The Poverty of Abundance, II

Inequality is your fault

(Administrative note: I happened to notice that some comments here are going to my spam folder, which I do not usually check. If I have not responded, that would be the explanation.)

I read a bit the other day in Abundance by Ezra Klein and Derek Thompson that income inequality in the U.S. was due to liberals. I had to go back and check that I read it correctly. It was very surprising to see it in a book by Ezra Klein, a very smart fellow (I don’t know his co-author), since it’s such ridiculous bullshit. The kind of thing you would see in a dumb right-wing blog.

The story goes like this. Restrictive zoning keeps working class families from finding affordable homes in affluent locales. (true) There is research that one’s location affects one’s life chances for income advancement (also true). Ergo liberals supporting zoning are responsible for inequality in the U.S.A.

I’ve written about zoning critically, both nationally and in my own little corner of the world. I agree that it is a significant problem for housing affordability. There are two other significant angles to housing costs. One is the relevance of rent control in cities. Another is what has come to be called “social housing,” meaning government funding of new construction. All three matter, not just zoning. But but but . . .

There is quite a bit of literature on U.S. income inequality. The earliest stuff in the 1980s addressed the stagnation of wages, associated with attacks on trade unionism and the waning through inflation of the minimum wage. This is the first I’ve seen putting it on zoning.

We need to back up a ways. Hostility to newcomers, even hatred, is ubiquitous, at every level. People in white-bread flyover country worry about immigrants from Central America, even if there are none where they live. Germans worry about Turks. Rwandans worry about Congolese. Old immigrants resent new immigrants. Etc etc etc. People suck! Refugees are unwelcome everywhere.

I did a piece on immigration, making the case that refugees are a positive thing, a blessing for the country of arrival. It’s here.

In Abundance, one piece of this revolting mosaic is chosen to stand for the entire apparatus of U.S. inequality, which by most scholarly work starts with labor compensation. Choosing zoning as if it’s a liberal creation as the frame for U.S. income inequality is a breathtaking flight of sophistry.

Ask yourself, in a political period where xenophobia has given rise to an autocratic, corrupt, vicious government that threatens the nation and the world with a wide spectrum of calamities, what is the significance of suburban liberals opposition to loosened up housing regulations? Where is the bias against newcomers with the greatest salience? Jesus!

The authors note that house prices grew faster than wages. This depends on which houses and whose wages we are talking about, but that aside, it goes to the “affordability” canard I unpacked in my previous post. Affordability is a two-way street. There are prices and there are the means to pay them—incomes, chiefly from wages. Which you choose to focus upon is a political choice.

Affordability really comes down to health care, higher education, and housing, all areas where the government plays a huge role, unlike eggs and gasoline. I could also mention the impact of patents and copyrights on prices and income distribution, following my friend Dean Baker.

One of the showcases in Abundance is the failure of California’s High Speed Rail (HSR) project. I worked on this subject myself at GAO. The authors’ account is seriously misleading. They give the impression that the project had widespread political support. It did not. This was evident in the fact that at no point were sufficient funds set aside to complete the project. Not by the state, nor by Obama’s deficit-twitchy administration.

Once again, you have to ask yourself, what are the sources of political unwillingness to expand public spending? Is it suburban liberals? In at least one case, it was. The California line was slated to go through wealthy Palo Alto to get to San Francisco. This aroused a fury of homeowner opposition. It is also true that cost estimates for the project kept increasing. One factor in the latter was the pressure to build tunnels in certain places to avoid disruption on the surface.

High speed rail has also been contemplated in Florida and Texas. It was squelched in both places, not I would guess due to liberal opposition. By far the most tenable route would be from Miami to Boston. The Eastern corridor is slow-poke Amtrak’s only profitable stretch of line, not that we should demand all public services cover their costs. The problem for the Eastern corridor is there is already a lot of stuff in between Florida and Boston that would have to be razed. It’s a massive NIMBY problem.

At the same time, Western Europe is honeycombed with passenger rail, and those nations are no strangers to an interest in regulation. A big difference is that they are unitary states, unlike the federalist U.S. Like most on the left, I like to point out, the problem of federalism rarely is broached in U.S. left discourse. In this respect, Klein and Thompson are in good company.

Who doesn’t like high-speed rail? Besides those in the path of prospective construction, there are the airlines. For certain distances, HSR eats the airlines’ lunch. The extra time in trains moving is more than offset by the ease of getting to and from stations, and boarding and leaving trains, not to mention the relative comfort of riding in a train compared to sardine-can airplanes. I’ve already mentioned ideological opponents of public spending of any sort, and especially big, glitzy projects that stand a good chance of public approval. At the Federal level, that includes the kind of centrist deficit-obsessives that guided Clinton and Obama.

Privatization is invoked as a factor in the HSR bog-down. The state government’s management functions were outsourced to private consultants. Yet who are the champions of privatization? It ain’t the Left. I’m so old I remember Al Gore’s “reinventing government,” which reinvented nothing, and the Clinton Administration’s boasting about reducing “head count” (meaning the level of Federal employment) in government.

The authors are eloquent on the need for, and the benefits of, economic growth and scientific research. What is lacking is a plausible political explanation for the nation’s failure to step up to the challenges they survey. To the contrary, in its indictment of “the broad Left,” this book is a political fiasco.

Trying to be generous, I could say the main thrust of the book, to focus the Left more on public goods and less on money transfers, is constructive. Still, the austerity millstone around the neck of public investment comes from the deficit-obsessed center and its sponsors in big finance, as well as the usual suspects on the Right, not from the Left.

It is interesting to note that “Abundance” is sometimes set up as a neoliberal or corporatist alternative to what is called left ‘populism,’ meaning Bernie, the Squad, and now Zohran Mamdani. In a NY Times review it is proposed as a criticism of neoliberalism. I would hesitate to classify Klein and Thompson as neoliberals, or anti-neoliberal. I’d say they are mostly just ambivalent. Their arguments go in circles. They constantly acknowledge the benefits of liberal regulation, then provide endless tales of liberal excess. Can’t there be insufficient regulation? Do its benefits never outweigh the costs? Oddly enough, it’s the authors who accuse promoters of regulation of failure to consider trade-offs. That’s a two-way street.

There is no rigorous benefit/cost analysis. There could hardly be in a book for a popular audience. In any case, the vibe is mostly negative. As the authors stipulate, the story is a critique of “the broad left.” The Left most explicitly referred to, besides liberal lawyers and suburbanites, is the small constituency for what is called “degrowth.” I took a swing at this a while back. Whatever you think of it, as far as the “broad left” goes, it’s a sideshow. These days the broad left is Bernie, AOC, and Mamdani. They are the future, if there is to be one. “Abundance” is just the latest distraction.