Abundance

by Ezra Klein

This book is dedicated to a simple idea: to have the future we want, we need to build and invent more of what we need. That’s it. That’s the thesis.

the story of America in the twenty-first century is the story of chosen scarcities.

Progressivism’s promises and policies, for decades, were built around giving people money, or money-like vouchers, to go out and buy something that the market was producing but that the poor could not afford. The Affordable Care Act subsidizes insurance that people can use to pay for health care. Food stamps give people money for food. Housing vouchers give them money for rent. Pell Grants give them money for college. Tax credits for child care give people money to buy child care. Social Security gives them money for retirement. The minimum wage and the earned-income tax credit give them more money for anything they want.

This leads to the standard Republican riposte: Just don’t subsidize demand. Keep the government out of it. Let the market work its magic. That’s fine for goods where access is not a matter of justice. If virtual-reality headsets are expensive, well, so be it. It is not a public policy problem if most households cannot afford a VR headset. But that cannot be said for housing and education and medicine. Society cares about access to these goods and services, as well it should.

An uncanny economy has emerged in which a secure, middle-class lifestyle receded for many, but the material trappings of middle-class success became affordable to most. In the 1960s, it was possible to attend a four-year college debt-free but impossible to purchase a flat-screen television. By the 2020s, the reality was close to the reverse.

Dig within the equations that power modern economics and you’ll find that growth comes from one of a few places. An economy can grow because it adds more people. It can grow because it adds more land or natural resources. But once those avenues are exhausted, it needs to do more with what it has. People need to think up new ideas.

The market cannot, on its own, distinguish between the riches that flow from burning coal and the wealth that is created by bettering battery storage. Government can. The market will not, on its own, fund the risky technologies whose payoff is social rather than economic. Government must.

The technologies we develop will shape the politics we come to have. A world where renewable energy is plentiful and cheap permits a politics that is different than a world where it is scarce and pricey. A world where modular construction has brought down the cost of building opens different possibilities for state and local budgets.

Too often, the right sees only the imagined glories of the past, and the left sees only the injustices of the present.

We have a startling abundance of the goods that fill a house and a shortage of what’s needed to build a good life. We call for a correction. We are interested in production more than consumption. We believe what we can build is more important than what we can buy.

Americans have long lionized the frontier. But our futures have largely been made in our cities.

“More Americans have changed their status by moving to the city than have done so by moving to the frontier.”

economies are not bounded by land.

A young family can still follow Horace Greeley’s advice and find a cheap home in the rural West. What they typically cannot do is follow Horace Greeley’s example and build a life in Manhattan,

in the late 1970s, home construction started to fall behind the pace of population growth.

Today, the average number of dwellings per thousand people in the developed world is about 470, according to the OECD (Organisation for Economic Co-operation and Development). France and Italy have nearly 600. Japan and Germany have about 500. The US has only about 425.6 Where did all the houses go? The answer is that they were never built at all.

sometimes a number stands out. Here is one: The economist Ed Glaeser calculates that, prior to the 1980s, wages in New York City were unusually high even after correcting for the local cost of living.9 The city had its problems, but most people would make more money by moving there. But that flipped. By the year 2000, moving to New York meant, for most people, taking an effective pay cut. That’s not because paychecks have shrunk but because housing costs have risen. People now pay to live there; they aren’t paid to live there.

Too many have bought into a perverse inversion of what the city should be. Cities are where wealth is created, not just where it is displayed. They are meant to be escalators into the middle class, not penthouses for the upper class. But through bad policy and worse politics, we are doing in the twenty-first century what we so feared in the nineteenth: we are closing the American frontier.

America lost its primacy in semiconductor innovation because much is learned in the making of things—a

Cities are not interchangeable. What each offers is a specific gift of the ecosystems of people and practice it has nurtured. Once deep communities of interest and industry form, they are difficult to dislodge, and they prove nearly impossible to replicate.

even global businesses are rooted in local phenomena.

“Companies appear to locate in absolutely the worst places,” Moretti writes. “They pick very expensive areas—the Bostons, San Franciscos, and New Yorks of the world. With sky-high wages and office rents, these are among the costliest places in America to operate a business. We would expect these cities to be unattractive for firms, especially those that compete globally.”18 But they’re not. It’s the firms that locate outside these cities that struggle. The money you save in rent doesn’t make up for the talent and knowledge that dissipate over distance.

We vanquished distance for shipping and sales. But innovation thrives amid closeness. Which is to say: it thrives in cities.

high housing costs wreak havoc on the city’s offering of opportunity.

upward mobility is in structural decline in the US. In 1940, a child born into an American household had a 92 percent chance of making more money than her parents. But a child born in the 1980s has just a 50 percent chance of surpassing their parents’ income.23 In forty years, the American dream went from being a widespread reality to a coin toss.24

It used to be that both high-wage and low-wage workers moved from poorer areas to richer ones. By the 1990s, poorer workers were moving away from high-income areas—and from the opportunities they once offered.

In our political typologies, it is liberals who embrace change and conservatives who cling to stasis. But that is not how things work when you compare red-state and blue-state housing policies.

In the 1800s, no American city had zoning rules,

The concept of zoning, unheard-of in 1900, covered 70 percent of the US population by 1933.

In the 1950s and 1960s, California routinely built more than 200,000 homes each year.38 Since 2007, California has never once permitted more than 150,000 new homes.39 “In Los Angeles, fewer homes were built in the seventies than in the sixties, fewer in the eighties than in the seventies, and fewer in the nineties than in the eighties, even as the city’s overall population grew,”

It is richer cities with low overall poverty rates that see more homelessness. A similar story emerges for unemployment: homelessness is low where unemployment is high and high where unemployment is low.46 Odd.

starting in the ’70s, wages began to stagnate, inequality began to soar, inflation began to rise, and housing prices began their inexorable march upward.

“[A] home’s value is directly tied to the scarcity of housing for other people,” Demsas says. “This system by its nature pits incumbents against newcomers.”56

imagines

Imagined?

“Environmental action is often framed as at odds with the economy,” writes Hannah Ritchie in Not the End of the World. “It’s either climate action or economic growth. Pollution versus the market. This is just wrong.”15 As societies become economically and technologically rich, they clean their air and water. Air pollution is not a problem of using too much energy or pursuing too much growth. It is a problem of using dirty energy because you do not have the money or the technology to grow another way.

In a thrilling paper with the very un-thrilling title “Empirically Grounded Technology Forecasts and the Energy Transition,” a team of researchers found that the price of oil, gas, and coal, after adjusting for inflation, is about what it was 140 years ago.18 But renewable energy keeps crushing expectations. The authors looked at 2,905 projections for solar costs made by the most popular forecasting models and found that solar costs were expected to fall by 2.6 percent a year and never by more than 6 percent. In reality, they fell by 15 percent per year, year after year.

One of Olson’s insights is that a complex society begins to reward those who can best navigate complexity. That creates an incentive for its best and brightest to become navigators of complexity and perhaps creators of further complexity.

A young country that is still in its building phase creates opportunities for engineers and architects. A mature country that has entered its negotiations phase creates opportunities for lawyers and management consultants.

behind these victories, Nader’s revolution created a new layer of government: democracy by lawsuit. The number of lawyers and cases soared in the 1970s and 1980s. The result, Sabin argues, was a new kind of liberalism, which regarded government not as a partner in the solution of societal problems but rather as the source of those very problems.

those same laws and processes were available for anyone else to use, too. You can bog clean energy projects down in environmental reviews. You can use a process meant to stop the government from building a highway through your town to keep a nonprofit developer from building affordable housing down the block. “It was as if liberals took a bicycle apart to fix it but never quite figured out how to get it running properly again,” Sabin writes.

If Republicans were proposing more paperwork and process to make the government less effective, wasn’t it likely that less paperwork and process would make government more effective? Or as Bagley asked, “If new administrative procedures can be used to advance a libertarian agenda, might not relaxing existing administrative constraints advance progressive ones?”

Liberal legalism—and through it, liberal government—had become process-obsessed rather than outcomes-oriented.

The system we developed is unique. Decisions that are often made by bureaucracies in other countries are made by judges in our country. Robert Kagan, a law professor at the University of California, Berkeley, calls it adversarial legalism.

When you make legal training the default training for a political career, you make legal thinking the default thinking in politics. And legal thinking centers around statutory language and commitment to process, not results and outcomes.

“Legitimacy is not solely—not even primarily—a product of the procedures that agencies follow,” Bagley writes. “Legitimacy arises more generally from the perception that government is capable, informed, prompt, responsive, and fair.”89 And that is where government is failing. California’s High-Speed Rail Authority has been scrupulous in following the law but has been unable to deliver a train. The result is less, not more, faith in government.

“The quid pro quo for a cleaner environment was that development would become slower and more expensive due both to permitting and to the litigation that often ensued. In many respects, this has turned out to be a good deal. Apart from greenhouse gases, which effectively have been unregulated, every major air pollutant has decreased significantly over the past five decades, from carbon monoxide and sulfur dioxide to airborne lead and others. Surface water quality has similarly improved substantially since the 1970s.”

“There’s tons of money that goes into homelessness, particularly in Los Angeles,” Marston says. “My budget was almost a billion dollars. But the money comes with such confined requirements that it’s almost impossible to spend. If you give me a billion dollars and the ability to spend it, it would be a different story.”

One problem liberals are facing at every level where they govern is that they often add too many goals to a single project. A government that tries to accomplish too much all at once often ends up accomplishing nothing at all.

What principally distinguishes the past from the present is not biology, nor psychology, but rather technology. If the world has changed, it’s because we have changed the world.

If progressives underrate the centrality of invention in their politics, conservatives often underrate the necessity of government policy in invention.