Abundance
Ezra Klein and Derek Thompson
Avid Reader Press, $30 (cloth)
In their new book, Abundance, Ezra Klein and Derek Thompson argue that American liberals have ironically succumbed to a conservative worldview, in the original sense of “conservative.”
After a midcentury boom, their story goes, progressives became skeptical of growth. To keep development from running roughshod over marginalized communities and the environment, liberals created a thicket of rules and regulations meant to constrain business power as well as the government itself. But these “anti-growth” policies are now causing harm in their own right, while China has been demonstrating just how much a nation can do when it is not so constrained. Though Joe Biden’s investments in renewables, chips, and infrastructure were a step in the right direction, Klein and Thompson say, too much red tape and too little ambition are still preventing the development of clean energy, plentiful housing, and life-saving drugs for all. Instead of delivering progress, liberals are enforcing scarcity, hamstringing government, and smothering innovation—all in the name of progressive values.
As a foil, the book opens with a utopian vision of the United States in 2050—a world where government has gotten out of its own way and learned to build things again, or at least allowed them to be built. For Klein and Thompson, this includes drones that deliver anti-aging pills right to your doorstep and AI that reduces the work week for “most people.” Looking back from that imagined future, an unnamed narrator laments:
For years, we accepted homelessness and poverty and untreated disease and declining life expectancy. For years, we knew what we needed to build to alleviate the scarcities so many faced and create the opportunities so many wanted, and we simply didn’t build it. For years, we failed to invent and implement technology that would make the world cleaner, healthier, and richer. For years, we constrained our ability to solve the most important problems.
Klein and Thompson thus set out to defend what they call “a simple idea: to have the future we want, we need to build and invent more of what we need.” They want a “liberalism that builds.”
Who wouldn’t agree with that? This rhetoric, like much of the writing throughout the book, isn’t just “simple.” It constantly verges on platitude or tautology, concealing consequential political, economic, and moral judgments behind a veneer of common sense. And it does so in language that repeatedly echoes the entrepreneurial mantras of the world’s most powerful corporations. We have to move faster, Klein and Thompson say. Stop worrying so much about breaking things, they imply. But “politics is not just about the problems we have,” as the authors rightly observe. “It’s about the problems we see.” Unfortunately, Abundance itself suffers from a severe case of myopia.
There are many causes of “untreated disease,” for example. Most salient to the authors are the not-yet-invented miracle drugs that would make pharmaceutical companies a fortune. But the book says little about most other causes—not even to weigh their relative contribution to our medical scarcity. Perhaps most notably, Klein and Thompson entirely ignore the intellectual property regime that protects pharmaceutical companies’ extraordinary wealth and power at the expense of citizens’ health by granting decades of patent monopoly frequently in exchange for nominal benefits to patients. Is a nation that leaves all this intact with the hope of plentiful daily medication really “the future we want”? Klein and Thompson might support patent reform too, but they never train their attention on that problem. Instead, with laser-like focus, Abundance again and again blames a real and urgent issue—poverty, homelessness, dirty energy, disease—on a simple and familiar villain: well-meaning but short-sighted liberals who are more concerned with tying things up than getting things done.
Like any good story, there are grains of truth in this one. Many readers will find it persuasive, primed by decades of anti-government rhetoric directed at certain state activities from Democrats and Republicans alike. But the reality is that the authors’ concrete agenda, so far as it is discernible in this mostly rhetorical book, is much more likely to perpetuate the ugliest aspects of the United States today than to deliver utopia for everyone.
That does not mean that abundance, or better-functioning government, is not a desirable end: it is. But achieving it requires breaking with the ethos of neoliberalism—its deference to private capital and hostility to public governance—that structures so much of Klein and Thompson’s thinking, even when they are praising Biden’s “post-neoliberal” industrial policy. A much more promising path to abundance than the one this book offers is to embrace a twenty-first-century New Deal. That is the tried-and-true model for a “liberalism that builds” in the United States, and Abundance rightly invokes it as a foil to the present. Yet Klein and Thompson strangely shy away from calling for a new (or Green) New Deal. And they display little understanding of how the old one actually worked, both in terms of politics and in terms of policy.
To be sure, Klein and Thompson are not hostile to government in the same way that hard-line free market fundamentalists are. They do not view government as inherently inefficient, nor do they wish to drown it in the bathtub. “The right lesson from World War II and Warp Speed”—the public-private partnership launched during Trump’s first administration to spearhead COVID-19 vaccines—“is that the state is no enemy of invention or innovation,” they write. “In fact, the government can accelerate both.” They clearly think government has a central role to play in delivering abundance.
Still, the role they see for it is mostly limited to fiscal support for the private sector, and their main target is what they consider excessive government bureaucracy. Throughout the book, the authors direct their ire at local zoning rules that bar the construction of multifamily housing, condition development on minimum parking requirements, or otherwise outlaw dense residential construction. And they repeatedly criticize environmental review processes that they claim delay, inhibit, or render construction of clean energy and transmission infrastructure prohibitively expensive. Remove these hurdles, Abundance contends, and private actors will deliver abundance—at least when goaded by sufficiently high levels of public subsidy.
The authors back these claims with anecdotes of regulations and bureaucrats supposedly stifling development. This is not rigorous argument, however, but a “story,” as the authors themselves put it on the last page of the book. The problem is that stories can be deeply misleading. Where this one doesn’t give a mistaken impression through sins of omission, it simply gets things wrong. It often blames government for bad outcomes where it should be blaming the whole structure of the market—including other government policies (among them too little regulation of the private sector) and, especially, the nature of private investment (even when spurred by government subsidy).
Take housing construction, a notoriously volatile industry. Many American cities are indeed facing an affordable housing crisis. Over the last half-century, U.S. housing starts—the number of privately owned units being constructed—reached a peak in 2006 before cratering in the run-up to the global financial crisis of 2008; they have not recovered since. Klein and Thompson acknowledge as much. But they fail to note that zoning rules can’t possibly be the primary driver of this stagnation.
In fact, one of the central themes of Abundance—dynamic Texas versus sclerotic California—ironically undercuts the myopic focus on zoning. Klein and Thompson note that states like Texas today are building more housing than liberal strongholds like California, which they view as the epitome of blue state misgovernance. But the Golden State built plenty of housing in the mid-aughts. In fact, at times in 2004 and 2005, California even permitted more new housing units than Texas did. Since zoning restrictions didn’t suddenly get tighter in the second half of the 2000s, this building boom scrambles the thesis that public land-use controls are the root cause of today’s housing crisis. The authors fail to note the many determinants of housing starts, ignoring recent national dampers on homebuilding (including high interest rates and shortages of building materials and construction workers) as well as local factors such as much higher land prices and wages and the relative scarcity of undeveloped land in blue center cities in blue states.
But even if zoning and other onerous regulations aren’t the primary reason for stagnant homebuilding, couldn’t upzoning help? However intuitive the idea may seem, the evidence is mixed—nowhere near as strong as Klein and Thompson insinuate. Such reforms have already been pursued in many localities. A leading meta-study published in 2023 found, on average, a 0.8 percent expansion of the local housing stock three to nine years after such changes, with significant variation. Zoning reforms produced a modest increase in housing stock in some places but not much elsewhere.
Recent work by economists Schuyler Louie, John A. Mondragon, and Johannes Wieland is even more skeptical. They find that unaffordable housing in coastal cities is not caused by excess regulation. Instead, it is driven by high demand and high and rising incomes. As they put it, “our findings challenge the consensus that relaxing regulatory constraints would substantially lower housing prices and meaningfully expand housing quantities.” In a recent study mapping the “many problems” in housing markets, legal scholars Ganesh Sitaraman and Christopher Serkin also conclude that “focusing exclusively—or even primarily—on loosening or eliminating zoning rules is misguided.”
Zoning is certainly too restrictive in many low-density suburbs throughout the country, but it is hardly the principal reason that housing is very expensive in high-density San Francisco and comparatively cheap in less dense Houston. The findings of Louie, Mondragon, and Wieland present another reason: San Francisco is simply a “superstar city” (in Klein and Thompson’s own words), while Houston is not. The simple story of California bad, Texas good does not stand up to scrutiny, at least on housing. Once a broader lens is brought to bear and rent is measured in relation to income, Texas looks much less like a success story.
As for energy, Abundance rightly stresses the need for more investment in zero-carbon power generation and transmission lines. But here the story of public barriers to abundance is even weaker. During the Biden administration, solar projects on public lands completed the environmental review process, on average, in less than six months, and between 2010 and 2021, few transmission projects required a time- and labor-intensive environmental impact statement. The real problems have to do with the authority to site transmission lines (which mostly remains at the state and local level, rather than with the federal government) and the bad incentives that shape the behavior of private transmission owners. Private management of the grid thwarts construction of lines that threaten the profits of investor-owned utilities and prevents timely connection of new generation facilities. In Kings County, California, solar projects that completed environmental review in a few months were stuck in the interconnection queue for an average of more than two years.
The excess procedure story is even less applicable to nuclear power. Setting aside public opposition, Klein and Thompson charge that the struggle to expand nuclear power in the United States “is not a failure of the private market to responsibly bear risk but of the federal government to properly weigh risk.” In reality, federal law has capped the legal liability of nuclear plant operators in the event of accidents since 1957. The problems of the nuclear power industry in the United States lie elsewhere. Its history is one of massive construction delays, cost overruns, and poor operational performance. While plant performance has greatly improved in recent years, frequent outages, high costs of operation, and the growth of cheaper alternatives have led to the closure of many nuclear plants. Rather than being “too cheap to meter,” as some nuclear proponents predicted in the 1950s, nuclear power has often proved too expensive and unreliable to keep in service.
For a case in point, consider the newest nuclear generation facilities in the United States: units 3 and 4 at Georgia Power’s Plant Vogtle on the Savannah River. These units came online in 2023 and 2024, respectively—seven years late and tens of billions of dollars over initial cost estimates. Both the federal and state governments eagerly supported the project, and environmental reviews were completed in 2008 and 2011. But the contractors on the project (including Westinghouse) faced persistent problems finding workers with specialized skills, as well as materials, to build the plant. The project developers overpromised and consistently failed to deliver.
Similar problems afflicted the V.C. Summer nuclear project near Columbia, South Carolina, which would have added two units at an existing plant. The construction program was such a disaster that the two owners, private SCE&G and public Santee Cooper, abandoned the project in 2017 while at the same time securing legislative approval for recovering project costs from South Carolina customers. The old utility regulation principle of ratepayers paying only for “used and useful” capital investments is too often honored more in the breach than in observance.
Industry insiders, for their part, flatly contradict Klein and Thompson’s assertion that the federal government is to blame. “The problem isn’t the commitment of governments; it is the performance of the industry,” Gregory Jaczko, the former chairman of the Nuclear Regulatory Commission, said last year. “We could ‘solve’ all ‘regulatory and permitting’ issues for nuclear tomorrow and not one new plant would get ordered or built,” Jigar Shah, a top official in Biden’s Department of Energy, tweeted in February.
This is the blind spot running through all of Abundance’s anecdotes: the limits of the private sector. The primary conceit is that in many areas, the private sector is ready to invest—and to invest big—if politicians would only lift public barriers standing in their way. There is little evidence that is true. In reality, corporate executives and managers make investment decisions based on expected profits. Even when zoning restrictions are favorable, developers evaluate a range of investment options before committing to construction. They are looking not only for positive returns but for higher returns than alternative options. Homebuilders, in particular, will not build unless they have reason to think they can achieve sufficiently high profits—those that outperform land banking, speculation, or other forms of investment. The much-touted housing boom in Austin is a case in point: after a few years of above-average building activity led to modest rent reductions, residential developers reduced construction substantially. The burst of construction made only a small dent in the dramatic increase in rents since 2010.
The same is true when it comes to renewable energy. In his recent book The Price Is Wrong, Brett Christophers shows that insufficient expected profits are a principal barrier to investment in solar and wind projects. Developers and lenders alike are reluctant to pursue and finance such projects unless they will deliver substantial and stable profits and are more attractive than other investment choices.
In addition to neglecting the central role of profit expectations in investment decisions, Klein and Thompson have nothing to say about the short-term orientation of today’s large shareholder-dominated corporations. In general, shareholders withdraw far more capital from businesses than they invest, and they often demand massive dividends and stock buybacks and acquisitions in lieu of capital expenditures, let alone higher wages for workers. Given that CEO compensation is often tied to their company’s stock price, top executives have little incentive to defy shareholder demands for cash.
Along with the state-guided enterprises of China, Klein and Thompson’s preferred corporate model is the AT&T of midcentury—a highly innovative enterprise credited with developing technologies like the laser, photovoltaic cell, and transistor. They attribute AT&T’s long-term orientation and accomplishments to its status as a secure, government-protected monopoly. If that AT&T existed today, large shareholders would balk at risky, long-term investment in speculative engineering and scientific projects. Indeed, this is what happened when a durable monopoly of our era tried to replicate the AT&T success. In 2010 Google set up Google X for an elite group of employees to pursue long-term projects, but by 2015 Chief Financial Officer Ruth Porat imposed a more short-term, cautious orientation on the venture as part of a broader effort to reduce costs and disburse more cash to shareholders. In the words of economist William Lazonick, whereas AT&T represented the American corporation practicing “retain and reinvest,” Google is closer to the prevailing norm of “downsize and distribute.”
The government could do a lot to change corporate behavior—by banning stock buybacks, for example, or requiring firms to give workers and consumers board representation. Yet except for a passing mention of stronger labor laws in the book’s introduction, Klein and Thompson say nothing about the public regulation of corporations. What about the risk of collusion and other unfair business practices? As federal and state lawsuits allege, software company RealPage has enabled landlords across the nation to collude and prioritize higher rents over occupancy, boosting collective profits while keeping more units empty. And where does sectoral regulation fit in the Abundance vision? Public agencies have closely regulated the electric power sector for more than a century and helped make affordable electricity universal in the United States. These questions are central to effective regulatory design, and thus to any real abundance program, but Klein and Thompson are silent about them.
Abundance thus makes a very weak case for the supposed benefits of relaxing public governance. But it also misrepresents deregulation’s obvious costs and regulation’s clear benefits. Klein and Thompson acknowledge that federal environmental laws have been enormously successful in cleaning up the air, water, and land of the United States. (An EPA study found that the Clean Air Act Amendments of 1990 produced public health and welfare benefits, including preventing hundreds of thousands deaths annually, that exceeded the costs of compliance by a factor of 30 to 1.) But they suggest zoning and environmental review have outlived their justification.
This narrative rests on an imagined past of unfettered discretion for property owners. “In the 1800s, no American city had zoning rules,” Klein and Thompson write. But public control of land use is hardly a twentieth-century phenomenon; it is rooted in the centuries-old common law of nuisance. A fundamental tenet of property law is that landowners cannot exercise their dominion in a way that injures others. Understood in this light, zoning and environmental review are statutory descendants of nuisance law. The difference is that they replace a judicial and remedial approach to the problem with an administrative and preventative one.
That is exactly why Klein and Thompson should look less harshly on them. The authors compare court-centric governance in the United States unfavorably with administrative governance in other nations. “Decisions that are often made by bureaucracies in other countries are made by judges in our country,” they observe. They are correct that administrative decision-making is generally superior to judicial supremacy, both on public accountability and expertise grounds. But the practical effect of abandoning administrative zoning and environmental review in the United States would be to cede even greater power to judges. In the words of Christopher Serkin, “the ad hoc character of piecemeal nuisance litigation creates risk and uncertainty and enormous costs to the entire system.”
While zoning rules are unduly restrictive in many affluent suburbs, they are often far too weak elsewhere. Many poor people, especially poor people of color, live in proximity to polluting facilities like oil refineries and power plants and bear disproportionate harms of polluted air and water, including higher incidences of asthma, cancer, and premature death. The Mississippi River corridor in Louisiana illustrates this problem: lined with oil refineries and petrochemical plants, it is dubbed Cancer Alley for the facilities’ adverse effects on residents’ health. Stronger zoning rules that separated such activities from residential areas would yield significant public health benefits.
Klein and Thompson say nothing at all about such issues—they simply write these impacts out of the story. In a notable passage, they credit Congress for exempting some new chip fabrication plants from NEPA review. What they don’t say is that these facilities are highly polluting, contaminating air and groundwater. They were once concentrated in Santa Clara County, helping to make it the county with the most Superfund sites in the nation. There are obvious benefits to studying social and environmental impacts in advance and designing and siting industrial facilities with an eye toward minimizing them. Any serious public policy discussion must contend with tradeoffs—but Klein and Thompson see nothing but costs.
In all these ways, Abundance misrepresents the costs and benefits of regulation. But it also misrepresents the political obstacles to abundant housing and abundant clean energy.
For the most part, that is because the book has little concrete political vision at all. Klein and Thompson repeatedly say that “we” are all in this together, depicting Americans as a monolith. It’s clear enough why they write this way: they hope to recruit people to the cause. But good missionary rhetoric makes for bad analysis.
The one notable exception to the book’s false universalism is its unstinting criticism of liberal, upper middle-class professionals—especially lawyers. This class is essentially opposed to growth, Klein and Thompson contend: it insists on larding process on top of process to thwart development, whether in the name of historic preservation, environmental protection, or simply in order to protect home values. The authors stress that it’s not “the mother working two jobs” but the affluent who show up at local planning meetings to express opposition to new construction. And they take progressive professionals to task for missing “the contribution that liberal governance”—again, they mean excessive zoning—“made to the rise of Trumpism.”
The authors are right that liberal failures contributed to Trump’s rise, though those failures have much more to do with repudiating New Deal politics than with opposition to zoning reform. (More on that in the next section.) But by focusing its ire on this group—to the exclusion of other political villains—Abundance occludes where the most important fault lines in American society lie. We could not be further from the story of Thomas Piketty’s Capital in the Twenty-First Century, with its clear portrait of patrimonial capitalists and lavishly compensated executives thriving at the expense of everyone else—as it happens, the same story that Bernie Sanders and Alexandria Ocasio-Cortez are telling as they travel the nation on their “Fighting Oligarchy” tour, which has turned out tens of thousands of people in places like Tucson, Arizona.
It’s not insignificant that Klein and Thompson’s attacks echo the Trumpist agenda they disclaim. The affluent undoubtedly have more time and resources to spend advocating for their interests than the poor. But instead of calling for steeper progressive taxation and anti-monopoly policies that would rein in the power of the affluent, Klein and Thompson focus single-mindedly on red tape. Instead of calling for expanded state capacity to expedite environmental reviews (as they do for some government projects, like California’s High-Speed Rail Authority), they suggest we should ditch environmental review entirely. And instead of making the case for strengthening and broadening democratic participation in land use policy, they imply we should simply jettison it altogether. They do not call for these things explicitly. But their simplistic morality tales invite these conclusions, and the authors do nothing to guard against them.
This vision is undemocratic in both form and function. Diminishing public power over land use decisions means greater private control, which in turn means more deference to the whims of the market and more discretion for corporate executives and financiers—in short, more oligarchy. That is exactly what Trump and Elon Musk are hoping to achieve by taking the chainsaw to federal agencies, and that is why, as Republican pollster Patrick Ruffini puts it, they are “hitting the professional-managerial class—and hitting them hard.” These points of overlap with Trump’s agenda also matter politically. Whatever one thinks of the merits of their policy proposals, Klein and Thompson present no evidence that Democrats—including the liberal professionals they condemn—will be energized by their anti-bureaucracy platform in the face of Trump’s destructive attacks on government. Perhaps the authors believe that steep partisan polarization, along with growing disgust at Trump, give Democrats a rare agenda-setting opportunity to declare war on the liberal PMC—an integral part of its base—without suffering at the ballot box. But if so, they do not argue the point.
The book echoes today’s oligarchy in another way, too: its embrace of Silicon Valley’s vision for America. Klein and Thompson gush about AI’s potential and want the United States to play a leading role in directing its development. Similarly, their transportation future says more about self-driving electric vehicles than about mass public transit. This is not the utopianism of Edward Bellamy or the Knights of Labor, but the familiar futurism of tech oligarchs.
To achieve it, Klein and Thompson do call on government to support research and development in the private sector—implicitly acknowledging that the corporate and public interest are not always aligned, and that markets, as presently constituted, won’t deliver abundance on their own. But they are wary of how many conditions are placed on this fiscal support. “One problem liberals are facing at every level where they govern is that they often add too many goals to a single project,” they write. “When the government adds the right number of goals, standards, and rules, much can be accomplished. When it adds too many, the project can collapse under its own weight.” This “everything-bagel liberalism” is inhibiting development by making it too hard or too expensive to follow through.
There are real tradeoffs here—the authors are right about that, though in a trivial way. Too many conditions on public financing can certainly be counterproductive. But this is little more than a tautology. Simply being told that excessive conditions are excessive doesn’t answer any of the hard questions; the real issue is how best to advance the public good in any particular case. Rather than propose surgical excisions or offer guidance about how to balance different aims, Klein and Thompson cast doubt on a broad range of public demands, from prevailing wage laws to green design standards, child care requirements for chips factories, and mandates for special air filtration systems for apartments located near highways.
The authors do not go so far as to insist that any one of these conditions should generally be given up. But because the book fails to give reasons for ever attaching any of these conditions to an actual project, readers are left with the impression that we might as well dispense with all of them. Never mind that prevailing wage requirements have been a foundation of federal contracting policy for nearly a century and worked harmoniously with the developmentalism of the 1930s, ’40s, and ’50s. Or that building energy-inefficient structures in an age of accelerating climate change is penny wise and pound foolish for society. Or that clean indoor air should not be a luxury in a society as wealthy as the United States in 2025. The final example is revealing: the paeans to a bountiful future in Abundance conceal an unacknowledged validation of scarcity.
As a result of these omissions, Klein and Thompson fail to convey the risks of overcorrecting in the opposite direction: a plain-bagel liberalism that simply hands money over with very few or even no conditions at all. We don’t have to look very far to get a sense of how such an agenda would play out. Since the early 2010s, Musk’s various ventures have been lavished with federal and state support, including low-cost credit, loan guarantees, and a variety of government contracts. Tesla and SpaceX would hardly exist if the government had not opened its coffers to them, with few if any conditions. These handouts have made Musk the wealthiest man on the planet, deepening oligarchy while providing only modest public benefits. After decades of federal support, electric vehicles accounted for only 8 percent of the total car market in 2024, and Tesla has a market share of under 5 percent. In China, by contrast, electric vehicles represented 40 percent of sales last year. Meanwhile, Tesla’s precise impact on carbon emissions remains disputed—one study found that its claimed reductions are overstated by up to 49 percent—and SpaceX has largely stepped into the shoes previously filled by NASA, privatizing a once public function.
This is not a new phenomenon. In the nineteenth century, Congress awarded more than 170 million acres of land in the West—land cleared of indigenous people through mass killing and evictions by the federal government—to rail companies to construct lines from the Midwest to the West Coast. The total land grant was nearly double the area of California. The companies did build, but it was hardly a model of good development: it fueled exploitation of immigrant workers, corruption, speculation, a major financial crisis in 1873, and the rise of the robber barons.
While widely shared abundance is a worthy aim, it will require a radically different program than further delegating public decision-making to private hands. But Americans do not have to build a program from scratch. They have a useful historical precedent: the New Deal.
Klein and Thompson credit the New Deal for its “boldness” and for cementing the idea that “the federal government must take an active role in managing the American economy and protecting workers.” They trace its bipartisan endurance through the Republican administration of Dwight Eisenhower and then briefly chronicle its demise through the administrations of Jimmy Carter, Ronald Reagan, and Bill Clinton. (Though they do not say so, Barack Obama continued this pattern among Democrats.) But remarkably, apart from citing fewer public controls on land use at the time, the book says nothing about why the New Deal was so successful, nor about the populist politics—including Franklin Roosevelt’s contempt for “economic royalists”—that undergirded it.
Consider the case of electric modernization—the delivery of abundant, low-cost power to all Americans. In the early 1930s, electricity was common in cities. Most urban households had electricity, though they did not have electricity in the sense we assume today. Working- and middle-class families had lights and a radio, but not the suite of appliances we take for granted today. As historian Ronald Tobey notes, most Americans had electrification, but not electric modernization. But in the countryside, most people did not even have basic electric service. In 1935, only about one in ten farmers had any type of electricity, including generators. A lack of electric service meant candles, no indoor plumbing, storing food in cellars, and doing laundry by hand.
The private sector failed to deliver electric modernization simply because it wasn’t profitable. Private electric utilities and their holding company owners wanted quick and easy profits. They discounted the potential for greater residential power consumption and were largely dismissive of the rural market. Private utilities did not want to spend money building lines into thinly populated areas where they believed households, farm and non-farm alike, would not use much power. They instead focused on wealthy households and large industrial customers in cities that used lots of electricity and did not cost much to serve.
FDR refused to accept this status quo and believed that electric modernization was a necessity. Two months before he was elected in 1932, he presented his vision for the power sector at a campaign stop in Portland, Oregon. He offered a program that was part conservative, part radical: stressing that private ownership should be the norm in electricity, but endorsing much stronger public control over private utilities. Even as he examined the finer points of utility cost accounting, his rhetoric was populist and combative. He condemned holding company “monstrosities” and declared “the public is beginning to understand the need for reform after the same public has been fleeced out of millions of dollars.” He further proposed large-scale power generation by federally owned and operated dams on the Colorado, Columbia, Tennessee, and St. Lawrence Rivers—the four corners of the United States. He believed public participation in the power sector could spur the private sector to do better, a philosophy he dubbed “the yardstick.”
Soon after taking office, Roosevelt worked with Congress to put the Portland program into practice. In his first 100 days, Congress established the Tennessee Valley Authority (TVA) to build and operate dams on the Tennessee River and its tributaries. The dams would control floods, promote inland navigation, and generate large quantities of low-cost electricity. While Congress ultimately did not create “little TVAs” to cover the rest of the country, it authorized public dam construction across much of the nation.
In the West, the federal Bureau of Reclamation and U.S. Army Corps of Engineers constructed dams like Bonneville and Grand Coulee on the Columbia, Fort Peck on the Missouri, and Shasta on the Sacramento. Private utilities countered that the United States, in the midst of the Great Depression, was already generating excess power, and the dams would only exacerbate the surplus. The mistake was to see consumption as largely fixed, dismissing the possibility that lower rates would stimulate much greater use. In other words, it took public action to break the hold of privately maintained scarcity and deliver abundant power.
To be sure, the national dam building program was hardly perfect. For all the benefits it produced, it carried substantial social and environmental costs—displacing tenant farmers and Native Americans, for example, and decimating fish stocks. But the choices of private actors carry tradeoffs too. The key advantage of Roosevelt’s Portland program is that it routed these decisions through public channels. If anything, its negative impacts illustrate the need for more public planning and consultation, not less.
Roosevelt and Congress also launched a major rural electrification program. Created in 1935, the Rural Electrification Administration (REA) offered low-cost credit to build power lines in the countryside. The carrot of cheap financing was not enough to get private utilities off the sidelines. (This experience should counsel against optimism about tax credits and other enticements to clean energy development today.) Instead, the REA turned to a largely untested institutional form—consumer-owned rural electric cooperatives—to build these lines.
The national rural electrification program departed from two prevailing norms today. First, Roosevelt and Congress wanted to bring modern life to the country. They understood people’s connections to their communities and sought to bring development to the people, instead of nudging or compelling people to relocate to the comparatively developed cities. Second, rejecting the philosophy that something is better than nothing, the REA called for area service—cooperatives would have to serve all farms and households in their territory, not only the lucrative subset of them. The REA also helped fight “cream skimming” by private utilities, the practice of building lines to serve wealthy farmers and leaving the unprofitable remainder for cooperatives and others.
In line with the Rooseveltian vision of maintaining private ownership and shoring up regulation, Congress strengthened public control of private utilities. In the Public Utility Act of 1935, Congress established regulation of interstate wholesaling and transmission of electricity and broke up and regulated the holding companies that dominated the industry.
The New Deal program was extraordinarily successful. Most visibly, it made rural electrification a reality. Thanks to federal support, the rates of farm electrification skyrocketed in just two decades, rising from one in ten in 1935 to more than nine in ten in 1955. Americans in the countryside got electricity and modern living in the form of indoor plumbing, electric refrigeration, and washing machines that liberated women from the backbreaking work of doing laundry by hand.
Rural cooperatives did the bulk of this line extension, but the private sector stepped up once the federal government showed that rural electrification was a profitable undertaking. The REA arranged a traveling big tent exhibition that showed many uses for electricity on farms and rural homes. It also identified ways of lowering the cost of line construction. Whereas private power had estimated that building rural lines would cost between $1,500 and $2,000 per mile, the REA found that through simplification and standardization of line designs the work could be done for as little as $430 per mile. The public sector led, and the private sector followed and began to recognize the profits to be made in serving rural markets. In line with Roosevelt’s own vision, most Americans continued to obtain electricity from private utilities. The New Deal kept private ownership in place but dislodged it from its pride of place.
The New Deal also brought electric modernization to cities. Federal and improved state regulation lowered rates, and public competition helped too. Pressure from federal agencies like TVA as well as a credible threat of public takeovers of utilities—hundreds of cities municipalized their utilities in the ’30s—forced private utilities to improve their performance. Public rivalry and stronger public control of private utilities changed their orientation: they exchanged the financial engineering of the 1920s with public service at reasonable profit. Lower rates stimulated greater domestic power consumption. Paired with federal participation in mortgage finance, national power policy brought electric modernization to all.
Abundance’s poverty of vision does not counsel hopelessness. We have a proven model for achieving broadly shared abundance. The New Deal delivered it through a combination of public investment and stronger public control of private corporations. The state spurred the private sector to adopt a longer-term social orientation in lieu of the extractive governance that had prevailed before the Depression.
That public abundance is still possible. Americans got a small taste of real “supply-side” liberalism in the American Recovery and Reinvestment Act of 2009. Through this program, EPB of Chattanooga, a municipally owned utility created in the 1930s, obtained a federal grant to build a citywide fiber optic network. The utility used these funds to deliver the nation’s first 1 gigabyte per second broadband service, helping attract tech companies and workers to the newly dubbed “Gig City.”
Replicating this success on a national scale and across a range of urgent challenges calls for a serious revival of New Deal politics, not a doubling down on the ethos of neoliberalism—however appealingly rebranded.
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