I don’t find all of this convincing. The ability to build a good transit system *does* predict GDP growth, and the link is state capacity to build things and enforce rules. There’s a reason that the countries that put together the state capacity to build or enforce rules are rich. There is no requirement that you can only be good at some subset of things that require state capacity. There is no trade off, there is only gain from doing the job better.
Trying to improve that capacity, and reorient government and political processes, aims to improve the same core state competence that you help push for and Ezra/Derek are getting at.
Not a big point. But there is *no* example of a private actor successfully building a full transit system or modern train system without lots of state subsidy and support. So learning how to do that effectively rather than in effectively matters, it cannot simply be delegated to the private sector to provision (as housing can and should be).
Same with law enforcement. To my more limited knowledge, there is no example of a country with a great and fully privatized law enforcement system. Given the state needs to be involved to some extent, how to manage that effectively matters.
Neoliberalism and privatization cannot answer all our problems, and refocusing what government must do in objectives is vital even in a more market oriented country.
Right, but transit and police are somewhat specific examples of where this doesn’t work. There are other sectors like residential housing where the private sector seems perfectly fit to satisfy demand if we could just let them do it.
yeah for housing all that needs to happen is government to allow people to do what they want with their own property, and the market will build all the housing people desire.
But there will definitely be room for government in say getting transmission lines built (eminent domain almost certainly needed)
I think that we may have overfunded R&D. The replication crisis in the social sciences may indicate there are more people chasing grants than are capable of doing quality science.
Not everyone can play in the NBA. I suspect that the intelligence and the talents to do creative work in the sciences are equally rare. Add the fact that the social sciences should be _more difficult_ than the physical sciences.
Yes. "Urbanism" falls under one social umbrella in terms of the people interested in it, but housing and transit are opposite in what we actually need - both need less regulation, but transit needs the government to do more things actively while housing pretty much only needs it to do less.
I am not sure why you are using the example of transit or policing. The book is about abundance, not mass transit and policing. I have not yet finished the book but it does not seem to mention those policy domains. Neither does Lehman’s review…
Good comment. I suspect the response to your comment “There’s a reason that the countries that put together the state capacity to build or enforce rules are rich” is something like, “Yes but the question is what should countries do next after they’re already rich?”
Rules enforcement seems like an absolute prerequisite for a country to function at all. Beyond that, I can get behind the observation that the USA and the EU have different comparative advantages re: whether the state or private industry is a more effective builder of physical infrastructure.
My idealized hope would be each learning to be a bit more like the other! Or at least the US learning about more aggressive law and behavior enforcement, dedicated planning and infrastructure agencies subject to political oversight rather than consultants, and the importance of ensuring your national champion industries are competitive by protecting workers, not jobs (as the Nordics do)
I will grant you that “ability to build a good transit system” not only correlates with but actually causes a country not to be poor. Or in the words of this discussion, the ability to build a good transit system does predict relatively decent versus relatively poor GDP *LEVEL*.
But that is very different than saying in the modern world - call it the last 50 years - that the ability to build a good transit system does predict ONGOING GDP *growth*.
California (and I am *no* fan of today’s CA governance) vs. Japan and Europe demonstrates decidedly that it does not.
CA cannot build a good transit system, and yet despite the best efforts of the leftists who have governed the state for more than 25 years now, CA’s economic growth rate has consistently exceeded that of Western Europe and Japan.
“There’s a lot of ruin in a nation.“ California also has the advantage of an enormous trading partner, the rest of the US, right next-door. Add the wonderful climate and geography.
But the fact remains that CA until the last few years pretty consistently had a higher growth rate than the rest of the country.
Again I maintain this was despite the state government, not because of it.
And even though I don’t have hard evidence, I also claim it was primarily because of the people, not the natural resources (though obviously the climate is a plus in attracting the people).
Singapore is a city state specializing in trade/finance with vastly larger states. This is like saying that the gdp/capita of tokyos finance district or Luxembourg is high. Sure it is. It tells us nothing about what can be done at scale.
There are lots of East Asians. Their average performance is pretty indicative of East Asian potential.
“There are lots of East Asians. Their average performance is pretty indicative of East Asian potential.”
Your point about Singapore is fair enough, to a point. Yet somehow there are not several Singapores, and Singapore did not start out being Singapore as a finance state.
But that’s a relatively small point. Your “average performance” statement is just stupid. That’s like saying the performance of the average Democrat voter in Illinois is indicative of American potential. Which surely it is not.
So you can generalize, but that doesn’t make you correct. Many East Asian states continue to grow their mean and median per capita GDP at rates above the U.S.’s , even if the poorer and more poorly organized ones do not. And I’m simply ignoring the elephant in the room (China) because their system is “unique” and I don’t trust Chinese government numbers.
1) It now seems clear that Red States are going to adopt universal school choice and Blue States are going to do the opposite (in fact are going to require a degree of ideological managerial control in schools that surpasses anything I grew up with). This is a huge difference between the "state capacity" and "free market" view on one of our societies biggest and most important sectors.
2) I personally have a front row seat to the IRA. I will give you a review of my sector:
1) The CBO score on the IRA was an outright lie and everyone knows it was an outright lie.
2) The IRA claims it saves money while at least increasing cost by 300%.
This matches earlier special interest giveaways I've observed in my career in healthcare.
The Democratic Party is ultimately an Eds and Meds lobbyist group backed by single and government employment (and adjacent) women. It's not going to build. That isn't what the base wants (the base isn't male policy wonk nerds that think they are philosopher kings that should rule).
I FULLY ENDOSE what Ezra is trying to do, and think the world would be a better place if he wins his intra party debate.
But I also advised my nephew in California to move to Florida, because I just don't believe in Ezra at a fundamental *goals* level. I think the state should shrink, not grow.
If Dems want to rule nationally they should prove they can rule well in blue states. If CA started following an abundance agenda I believe that would actually work.
I also think it's unlikely, but I will continue to promote it.
We REALLY need two sane competent political parties. Sadly we have ZERO right now
I think there's some real value in this review, but I also think Klein and Thompson do a better job of talking political economy than the author concedes.
Take their discussion of housing. They say that a major obstacle to housing construction is that, by encouraging people to treat homes as investments (through mortgage policy), we have created a huge coalition that will try to block new housing.
I'll also add that I do think there's some potential in persuading liberals to be more pro-abundance. It's not as if Hamiltonian progressivism is going to be dead forever. Jeffersonian progressivism might be on the downswing.
Investment value is not the only or even primary motivation for NIMBY-ism. Low cost housing brings low quality people who degrade the shared environment. That’s why the suburbs exist in the first place.
Klein and Thompson are themselves bad faith actors who are shocked! to find waste and corruption in government procurement and legislation. I watched Klein and Jon Stewart put on a performance while discussing some of this waste as if they haven't been fully aware of every liberal boondoggle of the past few decades. They claim to want to change things but when you get down to brass tacks they'll worry themselves right back into the same positions they claim to critique. As always they want illiberal outcomes via liberal means. It doesn't work that way.
Govt has largely been out of the way in NYC for decades and all we seem to build are condos for multimillionaires. The answer isn't to have govt build affordable housing. The answer is to adjust economic and industrial policy to incentivize the private sector to build the housing we need and not the housing that will bring in the biggest short-term profits as they sell $30 million condos to foreign oligarchs. Letting the market decide everything has led us to a society with a hollowed out industrial base, very few good jobs for young people, insanely high housing costs, education costs, food costs and healthcare costs.
The solution is for govt to rebalance away from constantly shoveling trillions into the banking system for rampant speculation and instead to raise protective barriers so industry can return to the US. The solution is to make stock buybacks illegal, incentivize firms to reinvest profits into domestic growth, and end the vast array of market manipulations and perverse incentives that enable the continued looting of our national wealth; to distinguish between productive and extractive economic activity, promote the former and tax the latter into oblivion.
The Dem party constituency - the NGOs and local functionaries they patronize - must be shut down and the uniparty constituency -- FIRE sector, MIC looters, healthcare looters and every other extractive business model must also be cutoff from the federal money gusher.
It's all about incentives and our nation is overwhelmed, from stem to stern, with perverse ones.
"The answer is to adjust economic and industrial policy to incentivize the private sector to build the housing we need and not the housing that will bring in the biggest short-term profits as they sell $30 million condos to foreign oligarchs."
This is largely a top tier city problem. Ban, or severely curtail, foreigners from buying real estate and they will stop building those condos. In other metro areas builders are building much more normal housing.
"The ability to build a good transit system *does* predict GDP growth... "
is a *consequence* of previous GDP growth from smaller, mostly privately funded endeavors, rather than the impetus for growth that would not have happened barring the transit system? It would therefore be an artifact of increased GDP.
So in this instance, the transit system is funded by earlier GDP and it *enhances* rather than initiates, further GDP growth.
Else, all one would need to do to initiate a growth in local GDP in Detroit, e.g., would be to build a new transit system.
We don't want to go and get cause and effect reversed.
You say "Johnson’s agenda, though, created not abundance, but dysfunction and sclerosis", but the way I remember it, The Great Society was not a construction agenda at all but a social policy one. I don't recall it doing anything but fomenting social programs. Was there a big infrastructure program that I have forgotten? To compare a social policy program's ultimate failures to an abundance infrastructure program is not valid.
Very interesting, but I doubt the causal connection you draw re: corruption and California. By this logic poor tin-pot dictatorships would either not be poor or not be corrupt, when in reality most are both.
Great article, I have been following the traffic with the book being out there. I have heard that the left celebrates (lofty) goals, and getting funded, but then nothing happens. The right is focused on process, systemic ways to drive results. It was interesting that you mentioned left preoccupation with parts of a process, but it doesn't go anywhere, it is just red tape. The theoretical ability is out there, I remember when part of the 14 freeway collapsed during an earthquake and was quickly restored, and part of the 10 caught on fire because of a homeless camp underneath, and it too was fixed pretty quickly. But the problem with the left is that they view all power through the state, distrust private enterprise, and the funding they get is siphoned off by the web of NGO that make it look like organized crime.
There is a lot that is wrong here. Mostly, I read this as motivated reasoning to fit your “the purpose of a system is what it does” framing.
I don’t have the time to detail everything right now, but yours is one of those articles that, sentence by sentence, defeats itself. Maybe I will return to this to explain.
I do not understand the claim of _contradiction_ in wanting to "build" more (grow faster) and the idea that intergroup politics is one of the things standing in the way.
Whether or not it woud have been good politics to turn over that rock in the KT book was their decision to make. Not turning it over does not mean ignorance.
Lehman's complaint in a way is similar to and just as off base as mine in that KT do not address even greater (and why compare, anyway) growth impediments: deficits, immigrating restrictions and tariffs.
If folks are interested in Stafford Beer, they should read The Unaccountability Machine by Dan Davies, which is a terrific attempt to explain why cybernetics might make sense now.
I don’t find all of this convincing. The ability to build a good transit system *does* predict GDP growth, and the link is state capacity to build things and enforce rules. There’s a reason that the countries that put together the state capacity to build or enforce rules are rich. There is no requirement that you can only be good at some subset of things that require state capacity. There is no trade off, there is only gain from doing the job better.
Trying to improve that capacity, and reorient government and political processes, aims to improve the same core state competence that you help push for and Ezra/Derek are getting at.
Not a big point. But there is *no* example of a private actor successfully building a full transit system or modern train system without lots of state subsidy and support. So learning how to do that effectively rather than in effectively matters, it cannot simply be delegated to the private sector to provision (as housing can and should be).
Same with law enforcement. To my more limited knowledge, there is no example of a country with a great and fully privatized law enforcement system. Given the state needs to be involved to some extent, how to manage that effectively matters.
Neoliberalism and privatization cannot answer all our problems, and refocusing what government must do in objectives is vital even in a more market oriented country.
Right, but transit and police are somewhat specific examples of where this doesn’t work. There are other sectors like residential housing where the private sector seems perfectly fit to satisfy demand if we could just let them do it.
yeah for housing all that needs to happen is government to allow people to do what they want with their own property, and the market will build all the housing people desire.
But there will definitely be room for government in say getting transmission lines built (eminent domain almost certainly needed)
Or funding basic R&D
I think that we may have overfunded R&D. The replication crisis in the social sciences may indicate there are more people chasing grants than are capable of doing quality science.
Are they not capable, or does the incentive structure encourage something else
Yes.
Not everyone can play in the NBA. I suspect that the intelligence and the talents to do creative work in the sciences are equally rare. Add the fact that the social sciences should be _more difficult_ than the physical sciences.
Then there are the various gatekeepers.
I wish Substack would move that button.
Yes. "Urbanism" falls under one social umbrella in terms of the people interested in it, but housing and transit are opposite in what we actually need - both need less regulation, but transit needs the government to do more things actively while housing pretty much only needs it to do less.
I am not sure why you are using the example of transit or policing. The book is about abundance, not mass transit and policing. I have not yet finished the book but it does not seem to mention those policy domains. Neither does Lehman’s review…
The book covers mass transit related to CA's failed attempt to build high speed rail.
While CA was not building 500 miles of high speed rail, China built 23,000 MILES of high speed rail.
China also built an over abundance of crappy housing blocks which no one will ever live in.
And of course, that's why this solution is letting the market actually build the housing, not mandate government build housing
Florida built high speed rail largely relying on private industry.
Florida may be a special case. Relatively flat, for cheaper construction. Good size cities reasonably close together. Growing population.
Also, the single line I know of hasn’t had _time_ to go bankrupt yet.
Good comment. I suspect the response to your comment “There’s a reason that the countries that put together the state capacity to build or enforce rules are rich” is something like, “Yes but the question is what should countries do next after they’re already rich?”
Rules enforcement seems like an absolute prerequisite for a country to function at all. Beyond that, I can get behind the observation that the USA and the EU have different comparative advantages re: whether the state or private industry is a more effective builder of physical infrastructure.
My idealized hope would be each learning to be a bit more like the other! Or at least the US learning about more aggressive law and behavior enforcement, dedicated planning and infrastructure agencies subject to political oversight rather than consultants, and the importance of ensuring your national champion industries are competitive by protecting workers, not jobs (as the Nordics do)
Why don’t you move to Europe then? Why on earth would homogenization be a stated goal in and of itself?
What evidence is there that the “ability to build a good transit system does predict GDP growth.”
Western Europe and Japan build excellent transit system (likely the best in the world), but their economies are relatively stagnant.
Their stagnation has little to do with their high speed rail though, a LOTS to do with an over regulated private sector in particular labor markets.
You are effectively agreeing with Michael.
I will grant you that “ability to build a good transit system” not only correlates with but actually causes a country not to be poor. Or in the words of this discussion, the ability to build a good transit system does predict relatively decent versus relatively poor GDP *LEVEL*.
But that is very different than saying in the modern world - call it the last 50 years - that the ability to build a good transit system does predict ONGOING GDP *growth*.
California (and I am *no* fan of today’s CA governance) vs. Japan and Europe demonstrates decidedly that it does not.
CA cannot build a good transit system, and yet despite the best efforts of the leftists who have governed the state for more than 25 years now, CA’s economic growth rate has consistently exceeded that of Western Europe and Japan.
“There’s a lot of ruin in a nation.“ California also has the advantage of an enormous trading partner, the rest of the US, right next-door. Add the wonderful climate and geography.
All true, certainly the climate and geography.
But the fact remains that CA until the last few years pretty consistently had a higher growth rate than the rest of the country.
Again I maintain this was despite the state government, not because of it.
And even though I don’t have hard evidence, I also claim it was primarily because of the people, not the natural resources (though obviously the climate is a plus in attracting the people).
It is always because of the people. People are the only true source of wealth. Everything else has substitutes.
“The ability to build a good transit system *does* predict GDP growth,”
No sir, it does not.
It merely predicts a decent GDP *level*
Annual growth is not the same thing as current level.
"There’s a reason that the countries that put together the state capacity to build or enforce rules are rich."
Nobody has more state capacity then East Asia, but all of those societies have topped out at GDP/capita way below USA and crisis level TFRs.
Europe ain't much better.
Well, most may have "topped out" (which isn't accurate, but I know what you mean).
Singapore still doing pretty well, AFAIK. I think it's actually higher GDP per capita than the U.S. And Taiwan is close.
It's true that their *median* incomes are a lot lower than the U.S. still. But they are both growing at least somewhat faster than the U.S.
Singapore is a city state specializing in trade/finance with vastly larger states. This is like saying that the gdp/capita of tokyos finance district or Luxembourg is high. Sure it is. It tells us nothing about what can be done at scale.
There are lots of East Asians. Their average performance is pretty indicative of East Asian potential.
“There are lots of East Asians. Their average performance is pretty indicative of East Asian potential.”
Your point about Singapore is fair enough, to a point. Yet somehow there are not several Singapores, and Singapore did not start out being Singapore as a finance state.
But that’s a relatively small point. Your “average performance” statement is just stupid. That’s like saying the performance of the average Democrat voter in Illinois is indicative of American potential. Which surely it is not.
So you can generalize, but that doesn’t make you correct. Many East Asian states continue to grow their mean and median per capita GDP at rates above the U.S.’s , even if the poorer and more poorly organized ones do not. And I’m simply ignoring the elephant in the room (China) because their system is “unique” and I don’t trust Chinese government numbers.
I want to give you two concrete examples.
1) It now seems clear that Red States are going to adopt universal school choice and Blue States are going to do the opposite (in fact are going to require a degree of ideological managerial control in schools that surpasses anything I grew up with). This is a huge difference between the "state capacity" and "free market" view on one of our societies biggest and most important sectors.
2) I personally have a front row seat to the IRA. I will give you a review of my sector:
1) The CBO score on the IRA was an outright lie and everyone knows it was an outright lie.
2) The IRA claims it saves money while at least increasing cost by 300%.
This matches earlier special interest giveaways I've observed in my career in healthcare.
The Democratic Party is ultimately an Eds and Meds lobbyist group backed by single and government employment (and adjacent) women. It's not going to build. That isn't what the base wants (the base isn't male policy wonk nerds that think they are philosopher kings that should rule).
I FULLY ENDOSE what Ezra is trying to do, and think the world would be a better place if he wins his intra party debate.
But I also advised my nephew in California to move to Florida, because I just don't believe in Ezra at a fundamental *goals* level. I think the state should shrink, not grow.
If Dems want to rule nationally they should prove they can rule well in blue states. If CA started following an abundance agenda I believe that would actually work.
I also think it's unlikely, but I will continue to promote it.
We REALLY need two sane competent political parties. Sadly we have ZERO right now
What, specifically is insane about the Republican Party right now?
They nominated Trump when they could have had someone competent like DeSantis or Haley.
They've put idiots like RFK at the head of HHS.
They've cut off funding for incredibly important research.
They've started trade wars with our friends instead of focusing on China etc etc
I think there's some real value in this review, but I also think Klein and Thompson do a better job of talking political economy than the author concedes.
Take their discussion of housing. They say that a major obstacle to housing construction is that, by encouraging people to treat homes as investments (through mortgage policy), we have created a huge coalition that will try to block new housing.
I'll also add that I do think there's some potential in persuading liberals to be more pro-abundance. It's not as if Hamiltonian progressivism is going to be dead forever. Jeffersonian progressivism might be on the downswing.
Investment value is not the only or even primary motivation for NIMBY-ism. Low cost housing brings low quality people who degrade the shared environment. That’s why the suburbs exist in the first place.
Klein and Thompson are themselves bad faith actors who are shocked! to find waste and corruption in government procurement and legislation. I watched Klein and Jon Stewart put on a performance while discussing some of this waste as if they haven't been fully aware of every liberal boondoggle of the past few decades. They claim to want to change things but when you get down to brass tacks they'll worry themselves right back into the same positions they claim to critique. As always they want illiberal outcomes via liberal means. It doesn't work that way.
Govt has largely been out of the way in NYC for decades and all we seem to build are condos for multimillionaires. The answer isn't to have govt build affordable housing. The answer is to adjust economic and industrial policy to incentivize the private sector to build the housing we need and not the housing that will bring in the biggest short-term profits as they sell $30 million condos to foreign oligarchs. Letting the market decide everything has led us to a society with a hollowed out industrial base, very few good jobs for young people, insanely high housing costs, education costs, food costs and healthcare costs.
The solution is for govt to rebalance away from constantly shoveling trillions into the banking system for rampant speculation and instead to raise protective barriers so industry can return to the US. The solution is to make stock buybacks illegal, incentivize firms to reinvest profits into domestic growth, and end the vast array of market manipulations and perverse incentives that enable the continued looting of our national wealth; to distinguish between productive and extractive economic activity, promote the former and tax the latter into oblivion.
The Dem party constituency - the NGOs and local functionaries they patronize - must be shut down and the uniparty constituency -- FIRE sector, MIC looters, healthcare looters and every other extractive business model must also be cutoff from the federal money gusher.
It's all about incentives and our nation is overwhelmed, from stem to stern, with perverse ones.
"The answer is to adjust economic and industrial policy to incentivize the private sector to build the housing we need and not the housing that will bring in the biggest short-term profits as they sell $30 million condos to foreign oligarchs."
This is largely a top tier city problem. Ban, or severely curtail, foreigners from buying real estate and they will stop building those condos. In other metro areas builders are building much more normal housing.
What if...
"The ability to build a good transit system *does* predict GDP growth... "
is a *consequence* of previous GDP growth from smaller, mostly privately funded endeavors, rather than the impetus for growth that would not have happened barring the transit system? It would therefore be an artifact of increased GDP.
So in this instance, the transit system is funded by earlier GDP and it *enhances* rather than initiates, further GDP growth.
Else, all one would need to do to initiate a growth in local GDP in Detroit, e.g., would be to build a new transit system.
We don't want to go and get cause and effect reversed.
You say "Johnson’s agenda, though, created not abundance, but dysfunction and sclerosis", but the way I remember it, The Great Society was not a construction agenda at all but a social policy one. I don't recall it doing anything but fomenting social programs. Was there a big infrastructure program that I have forgotten? To compare a social policy program's ultimate failures to an abundance infrastructure program is not valid.
The left has a deep craving for power over others that democrats like Klein don’t like to acknowledge.
All this other stuff serves an outlet to achieve that power, and that’s a powerful emotional block to reform
Very interesting, but I doubt the causal connection you draw re: corruption and California. By this logic poor tin-pot dictatorships would either not be poor or not be corrupt, when in reality most are both.
Great article, I have been following the traffic with the book being out there. I have heard that the left celebrates (lofty) goals, and getting funded, but then nothing happens. The right is focused on process, systemic ways to drive results. It was interesting that you mentioned left preoccupation with parts of a process, but it doesn't go anywhere, it is just red tape. The theoretical ability is out there, I remember when part of the 14 freeway collapsed during an earthquake and was quickly restored, and part of the 10 caught on fire because of a homeless camp underneath, and it too was fixed pretty quickly. But the problem with the left is that they view all power through the state, distrust private enterprise, and the funding they get is siphoned off by the web of NGO that make it look like organized crime.
There is a lot that is wrong here. Mostly, I read this as motivated reasoning to fit your “the purpose of a system is what it does” framing.
I don’t have the time to detail everything right now, but yours is one of those articles that, sentence by sentence, defeats itself. Maybe I will return to this to explain.
I do not understand the claim of _contradiction_ in wanting to "build" more (grow faster) and the idea that intergroup politics is one of the things standing in the way.
Whether or not it woud have been good politics to turn over that rock in the KT book was their decision to make. Not turning it over does not mean ignorance.
Lehman's complaint in a way is similar to and just as off base as mine in that KT do not address even greater (and why compare, anyway) growth impediments: deficits, immigrating restrictions and tariffs.
This what a good read, thank you.
If folks are interested in Stafford Beer, they should read The Unaccountability Machine by Dan Davies, which is a terrific attempt to explain why cybernetics might make sense now.