Book Review by Michael Roberts
Abundance is a new book that has been attracting attention and debate among mainstream economists and politicians. It aims to explain to Democrat members in the US why their party lost the election to Trump (narrow as that result was). The authors, Ezra Klein and Derek Thompson, writers at very liberal mainstream The New York Times and The Atlantic, respectively, argue that it was because the Democrats and supporters of ‘liberal democracy’ have lost their ability in government to carry out great projects that could deliver the things and services that working people (called the ‘middle class’ in America) need.
Why did the Biden administration fail, despite the infrastructure programme and despite the green climate change programme? Well, according to the authors, it was not to do with high inflation causing falling average real incomes etc. It was more because of the failure of Democrat administrations to get the US back to making stuff to meet people’s needs. Abundance, not distribution; growth, not stagnation. What was really needed was not more environmental controls or equality measures, but just more things – in abundance. You see, the Democrats and the liberal elite were only interested in things like regulations on pollution, or on housing projects, or on roads etc. This stood in the way of just allowing capitalism (or to be more exact, capitalist combines) to get on with delivering.
The authors outline many examples of how production, resources and projects could be done to raise living standards if only government regulations and middle-class nimbyism stood aside. Take housing, the authors argue that the housing crisis in America with rising rents, and unaffordable home prices, is due to a sheer lack of supply. This housing scarcity has been caused by restrictive zoning regulations and community vetos, which collectively prevent housing from being built where it is most needed, sending house prices skyrocketing.
Take global warming and climate change. Environmental regulations intended to stop the use of fossil fuels have actually inhibited the large-scale deployment of clean energy alternatives. For example, efforts to build energy infrastructure—from solar panels to the transmission lines needed to connect them to electrical grids—face fierce opposition, often from the same liberals trying to block housing projects.
Fellow ‘Abundist’ Matt Yglesias reckons these blockages to delivering the needs of working people is due to the liberal left adopting the interests of the upper-middle class elite, which has led to “the adoption of a kind of English gentry attitude that prioritizes ‘open space,’ quiet, good taste, and a harmonious social order over dynamism, prosperity, and the kind of broad, upward absolute mobility that is made possible by growth.” These interests are what stop governments and companies from delivering ‘abundance’.
A central argument of the authors is that it is these middle-class well-off, property owners who oppose getting things done. Projects that would make a difference are blocked by local participation and litigation from a narrow band of rich homeowners and interest groups. Abundance is a call to dislodge these concentrated interests, who are basically the friends and neighbours of the authors themselves.
There is much truth in the author’s argument that America is no longer delivering on basic needs; and it is falling behind in implementing important technologies. But is it true that why America is failing to deliver a decent, reasonably priced health service is because of too much regulation and nimbyism ‘(not in my backyard’)? Is it true that America has failed to deliver a high quality education service for young people without huge student debt because of too much regulation and cultural elitism? Is it true that America’s roads and bridges are falling apart because of planning regulations and legal actions?
Surely, the reason that America has the most expensive healthcare in the major economies with the lowest health outcomes is because it is the only major economy that does not have a health service financed by government and taxpayers free at the point of use. Instead, it has huge private health insurance companies and hospital hiking up fees and avoiding payments and services at every opportunity.
Surely, education levels have deteriorated is because public investment in education has been continually reduced and governments have imposed huge debt burdens on students that deter many from getting qualifications.
Surely, America’s poor infrastructure is due to the very low levels of government spending for decades. The US rail network is tiny, slow and inadequate not because of nimbyism and regulations, but because it has been left to the private sector to consider it and it is just not profitable. Compare that to the massive state investment in the rail network in China that has transformed transport and communcations there in just a decade or so.
When one of the Abundance authors, Klein, was asked if he favoured a universal public health insurance model, he said that it would be hugely preferable over the status quo, but making Medicare for All the centrepiece of a Democratic health care agenda was not ‘politically practical’. Klein argued that this was so because of the vested interests of the medical profession. But surely the main reason is because of the mighty power of the health insurers, drug makers and private equity-owned hospitals that lobby the political parties. And since when do we not advocate the right solution because it won’t be accepted by vested interests? Should people have not fought to get rid of slavery in 19th century America because it was not ‘politically practical’?
The authors make much of the housing crisis in America – a crisis that they blame on regulations, local opposition to planning etc. But whatever truth there is in that, it pales into insignificence with the real cause of the housing crisis. There are just not enough homes being built, even though US population growth is slowing and household formation is slowing.
Though estimates vary, experts put the US housing shortage at somewhere between 3.7 million and 6.8 million homes. If more homes were built and demand for homes was met, then the price of homes would fall or stop rising and incomes would start to close the gap on affordability. But at the current rate of build, it would take 7.5 years to close the current housing gap – in other words, never.
Why are not enough affordable homes being built? It is because the privately owned building sector does not want to build them unless they are profitable. More research has emerged over the last few years showing the link between the housing shortage and higher costs. So does America have a national house building programme funded by federal and state governments and built by a publicly owned national construction agency to solve this problem? No, of course not – this is America. Such a policy proposal would be ‘politically unacceptable’.
The abundance agenda appears to be an attack on the Trumpist right, but it is really an attack on the socialist left. The left is attacked for concentrating on inequality and discrimination and not on increasing production to meet working class needs. But what is the authors’ solution to getting more stuff – it is getting rid of regulations, even those supposedly there to protect our health, the environment and the planet. By the way, we hear the same argument in the UK from our ‘Labour’ government – namely the way to get millions of houses built is to do away with local planning and environmental regulations. Apparently, there is nothing wrong with capitalist system in the US (or in the UK), it’s just that it is hampered by petty regulations and bureaucracy.
Yes, we need more stuff and an ‘abundance’ of what working people need. But this book directs its sights towards planning regulations as the obstacle to abundance not to the real blockages imposed by the vested interests of the fossil fuel giants, the private equity moguls, the building and construction companies, and private sector control of America’s health and education.
Moreover, the authors have a naïve belief that new technologies can transform people’s lives if only they were freed up from unnecessary obstacles to implement them. The authors have a completely techno approach: “whether government is bigger or smaller is the wrong question. What it needs to be is better. It needs to justify itself not through the rules it follows but through the outcomes it delivers.” Take their view on AI. AI means “less work . . . [but] not . . . less pay. [It] is built on the collective knowledge of humanity, and so its profits are shared”. Really? Are the likes of OpenAI, Microsoft, Google, Nvidia etc going to share the profits of AI implementation with the rest of us? Intellectual property rights and monopoly control of new technology are the biggest obstacles to getting abundance. This book has an abundant title, but a scarcity of answers.
Abundance – by Ezra Klein and Derek Thompson
Publisher: Profile Book
ISBN-13: 978-1805226055
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