The Productive Path to Affordability

The American Dream rests on a simple promise: Work hard, play by the rules, and you will build a better life for yourself and your children. That promise still inspires millions of Americans, but the cost of achieving it has risen so sharply that even families who do everything right feel themselves falling behind. Upward mobility is becoming more expensive, and the country is worse off for it.

Politicians spend most of their time treating symptoms. Some call for price controls. Others want subsidies for basic goods and services that households rely on. These proposals are always framed as relief for families. But history shows that their true effect is often to raise prices or to keep goods and services from ever reaching the market. The affordability debate is driven by how to redistribute economic scarcity rather than how to eliminate it.

The fundamental problem is that America is not producing enough of the things that make a nation prosperous. We do not build enough homes. We do not expand child care capacity fast enough. We do not permit new technologies to scale. We do not create enough high-productivity jobs that allow workers to produce more and earn more. A country that invented the modern economy now spends too much of its talent on complying with government requirements. This is one important reason why affordability has become a problem.

The path out of the scarcity-mindset trap begins with recognizing that affordability depends on productivity, and productivity depends on innovation. Economic growth is not simply a matter of capital and labor. It requires that people have the skills and freedom to turn ideas into commercial products, and a culture willing to let changemakers disrupt the status quo. This was the insight captured by Joel Mokyr that won him the 2025 Nobel Prize in economics. His research showed that the great leaps in living standards throughout history came from societies that cultivated artisans, engineers, and tinkerers, and that embraced the mentality that new ideas are worth testing, building, and pushing into the world as commercially viable products. Prosperity is a consequence of societies that value creation over protection.

America has drifted from that formula. Entire industries exist because regulatory codes require that they exist. Talent that could be designing new products, building new firms, or solving technical problems is instead diverted into navigating rules, filling out forms, and managing risks created by the government rather than markets. The real burden of government is the opportunity foregone by these policies. It is the next innovation that isn’t developed, and the next factory that no one bothers to build.

Housing is a clear example. In cities with the strongest labor markets and the highest intergenerational economic mobility, the cost of living has soared because the supply of homes cannot expand by law. Zoning restrictions, minimum lot sizes, environmental reviews, and years of permitting delays make construction prohibitively expensive. The beneficiaries are existing property owners. The casualties are families who can see opportunity but cannot reach it.

Child care follows the same pattern. Demand has surged as more families have two parents who work, yet, by restricting supply, unnecessarily onerous regulations have pushed costs up by thousands of dollars. For example, Washington, D.C., now requires daycare workers to hold an associate’s degree. That credential has little to do with caring for children, but it shrinks the pool of eligible providers. The result is higher costs.

Federal policy compounds these problems. Subsidized demand for housing, child care, and other household goods raises prices when supply is constrained. Excessive environmental and technological regulations push energy and manufacturing costs up across the economy. Higher budget deficits can feed inflation and push interest rates higher, raising mortgage payments, credit card balances, auto loans, and rents. Households are squeezed not by a single policy but by an accumulation of poor policy choices that reduce supply and weaken productivity.

But when governments step back, affordability increases. The city of Austin expanded its housing stock by reducing minimum lot sizes and permitting more units on single-family parcels. As a result, rents have fallen over the past two years. FDA approval of more generic drugs beginning in the 1980s increased competition and lowered prescription costs. Whenever government policy empowers builders rather than gatekeepers, the American Dream comes into reach.

Yet restoring affordability requires more than trimming regulations. It requires rediscovering a national confidence in innovation. A country that produces more is a country in which families can afford more. To achieve that aim, we must cultivate a society of builders and a culture open to change. If we do that again, the American Dream will not need to be subsidized or protected. It will simply be achievable for all who pursue it.