Getting Serious about Supply Through an “Abundance & Affordability” Agenda
Formulating an Agenda to Reduce Americans’ Highest Costs and Kick-Start Building
The American Dream is predicated on rising economic prosperity. Economic prosperity requires abundance. And abundance is, fundamentally, a supply issue.
How citizens feel about the economy is not purely based on their wages, it is based on what their wages can buy. Even before the inflation spike of 2021–2023, Americans’ wages weren’t buying as much as they’d like it to.
After that inflation spike, the cost of living remains the central drag on people’s lived experience of the economy; more than twice as many Americans say that inflation is the most important problem facing the country than say that about unemployment, the gap between the rich and the poor, and taxes combined. When asked which issue matters most to them, 18–29 year olds place inflation as their number one priority, with healthcare and housing coming in second and third respectively.
Housing, green energy, and services like health care and childcare are all more expensive than Americans would like them to be. They are more expensive than they should be because they are scarcer than they should be. It doesn’t have to be this way.
Working to substantially increase the housing supply would make it easier for middle-class people to afford the American Dream, reduce the extent to which working-class and poor people are rent-burdened, give all Americans more ability to live where they want, and create many thousands of good paying jobs in the construction industry.
Working to substantially increase the supply of green energy would make it easier for us to meet our climate goals without asking people to lead less prosperous lives.
Working to increase the supply of key services would bend cost curves down and so help American workers stretch their paychecks further.
Democrats should imagine a world where Americans of all social classes have good housing that doesn’t eat 40% of their paycheck, where fighting climate change and growing the economy go hand-in-hand, and where everyone can afford the services like medical care and childcare that they need to live a full life.
Chamber of Progress is launching an effort to articulate what an “Abundance & Affordability” agenda could look like, how a world of abundance would impact American families, and what the political return for Democrats is.
The agenda is focused on advocating for policies that will increase the supply of goods and services that have risen most in cost and policies that will reduce the roadblocks that stand in the way of building. We need to be a society that’s affordable, and we need to be a society that builds things.
How Democrats Can Respond to Rising Costs: Four Options
Democrats have four policy options when it comes to addressing rising costs
The first option is the ostrich option: stick our heads in the sand and pretend like the high cost of living isn’t a problem.
Traveling down that path is likely to be politically disastrous- voters do not like to be told that their complaints are stupid. Moreover, it is an abdication of political responsibility for a party dedicated to using the government to make people’s lives better to say that cost of living isn’t worthy of its attention.
The second option is to scapegoat: blame corporations for higher prices.
That may feel good and may even sound nice to certain constituencies within the Democratic Party and there are a few examples where the business in question seems to be a middleman delivering little to no discernible value while charging big fees (almost no one likes Ticketmaster, and many people have quite negative experiences with car dealerships). The Biden administration, to their credit, has started to crack down on junk fees and other deceptive pricing practices.
Junk fees, as annoying as they are, are a relatively small percentage of spending. For example, total revenue in the accommodations sector in 2022 was $316 billion, and hotel resort fees add up to $3.3 billion, so about 1% of total spending in that industry. Conversely, shelter makes up 36% of the Consumer Price Index, meaning it’s more than a third of what the average American spends overall, and housing inflation has been running very hot at 5.7% annually. Similarly, hospital services have gotten 7.5% more expensive over the last year while home health care for the disabled and elderly is up 14.2%.
Junk fees are largely not what is driving cost increases in many of our most important economic sectors. It is not businesses that are the cause of the housing shortage in blue cities and states; developers would like to build more housing there. It is not businesses that are blocking offshore wind turbine construction; energy firms would love to build those turbines. Nor are multinational corporations responsible for the high costs of college or childcare.
If Democrats want to bring down the cost of living, broad-based rhetorical attacks on the private sector and capitalism are unlikely to achieve much. Where businesses can be fairly blamed — such as healthcare providers that lobby in favor of certificate-of-need laws or shipbuilders that ferociously defend the Jones Act or import-competing businesses that push for tariffs on solar panels — it is their attempts to get government to squelch competition on their behalf that is the root of the problem, not the pursuit of profit per se.
The third option is perhaps the most long-term unhelpful because it is the most intellectually seductive: subsidize demand.
At first glance, it is understandable why Democrats want to use government funds to subsidize demand for low-income people. They are often the people who need help the most and with limited resources, means-testing makes some sense.
The problem is that simultaneously subsidizing demand while not addressing supply constraints creates what’s been called ‘Cost Disease Socialism’, under which prices for the subsidized good or service rise for everyone. Those who do not receive the subsidy are left worse off via higher cost of living, and government spending under this model suffers from inefficiency.
The problem of subsidized demand with constrained supply is made even worse by what Ezra Klein has dubbed ‘Everything Bagel Liberalism’ under which the government tries to achieve so many different objectives with the same policy that supply does not increase as much as it otherwise could.
Moreover, if the underlying challenge is scarcity, as it often is, no form of subsidization or redistribution is going to get at the root of the problem. There’s no redistributing your way out of a shortage. Finally, there is a class element to problems created by subsidized demand. While the very poor need government subsidies, the middle and working classes need a functioning market with lots of supply.
Our fourth option, increasing supply, corrects for that problem.
There are times when it makes sense for the government to do the supply provision (free lunches at public schools for example) but, for the most part, supply comes from the private sector, and so a focus on increasing supply means reforming regulatory barriers that stand in the way of production.
That means adopting more permissive zoning rules, ensuring that environmental regulations don’t obstruct green projects, and updating our services regulations for the 21st century.
The Biden administration is already making some great moves in this direction. The Department of Energy recently finalized new permitting rules designed to accelerate the construction and upgrading of high-capacity power lines. Still, there is much more to be done on all of these issues.
We cannot continue to let not-in-my-backyard (NIMBY) activists strangle housing supply, we cannot let degrowthers define what it means to be a climate advocate, and we cannot let services continue their upward cost spiral. In our fear of change we have forgotten that it is our current generation’s duty — every generation’s duty — to build a bright future rather than wallow in nostalgia.
Developing an Abundance & Affordability Agenda
Over the coming months, I will be serving as a Senior Advisor to Chamber of Progress to develop a new Abundance & Affordability Agenda, focused on increasing the supply of goods and services that are most impacting Americans’ pocketbooks and on helping America become a society that builds.
This project is not about what we are against but what we are for. I like to think of us as “Costco Democrats.” Costco has lots of fans for many reasons and virtually all of them relate to scale, which is to say abundance.
Costco is, on one level, extremely ambitious but it’s also deeply pragmatic, with a zeal for attention to detail and a laser focus on prices. And so, at Costco, American consumers can stretch their dollar; a hot dog and soda is still $1.50, a new 58-inch TV is priced at less than $300, and men’s polos run about 14 bucks. Abundance.
As unsexy as it sounds, that is what America’s political economy needs. If, like Austin, Texas, we make it easy to build housing, America can create enough housing supply that rents go down even as the population increases.
Colorado doesn’t artificially constrain health care service supply with certificate-of-need laws, and not coincidentally it has some of the lowest per capita spending on health care in the country. Increasing the supply of health care services is crucial to making “Health care is a human right” not just a promise, but a lived reality that we actually deliver.
If we reduce unnecessary, burdensome occupational licensing regulations, people can move near family or to a better home rather than feel trapped where they are.
If we build lots of clean energy we can meet the demand from new data centers, EV charging, electric heat pumps, and more. We can build the kind of world we want. We can make America even greater than it already is.
To do that, we need Abundance. This project is about entrepreneurially advancing that idea. We’ll be putting out a range of content on these and other policy options that advance that Abundance & Affordability Agenda. Anyone interested in contributing ideas or supporting our efforts can contact me at gary.winslett@gmail.com or follow me on Twitter.
Abundance for All Americans — Not “Us Versus Them”
A final advantage of a supply focus and a commitment to unleashing abundance is that it gets Democrats and America away from zero-sum thinking.
The most toxic and wrongheaded idea in American political economy today is the belief that for one person to get richer, someone else must get poorer. Nothing could be further from the truth. When we make politics an ‘us versus them’ battle in which allies are exalted and enemies are laid low, we shred the notion of equality before the law for friend and opponent alike, and we do grave damage to the argument that all of us can rise together and that all of us can be free together.
When we take action to increase supply, every American can live where they want, work how they want, and dream whatever dreams for themselves and their children that they want, regardless of where they’re from, regardless of what social class their parents occupied. That is 21st century prosperity.
Chamber of Progress (progresschamber.org) is a center-left tech industry association promoting technology’s progressive future. We work to ensure that all people benefit from technological leaps, and that the tech industry operates responsibly and fairly.
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