Supply Side Progressivism: An Opportunity for Political Unity
This post is an adaptation of an August 23, 2022 article originally appearing on Catalyst.
There is a growing movement that hasn’t received much attention beyond policy wonks. It is a movement that preaches growth, deregulation and market competition to achieve progressive outcomes, termed “supply-side progressivism,” and its influence is seen in last year’s Inflation Reduction Act, which includes tax incentives for producing green technologies, as well as throughout state and local government in the US.
The lack of coverage on this ideological shift is a shame, because the ideas proposed by supply-side progressivism present an opportunity for political unity.
The housing crisis is the best example. It has been advocated for decades by policy experts across the political spectrum — from Milton Friedman and Thomas Sowell to John Kenneth Galbraith and Paul Krugman — and in recent years argued fiercely by supply-side progressives that government regulations like municipal zoning, use and height restrictions, and mandatory parking minimums are the primary drivers of high rents and housing prices.
Such regulations prevent the market (as well as governments) from developing new housing units, thus keeping supply from ever meeting demand. Unlike policies stereotypically associated with the left, supply-side progressivism makes no claims about whether or not housing costs should be socialized. Rather, it aims to spur enough housing growth to where the question of socialized housing is hardly needed.
(Contrary to popular belief, the housing crisis is not driven by vacant units, of which there are few in densely populated regions like the San Francisco Bay Area — although the commonly espoused “greedy landlords” argument has some merit by viture of regulatory capture.)
In addition to those who identify with the left, zoning deregulation’s strongest supporters can also be libertarians and conservatives. This is a policy solution with little partisan baggage. Political baggage, yes, because NIMBYs (not-in-my-backyard) form a powerful voting bloc that also crosses ideologies and includes the aforementioned landlords to name a few. But there is little ideological baggage.
Other examples of supply-side progressive policy solutions include the deregulation of the U.S. medical-residency system to alleviate the physician shortage, and pulling back certain environmental regulations that actually benefit the fossil fuel industry by hampering the development of solar and nuclear power plants, as well as mass transit. Consider further supply-side proposals that have been put forth by the Niskanen Center, policy journalists like Derek Thompson, Ezra Klein, Matt Yglesias, or Noah Smith, or by economist Miles Kimball.
Earlier last year, Robert Poole at Reason laid out a vision for bipartisan reform of the National Environmental Policy Act. Legal scholar Ilya Somin argued last year for cross-ideological unity against exclusionary zoning. Libertarian and liberal pair Brink Lindsey and Steven Teles’ 2017 book The Captured Economy also puts forth a similar vision of political unity across several of the aforementioned policy areas.
Some might balk that these deregulatory measures do not go far enough. After all, these pro-marketeers are still ideological progressives and are unlikely to, say, advocate for anti-union policies, privatizing public lands and social security, or austerity in general. The Build Back Better plan, for example, which included provisions for government spending towards research and development to increase the supply of renewable energy generation and infrastructure, was branded by Treasury Secretary Janet Yellen as “modern supply-side economics.”
This is not to convince everyone to become supply-side progressives — nor will the aforementioned policy ideas necessarily bring America out of its political divide. But these well-agreed-upon solutions are massive steps to alleviate some of the largest crises of our time. Returning to the example of housing, as economists such as Matthew Rognlie and Nobel Prize winner Joseph Stiglitz have pointed out, wealth inequality is largely a function of home and land ownership.
With the aforementioned restrictions on housing supply accounting for the most significant barriers to entry in the housing market, working together on these policy solutions will help us take back a piece of the American dream.
