When Markets Fail: Childcare, Green Tech, and How Government Comes In

May 31, 2024

Some problems require more than subsidies.

The Roosevelt Rundown features our top stories of the week.

Marketcrafting in More Ways than One

As a new policy paradigm starts to replace neoliberalism, the government has become more comfortable stepping in and using public power to solve problems markets can’t or won’t. In a new blog post, Roosevelt’s Suzanne Kahn uses the examples of clean energy production and childcare to remind policymakers that different challenges require different marketcrafting approaches. 

The government has encouraged clean energy production through subsidizing and incentivizing the private sector to invest in renewables with the goal that eventually, the industry will be self-sustaining. Another market that’s failing to survive on its own is childcare—which presents a very different challenge. 

“In both of these cases, the public sector has to step in because these are industries Americans need to thrive and currently do not have reliable and stable access to,” Kahn writes. But, “there is no reason to believe that an initial influx of capital will lead to a more profitable childcare industry.”

There are other tools the government can use, like more direct public provision. “If a stable industry will always require public funding, what are the advantages of channeling it through private providers instead of building a true public option?” Kahn writes.

Read more in “A Tale of Two Market Failures: Why Childcare and Green Technology Require Different Public Approaches.”


Thinking outside the TCJA

Key provisions of the Tax Cuts and Jobs Act (TCJA) are set to expire in 2025. In a new blog post, Coro Fellow Annelise Bowser examines the law’s impact—and what we could achieve without it.

The TCJA failed to grow the economy, made the wealthy wealthier, and did little for the wages of low- and middle-income Americans. According to the Congressional Budget Office, if the TCJA is extended for another 10 years, it would reduce federal revenues by $4.6 trillion. As Bowser points out, that’s more than what it would cost the government to provide universal affordable childcare, to provide universal paid family and medical leave, and to eliminate the entirety of the country’s student debt burden.

“Reducing the TCJA debate to either renewing the policy or letting it expire boxes out an opportunity to reexamine what taxes could do to benefit the nation,” Bowser writes. The TCJA expiration gives policymakers the opportunity “to enact tax policy that funds the kinds of public investments working-class Americans need.” Read more in “As the TCJA Expires, Policymakers Can Do Better for Low- and Middle-Income Americans.”


Roosevelt Receives Grant from Pivotal

This week, Pivotal, the philanthropic organization founded by Melinda French Gates, announced that it would provide significant funding support to the Roosevelt Institute. With recent rollbacks to women’s rights, French Gates believes in urgently providing organizations with the capital needed to remove barriers to women’s equality. Through researching and advocating for a rebalancing of economic power, the Roosevelt Institute is committed to this fight.

“At the heart of our work is a critical examination of who the status quo serves so we can imagine a future where the economy serves the many,” said Felicia Wong, president and CEO of the Roosevelt Institute. “This grant from Pivotal supports our work to rewrite the rules for a political economy that works for people who have been excluded—women, immigrants, and people of color.”


What We’re Talking About