Some Initial Thoughts on Abundance

Abundance is a framework for aligning market incentives to create abundant supply. It is incomplete without land value taxes.

Abundance is in. If you haven't been hearing that term buzzing around lately, especially in the past week, you might’ve at least caught wind of Ezra Klein and Derek Thompson's new book, Abundance. They're making a big push for eliminating regulatory barriers to boost supply under the premise that an abundance of supply is the key to keeping prices down. Here is the purpose and meaning in Klein’s words:

The answer to a politics of scarcity is a politics of abundance, a politics that asks what it is that people really need and then organizes government to make sure there is enough of it. That doesn’t lend itself to the childishly simple divides that have so deformed our politics. Sometimes government has to get out of the way, as in housing. Sometimes it has to take a central role, creating markets or organizing resources for risky technologies that do not yet exist.

Abundance reorients politics around a fresh provocation: Can we solve our problems with supply? Valuable questions bloom from this deceptively simple prompt. If there are not enough homes, can we make more? If not, why not? If there is not enough clean energy, can we make more? If not, why not? If the government is repeatedly failing to complete major projects on time and on budget, then what is going wrong, and how do we fix it? If we need new technologies to solve our important problems, how do we pull these inventions from the future and distribute them in the present?

The book recently came out and is sure to stir much more conversation across the political spectrum, but Klein and Thompson are not the only ones who get to speak for abundance, a conversation which stretches back years. In that light, I wanted to share some thoughts on this emerging framework.

• Abundance is the natural progression of the YIMBY movement.

The Yes-In-My-Backyard (YIMBY) movement has come a long way. It started with a simple goal: upzoning cities to allow for more townhouses and apartments. While more upzoning remains to be done, even in places with success, the housing crisis persists. Minneapolis was one of the poster cities of the YIMBY movement as they legalized duplexes and triplexes all across the city in 2018. Yet, last year, Zillow ranked Minneapolis as one of the top 10 metropolitan areas with housing shortages. Meanwhile, other cities, particularly post-industrial cities, face a housing shortage that can't be solved by simply allowing denser housing; many have vacant lots and underutilized properties where new buildings could be constructed, but aren't, highlighting the impact of non-zoning related obstacles to development.

The YIMBY movement has long realized that its objectives go beyond zoning. The movement is about dismantling regulatory barriers that stifle market supply at the local government level whether it be eliminating parking minimums or building code requirements for the number of stairs. This progression is in part why CA YIMBY president Brian Hanlon launched the Metropolitan Abundance Project (MAP) last year. YIMBYs will lead the way on the housing front of abundance. Abundance is about more than housing, but because of the degree of housing shortage in the country, housing will be a large part of the conversation.

• Abundance should be a framework, not a rigid set of top-down policy prescriptions.

Ezra Klein and Derek Thompson, while influential, don't have a monopoly on the term. Abundance should be a framework, and that's key to its potential. I've seen some skeptical takes on abundance, including this very thoughtful one on Bloomberg's Odd Lots newsletter. But what's interesting is that even the skeptics aren't fully against the concept, partly because they recognize that abundance doesn't have to be so narrowly defined.

Movements, of course, can sometimes get pigeonholed by the specific policies they prioritize, and it remains to be seen where the abundance movement will ultimately land. It could be a passing fad, or it could become the new, unifying framework that YIMBYs and other like-minded groups adopt and champion. While abundance is likely to be initially associated with liberals, given its origins, the core idea of fostering greater supply through reduced barriers doesn't need to be partisan. It's a principle that can resonate across the political spectrum.

Take Montana, a red state for example. The state has implemented sweeping zoning reforms, including allowing duplexes and ADUs in single-family zones and permitting residential development in commercial areas. Klein in his book concedes that red states, like Montana, are the primary ones enacting more pro-abundance policies, and a core theme of his book is urging blue states to catch up. Montana’s policies have been called a “free-market wish list of pro-housing reforms” by the Metropolitan Abundance Project.

• Abundance recognizes that significant progress can occur locally.

It's easy to get caught up in the federalization of politics. It often feels like every problem needs a federal solution. But the abundance agenda reminds us that meaningful change can happen at the local level. We don't always need to wait for Washington to act. In fact, given that the federal government persistently fails to pass a budget and how much big money donors are laser focused on national races, now is the perfect time to redirect attention to the state and local level to make meaningful change.

Land value tax advocates should seize this opportunity. We have the power to shift taxes onto land through our city councils and state legislatures right now, bypassing the constitutional limitations on federal property taxation. Success at the local level can build momentum, creating a model that might even inspire future federal reforms.

• Abundance gives us a better toolkit for housing solutions

The status quo housing policy conversation often feels overly focused on national subsidies to address the severe housing shortage in the United States. Proposals have called for massive expansions of programs like the Low-Income Housing Tax Credit (LIHTC), housing trust funds, universal housing vouchers, and large-scale public housing construction.

While significant expansion of subsidies may be necessary eventually, the abundance movement offers a different starting point: Let's see if we can remove obstacles and change incentives directly. And the best part? We can test these ideas locally without getting bogged down in national political debates.

To center market incentives in housing development, we need better tools in our kit. Chief among them is better calibrated property tax policies.

• The abundance movement needs to include shifting taxes off buildings onto land.

The “inversion” test is a good way to come up with a winning strategy. First imagine a strategy that will guarantee your defeat, then try to not do that.

What’s the perfect strategy for municipal decline? Reward people for doing nothing, and at the same time punish anyone who invests in the community. In other words, take the most valuable land in your city, and exempt it from taxation. Meanwhile, in the exact same highly valuable locations, jack up taxes on building development. This strategy will leave your most valuable asset untaxed, discouraging people from building homes and businesses. Demand would be forced outwards in every direction, raising the price of land everywhere else. Since you are no longer taxing valuable land, you’ll have to levy extra taxes on buildings, sales, personal incomes, and businesses to make up the difference, further suppressing all the activity that makes a community thrive. Doing the opposite would align market incentives.

Property taxes are two taxes hidden in one: a tax on land and a tax on buildings. We can decrease taxes on buildings and offset that with an increased tax on land. Reward development, discourage blight. We have done it before. In Pittsburgh, Allentown, Harrisburg and more, economic research has shown that land value tax shifts lead to significant increases in development.

Without aligning market incentives in property taxes, development will not achieve its full potential, and speculators will continue to hold onto land and benefit from economic gains that abundance brings. Abundance is incomplete without land value taxes.

Luckily, land value taxes are gaining momentum in housing conversations. The National Housing Crisis Task Force, with its impressive roster of mayors, former HUD secretary Henry Cisneros, and housing experts, published a State and Local Housing Action Plan this month and included LVT as a key intervention a city can take to address housing shortages.

LVT advocates could choose to levy large critiques of abundance claiming that the movement does not properly center the role of land in our economy. Or, we can take the more pragmatic approach. Land value taxes make sense under many frameworks, including a neoliberal and abundance framework. Remove taxes from the things we want. Tax the things we don’t want.

Abundance and Georgism have a natural synergy, and this should be the opportunity for land value taxes to become a larger part of the national conversation.