I read Abundance as part of my participation in the Hudson Area Library’s Nonfiction Book Group.
Abundance offers many telling comments about our situation. In particular, the lawyerification of our policy and regulatory regimes, artificial scarcities of housing, transportation, and more, and excessive focus on strict adherence to procedural requirements. The authors make much of the potential for activist government to get things done while supporting long-term investments in research and infrastructure. In this regard, they point out that when you pick up your cellphone, you are using a tool whose fundamental technologies were all invented by government research projects. This is also true of the entire panoply of internet-age devices.
A central focus of Abundance are the troubles we have with housing, both availability and cost. “Real wages stagnated over these decades [1980 to today], but they didn’t fall. The action was in housing prices, which rose and rose.” “….how many years an average wage earner would presumably need to save to buy a home. In 1950, it’s 2.3 years. In 1960, it’s 2.6 years. In 1970, it’s 2.4 years. But then something happens. By 1980, it’s 3.8 years. By 1990, it’s 5.4 years. By 2000, it’s 7 years.”1
However, the claim that wages merely stagnated without falling does not hold up within the context of an economy that grew from $27,310 per capita in 1975 to $59,484 per capita in 2020. That is a more than doubling at a 115% increase. To describe real median wages that actually only grew 16% over the same forty-five-year period as “they didn’t fall” is a bit misleading.
Here we come to a central blind spot in the book’s analysis. Abundance references the website WTF Happened in 1971? as one of the sources for housing issues. Somehow, the authors missed the very first two charts on this site:
Both of these charts show that wages tracked with productivity growth (output per hour of work) and various other measures of wages compared to overall (GDP) economic growth from the end of WWII into the 1970s. Then, something happened.
The Rich and Corporations Took Over the Government
Beginning in the 1970s, the rich and corporations, in league with the Republican Party, then in the 1980s with Clinton’s New Democrats, also carried out a well-financed, patient political campaign. At this point in history, we can describe this as a top-down class war. In the age of Trump, this is painfully clear because we see the rich and corporations deeply involved very publicly at the very top of the federal government. The Trump administration’s connections to the rich and corporations is not a new phenomenon. It is the current manifestation of the fifty-year campaign by the rich and corporations in league with conservatives in both the Republican and Democratic parties to control the Federal government and shape society for their benefit.
The rich and corporations dominate the election process by funding both the Republican and Democratic parties and extending their influence through a network of lobbyists in Washington. Lobbyists ensure that the interests of the rich and corporations are carefully protected through legislation and regulations. There are 435 members of Congress and 100 Senators. In 2021, there were 12,136 registered lobbyists in Washington, supported by over $3.73 billion used to influence legislation and regulations. This amounts to $6,972,000 and 23 lobbyists per legislator.1
Extraction capitalism, growth of finance, monopolization, globalization, and the decline of unions
Primarily as a result of changes in laws and regulations implemented by the rich and corporations, a new version of capitalism, which I call Extraction Capitalism (financialized capitalism), has emerged over the past fifty years. Traditionally, managers of corporations worried about what customers wanted, invested in developing products and services to meet those needs, and tried to maintain a stable, skilled workforce. This is the capitalism of products and services. The theory was that if you did these three basics well, profits would follow.
Financialization
Extraction Capitalism says that the only function of a company is to increase the wealth of shareholders. This is also referred to as Shareholder Value Theory.2
This is managing the business to meet next quarter’s financial promises to Wall Street. Everything is subordinated to this objective, and new financial strategies are deployed to accelerate the process. Senior management compensation is tied to accomplishing this extraction of as much money as possible in the shortest time. In the 1950s and ‘60s, CEOs earned roughly 26 times their average worker’s salary. Today, CEOs earn far in excess of 350 times that of the same worker. Corporations buy back their own shares in the market to drive stock prices higher. This has led to $ trillions of corporate profits being used to fill the pockets of top management and shareholders instead of being reinvested in the future of the business.
The growth of the finance sector (banks, insurance, hedge funds, private equity, etc) has been substantial. In 1950, it accounted for approximately 4.5% of the economy, whereas today it exceeds 8.5%. Its share of profits is disproportionately high, at 26% of all corporate profits. This is an industry that provoked a global financial crisis in 2008 because of its speculative, risky behaviors, which required $trillions in government bailouts to keep it afloat. The well-known socialization of private risk.
Monopolization
Beyond extraction capitalism, the US economy has become highly concentrated. In virtually every market, three or four companies control more than 50% of the market. This is the definition of a monopolized market. Effectively, competitive capitalism in the US is dead. My favorite example can be seen in the toothpaste display at your grocery store.
All those different brands! Procter & Gamble, Colgate Palmolive, and GlaxoSmithKline, three companies, control 89% of this $3.19 billion market.
Monopolized markets have four prominent characteristics. First, they can set their own prices; price competition is lacking. Second, they can pay lower wages because workers have fewer choices of where to work. Third, they can pay their suppliers less for their products and services because there are fewer or no choices to whom the suppliers can sell. Fourth, monopoly companies crush competition and reduce innovation and choice.
Globalization
Globalization has allowed US companies to move their production of goods and services to low-wage countries, like China, India, Vietnam, Mexico, and so on. High-paying American jobs disappeared to these countries. Both the Republican and Democratic parties supported the many international treaties that spread free-market policies around the world.
Decline of Unions
Beginning with the Reagan presidency, anti-union policies and actions have reduced the number of workers represented by unions from 35% of the workforce to less than 10% (mostly government employees) today. Union wages no longer act as a wage floor in the labor market. A final indicator of the success of the conservative-led coalition of the rich and corporations is the fate of the federal minimum hourly wage law. The minimum wage of $1.60 in 1968 would be approximately $14.48 in 2024, nearly double the current $7.50.
The authors of Abundance appear to be substantially ignorant or oblivious of these significant, long-term changes in our economy.
The $79 Trillion Heist
These structural and operational changes in the economy have produced an enormous surge in wealth and income at the very top of the population and a flatlining of income for the bottom 90%. Keep in mind the 115% growth in the economy over that period. Between 1975 and 2023 $79 trillion of income was transferred (stolen, perhaps) from the bottom 90% of the population by those in the top 10%, with most of it ending up in the hands of the top 1%.3
For example, from a Price and Edwards 2020 report, a worker at the median (50th percentile) of the population earned $42,000 in 1975. This rose to $50,000 in 2018 (stated in 2018 constant dollars), a 16% increase over 43 years. However, if the income-sharing trends of the thirty years following WWII had continued, that same worker would have earned $92,000 in 2018, an 84% increase.
A Conservative View of Wage Stagnation
For a different, conservative take on wage stagnation, take a look at the Cost of Thriving Index from the self-described home of conservative economics, American Compass.
The Cost of Thriving Index (COTI) demonstrates the effect of wage stagnation on middle-class incomes over the past 40 years.
“The Index measures the number of weeks a typical worker would need to work in a given year to earn enough income to cover the major costs for a family of four in the American middle class in that year: Food, Housing, Health Care, Transportation, and Higher Education.
In 1985, COTI was 39.7 weeks. Costs totaled $17,586, while the weekly income for a man aged 25 or older working full-time was $443 per week ($23,036 per year).
In 2022, COTI was 62.1 weeks. Costs totaled $75,732, while the weekly income for a man aged 25 or older working full-time was $1,219 per week ($63,388 per year.)”4
In 1985, a single male worker labored for 40 weeks to afford the essentials of middle-class life for a family of four. By 2022, that same worker needed to work 62 weeks (55% longer) just to cover the same basics. However, there are still only 52 weeks in a year. Consequently, he found himself $12,344 short for the essentials over the course of a calendar year.
Based on the surge in the number of US billionaires since the pandemic, these results are not entirely surprising. The 2019 Forbes billionaires list counted 607 billionaires in the US. By April 2024, this number had grown by 34 percent to 813. In dollar terms, US billionaires held $3.1 trillion in net wealth in 2019. This figure ballooned by 117 percent to $6.7 trillion by the end of 2024.
Abundance makes no note of these huge changes in how the economy functions and who benefits. In discussing declining social mobility, the likelihood of your child doing better than you in the economic world, the problem is cast off as the result of the location where you are born. Though this is doubtless a factor, in light of the $79 trillion heist, there appears to be a more obvious and compelling explanation. In discussing the surge in the cost of buying the family house, zoning and inefficient construction methodologies are no doubt factors. Still, when the average worker’s wages have only risen 16% in fifty years, there seems to be a more obvious and compelling explanation.
Insecurities Intensified
Abundance provides lots of evidence for the surge in housing costs, purchase and rental, and the absolute lack of available housing for the 771,000 unhoused people in the US today. The discussion about zoning and permitting policies inhibiting construction is certainly on target. But, imagine the difference for people in the bottom quarter or second quarter of the population having incomes that would be 86% and 84% higher, respectively.
Beyond housing, the number and intensity of insecurities in day-to-day life for the vast majority of Americans are enormous and crushing. Insecurities in employment, healthcare, retirement, childcare, education, food, transportation, and others, are all subjects of great concern beyond housing.
Abundance assumes that markets can deliver what we need. This ignores the structural factors noted earlier. Further, it ignores the limits of markets. Investors will not invest in things that do not deliver a profit, not a profit in the long term, but next quarter. So, family life, education, housing, and healthcare are only addressed by markets to the extent that a profit can be extracted. This fact about markets is reflected in the significant role played by the government in producing housing from the Great Depression through the 1970s.
Abundance spends a lot of time on the differing roles of the Republican and Democratic parties in the emergence of a society described as bound up by the red tape of regulations, avoidance of risk-taking, and the putative advantages of small government. Missing from this are the facts, and today we can observe these as facts under the Trump regime, the rich and corporations control the policy-making functions of the Federal government’s legislative branch and the regulatory apparatus of the executive branch.
Abundance ignores the fact that the US is an extremely wealthy country. It posits that we are on the cusp of a decision about whether to embrace scarcity or create abundance. The problem isn’t that we are facing scarcity. No, we are facing an ongoing class war by the rich and corporations that is generating ever greater levels of income and wealth inequality.
In the Conclusion to Abundance, the authors state: “This book has offered a critique of the ways that liberals have governed and thought over the past fifty years. It also reflects an opportunity open to liberals now.” The central failure of liberals in the past fifty years is their embrace of the mindless free market ideology driven by the rich and corporations. The Democrats came to embrace Reagan’s call in his first inaugural address: “In this present crisis, government is not the solution to our problem; government is the problem.” Liberals have been in the pay of the rich and corporations for decades. How else can we explain their paralysis in the face of such an enormous heist. The rich and corporations know full well that those who control the rules and regulations of capitalism reap the rewards. Free market rhetoric is just window dressing for their class war.
An Alternative: A Progressive Agenda
If you want to see some policy recommendations for how our politics and the US economy can be moved towards a more sustainable and equitable state, see my earlier note: A Progressive Agenda for the US Economy
Footnotes
- In 1975, there were 1,172 lobbyists registered in Washington. Roughly 3 lobbyists per legislator.
- See Friedman, Milton. “A Friedman Doctrine‐- The Social Responsibility Of Business Is to Increase Its Profits.” Archives. The New York Times, September 13, 1970. https://www.nytimes.com/1970/09/13/archives/a-friedman-doctrine-the-social-responsibility-of-business-is-to.html.
- See Price, Carter C., and Kathryn A. Edwards. Trends in Income From 1975 to 2018. RAND Corporation, 2020. https://www.rand.org/pubs/working_papers/WRA516-1.html. andPrice, Carter C. Measuring the Income Gap from 1975 to 2023: Extending Previous Work. RAND Corporation, 2025. https://www.rand.org/pubs/working_papers/WRA516-2.html.
- https://americancompass.org/2023-cost-of-thriving-index/
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