Energy Abundance +

2025 03 22

Lots of talk about the new book, “Abundance” by Ezra Klein and Derek Thompson. Noah Smith has a

Book review: "Abundance"

here. As expected, Noah is quite positive but thinks it fails to confront some of the real factors that impede abundance.

Klein and Thompson never spare the opportunity to pull a punch.

Throughout their book, Klein and Thompson take great pains to specify that the goals of progressive obstructionism are good, and that they only disagree with the methods. It’s littered with statements like “Every one of these is a worthy goal,” and “Each individual [obstructionist] decision is rational.” But is this really true? If San Francisco outsources critical city functions to politically friendly nonprofits, is that actually a worthy goal, or just corrupt? If federal funding is saddled with onerous reporting requirements that prevent anything from getting done, is that rational, or just plain stupid?

Josh Barro has a narrow but more pointed critique “Abundance Liberals Have a Carbon Problem,” that K-T assume away any trade-off between abundance and the costs of achieving CO2 concentration goals, mocking, K-T’s vison of cheap energy in 2050

“You open your eyes at dawn and turn in the cool bedsheets. A few feet above your head, affixed to the top of the roof, a layer of solar panels blinks in the morning sun. Their power mixes with electricity pulled from several clean energy sources — towering wind turbines to the east, small nuclear power plants to the north, deep geothermal wells to the south… You live in a cocoon of energy so clean it barely leaves a carbon trace and so cheap you can scarcely find it on your monthly bill.”

Barro just does not believe that is possible, certainly not by just smartly deregulating development of solar, wind, battery storage, nuclear and geothermal. Rather,

Klein and Thompson don’t quite believe in their own energy vision. The suite of policies they advocate suggests they believe their agenda as a whole would grow the economy and raise standards of living. (And I agree). But it also suggests they still view decarbonization as a cost center. They would take some of the gains from a pro-abundance policy agenda and plow them into the green transition — maybe producing a higher standard of living than if you didn’t change policy at all, but producing a lower one than if you unleashed abundance in the economy while allowing users of energy to seek out the cheapest possible source, whether fossil or renewable.

Of course, advocates of decarbonization would argue that reducing carbon emissions is itself a benefit — a component of abundance. But the benefits of decarbonization are diffuse: they arise all over the world, and disproportionately in lower-income countries that are less prepared to adapt to climate change. They also mostly accrue far in the future. Meanwhile, the cost of decarbonizing the US economy is borne almost entirely in the US, and in the near term. This is why carbon-reduction policy comes into conflict with a politics of abundance (and also why it’s so politically difficult to implement): It imposes costs on the voters who get to pass judgment on the policy, while producing benefits that mostly go to foreigners, a lot of them not yet born.¹

So, if the calculation is that a decarbonization agenda leads to abundance because it will lead to higher global GDP in 2080, with the benefits concentrated in poor foreign countries, even as the investments required for it will raise costs in the United States over the next couple of decades — well, that’s not likely to be perceived by US consumers as increasing abundance

Here Barro may be a bit too pessimistic in that he seems to be assuming costs like those of current policies rather than the much lower cost of decision rules that mimic the effects of a tax on net CO2 emissions. Likewise, the US woud also benefit (in net present value) from universal application of taxes on net emissions of CO2 and a border adjustment tax would be a powerful tool to encourage other countries to adopt that lowest cost policy.[1] Nevertheless, we do not today have a net emissions tax and subsuming it in an abundance agenda will not make opposition and Barro’s criticism go away.

And there is a broader criticism that neither Noah or Barro address. Is even eliminating the microeconomic abundance-inhibiting (let’s just call it growth-inhibiting) regulations, regulations, government practices – boon though that would be – enough? Can we afford to ignore the macroeconomic framework – taxes, deficits mainly stemming from the mismatch of promised social insurance benefits and revenue collected to fund them, investment distortions embedded in the corporate income tax, immigration and trade restrictions, monetary policy[2]? Are our educational and research institutions creating the human and intellectual capital that a faster growing, more dynamic economy woud require.[3]

And to zoom out farther can even this maximalist growth agenda be achieved as a checklist of policy fixes? Does it not require something more like Kennedy’s New Frontier or Reagan’s Morning in America (without the tax cuts and deficits)?

Image in the style of Delacroix "Liberty leading the People" but with modern politician in the role of Liberty

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[Standard bleg: Although my style is know-it-all-ism, I am aware that I could be mistaken or overstate my points. I would, therefore, welcome comments on these views.]

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[1] That there ARE upfront costs to pushing any one technology (here solar) as an exclusive “solution” is exquisitely argued at ‘Construction Physis in “Understanding Solar Energy”

[2] With the adoption of Flexible Average Inflation Targeting FAIT monetary policy ceases to be an independent growth impediment although it can transmit the consequences of fiscal policy mistakes.

[3] For this post, let’s just ignore that current policies are growth inhibiting in almost every way.