I don’t often see something I feel is a MUST read, but the NRYB essay by novelist Zadie Smith, about the loss of a local public library in London, is amazing.  It is the best statement I have seen about how much of what we value for sustaining middle class life depends on public institutions — good public schools, access to public universities, public libraries, public parks/spaces, public hospitals or health care.  Without these institutions, the basics of middle class life are essentially unaffordable on a middle class income.

Imagine you have two kids; to send them to a good private school and private college requires about $30,000 per year for 12 years then $50,000 for four more (not to mention professional school; OK there are loans for that).  That is $560,000 per child, over a million — $1.12M to be exact — should you be bold enough to have two.    A professional family with two earners, in the top 20% of US housholds, makes about $100,000 per year before taxes; an average family (at median US income) makes about $50,000 per year.  Take the top 20% family making $100,000 per year.  If they earn that on average, in real terms, for 40 years (age 25-65), that is a total before-tax income of four million dollars.  About one-third would go to Federal and State Income taxes, property taxes, and Social Security/Medicare taxes.  That leaves only $2.7 million dollars in available after-tax income.  Let’s also say this family is on a defined contribution pension plan, to which they contribute 10% of their before tax income each year, leaving them with lifetime spendable earnings of $2.3 million dollars.   Rent or Mortgage would take at least $2,000 per month (after taxes if they own a home and get a mortgage deduction), or $960,000 over 40 years.  That leaves $1.34M after tax lifetime spendable income. If the parents had to pay the full private cost of quality education through college for their two kids, that would leave them lifetime spendable income of $220,000, or about $5,500 per year, for food, clothing, travel, entertainment, medical insurance, home repairs, music lessons, etc.   In other words, it’s simply impossible to have a middle class life AND educate your children without quality public education on a middle-class income (and that is for the top 20%, not the median earner).

Of course, middle classes around the world benefited hugely during the 1980s from the run up in stocks and home equity, which they borrowed against to finance big expenditures.  We all know how that ended.  Those days are gone forever — growth in the US labor force, which drove up house prices through new family formation, is down by about 75% due to falling fertility compared to the baby boomers.    So people will have to think about paying for expenses out of actual income (what a concept!).

But this means that unless we focus on improving and maintaining the quality of public goods, middle class life will drift out of reach of the vast majority of Americans, for whom National and State parks, public roads, public schools, state universities, public beaches and parks, and public libraries are the essential tickets to a rich and varied life.