Carrying Charges

Not too long ago, commentators were saying that some people voted for Trump because they were economically pressed in that wages were stagnating, this assessment based on national wage figures. That is an economic change of which people may not be aware, but which will somehow go into their calculations of how well off they are. Somehow, voters have a sense of how only statistically significant increases or decreases in wages impinged on their own lives and respond accordingly. That is not very plausible and it is a factor in life that, one would presume, would be easily enough washed out by cultural issues like abortion or thinking that coastal people are condescending towards middle Americans. At this moment, however, a very different economic logic is being pursued by commentators trying to forecast the impact of the Trump tax bill. It may not do much good for the country, this giving away of a trillion dollars to rich people without any requirement that they invest it in productive ways, but it will put a thousand dollars or so in the pockets of many of the middle class and that is something concrete, a real if small gain, and so may lead them to stick with Trump. Note the difference between the two argument: in the first case, there is an incremental change in people’s disposable income as a result of a lack of increase in paychecks, a change of which people may not be aware, but which will somehow go into their calculations of how well off they are, and in the second case, there is an increase in take home pay because of a decrease in payroll deductions and people will be aware of this change even though it is not very sizable. I want to apply this second kind of logic, of what people know as a change in their own lives, to addressing the first question, which is why people feel squeezed, and so dispense with any need for economic metaphysics.

A carrying charge is the assumption of a substantial debt to be paid out over a relatively long period of time, and to include interest payments, so as to carry out what seems to be a normal course of life. Carrying charges are to be subtracted from income and so constitute a lowering of net disposable income, which is the amount of money you have at the end of the month after the bills are paid and you have used up petty cash on bus fare and ice cream for the children. The most recognizable of carrying charges is a mortgage. It is a life accomplishment to pay one of those thirty year mortgages off, something that Willy Loman recognized. Car loans are another carrying charge. You agree to pay a certain amount per month for a certain number of years to lease a car and then you can turn it in or buy up the car. So your transportation costs are largely paid for by an additional regular deduction from your income, that not much different from when you paid off a car loan except that there is less sticker shock because you focus on the monthly payment rather than the aggregated total cost.

Another readily recognized carrying charge that is ever more prominent in public consciousness is paying off student loans for the college education of children, something that is often referred to as a second mortgage on your life and that often involves a second mortgage on your house, so serious a matter it is, children sometimes left with the burden of paying off their own student loans, so that they are debtors from the moment they enter the workforce. People are aware of these impacts on their standards of living because they write the checks or note the deductions for those payments as those are recorded on their monthly banking statements.

Think of all the other forms of carrying charges that might not be so readily recognized as such. There are payroll tax deductions for Social Security and perhaps for a retirement plan, the first of which is involuntary and the second of which is voluntary but may be a requirement of an employer plan that matches or bases its contributions on what the employee contributes. Then there is health insurance, which is a carrying charge in that you need health care when you need it and so have to pay out on a monthly basis so as to be sure it will be there when you need it, and that particular carrying charge isn’t paid off until you graduate to Medicare. No wonder people can feel that the cost of government is so oppressive: it involves so many carrying charges that are administered by the government, even if there are benefits at the end of the rainbow, and even if, as is the case with Social Security, the recipient receives far more than they ever contributed.

Now let us turn to matters that are far less clearly carrying charges even though they have to do with efforts made to increase income because after a few generations they are no longer regarded as an excessive work requirement but just as the ordinary way social life works. Women entered the labor force in large number during the Seventies and the Eighties. In large measure, this paid off the decreasing relative incomes of their spouses by creating two paycheck families rather than ones reliant on a single breadwinner. So a woman’s income was a way of creating the same standard of living but at the cost of her time and labor and all its consequences, such as increased child care costs in that day care had become necessary for young children, that cost, along with clothing and transportation, to be deducted from the wages the woman added to the family income. Now, in the course of two generations, women being in the workforce is taken as just the way things are, part of women’s liberation to be everything they can be, rather than an additional burden on women and an inconvenience on their families, men no longer capable of taking pride in the fact that they are the sole supports of their families. So women in the workplace is no longer a carrying charge of maintaining a family. In similar fashion, it took about two generations for the additional carrying charge of raising children, which was raised from the eighteen years until they were able to be employed by the time they graduated from high school, to the twenty two years when they were able to be employed at the time they graduated from college, to be absorbed into the common way of life, children whose longer deferred incomes no longer regarded as a cost, just as, in earlier times, allowing children to finish high school was considered a luxury because they could otherwise have been turned out to work in the fields or the factory when they completed only the most elementary of schooling.

As a matter of fact, the whole carrying charges issue, that goad to voters about how much money they have to lay out up front just to get on with life, and so depriving themselves, on that account, of countless luxuries, may itself become outdated, just the way the woman in the workplace issue has been replaced by the issue of how to get women in the workplace respected rather than exempted from the workplace. In time, there will be so many charges collected by the government in the form of taxes that the new higher tax rates will just be regarded as the way to pay for substantial pensions, universal health care, free higher education, and all the other things that are incumbent upon modern life, just as they are now paid for in that way in Scandinavia. Calling them taxes rather than individually contracted mortgages will make all the difference in that people will think they have, in democratic fashion, decided to have government shoulder this burden and therefore taxes are a fair way to pay for it rather than through a Christmas tree of individually assessed payments, each one designed to get you to pay as dearly as you can for what it is you need.

But in the short run, carrying charges do act as a political issue. People know and do not just sense when they are coming up short, when their fixed expenses out run their incomes. Why should I squeeze myself even more to pay tuition when someone else’s child is getting a heavy discount on tuition? Why should I rather than my employer pay for my child’s day care and why isn’t the government doing something about that rather than giving money to poor people (or to rich people)? There is no end of contentiousness wrapped up in all the variety of carrying charges. These are the locus of attention in the way that collective bargaining rights were the contentious economic issue for an earlier generation of people who felt economically oppressed because their hourly wages were too low rather than because, as is the present case, they had to squeeze ever more dollars out of their budget to deal with the carrying charges of life. I am waiting for the political debate on the left to switch from how much more rich some people get from government largesse, which is the current state of rhetorical play, to how much middle class people spend and what can be done to consolidate and retire those debts, whether student loans or health insurance, through the use of the tax system.