Over Abundance

The theme of Ezra Klein’s and Derek Thompson’s recent book, Abundance, is that a politics of abundance will serve the US better than a politics of scarcity. Their thesis is that excess regulations and restrictions on building housing, building out the electrical grid and high-speed rail, scientific research, and computer technology, are holding us back from developing things we need for the future. We could unleash great prosperity for everyone if we’d eliminate these barriers to creativity and growth.

The centerpiece of their argument is housing, especially housing in California, which has received a lot of attention recently. There is supposedly a big housing shortage, and we can’t build our way out of the shortage because of excessive laws and regulations, especially environmental laws like CEQA in California.

CEQA is the California Environmental Quality Act, enacted in 1970. It, like many similar laws around the world, requires the government agency that will build or approve the project to prepare an environmental impact report if the project might have a significant impact on the environment. The EIR informs the public and the decision-makers about the project’s expected environmental impacts. Before CEQA, the agency approving a project had no information about how the project would affect the environment.

Anti-CEQA forces like the YIMBYs claim that CEQA is a massive drag on housing production because CEQA litigation can cause multi-year delays. But studies show that less than one percent of projects requiring environmental documentation under CEQA are litigated.There are four levels of process for projects under CEQA:

• Exempt projects - around 52% - projects that need do no CEQA review

• Negative declarations - around 42% - projects that need a relatively short statement of why their impacts are not significant

• Environmental impact reports (EIRs) - 6% or less - projects requiring a full evaluation because their environmental impacts are significant

• Projects that are litigated after approval - less than 1%

A certain amount of work and expense is required to prepare a negative declaration or an EIR, but it’s important for the agency approving the project to understand the project’s environmental impacts. Litigation is necessary to ensure that EIRs and negative declarations are properly prepared and conform to CEQA. Some changes to CEQA would benefit everyone, but a significant reform of CEQA is not going to get more houses and other projects built in California.

There are three tiers in the housing market: homeless housing, affordable housing, and market-rate housing. Abundance uses Los Angeles’ high rate of homelessness as evidence of a housing shortage here, but this argument ignores the many other causes of homelessness, such as mental illness, weakened social and familial networks, substance abuse, inadequate support after release from prisons and hospitals, and racism. Many homeless people cannot afford affordable housing and must live in shelters, permanent supportive housing, or transitional housing.

Affordable housing generally requires government subsidies and exemptions; otherwise developers can’t recover the costs of construction by renting the units out at below-market rates. Getting these subsidies and complying with the affordable-housing rules adds delay and expense to the process. I would support removing as many barriers and complications as possible from this process. Some of the barriers have already been removed by state legislation over the last few years.

Developers mostly build market-rate housing because it doesn’t come with the restrictions and red tape associated with building affordable units. It is also more profitable, and their businesses are set up to make a profit. Increasing supply generally lowers prices, but the lowered prices for market-rate units don’t usually “trickle down” through the market to significantly reduce prices of affordable units. Increasing the housing supply has the side-effect of inducing demand for market-rate housing by attracting more people to move to California. The hope, when widening a freeway, is that it will relieve congestion, but afterwards, congestion often comes back because drivers who were taking other routes switch to the freeway to avoid congestion. This is induced demand. Building more market-rate housing will work the same way: it will lower housing costs for a bit but then more people will move to California, attracted by the lower housing costs, and those costs will go back up.

California’s population would grow more, as Abundance points out, if housing costs were reduced in the big cities everyone wants to move to: Los Angeles, San Francisco, and San Diego. Slowing the construction of new housing in those cities has the advantage (for me, anyway) of helping to keep the population from growing, but it also causes hardship for existing residents who are spending too high a proportion of their income on housing, who are overcrowded, or who endure long commutes to and from cheaper housing.

Nonetheless, I support low growth in general. Many developed countries are experiencing low growth or gradual population decline. Projections from California’s Department of Financeestimate 2025 California population at 39.5 million and project the state’s 2060 population at 41.7 million. This 5% projected growth over the next 35 years means the growth rates is expected to be about one tenth of one percent per year. I discuss California population in more depth on another post on this substack, but I’m glad to see that California’s population probably won’t grow much in the next few decades. Stabilizing our population is an important goal, and keeping housing prices a bit high helps with this.

Our failure to build housing is much less of a problem than our failure to build infrastructure that’s needed to help deal with climate change. Abundance mentions as examples both California high-speed rail, and the nation’s need to build out its power grid. Regulation significantly retards both of these efforts. I would support some exemptions from regulations, including environmental regulations, for projects that are important for the environment. When I was a member of the Sierra Club Board of Directors, we put in place a policy that local chapters, before bringing environmental litigation to stop solar-energy projects, must consult with the national environmental law program to balance the environmental pros and cons. Building out solar usually outbalanced the damages to local land and biota.

Abundance uses China as a foil; China can get things done because the all-powerful central government can cut through red tape. China is building six times as much wind and solar generation capacity per year as the US. And China is building around 1,500 miles of high-speed rail per year while California’s high-speed rail connection between San Francisco and Los Angeles pokes along for decades, stymied by finance, law, and regulation. But China’s ability to do this is like Hitler’s famed ability to get the trains running on time. China can build more rapidly than the US partly because it is a totalitarian society. I wouldn’t be willing to give up my civil liberties or my (minuscule) say in how the country is run in order to streamline infrastructure approvals.

Abundance is a nod in the direction of President Clinton’s “it’s the economy, stupid.” It’s always the economy. The book’s prescription for the Democratic Party is to embrace the politics of abundance instead of the politics of scarcity. I’m not a capable enough pundit to opine on whether this would succeed in attracting voters. But, from an ethical point of view, it seems like a cop-out. People shouldn’t always just put their economic interests first.

It’s ironic that MAGA harkens back to a day when America was supposedly great, presumably during the 1950s when the country was more white and Christian and there were many more manufacturing jobs for men. We were much poorer then: per-capita GDP (income) in 1951 was 26% of what it is now, adjusted for inflation. Both sides of this fact are worth looking at. Things are much better now economically for Americans than they were 75 years ago, the time the MAGA movement claims were “great.” And US people weren’t less happy back then even though their standard of living was much lower than it is now. Happiness isn’t just about money.

I’d like to see the Democrats embrace values other than money, and policies that benefit the whole economic and cultural gamut, such as inclusion, decent wages and economic security for all, universal health insurance, less economic inequality, and environmental and climate security. These issues differentiate progressives from the current administration, which sees everything as transactional economics; the MAGA leaders acknowledge issues other than money, but don’t really care about them, and assume that nobody else really does either, that everybody is just using those issues to score political points with the voters.

What we had back in 1951, and are missing now, is a sense of dynamism, growth and progress. The US became an adult country in World War II, where we showed the world and ourselves what we could accomplish if we set our priorities right. In the 75 years since then the US has passed through maturity into early old age. We’re no longer a “can do” country. We no longer have the vitality of a young country. This lack of vitality, rather than too much regulation, is the main reason why we can’t get things done and built the way we used to. The world has seen the rise and fall of many empires and countries in the last two thousand years and the US is not exceptional enough to avoid the same fate.

China is rising as the US declines. By some measures (purchasing power parity) it has surpassed the US as the world’s largest economy. It has the young, “can-do” dynamism we lack. That, along with the centrally managed economy, are the main reasons why China can get so much more done and built than we can.

Europe is in the opposite position. Many European countries had colonies and empires, and several countries were major world powers. Europe was militarily and economically dominant before the two world wars. Since then they’ve taken an approach which is the opposite of the abundance agenda—they put other values ahead of economics. They sacrifice personal income for a better life-work balance. They are heavily regulated, but can still build things. They’ve been building 360 miles of high-speed rail per year, and the European Commission adopted a plan in 2025 to build out a continent-wide high-speed rail system by 2040. They’re also ahead of the US in deploying renewable electricity generation.

We in the US should follow Europe’s example and take a balanced approach. We should streamline regulation for important infrastructure projects like high-speed rail and the electric grid, but we also need to protect the environment.

Alexis de Tocqueville, in his almost two-hundred-year old book, Democracy in America, stated “I know of no country, indeed, where the love of money has taken a stronger hold on the affections of men...” He also presciently feared the rise of an “industrial aristocracy” in the US. Paul Krugman, in his substack posts, confirms that the US economy is doing pretty well, but many Americans, according to polls, think it’s doing badly. They tend to say things are OK for them, but not for most others. As Krugman frequently points out, we can’t change this by telling them things are really fine, even though they don’t seem fine. That’s not good politics.

We would all be better off if voters would focus less on the economy and more on other issues and values. The things in the US that most need improvement are not economic; they’re things that concern fairness for our residents, things like political and income equality, the ability to speak one’s mind, abortion rights, gun control, racism, and civil rights, the traditional litany of the left. This is probably not a good formula for winning elections, but Democrats should not give up on these important values.

Abundance is a dangerous meme, because it implies that we can increase the standard of living for everyone by relaxing regulation, especially environmental regulation. If we make a few tweaks we’ll have shared prosperity. The meme is dangerous because it is a concession on one of the pillars of the MAGA faith: abolish regulation because it hinders the rich from making money. How much of the supposed benefits will go to the non-wealthy? In this age of extreme economic inequality, most of the benefits would go to the rich.

Progressives are scrambling to come up with a vision to counter the MAGA vision that won the last election. But abundance is not the right vision for us.