A review by Paul Bolster
In their new book Abundance, Ezra Klein, a columnist and podcaster for The New York Times, and Derek Thompson, a journalist for The Atlantic, are looking for a new national strategy to overcome what they see as a shortage economy: not enough affordable housing, energy, healthcare, and action on climate change. As liberals, they are harsh critics of conservatives who stick to supply side trickle-down economic theory. However, most of their criticism is reserved for liberals. The shortages, they believe come from policy decisions. In the 1970s, we liberals (I put myself in the group), put process rules in place to ensure every interest group got its say before any new development broke ground. We have made it hard to build what the country needs.
They ask why American technological innovations and scientific breakthroughs are not built to scale by the U.S. economy. American scientists and engineers discovered how to take the sun’s energy and turn it into electricity, yet the industry bringing this amazing source of clean energy to the world is located in China. Why are the microchips invented by Bell Labs, that now double in capacity every seven years, produced for the world by China and Taiwan? Why are the drugs our health scientists discovered and certified safe and effective, produced in mass quantities outside our country and priced higher here than anywhere else in the world?
Abundance tells many insightful stories of how the American approval process slows production and pushes the cost above other countries. Liberal California gets a special share of criticism. It asks why the wealthiest state in the union controlled by liberal democrats has a dramatic shortage of housing and the highest average price for owning a home. With its shortage in housing and high prices comes the highest rate of homelessness in the country.
The authors find some encouraging examples from our recent history illustrating we can be more effective at bringing scientific breakthroughs to scale. In the middle of World War II a federal agency took responsibility for bringing penicillin out of the lab to save the lives of thousands of wounded soldiers and provide a medical solution to bacterial infections around the world. Before the war was over we were distributing millions of doses. In a more recent example, the authors retell the story of Project Warp Speed. Within 10 months the COVID vaccines went from small-scale experimentation to the production and distribution of hundreds of millions of doses. While neither Democrats nor Trump supporters seem to claim this success, the authors find this an exciting example of how government and the free market merged their capacities to save the lives of 20 million people worldwide and gave us all the confidence we could live through a pandemic. This amazing feat, they say, gives insight into the role of government in a shortage economy.
The book gives a lot of attention to the policies and processes that created the affordable housing shortage. Here, liberals take the brunt of the criticism. The little rules in our big city zoning laws, the environmental laws of the 1970s, and the lengthy stacking of low interest rate government funds add time and cost to the production of housing. At every step – the neighborhood zoning review, the impact fees, the sewer tap fees, the tree ordinance, the plan reviews – the cost of housing increases and its availability declines.
The authors give California another jolt for its failure to get things built. Eight years ago the voters of California approved an expenditure of $1.5 billion for housing for homeless persons. Less than half the money has been spent and the production is way short of voter expectations.
There’s a lot to think about in this book. Maybe it is relevant to Atlanta’s Zoning 2.0, our neighborhood land use review process/NPU, or the new tree ordinance. The authors have made a bold contribution to the search for a new American policy agenda. They seek a blend of free market strengths and the actions of government to create an abundant society for all Americans.
