Perhaps you’ve heard the cliche that the economy is a pie we must grow rather than slice. It is hard to know where to begin with what this image gets wrong, because it gets almost nothing right. If you somehow grew a blueberry pie, you’d get more blueberry pie. But economic growth is not an addition of sameness. The difference between an economy that grows and an economy that stagnates is change. When you grow an economy, you hasten a future that is different. The more growth there is, the more radically the future diverges from the past. We have settled on a metaphor for growth that erases its most important characteristic.
Dig within the equations that power modern economics and you’ll find that growth comes from one of a few places. An economy can grow because it adds more people. It can grow because it adds more land or natural resources. But once those avenues are exhausted, it needs to do more with what it has. People need to think up new ideas. Factories need to innovate new processes. These new ideas and new processes must be encoded into new technologies. All this is grouped under the sterile label of productivity: How much more can we produce with the same number of people and resources? When productivity surges, what we get is not more of what we had, but new things we never imagined.
Imagine going to sleep in 1875 in New York City and waking up 30 years later. As you shut your eyes, there is no electric lighting, Coca-Cola, basketball, or aspirin. There are no cars or “sneakers.” The tallest building in Manhattan is a church. When you wake up in 1905, the city has been remade with towering steel-skeleton buildings called “skyscrapers.” The streets are filled with novelty: automobiles powered by new internal combustion engines, people riding bicycles in rubber-soled shoes – all recent innovations. The Sears catalogue, the cardboard box, and aspirin are new arrivals. People have enjoyed their first sip of Coca-Cola and their first bite of what we now call an American hamburger. The Wright brothers have flown the first aeroplane. When you passed into slumber, nobody had taken a picture with a Kodak camera or used a machine that made motion pictures, or bought a device to play recorded music. By 1905, we have the first commercial versions of all three – the simple box camera, the cinematograph, and the phonograph.
Now imagine dozing off for another 30-year nap between 1990 and 2020. You would wonder at the dazzling ingenuity that we funnelled into our smartphones and computers. But the physical world would feel much the same. This is reflected in the productivity statistics, which record a slowing of change as the 20th century wore on. This is not just a problem for our economy. It is a crisis for our politics. The nostalgia that permeates so much of today’s right and no small part of today’s left is no accident.
We have lost the faith in the future that once powered our optimism. We fight instead over what we have, or what we had.
Much that we need for the world we want we already know how to build. But much that we need for the world we want still needs to be invented and improved. Green hydrogen and cement. Nuclear fusion. Treatments for the terminal cancers that overwhelm today’s therapies and the shadowy autoimmune diseases that baffle today’s doctors. AI that moulds itself to the needs of children who learn and think differently. Markets will, we hope, proffer some of these advances. But not nearly enough of them. The market cannot, on its own, distinguish between the riches that flow from burning coal and the wealth that is created by bettering battery storage. Government can. The market will not, on its own, fund the risky technologies whose payoff is social rather than economic. Government must.
But let us not be naive. It is childish to declare government the problem. It is just as childish to declare government the solution. Government can be either the problem or the solution, and it is often both. By some counts, nuclear power is safer than wind and cleaner than solar. It is inarguably safer than burning coal and petrol. And yet the US, facing a crisis of global warming, has almost stopped building nuclear power reactors and plants entirely. Between 1973 and 2024, the country started and finished only three new nuclear reactors. And it has shut down more nuclear plants than it’s opened in most of our lifetimes. That is not a failure of the private market to responsibly bear risk but of the federal government to properly weigh risk.
To take technology seriously as a force for change is to take it seriously as infused with values and, yes, politics. The relationship is bidirectional. It is not just that the politics we have will affect the technologies we develop. The technologies we develop will shape the politics we come to have. A world where renewable energy is plentiful and cheap permits a politics that is different from a world where it is scarce and pricey. A world where modular construction has brought down the cost of building opens different possibilities for state and local budgets.
In 1985, the great technology critic Neil Postman wrote, “to be unaware that a technology comes equipped with a programme for social change, to maintain that technology is neutral, to make the assumption that technology is always a friend to culture is, at this late hour, stupidity plain and simple.” The corollary is also true: to have no program to harness technology in service of social change is its own form of blindness.
There is an old finding in political science that Americans are “symbolically” conservative but “operationally” liberal. Americans talk like conservatives but want to be governed like liberals. The Tea Party-era sign saying “Keep your government hands off my Medicare” is perhaps the most famous example of this divided soul. Americans like both the rhetoric and reality of low taxes, but they also like the programmes that taxes fund. They thrill to politicians who talk of personal responsibility but want a safety net tightened if they, or those they know and love, fall.
This dynamic is so well known, so easy to see, that we miss how often it gets reality backwards. In many blue states, voters exhibit the same split political personality, but in reverse: they are symbolically liberal but operationally conservative.
In much of San Francisco, you can’t walk 20 feet without seeing a multicoloured sign declaring that Black Lives Matter, Kindness Is Everything, and No Human Being Is Illegal. Those signs sit in yards zoned for single families, in communities that organise against efforts to add the new homes that would bring those values closer to reality. San Francisco’s Black population has fallen in every census count since 1970. Poorer families – disproportionately non-white and immigrant – are pushed into long commutes, overcrowded housing, and street homelessness.
Texas has been the single largest beneficiary of California’s housing crisis. And that is, in part, because Texas is California’s mirror image on housing. The Austin metro area led the nation in housing permits in 2022, permitting 18 new homes for every 1,000 residents. Los Angeles’s and San Francisco’s metro areas permitted only 2.5 units per 1,000 residents. In our political typologies, it is liberals who embrace change and conservatives who cling to stasis. But that is not how things work when you compare red-state and blue-state housing policies.
To be fair to California, change is messy and uncomfortable everywhere. Any growing community that likes itself roughly the way it is faces a problem. If more people want to live in that community, then developers will build places for them to live. Worse, they might build dense places for them to live. A plot of land that houses a large single-family house could become a plot of land housing a small building with six units. You can make more money, typically, selling homes to six families than to one family, so it’s relatively easy for the developer to offer the family living there now a good price for their home, raze the building, stack six units atop each other, and make a profit. This can be done in many places at once, fairly quickly, and the community will soon wake to find that it is unrecognisable to itself.
But how do you stop people from selling homes they own and developers from building on land they own and people from moving to a city they would like to be part of? Who invented this whole business of cutting US cities into “zones” and creating rules about what can and can’t be built there? The answer takes us back more than 100 years.
In the 1800s, no American city had zoning rules, the economist William Fischel writes in his aptly titled book Zoning Rules! In the early 1900s, Los Angeles adopted a small package of regulations that divided the city between zones for industrial buildings and residential construction. New York City followed, and soon enough, so did almost everywhere else. “Eight cities had zoning by the end of 1916,” Fischel writes. “By 1926, 68 more cities had adopted it, and between 1926 and 1936, zoning was adopted by 1,246 additional municipalities.” The concept of zoning, unheard of in 1900, covered 70% of the US population by 1933.
Fischel’s explanation begins with trucks and buses, which forever changed the spatial geometry of the city. Before big, petrol-powered vehicles took over the streets, it was easy to keep the different functions of the city separate. If you didn’t want to live near a manufacturing plant or the masses of workers who worked in it, you could always live (or build) somewhere else. Trucks and buses changed that. “The truck liberated heavy industry from close proximity to downtown railroad stations and docks,” Fischel writes. Factories could now be located anywhere. Buses liberated urban workers, too. They didn’t have to live within walking distance of their jobs or on a streetcar line. They could reside anywhere, and working-class apartments could be built anywhere. Homeowners could no longer rely on geography to protect them from the people and producers they wanted to avoid. If distance couldn’t keep them safe, rules would have to do so instead.
The first zoning rules did little to prevent housing construction at scale. Instead they dictated what kind of buildings could go where. James Metzenbaum, an Ohio litigator, compared these early rules to good housekeeping in the 1930s. “It keeps the kitchen stove out of the parlour, the bookcase out of the pantry,” he said. Of course, the rules also often kept non-white Americans out of owning in rich parts of the city.
But the American zoning experiment wasn’t finished – not even close. What came next is what really put the clamps on housing supply: zoning as a form of anti-growth regulation. It is this form of zoning that still governs cities and suburbs today.
A slew of new zoning laws in Westchester County, New York, reduced the maximum permissible population of the county by 1.4 million people, largely by banning forms of home construction other than large-lot single-family houses. Bergen County, New Jersey, made it illegal by 1970 to build apartments on all but 131 acres of land. A 1973 survey of city and county governments found that one in five had passed laws in the previous two years that limited new residential development by halting expansions of public sewer systems. New York City’s first historic district was created in 1965; three decades later, more than 15,000 buildings were protected from redevelopment by its landmarks law. By the 1990s, 71% of cities and 77% of counties in California practiced some form of growth control, with hundreds of such measures enacted in the 1980s alone.
In 2020, for the first time in the history of the state, California – which, as late as the 1960s, was growing twice as fast as the rest of the country – shrank. The state is dominated by Democrats, but many of the people Democrats claim to care about most can’t afford to live there. In the same progressive zip codes where homeowners press signs into the soil of their front lawns bearing the message Kindness Is Everything, affordable housing can’t be found – and homelessness is endemic.
Too often, the right sees only the imagined glories of the past, and the left sees only the injustices of the present. Our sympathies there lie with the left, but that is not a debate we can settle. What is often missing from both sides is a clearly articulated vision of the future and how it differs from the present. Our new book, Abundance, is a sketch of, and argument for, one such vision.
Abundance: How We Build a Better Future, by Ezra Klein and Derek Thompson, is published by Profile Books
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