Why is it so difficult to build vital infrastructure? A captivation by governments with progressive causes, claims a new book by influential centre-left commentators Ezra Klein and Derek Thompson.
McDonald’s recently spent a year trying to get planning permission for a new restaurant just outside Wānaka. Alongside the usual local businesses blocking construction of a commercial rival, Health NZ’s National Public Health Service (NPHS) registered its disapproval on the grounds that ill health can be caused by multinational corporations, privatisation and trade liberalisation, and also by using GDP growth as a metric. It recommended the consent process required consultation with iwi on the holistic value of McDonald’s and considered the “recreational, historical, spiritual and cultural value for present and future generations”. The application was declined.
Even if you don’t like McDonald’s – the obesity, the litter, the aesthetic – it is a little odd to have the public health service commenting on the spiritual dimensions of rural resource planning, especially in the name of opposing economic growth and free trade, especially during a recession, especially when it was supposed to be dealing with a whooping cough outbreak. The Minister of Health at the time – Shane Reti – issued a sharp response, noting “observations about planetary health, landscape values, traffic and Te Tiriti do not match my overarching view of what the NPHS should be spending its time on”.
Ezra Klein, the New York Times columnist, and podcaster Derek Thompson are two of the most influential centre-left commentators in the US. They’re the public face of a group of economists and policy analysts critiquing a mode of government that has become standard across advanced democracies in the 21st century, reaching its nadir under left-wing administrations and policies.
The Harvard economist and former Obama adviser Jason Furman refers to this tendency as “post-neoliberalism”. It attempts to correct for the amoral market-led regimes of the 1980s and 90s, but the cure is worse than the disease. Post-neoliberal bureaucracies don’t just block the construction of new fast-food restaurants; they make it more difficult and more expensive to build new houses, green energy projects, hospitals, supermarkets, public transport, public infrastructure.
All the things that left-wing governments are supposed to believe in – housing as a human right, free healthcare, the transition to a low-carbon economy – are undermined by these expanded regulatory states. It’s much easier for cartels and oligopolies – like supermarkets – to operate in an economy in which potential competitors struggle to buy property, let alone build on it.
Klein and Thompson complain that left-wing political parties should be able to tell voters: “Vote for us, and we will govern the country the way we govern California!” Instead, Donald Trump is able to say “Don’t vote for Democrats! They’ll govern the country the way they govern California.” We see this same dynamic play out in Wellington, in which Labour and Green councillors preside over a local government apparatus that costs a fortune but struggles to build or deliver anything, and whose yearly housing consents per thousand residents are roughly a quarter of the number granted by Auckland or Christchurch.
Abundance identifies three key problems with post-neoliberalism. First, there’s the “all-of-government” approach. Progressive causes – climate, equity and inclusion, environment and, in New Zealand, the principles of the treaty – are deemed so important that they need to be championed across every policy domain and delivery organisation simultaneously.
That’s why the public health service jumps into resource consent applications with its views on free trade; it’s why our vast and bloated Reserve Bank was so preoccupied with te ao Māori and climate change and – initially – uninterested in rapid price increases in early 2021; why the Human Rights Commission was investigating the housing market and not rampart exploitation of migrant workers; why Wellington City Council discussions about selling shares in the airport degenerate into screaming matches about racism.
This style of “everything, everywhere, all at once” government is popular with left-wing political parties because it creates a huge number of jobs for their core constituents – urban-based knowledge workers with professional or advanced degrees – and turns the entire state into a machine for progressive activism (the public health submission opposing the McDonald’s was filled with diagrams inspired by Doughnut Economics, a left-wing polemic much in fashion during the Ardern years). But it makes government a lot more expensive and a lot less effective at delivering the core services voters like to think they’re paying for via their taxes.
It also makes it hard to build things, because each progressive cause now functions as a veto point for every proposed development, and the downstream impact of this is scarcity. Post-neoliberal governments inflate prices across all of these over-regulated markets then address this by subsidising demand via government transfers: tax credits, rebates, child-care credits and accommodation supplements, and via regulatory settings, like increases in the minimum wage. It’s all very kind on a superficial level, but – as every first-year economics student learns – throwing money at these problems without increasing supply only further drives up prices while diverting the state’s resources away from more productive investment.
And that links into the third cardinal sin. Post-neoliberalism is fixated on good intentions: on inputs and processes rather than outputs and accomplishments, on spending rather than delivery. Klein and Thompson attribute this to the predominance of lawyers in democratic politics and government. This results in a form of bureaucratic legalism that “convinces itself that the state’s legitimacy is earned through compliance with an endless catalogue of rules and restraints rather than through getting things done for the people it claims to serve”. Again, this is also a very perceptive critique of Wellington’s public service culture: risk-minimisation and process is the key to career advancement, and the lawyers run nearly everything.
What is to be done? Abundance has a very simple solution: left-wing governments should focus on building things, and on allowing things to be built – houses, hospitals, solar farms, wind farms, maybe even McDonald’s. Things that improve wellbeing should be delivered in abundance, especially to disadvantaged communities. It’s that simple!
Although of course it’s not. Consider Ihumātao, an attempt to build a housing development close to a historic reserve in South Auckland, on land confiscated in the 1860s. An occupation prevented construction and in 2019, the government bought the land, which remains unused six years later. The Abundance agenda would regard spending more than $30 million to prevent the construction of 480 houses during a housing crisis as a net negative rather than a grand progressive triumph. It’s hard to imagine any version of the modern left that could agree to that.
