Abundance

Why blue states have an affordability problem

Capitalism’s ability to lift material living standards is so immense that even Karl Marx paid tribute. “[D]uring its rule of scarce one hundred years,” he wrote in “The Communist Manifesto” in 1848, capitalism “has created more massive and more colossal productive forces than have all preceding generations together.” Socialism would surpass it. Writing in the immediate, giddy wake of the Russian Revolution, Nikolai Bukharin and Yevgeni Preobrazhensky claimed in “The ABC of Communism” that by eliminating competition and “the organisation of industry on a purposive plan,” “the communist system will rapidly develop the forces of production.” There would be even more material abundance.

That didn’t happen. In 1976, per capita consumption in the capitalist United States was more than double that in the communist/socialist Soviet Union. Soviets spent a higher share of their income on necessities like food, education, and health than Americans, and a lower share on luxuries, like durable goods and household services. The failure to deliver material abundance was one reason communism/ socialism collapsed in the late 1980s.

Following this collapse, the left needed a new approach. If, economically, it could offer only impoverishment, it must make this a virtue. Rejecting Marx and the early Bolsheviks, the left now embraced “degrowth,” the belief that abundance was bad for us. Jason Hickel’s 2020 book “Less is More: How Degrowth Will Save the World” encapsulates this argument.

This drivel is a tough sell in a world where almost 700 million people — 8.5 percent of its population — live in the World Bank’s definition of extreme poverty. But voters in developed countries don’t appreciate their living standards being trashed either. So, in their new book “Abundance,” Ezra Klein and Derek Thompson seek to craft an alternative economic agenda for the left.

They need it. “California’s most populous cities are run by Democrats,” Klein and Thompson note. “Every statewide official in California is a Democrat. Both chambers of the legislature are run by Democrats.” “Liberals should be able to say: Vote for us, and we will govern the country the way we govern California! Instead, conservatives are able to say: Vote for them, and they will govern the country the way they govern California!” R.I.P Newsom, 2028.

“This book is motivated…by our belief that we need to decarbonize the global economy to head off the threat of climate change,” they write, but note that “it is often easier to build renewable energy in red states than in blue states, despite Republican opposition to the cause of climate change.” And, for all that Democrats agonize about affordable housing, “[t]he Austin metro area led the nation in housing permits in 2022, permitting 18 new homes for every 1,000 residents. Los Angeles’s and San Francisco’s metro areas permitted only 2.5 units per 1,000 residents.” Indeed, in 2024, states with Republican trifectas had a housebuilding rate of 564.9 per 100,000 residents, twice that in states with Democratic trifectas, with 281.8.

“In our political typologies, it is liberals who embrace change and conservatives who cling to stasis,” Klein and Thompson write. “But that is not how things work when you compare red-state and blue-state housing policies.” They blame “liberals — and particularly the strain of liberalism that began to develop in the ’60s and ’70s” which has created “so many rules around permitting and environmental regulations” — what some have called “Blue Tape” — “that it became impossible to build necessary housing and energy.”

Faced with the results of “Blue Tape,” Democrats treat the symptom — prices — rather than the underlying problem, insufficient supply. But this only exacerbates the situation. “[I]f you subsidize demand for something that is scarce,” as with housing vouchers, “you’ll raise prices or force rationing,” Klein and Thompson write, noting that “[t]oo much money chasing too few homes means windfall profits for homeowners and an affordability crisis for buyers.” These are supply side problems of insufficient production, not demand side ones of insufficient spending power.

The obvious inference is that blue states need to be more like red states, but, while Klein and Thompson are enlightened “progressives,” progressives they remain, feeling the need to split the difference between “a progressive movement that is too afraid of growth and a conservative movement that is allergic to government intervention.” But houses aren’t being built at impressive rates in Texas or wind farms in Iowa because the state government intervened; quite the opposite. This is the golden mean fallacy.

Klein and Thompson acknowledge that they are invoking Marx’s “earlier tradition of leftist thought,” but that was a disaster, as history shows. In praising Marx’s aim of directing production’s “ends towards a shared abundance,” it isn’t clear that they understand why his system failed so miserably to produce that “shared abundance.” When they advocate “plans” and “picking winners,” they echo Bukharin and Preobrazhensky a century ago; look how that worked out.