“[W]e focus, in this book, on the pathologies of the broad left.”
There is so much to argue with in a book that is all the rage, “Abundance“ by Ezra Klein and Derek Thompson. Perhaps the core mistake is to take market institutions for granted, when there are malign, underlying forces that construct those markets for their own profit. In other words, “economics” is not supply and demand. It is class struggle. Supply is controlled by Capital, not by superannuated Nader’s raiders.
The leitmotif running through the narrative is that the U.S. suffers from over-regulation, and we all know who is responsible — those damned aging hippies. At the same time, the authors argue that Government is required to guide the market. They praise California’s ban on gas-powered automobiles, while agonizing about its population loss. On the one side California is losing people. On the other its housing shortage drives up prices. At some point the Yogi Berra joke kicks in: “It’s too crowded, nobody goes there anymore.” So which is it? It is both things. It’s easier to hold up an argument when you accept both sides.
The duality is applied to cities as well. The authors cite the eminent urban economist Edward Glaeser to the effect that cities are sources of dynamic economic growth. I could cite a report I edited decades ago by my pals Joe Persky, Elliott Sclar, and Wim Wiewel to the same effect. What cities provide is face-to-face contact that promotes innovation and productivity. People thought fax machines would eliminate this benefit. Uh-uh. Economists call this “agglomeration economies.”
The authors bemoan the shape of U.S. cities, which naturally tend to be governed by Democrats. Let pass for a second the fact that this is another Republican talking point. It’s also just ignorant. The enduring economic power of cities debunks the authors’ case. It is well-known that metro regions supply most of the nation’s GDP. Glaeser says so too.
Urban dilemmas stem partly from U.S. federalism. Local governments have no Constitutional power. It’s all vested in sovereign state governments. Suburbs exploit cities, hoarding tax bases while enjoying the amenities cities provide. Local taxation is intrinsically more difficult than state or national taxation — it’s easier for the taxpayer to run away. State legislatures get in the way of municipal activism.
So are cities in trouble? Housing is clearly a concern. The authors might have mentioned the impact of the crash of 2008 and the Great Recession that followed, associated with a collapse of home-building. We have yet to recover. Readers of this page can guess who was behind that lapse. It’s not the endless “we” of Klein and Thompson.
Delving a little more deeply, cities are replete with what economists call “externalities,” costs and benefits generated by market transactions that fall on third parties. External costs require public response. At the same time, rising productivity in manufacturing renders public response more expensive as time goes on, in keeping with William Baumol’s “cost disease of public services” story. Combined with the problems of federalism, cited above, you have a formula for urban angst. “Abundance” skitters along the surface of all this. Still, people keep coming to cities, even though as Yogi said it’s too crowded.
About Blue State population loss, the authors might have mentioned California’s population grew in most years while being governed by Democrats, but it would have disrupted their narrative. That distribution shifted among states is foregrounded instead. The new Administration is surely discouraging in-migration to states such as California, but we will likely be treated to more allegations of mis-governance by liberals.
The regulation problem resembles that of waste in government. They both speak to the design of policy. Of course there are instances of over-regulation and waste. The trick is finding and eliminating them. That means you need a system that runs more or less automatically. It cannot be based on individual heroism. Executive heroism that lacks democratic legitimacy is autocracy.
I have a teacup of experience along these lines, since for a decade I worked at the U.S. Government Accountability Office (GAO). GAO is what Elon Musk dreamed his own creation, the so-called Department of Government Efficiency (‘DOGE’) could be, but hip and fearless. Nor surprisingly, MAGAs in Congress want to gut it.
Lemme tell you about GAO. It produces boring, lengthy reports that are rigorously documented. It is up to the Congress to do something with any findings. That’s a little thing called Democracy. The documentation is necessary because any sort of spending that goes on in the Federal government has interests behind it. Those parties will pounce on any error in a GAO report at all critical of such spending, hence the reports are extensively vetted for accuracy and cleansed of political rhetoric. That is how you fix something in government. Not by sailing into an agency with no preparation and making radical decisions without benefit of experience, expertise, or legal authority.
GAO does have a bias; it is more interested in money spent to little effect and not enough to neglected opportunities for increased spending. This stems from its accountant mindset, rooted in the traditions of the agency—originally known as the General Accounting Office. The Newt Gingrich Congress changed the name to pretend a dedication to accountability. They also forced a huge staff cut. You can’t have too much accountability.
Whatever its biases, GAO is the place where wasteful spending and over-regulation can be examined objectively and brought to the attention of decision-makers. It is up to the latter to take action, which ultimately means it’s up to their constituents.
One complaint is all the welfare state Democrats do is try to give away money. In so doing, Klein & Thompson reduce the most important welfare state institutions — Medicare and Social Security — to mere giveaways. This reflects a failure to comprehend or acknowledge the notion of social insurance. Such reductionism is a trope on the Right.
I do agree there is a tendency on the Left to dwell on the distribution of money rather than public services. One sign of this bias is the rage over the so-called Universal Basic Income, zealously advocated in a book by Ezra’s wife. Most of my own little career has been devoted to the same general thing. When I began my tenure at the Economic Policy Institute, however, our mission and my mandate was to talk up public investment. I used to call it “left-wing supply-side economics.” My most recent stab at this subject is here.
Every time there is a surge of voter interest in the Left, the wet blanket brigade comes marching in. “Pathologies on the Left” indeed. How about pathologies of the Center, or the ruling Democratic gerontocracy?
After the Dukakis debacle of 1988 brought discredit to technocratic centrism — “It’s about competence, not ideology” — Bill Clinton managed to co-opt liberal hopes, then thoroughly sold them out. Obama performed the same feat in 2009. Both had sailed in with Democratic majorities in Congress, and both screwed the pooch, losing their Congressional majorities, first setting the stage for G. Bush and a disastrous war in Iraq, and second, God help us, for Donald Trump. Each time around, centrist ideology is dressed up in new clothes, in an effort to compete with progressive thinking. The pretense is that something new has been launched, in contrast to retreaded liberalism.
In the 1990s, the vehicle was the Democratic Leadership Council (DLC). It helped elevate Bill Clinton. Its mission was to marginalize the Left by promoting Republican talking points in a liberal guise. In the face of widespread panic over the national debt, its budget message was “cut and invest.” Somehow the investment part got lost, and Clinton morphed, by his own estimation, into an Eisenhower Republican devoted to free trade and a balanced budget.
Now we are getting more fresh hell, in efforts to combat a potentially resurgent left. One is “Project 2029,” dedicated to the proposition that the Left is fomenting sexual perversion and treason, in opposition to the left's "interest-group Borg." Another is a new project on “American identity” that is also in the business of amplifying conservative nostrums. These are the same characters that were behind the DLC. I suppose it’s great to have long-term job security.
My latest pet peeve is the kerfuffle over “affordability.” Why not a problem of low incomes, due to wage suppression, and due to the attack on public benefits? After all, if you make more money, you can afford more stuff. If the Gov subsidizes your medical care, there is less you have to pay for yourself. The affordability bit tends to focus on eggs and gasoline, both mostly out of reach of public policy. It puts focus on retail, where competition is relatively strong and profit margins are thin.
The real affordability problems pertain to health care, higher education, and housing, all subject to public sector intervention, and all attributable to those malign capitalist forces noted above. As I’ve written myself, housing is partly a matter of deregulation (applied to local zoning, thanks in part to liberal homeowners). But it’s also a matter of austerity policy, as are health care and higher ed. Naturally, tax cuts and ICE have escaped austerity objectives. Class struggle persists.
I’m out of ranting gas today and I haven’t finished the book. So more shortly.
MaxSpeak, I listen!; Thank you for The Poverty of Abundace, Part I.https://sawicky.substack.com/p/the-poverty-of-abundance-i?utm_campaign=email-half-post&r=c4op1&utm_source=substack&utm_medium=email. I have not read it or a review of it but it seems everyone talks about it as if it were the first gospel of anti-Marx. Yes, you are right: suburbs exploit suburbs by enjoying urban amenties.
Those amenities have a little known form of externality associated with them: an input-side externality. Whereas exput-side eternalities involve costs of production not paid for by the market transaction, input-side externalities invole a market transaction which is distorted because the actor isn't paying the full normal market cost of such transactions, thus distorting the market. That is the case for the large public and nonprofit tax exempt amenitiy-generating insitutions (the hospitals are the 800 pound gorillas but universities as well). The overall operating cost per square foot is much lower due to no property tax. Let's not get into the tax abatements and TIFs. But all of this robs inner city schools of funding.
So even if suburban and inner-city residential tax millage levels are the same in adjacent school distticts, the high proportion of real property that is exempt or abated in the inner city county seat puts cities at a disadvantage, per McEachern's property tax capitalization thesis, but the suburbs still get to benefit from the wonderful amenities in the county seat. Their property values rise faster and there is what is known as a "donut" hole in the inner city.
Meanwhile, do the liberal democratic suburbanities instruct their county executives and county council members to really do something about urban poverty? Things they could do even given certain limits on county options, given they are creatures of the state? No. Don't get me started. But I ordered the book and will take a look.
Class struggle
The borg can't live without " them"
The wagery can't live with " him"
Problem with social democracy inside a g8 today
Too many classes
Exploiters in towers
Experts manque in their heads
Wage chumpions in week to week
Let's pick a knock off class