I know I promised inflation talk, but I forgot to check the timing of the release of the Import Price Index, which will not be out until Tuesday. So, I’ll talk abundance today.

The immediate motivation is an American Prospect piece about how big buck Silicon Valley types are tossing huge money at Democratic politicians who will back their abundance agenda. This seems to be largely about reducing or eliminating zoning and environmental restrictions on building and attacking public education, and especially teachers’ unions. 

As I have said in the past, I am sympathetic to at least part of this story. Excessive zoning restrictions have made it extremely difficult to build in places like San Francisco, New York, and other very expensive cities. But there are both political and practical problems that make progress in this area difficult.

The political obstacles are obvious. The NIMBY crowd makes it very difficult to increase density in most high-priced neighborhoods. But the issue is complicated by the fact that in some places they have a case. Places like San Francisco and Paris have huge tourism industries. My guess is that they would attract far fewer tourists if their old neighborhoods were torn down and replaced with mid-rise or high-rise buildings. 

If they were less vibrant cities, rents would be lower both because they have more housing, but also because fewer people want to live there. Rent is cheap in Peoria, Illinois, also.  

There is also the important point that I have made many times; on a national level, the shortage of housing is the story of the housing bubble and subsequent crash. We were building plenty of housing in the first six years of the century. 

Construction then plummeted in 2008 and beyond. That wasn’t zoning restrictions; that was the collapse of the housing bubble. The story here is we need better-regulated finance, not something that I have heard much about from the abundance gang.

The abundance gang is also upset about environmental regulations that impede construction of data centers and other things they like. There are plenty of environmental regulations that are wasteful or redundant. The problem is that it is not easy to determine which ones and under what circumstances. And we really don’t want to leave that determination to the folks trying to build the data centers.

I won’t say much about the abundance folks’ attacks on public education. Unlike the left, the right thinks strategically. Public school unions have long been major supporters of progressive causes, which is why the right is always trying to weaken them. This is the main motivation for vouchers and other efforts to undermine public education.

They are also happy to use fraudulent claims to advance their case. Many folks may have heard about the “Mississippi Miracle” where their fourth-grade reading scores went from among the lowest to one of the highest. As Andrew Gelman shows, they discovered they could raise the averages in the fourth grade, by holding back the poor readers in third grade. Making kids repeat a grade may or may not be good policy, but raising the average by pulling out the lowest performing students is not exactly miracle stuff. 

Patents and Copyrights: Government Interventions that DO Make Us Poorer

If any of the abundance folks are really interested in making us wealthy by removing costly government regulations, they would fix their guns on government-granted patent and copyright monopolies. We easily pay well over $1 trillion a year ($8k per household) in higher prices because of these monopolies. 

This issue is most important in the case of drugs and medical devices, since it is not just money, but people’s health at stake. As I have argued many times, drugs would almost invariably be cheap if they were sold in a free market without patent monopolies or related protections. The vast majority of drugs would sell for less than $30 a prescription, and most for far less. 

The same story would apply to medical tests and various types of scans. The most advanced scans would likely cost just a few hundred dollars if the equipment did not have patent monopolies.

Drug and medical equipment companies do spend considerable money in developing their products. The government would have to replace this with public spending. But we already spend roughly $50 billion a year on biomedical research through the National Institutes of Health. We would have to triple this to replace the patent-supported funding, but we would still be around $500 billion ahead.

The argument against relying on public funding for drug development is sort of a magical view of human thought. Somehow, researchers can do great basic research on the public dime (almost everyone other than RFK Jr. agrees on this point), but when researchers move downstream to actually developing drugs, they become morons, unless they are motivated by patents. 

This argument should strike people as absurd on its face, especially since there is not a sharp distinction between the sort of research supported by NIH and the later phase research supported by the pharmaceutical industry. In fact, many drugs have been developed and even gone through clinical testing on the NIH’s dime.  

Moving to public funding and free market drugs would be a story of real abundance. Imagine never having to worry about how much a prescription costs. The same is true for medical tests. If your doctor felt a particular scan was necessary, an insurer is not likely to feel the need to second-guess them if the tab is just a couple of hundred dollars. (In fact, ending patent monopolies in medicine and medical equipment would go well with universal Medicare.) 

Shorter and weaker patent and copyright monopolies could have enormous impact elsewhere, for example, making software and computer devices free or at least much cheaper. It would also radically reduce the wealth of software billionaires like Larry Ellison and Bill Gates.

Reducing the wealth of these folks would also help with housing. They would not be able to tie up large plots of land in prime locations. Also, the minions of multi-millionaires produced by companies like Google, Meta, and Microsoft would be less able to outbid everyone for homes in San Francisco, Seattle, and elsewhere. 

Unfortunately, it seems the abundance gang has little interest in actually creating abundance. It looks mostly like they want to reduce the obstacles that prevent people like them from getting an even larger share of the pie.