By Jeffrey Frankel, Professor of Capital Formation and Growth, Harvard University, and research associate, US National Bureau of Economic Research
As US President Donald Trump purports to “Make America Great Again” by implementing policies that directly harm the lower- and middle-income Americans who voted for him, US Democrats are attempting to devise an alternative vision that might appeal to workers. Some seem to believe the answer lies in the idea of “abundance”.
This partly reflects the release earlier this year of an eponymous book, written by New York Times commentator Ezra Klein and The Atlantic magazine’s Derek Thompson. While Klein is among my favourite columnists and podcasters, I hesitate to embrace claims that the book represents a “once-in-a-generation, paradigm-shifting” revelation. And I am not sure that the term abundance can be translated into an effective political strategy.
To be sure, abundance does satisfy some of the criteria for choosing a compelling political slogan. The word is common enough to be recognisable, but not so common that it fails to stand out. Its connotations are positive and broadly appealing, especially at a time when belt-tightening has become the norm. And it is concise enough to fit on a bumper sticker. Democrats’ embrace of abundance could even function as a kind of admission of past mistakes—essential to any credible strategy at this point.
Moreover, the basic argument of Klein and Thompson’s book—that the United States has lost its ability to build the things that people need and want—is sound. It is absurd that major, socially beneficial projects, from renewable energy to housing construction, take decades to complete in the US. In California, about $14.4 billion has been spent over 17 years to build a high-speed rail system, with only 60 miles of track to show for it. Over the same period, the authors point out, China has built more than 23,000 miles of high-speed rail.
Part of the problem lies in prolonged permitting processes. As Klein and Thompson also note, the blame for this falls partly on progressives, who have often favoured cumbersome, if well-intentioned, regulations. It was a sign of the times when California Governor Gavin Newsom signed a bill on October 10 to make permitting easier for high-density housing to be located within a half-mile (800 metres) of a major rail station.
Of course, some restrictions are necessary. For example, most Americans support the protection of national parks. Municipal zoning laws prevent factories or high-rise buildings from being erected next to existing homes—a legitimate demand from homeowners.
And it is no defence to say, “those NIMBY (not in my backyard) people are just interested in the market value of their houses”. It shouldn’t really matter whether a family wants to keep the view it already has for their own pleasure, or whether it is a future family to which the house will eventually be sold that would lose the benefit if the monstrosity were built next door.
But measures for addressing community concerns should not be designed in such a way that these concerns effectively become blanket vetoes. Nor should decade-long lawsuits, which benefit nobody but the lawyers, be the main tool for achieving compromise.
On this point, Klein and Thompson are right: the pendulum has swung too far toward procedural gridlock. And the problem extends beyond construction. Similar pathologies pervade air travel, health insurance, water rights, banking and finance, and countless other microeconomic policy issues. Often, rules and institutions exist that could do a better job of satisfying competing interests than those currently in place, but they are not being used. Instead, regulation and litigation are being allowed to thwart the timely delivery of crucial public goods.
The challenge for the US lies in balancing competing objectives efficiently. Meeting it requires determining not only how much regulation is appropriate, but what kind of regulation would correct market failures while avoiding government failures. In other words, instead of seeking simply to remove regulations, we should be designing better ones.
Any worldview that ignores scarcity is unlikely to succeed. There is a finite amount of land, and in some parts of the US, it is already densely populated. But abundance is the opposite of scarcity. Instead of pretending that land is abundant, we should be doing the hard work of figuring out how to make the best use of it. Park or factory? Single-family homes or high-rises? These are questions that bombastic slogans and wishful thinking cannot answer, but textbook economics can.
What Klein and Thompson are advocating is “competent capacity”: a US that can effectively plan, approve, and execute projects. That is a worthy goal, but “abundance”—a rhetorically uplifting but analytically imprecise concept—is probably not the clearest way to convey it, let alone the most effective means of achieving it.
It is no coincidence that many textbooks define economics as the study of behaviour with respect to scarcity. Economics frameworks excel, above all, at optimising systems to achieve objectives subject to specified constraints—identifying tradeoffs, pricing externalities, and designing institutions that align incentives instead of stifling them. Textbook economics will never be a powerful rallying cry, but with its focus on clear thinking about opportunity costs, efficiency, and welfare, it remains the best compass for policymaking.
Economic progress depends on reconciling competing interests through sound rules and predictable governance. Klein and Thompson are right that America has lost the ability to deliver on this front. But rather than chase after a fantasy called abundance, we must learn to cope with scarcity and restore institutional competence—guided by the balanced reasoning of established economic wisdom.
(Sohaib Nasim contributed to this commentary)
Copyright: Project Syndicate, 2025.
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