‘Permission-slip’ government

What does it mean to be middle-class in America today? Although there are exceptions, a middle-class lifestyle in the U.S. today typically involves holding a full-time job, having a car and earning enough to eventually buy a house.

Income and consumption are up, thanks to economic growth over the past generation. So why do so many Americans feel that those middleclass milestones are becoming harder to achieve?

One reason for the disconnect between data and perception is that there’s more prejudicial regulation in the economic areas that define middleclass status.

In the classic understanding of economic regulation, the government sets out the rules and lets the market work. If someone breaks the rules — perpetrating fraud or malpractice — he or she faces heavy penalties. The classic approach to regulation left citizens free to work, compete and innovate as they wished.

However, in more and more areas, governments have stepped in to prejudge who may or may not participate in the market. Rather than allowing home builders, automakers and professionals to compete on an equal playing field with the same rules, government has intervened in each of these crucial sectors.

A Heritage Foundation research paper published in 2015 examined a dozen cases of overregulation and estimated that the average family pays $4,440 a year in higher prices, thanks to the market restrictions of those regulations.

Home prices are heavily influenced by local regulation. In reasonably regulated cities and suburbs, the government enforces safety requirements through building codes. But in a growing number of municipalities, central planners and nosy neighbors are given veto power over construction projects large and small.

Even families that already are well-employed suffer from “permission slip” government. For the typical American household, license requirements for professionals, from barbers to teachers to dentists, cost $1,037 per year. Policymakers should focus on making it easier for struggling families to achieve middle-class status.