There is a widespread feeling that the American economy is broken. Data shows that the percentage of families living paycheck to paycheck has risen from around 30% in the late 1990s to 50% to 60% today. Rising costs and stagnant wages have lowered the standard of living for working families, even as per-capita GDP has reached new records in a linear ascent. In many aspects of society, we are acting as if we are impoverished instead of wealthy. Both federal and state government agencies have laid off workers, services are impaired, maintenance of infrastructure is declining, homelessness is rising, etc. What is wrong?
Ezra Klein and Derek Thompson recently wrote the book “Abundance”, published in 2025 to address issues with the broken economy. The book expresses the core ideas of supply-side progressivism, a movement originating in about 2010 and building momentum until today. There's a Wikipedia Page for supply-side progressivism; check it out.
The term “Abundance” is now being widely used by Democratic candidates for Congress, though I suspect few of them have actually read the book. “Abundance” may become the main campaign theme for the 2026 mid-term elections, particularly for centrist Democrats. Abundance seems an odd choice as the unifying rallying cry for Democrats – because the main message is a confession that Republicans were right when they said that government regulations were strangling the economy.
The central thesis of Abundance is that limitations in the supply of goods and services have driven prices higher and impaired American prosperity. Klein and Thompson lay out the argument that excessive government regulation has been the root cause of those shortages. Specific examples include goods and services which have increased in price more than the rate of inflation – housing, health care, higher education, and other key necessities, including energy, food and transportation. For me, there’s an uncomfortable echo of Reagan-era supply side economics, which proposed that lower tax rates, in combination with reduced regulation, would bring prosperity to consumers and higher government revenue. The theory is largely discredited by current day economists.
Klein and Thompson title their chapters Beyond Scarcity, Grow, Build, Invent, and Deploy. The first chapters examine the impact of regulatory over-reach on particular aspects of the American economy. The final chapter, “Deploy”, emphasizes the role that government should play in encouraging the development and commercialization of new technologies, after invention.
Klein and Thompson give short shrift to the societal benefits of the last 60 years of government regulations. We now have cleaner air and water; fatalities per air-travel passenger-mile have fallen by a staggering 99%; fatalities per vehicle-travel passenger-mile have fallen by about 66%; worker safety is greatly improved across many industries; food and medical safety is far better in the United States than in other nations; etc. But they are correct that there is a cost to regulations, and those costs have not always been weighed accurately against the benefits.
To use a Millennial idiom, one could say that Klein and Thompson are *not wrong*, damning them with faint praise. I believe the book is correct that policy choices about some regulations have led to scarcity, which then led to rising costs. Housing and medical treatment are the best examples. On the other hand, abundance theory is woefully incomplete in describing or remedying the problems with the economy.
The primary problem with the economy is demonstrably not on the supply side. Adjusted for inflation, personal earnings (wages and salaries) have increased by only about 12% since 1980, while per capita GDP has more than doubled, according to data from the Federal Reserve Database. Wage stagnation is the primary reason that working-class Americans are being left behind, not limited supplies of needed goods and services.
The reason for wage stagnation is also pretty clear. Over the course of my career (1980 – 2026), I saw computer automation eliminate many good-paying jobs. Managers were issued PCs to do correspondence and clerical work, and secretaries were re-assigned or fired. A geologist with a workstation could do the work of three to five geologists working with pencils and drafting tables, so 2/3rds of the geologists were fired. Workstations produced high-quality graphics, so the entire drafting and reprographics departments were fired. Enterprise-wide accounting software reduced the number of accountants in my department from 28 to 1; the other 27 were fired. The Internet and internal information archives eliminated the need for information specialists. In the 1980s, management set a goal of reducing professional headcount from 3000 to 1000, and achieved that goal; also in 1980, there was an aspirational goal to reduce the headcount to 300. The company has now been sold, so it appears that they achieved that goal as well. As Thomas Piketty wrote, technology and capital replace labor.
There is a belief, often cited in articles about economics and technology, that new technologies *always* produce new jobs. I saw another article citing that dogma two days ago, in an article about the Davos conference and AI. The argument is empirical, and to my mind, began to break down with the introduction of the PC in 1980. It may be true that the introduction of the automobile created more jobs for buggy-whip manufacturers, but that will not necessarily be true about the replacement of lawyers by AI. Empiricism is the weakest scientific argument, because it provides no fundamental explanation for why it is true, and it provides no predictive power for situations outside of the envelope of prior experience. And the future is always outside of the envelope of prior experience.
The goal of many Democratic policies of the past 60 years has been to address the symptoms, rather than the cause, of economic dysfunction. Higher minimum wage, pro-union regulations, food assistance, rental assistance, child-care tax credits, health insurance subsidies, etc., are all band-aids, not solutions to our economic problems. Neither party has been able to develop policies that improve the fundamental productivity of all individual workers, and the power of those workers to demand greater compensation for their work.
My employer’s view is that employees were a cost, not an asset. For 45 years, the pathway to improve corporate profitability has been to employ fewer people. That put relentless pressure on employee compensation.
There are a few obvious possibilities. Nationalized health care would remove the burden on businesses of providing health insurance for employees. Higher minimum wage might help, but also provides an incentive for businesses to automate low-paying jobs. It might be possible to tax companies based on the number of good-paying jobs they provide, relative to profits. But this might put American companies at a disadvantage in global trade.
Government policies have long been tolerant of the gimmicks that employers (even government employers) use to avoid paying benefits to employees, such as restricting weekly hours, or periodically laying off worked, only to hire them again shortly afterwards. But as well as ensuring that workers are paid benefits that they deserve, government should help to improve their productivity and value to employers.
In my opinion, there are no clear policy fixes for the problems plaguing the 21st century economy. Abundance, as a book and as a policy goal, is a good start. But after 2028, Democrats must not fail to deliver on the idea that Americans deserve prosperity, or we will face a return to the populist politics of grievance and blame which characterizes the Trump administration.
