Aug 15, 2025-Housing Shortages Amid Abundance: Part 2  

As larger shares of income and wealth go to the top, success is often displayed through housing. Over the last forty years, average home size has gotten larger even as family size has gotten smaller. Public policy has encouraged this: mortgage payments and property taxes are tax-deductible—even for multiple homes!  So it’s relatively cheaper to display wealth through housing than in other ways. Since builders’ profits per square foot are higher on large, elaborate properties  than on basic starter homes they have been delighted to cooperate.

Ezra Klein and Derek Thompson’s Abundance (2025) cites bureaucratic hurdles that block access to the abundance we already have. A major examples is the failure to build enough housing in the US that’s  affordable for first-time buyers. Re-examining local building codes and regulations to ensure they are achieving worthy goals and not just blocking needed expansion sounds good. Codes and planning should also reflect changing modes of transportation and household formation. But that’s not enough by itself to fix the housing affordability problem! That requires addressing the competitive spending that comes with rising inequality. (See Robert Frank’s Falling Behind: How Inequality Hurts the Middle Class). Frank explains how competitive spending at the top cascades down to those immediately below, and then the next tier of households, etc., etc.

However, rising inequality is the elephant in the room that many don’t want to discuss. Doing so does not win you friends in high places! It’s safer to focus on other types of solutions—new technologies or bureaucratic reform. Next post:  I’ll explain how inequality affects not only building patterns but the policies around them.

July 5, 2025—Abundance, Wealth, and Economics: Part 1

US per capita GDP  is over four times what it was in 1950-- after adjusting for price changes.  That suggests that unparalleled abundance is possible. But GDP doesn’t tell us what is being produced and who can afford to purchase it.  While productivity growth in  the 1950s to mid-1970s was a  “rising tide that lifts all boats,” it’s no longer widely shared among the population.

When the benefits of productivity growth flow increasingly to the top few percentiles of the population, that limits the ability of workers to quit a dangerous job (or worse yet, survive a layoff), to buy a home, or to send kids to college.  The concentration of wealth, in particular, leaves a much smaller share of people making the big decisions about how our knowledge and resources are used. Should their be affordable health care for all—or mega-mansions and gold toilets for some?  What could be abundance for an entire nation ends up putting most of the oranges (see illustration) in the hands of a few.

Concern with wealth and income concentration is not a matter of envy or class warfare — it’s an integral part of the whole affordability discussion. I’ll return to that in a later blog. But if you’d like to learn more about wage, income, and wealth inequality check out Chapter 8 of Work, Pay, and Sustainability. It provides a short but comprehensive discussion, with lots of references for those who want to dive deeper.

March 4, 2025

The world’s richest man is firing public sector workers at whim, as well as dismantling agencies that protect all workers’ rights. And it doesn’t appear to be a one-off. Demagogues with simplistic solutions are attracting worker votes worldwide. It’s high time for a new political economy of labor that acknowledges and incorporates the social costs of inequality—especially its effects on bargaining power.

Work, Pay, and Sustainability: A New Economics of Labor tackles rising inequality, insecurity, and climate change using a pluralist analysis. That means drawing on heterodox as well as mainstream economic approaches to explain more of today’s problems of work and pay. Technological change and globalization are important, but they affect all countries. Institutions and policies differ considerably by nation and across time. By focusing on the US, but with comparisons to other affluent nations, we can more clearly see how institutions frame and shape market behavior. The subject matter is broader than a traditional labor economics book in several ways.

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