Abundance in One Country?

The most pressing place to expand abundance is in the countries facing the greatest scarcity

Note: This review was accepted for publication in an outlet that then declined to publish it. I still think it has something of value to say, so I’m publishing it here.

In an otherwise unremarkable passage 50 pages into Ezra Klein and Derek Thompson’s Abundance, the authors provide a subtle reference point for their ambitions. They are in the midst of discussing how the boom of post-New Deal growth and construction came at a cost: deadly smog, chemically-dyed rivers, soot so thick that drivers needed to turn on their windshield wipers to see.

“In 1962,” they write, “Rachel Carson, a marine biologist suffering from breast cancer, published Silent Spring, which argued that chemical pesticides were devastating our ecosystems and destabilizing the biosphere. The book is broadly credited with founding the environmental movement, but like any founding document, it hit a nerve because it concretized anxieties that already existed.”

This is, in a nutshell, what Klein and Thompson aim for Abundance to achieve. They see a set of preexisting anxieties that need an answer: Unless degrowth receives an unlikely surge in public support, addressing climate change demands a mass reconstruction of material systems. The United States struggles to build the clean energy, public transport, and housing needed to address climate change and reduce the cost of living. Politics is increasingly dominated by zero-sum thinking.

Klein and Thompson see an ideology of abundance as the answer. They want abundance to form the new political order dominating American politics, and they are offering up Abundance as its founding document. But for a book with such grand ambitions, Abundance has a limited scope. Much of the book is preoccupied with questions of zoning and permitting, with California a frequent setting for their case studies. While Klein and Thompson compare abundance to world-historical ideologies like environmentalism and neoliberalism, Abundance rarely extends its gaze beyond the United States’ borders.

The book’s limited scope does not necessarily undermine its ambitions as a founding document. Silent Spring, after all, focused on DDT rather than the concerns that preoccupy most environmentalists today. And Klein and Thompson are open that what they “are proposing is less a set of policy solutions than a new set of questions around which our politics should revolve.”

But as this set of questions show, Abundance’s implications extend well beyond the book’s limited scope. Taking the authors’ three questions in turn suggests that the most pressing locus for a new era of abundance in fact lies far from the United States.

“What is scarce that should be abundant?” For one, a shot at life, an opportunity denied the roughly five million children who die before their fifth birthday each year, overwhelmingly in poor countries.

“What is difficult to build that should be easy?” Paved roads and running water, which became close to universal in some countries nearly a century ago but remain limited in many today.

“What inventions do we need that we do not yet have?” Effective vaccines for diseases like leishmaniasis and chagas, which receive little investment because the people who would directly benefit from them are almost all poor.

Klein and Thompson rarely tackle these issues head on, but at its core, Abundance is a book of economic development. Expanding global abundance requires removing the barriers that prevent low- and middle-income countries from implementing the state-coordinated, growth-generating, and green model of development Klein and Thompson propose for the United States. For abundance to truly serve as the transformative worldview Klein and Thompson hope, it must be extended to the world.

Development

Especially for such a wide-ranging and ambitious book, Abundance is refreshingly concise. Much of the writing is accessible enough it could double as a podcast script (and indeed, parts of it have). But Abundance suffers from two related flaws.

First, the book paints a general theory of politics while rarely venturing outside the concrete examples of American housing and energy construction—important issues but also idiosyncratic ones, particularly if trying to apply it to countries not burdened by the particularities of American land use policy.

Second, Abundance is a book largely written before the election but released into a moment of factional infighting for the direction of the Democratic Party. When the book’s chief examples are favored by the wing of the party that favors deregulation and moderation, it is easy to sort Abundance under that faction. (And the authors’ choice of ideological partners has contributed to this.) But this view sits uneasily with much of the message of Abundance.

The actual contents of Abundance—which many of the people contributing to the online discourse have not yet read—read much like a vision of the Democratic Party that was dominant at the time of writing but no one wants to be associated with right now: Bidenomics. If you want a Democratic Party that builds, a president whose main legislative achievements were CHIPS, infrastructure, and the IRA sounds pretty good. The idea of abundance also emerged in close and conscious dialogue with Bidenomics. The libertarian-leaning champions of Abundance might like its championing of zoning reform, but they have little to say about its extensive passages on industrial policy.

Abundance’s overlap with Bidenomics shouldn’t be disqualifying: Bidenomics had nothing to do with Biden’s age or the way he withdrew his candidacy, and Klein and Thompson could fairly argue that the barriers to construction prevented Biden’s legislative achievements from being fully realized. (Though having seen the extent of the American public’s disillusionment with the state of the country, both Abundance and Biden/Harris feel like they were missing a clear villain.)

And if Abundance and Bidenomics were attracted to a similar set of themes, it is also because they were provoked by real and novel dynamics. The combination of climate change, the COVID-19 pandemic, the cost of living, and the rise of China has meant that Klein and Thompson sit at the center of a Venn Diagram that would have looked heterodox to Americans in recent decades but is increasingly common in this one: pro-growth but anti-fossil fuel, pro-government intervention but skeptical of regulation, supply-focused but Democrat-aligned.

But while the questions animating Abundance may be newly in vogue in American politics, they are well-trodden in development economics. Industrial policy was confined to arcane debates between development economists before it became a central preoccupation of the Biden administration and Abundance.

For developing countries, structural transformation has historically meant moving economies dominated by agriculture and exporting raw commodities towards higher-value industries; in an era of climate crisis, the concept applies well to the challenge of transforming a fossil-powered economy into a green one. For the US, Klein and Thompson have a range of political and moral arguments for emphasizing growth rather than letting redistribution lead the way. In poor countries, the calculus is much simpler: even if they eliminated all inequality between their citizens, these countries are not wealthy enough to provide a decent standard of living.

The poor countries that have grown into rich ones have largely utilized industrial policy to drive structural transformation. As South Korea built Hyundai, it guaranteed a domestic market by banning automobile imports and directed subsidized credit towards the company to help it export competitively. Singapore’s Economic Development Board helped coordinate its industrialization strategy, including by offering tax incentives to export-oriented industries like garments and electronics.

These countries saw the benefits of trade, but they certainly did not practice the laissez-faire Washington Consensus. Similarly, China’s rapid growth occurred in a period of liberalization relative to what came before, but the government still played a central role: China relied heavily on state-owned companies and insisted upon joint ventures that ensured domestic enterprises got an up-close look at foreign technological and industrial techniques.

However, too few countries have been able to replicate these accomplishments. The path to development is an extremely hard tightrope to walk. And while domestic challenges of poor governance and corruption knock many countries off, it is the structure of the international system that leaves them with nothing wider than a tightrope to walk on.

To pull off Klein and Thompson’s abundance recipe of build, grow, govern, invent, and deploy—the titles of their five chapters—countries need fiscal space and policy space. This is less of a problem for the world’s largest economy and chief arbiter of international rules. But developing countries have too little of both.

Building solar farms or investing in strategic industries costs money. The main way to get money is through tax. But poor countries largely contain poor people, and many of them work in the informal sector, making it hard to get much revenue from the domestic population. Foreign investors have money, but they threaten to move elsewhere if tax policies aren’t to their liking, and over a third of multinational profits are shifted to tax havens anyway. The result is that developing countries collect a small share of their small economies in tax: on average, low- and middle-income countries collect around 10% of GDP in tax. For the developed countries that form the OECD, the average is 34%.

The other way to get money is borrowing. But when Latin American countries issue bonds, the interest rate is, on average, close to three times the rate charged to the US. For African countries, it is nearly four times. Creditors justify these rates by saying that they need protection from the risk that countries will default on their payments. But even when countries default, private creditors rarely take major losses for their bets gone bad—and because there is no system of bankruptcy for sovereign governments, no one makes them.

Countries can get loans at cheaper rates from multilateral development banks like the World Bank. These banks use their excellent credit ratings to borrow on markets at low rates and then pass on the loans to countries with just a small markup. But their capital only allows them to lend so much. Major expansions of lending would require governments to put more money in. And both the World Bank and the IMF—where countries turn for loans when they hit hard times—attach conditions to their loans that are generally unfavorable to the industrial policies that successful developing countries applied and Klein and Thompson wish to apply to the US.

The cycle of unaffordable credit that generates excessive debt produces a variety of knock-on effects that undermine an abundance agenda. Countries that don’t have money struggle to hire and train tax collectors, further limiting their revenue. Underfunded education results in wide swaths of the population lacking the skills to work in higher-value industries—two billion people live in countries that pay more on the interest on their debts than on education. And even if countries lack the capacity to make the components of an abundant life, their economic conditions undermine their ability to buy it. High levels of dollar-denominated debt suck up their foreign currency, leaving little to import heat pumps or medical devices.

There is also the challenge of policy space. Even when countries are not constrained by money, trade and investment rules can tie their hands. The advent of the World Trade Organization in 1995 and a tripling of bilateral investment treaties between 1995 to 2010 stripped many tools from the toolbox South Korea and Singapore had just used to get rich. Offering preferential tax credits for buyers of domestically produced steel would now violate rules on equal treatment of foreign and domestic goods. For centuries, developing countries sought to copy the technology of more advanced countries—Alexander Hamilton actively pursued the blueprints of British spinning machines. Now, it often falls afoul of intellectual property rules.

For several consecutive administrations—if supercharged with Trump’s second term—the US has turned against the trade rules it once shepherded into existence, including rendering the WTO’s adjudicatory arm unable to function. But the sprawling global network of investment treaties remain on the books, offering foreign investors a path to arbitral tribunals that discipline governments using an unacceptably wide set of tools.

Global development has taken a somewhat parallel path to the political trajectory Abundance traces in the US. As the US went through the New Deal and post-war boom, the Global South experienced a wave of decolonization and developmental states. Like in the US, that era was not without its excesses, like the prevalence of bloated state-owned companies or population displacement. Among globally-minded progressives, a focus on national development faded in favor of poverty reduction and stopping corporate abuses, but the real winner was neoliberal economics. China got the best of both worlds with open markets abroad and industrial policies at home, but the role of the state faded in most developing countries. While living standards rose globally, few countries achieved the structural transformation that turns poor countries into rich ones.

For all the flaws of today’s international system, it is important not to throw the baby out with the bathwater. Preserving a healthy degree of open trade allows poor countries to export into richer markets. Foreign aid has meant that, even at the same level of income, people enjoy better health and education than they used to. Still, even before the recent slashing of aid spending, all annual aid amounted to less than the GDP of New Zealand, a country of five million people. It is never going to catapult the five billion people who live on less than $4,000 per year into a life of abundance.

When the majority of the world still lives in a state of grinding material scarcity, the only way out is through robust, broad-based growth. In analyzing how the United States can achieve this for itself, Klein and Thompson come to a formula quite similar to the few countries that have managed to grow from poor ones into rich ones. But if applying this formula to the US is primarily a question of finding the domestic will to do so, the challenge for poor countries is to pull it off in an international system that makes it exceptionally hard for them to do so.

Positive sums

In Abundance, the project of global abundance is something of a footnote: morally justified enough to merit acknowledgement, but not seen as sufficiently on topic to merit much space in the main text.

This is understandable. Klein and Thompson want to win the battle for the direction of the Democratic Party, and not many people within it will make their decision based on global development. The golden eras of American growth and innovation coexisted with mass global injustice. Standing at the top of global hierarchies brings some benefits.

At the same time, it will not be straightforward for the United States to build an island of abundance in a sea of scarcity. Seven in eight humans live outside the US and Europe, and that ratio will only grow.

The Global South’s sheer numerosity ensures the United States cannot wall itself off from its fate. Global South countries have grown far too slowly in recent decades, but they have grown. It doesn’t take that much per capita wealth for six billion people to make their presence felt in global economics and geopolitics. Accelerating growth across the Global South both provides opportunities for the American economy and convinces Global South countries that geopolitics does not have to be a zero-sum game.

Speeding up global development is also pro-innovation. For such a large share of humans to live in a state of deep poverty amounts to an immense waste of talent. Freeing billions of minds from stunted educations and dull, repetitive labor is to grant ourselves access to the potential products of their ingenuity.

Most existentially, the possibility of a safe climate in the United States hinges on the availability of green growth pathways in developing countries. Abundance devotes a great deal of attention to the reconstruction of the US energy system, but as important as that task is, the fate of the climate depends far more on developing countries. A third of global emissions already come from developing countries excluding China (the United States accounts for 13%), and they are the fastest-growing segment of emissions. These countries will not trade away development to prevent emissions, but clean energy can power the cars, fridges, and washing machines their populations will buy as they get richer.

That we live in a positive-sum world is one of the core tenets of Abundance. It is a short leap to the idea that fighting scarcity in the rest of the world aligns with American abundance. And the model of development that has historically turned poor countries into rich ones carries real similarities with Klein and Thompson’s vision for turning the United States from a wayward wealthy country into an abundant one.

But while these recipes may be similar, the global economic system atop which the United States sits grants poor countries far less access to its ingredients. A few countries like South Korea and Singapore obtained these ingredients and escaped from deep scarcity in a matter of decades, but most of the world is stuck on a trajectory that would stretch into the next century. Abundance the book may restrain its focus to creating a new era of abundance in this country, but true victory means achieving abundance everywhere.