedom. Many hardworking single parents in their late twenties face the impossibility of saving for a down payment. small family monthly healthcare premiums can outperform housing costs. monthly Student loan installments Often twice as expensive Leasing. If adequate health care, education, and homes are beyond their financial reach, what kind of life does that leave for them?
The elusiveness of the American dream is getting worse. The twin diseases of unemployment and inflation fall within a percentage point of the notorious “Stagflation” 1970-1974. Stagflation occurs when sharp price increases and high unemployment combine to paralyze the economy. Economists in major news outlets and across the political spectrum were rightly sounding the alarm.
As we face these troubling circumstances, we must diagnose how we got to high prices and high unemployment. This then helps describe solutions to address these problems. First, let’s look at inflation and its causes. Inflation occurs when too many dollars chase too few goods. It is easy to see how inflation has spread to us. Unprecedented government spending and cash injections, along with job disincentives and restrictions imposed by the pandemic, act as one blow to pumping dollars into the economy and restricting the flow of goods and services.
Washington has relied too much on government spending to help people pay for health care and education as inflation runs rampant. The influx of government spending haphazardly into our schools and hospitals generally increases prices rather than lowers them. Beneficiaries of schools and hospitals simply insert the expected monetary input into the price hike and collect as much or more out of the pockets of students and patients as before.
Washington should promote competition and market forces, not hinder them, to help address rising prices. For example, when prices in health care have risen, the government must enforce true price transparency and provide consumers with price and quality information to help them choose cost-efficient providers. This will lead to lower cost and price pressures. When the government is directly involved in selecting suppliers for public goods such as infrastructure, health and education, it must do so in the same way that an audited and informed consumer does. Government spending must be linked to cost-benefit efficiency in order to push inflation down.
In combination with our efforts to reduce inflation, we must pay equal attention to reducing unemployment. Washington, unfortunately, has encouraged unemployment for too long, often through aid over private sector wages. Despite spending trillions, unemployment is still far from pre-pandemic levels. Reported unemployment rates don’t tell the whole story. Department of Labor statistics do not count the millions who have already given up searching.
Instead of spurring unemployment, we should encourage employment and create the conditions in which more Americans can qualify for available, higher-paying jobs. We can do this through incentives and aid to production: lower taxes for middle-class workers and entrepreneurs starting small businesses, loans to start businesses, and programs to help unemployed people find jobs.
Some of the much-needed aid is training. Many tech companies along the Wasatch front want to fill computer programming and data science jobs but can’t with our current workforce. We can get closer to full employment and keep our middle class strong if we encourage and stimulate training, especially in industries that are understaffed. One surefire way to increase production is to invest in a productive and highly trained workforce that is ready for the jobs of the future.
Efforts to build a strong economy must enable Americans to create value in the marketplace for goods and services. Small business owners account for nearly half US GDP And Recruit. We will grow even more if we lower their taxes and enable them to keep and spend their earnings and invest in job creation initiatives.
Don’t be fooled by proposals for billions of dollars in spending bills. The only way to finance these is by raising taxes on business owners – blocking further paths to the realization of the middle-class dream.
These pro-market and growth ideas reflect the successful approach to fixing stagflation in the 1970s. Nobel laureate Milton Friedman drew on these principles to help our leaders get the economy back on track. Its implementation now gives us the best opportunity to strengthen the economy, enable home ownership, and ease the financial pressures affecting the rising generation of American parents and their children.
America can do anything it wants. They can still harness and deploy their collective resources to sustain the strongest economy and greatest prosperity this world has ever seen. Prosperity stems from maintaining a healthy dollar and keeping our paid workforce in well-paying jobs. This is the best way to help as many people as possible achieve the American Dream.
Henry Ering teaches at Utah State University and the London School of Economics. Douglas Hervey is a partner at Cicero and leads the healthcare and private equity practices.