Zephyr Teachout and Saikat Chakrabarti on Abundance and the Left

Ezra Klein

And Zephyr, why don't we start with you?

Zephyr Teachout

Yeah. I mean, I appreciate how you let off because I do actually think that there's a deep disagreement. I'll start with the deep disagreement. And then there's some areas of genuine agreement. And we should talk about those as well. But I gather you're having us on to really fight out the... I want the deep disagreement. Yeah. There's an area of deep disagreement and there's areas of specific disagreement. So the deepest disagreement is actually what you started with, which is the question of focus. And I think that we should be focusing democratic politics and politics in general on the problem of concentrated power and the way in which concentrated power is making it impossible To do things and also really crushing our democracy, that we really do have an oligarchy problem and that the anti-monopoly toolkit is then a response to that. So, like, with that focus, I would say, OK, something good the Biden administration did getting over-the hearing aids, like a life changer for millions of Americans. Who blocked that? Well, it's an oligarchy in the hearing aid market. There's basically five companies that control the hearing aids, and they did everything they could to slow down the procedure. The best friend of the Chamber of Commerce is a long notice and comment period that slows down government from doing something really good and meaningful.

Saikat Chakrabarti

And I think everyone here agrees that America is really stuck, you know, and the specific reasons why we're stuck, I think, might be where there's some disagreement or, you know, is Broader than a thing than just process. But the thing I really want to add to the discussion and the question we've been studying at New Consensus has been how do countries get unstuck? Because if you look at the history of the 20th century, every modern developed nation, most of them liberal democracies, they went through these phases of rapidly transforming their Economies and creating absurd levels of prosperity for pretty much everyone in their society. And, you know, they often did it after these periods of being really stuck. America in the mobilization for World War II, we did after years of stagnation in the Great Depression. And what we've sort of seen is countries seem to do it by pitching the sort of sweeping transformation of the whole economy and executing at breakneck speed. They flip into this whole other mode of operating that I think is really different than how we operate today in America. And, you know, we've been calling it mission mode at New Consensus, but it's different three really distinct ways. You know, countries in mission mode, they have this whole other kind of leadership that pops up that doesn't just pitch a mission. They actually follow through and execute. They organize society actively to be a part of it. And really importantly, they capture the national attention. You know, they really make a show of the progress. They call it the heroes, and they use that as political capital to blow through obstacles, whether that's corporate monopolies or process. And the second part is they make comprehensive plans. They don't just pass a bunch of policies and take their hands off the steering wheel. They actually plan for all the things that need to happen to make things happen. And, you know, the third piece is they create financing and executing institutions. And so America needs to have a bunch of these all across our society. During World War II, the largest that we've ever had was one called the Reconstruction Finance Corporation. And the RFC wasn't just a public investment bank. It was like a project manager. It would go out and find problems and find bottlenecks and push and actively make sure stuff got done, things got built, do whatever is necessary to just push things along. And we've really tried to find examples of societies that managed to do this kind of broad-based prosperity through iterative slow reforms. And it's really hard to find a single society that did it. You know, it's there's something about the scale and speed of a sweeping transformation that creates this momentum, that gives you this escape velocity where these countries finally Get the gumption to tackle all these obstacles that are standing in the way of progress.

Ezra Klein

But it can change pretty dramatically in different places. So I want to ground this. The single biggest item in virtually every household's budget is the home they live in. It's the rent. It's the mortgage. So there's a new RAND report. It came out after my book was written. It found it costs four times as much, more than four times actually, per square foot to produce publicly subsidized affordable housing. So the public affordable housing that I think the left supports in California as it costs to produce a square foot of market rate housing in Texas. This is to both of you. Maybe I'll start with you, Shikad, because you're in California. Why do you think that is? Well, yeah, you know, we have a huge housing shortage in California.

Saikat Chakrabarti

I think the process that we use to build housing is crazy. Everyone knows it's not going to build enough housing. We'd have this process in San Francisco where you approve on a parcel by parcel method to decide which housing gets built. So that process is a big part of the problem. But I don't actually think it's just going to be a process that'll fix it. Because what we see is often financing is a problem. Like last year, a bunch of construction projects in San Francisco got stalled because interest rates went up. So construction loans got very expensive. And our current approach to that is throwing our hands up and saying, well, I guess that's too bad. But it's why it's really key that we have public financing institutions to try to make sure this stuff moves along and keeps happening. We can't have just this one solution. There's going to be so many bottlenecks that come in the way. Even if we fix the financing, there might be something else that pops up, right? So it's this whole other mindset we really need to get into to try to figure out how to make sure the houses get built. Zephyr, what's your take on this?

Zephyr Teachout

I mean, housing is a global crisis right now. It's not just an American crisis, especially the cost of housing.

Ezra Klein

But California versus Texas, I want to keep grounded there.

Zephyr Teachout

Why is it 4x more?

Ezra Klein

If you just look at market rate housing, California, it's more than two X more in Texas per square foot. Yeah. Why?

Zephyr Teachout

So I, as I wrote in the review, you know, I have some initial thoughts on housing, but I actually think there's a lot of areas of overlap on housing that we both agree that there are actually Significant problems with zoning. My suspicion is that there is a decent amount of problem in the concentration in the home bill 2x market and some of the supplies for construction market. I don't know if that's different in those different areas.

Ezra Klein

It's unlikely to me that California would be much more porous to corporate power than Texas.

Zephyr Teachout

Yeah. But I actually suspect, like, I don't need to fight you on particular housing policies that you're deep in the weeds of on zoning policies. Your theory, as I understand it, is that the main reason for the cost difference is left-wing resistance, like Rick Caruso. You know, I think Rick Caruso is this billionaire in LA who was leading a big NIMBY movement to make sure that you shouldn't have any reform on single-family housing. Does he fit into your story?

Ezra Klein

And not find a huge amount of nimbyism. Or I mean, Rick Caruso is currently suing. He's using the California Environmental Quality Act to sue to stop a development next to one of his malls, which implies to me there's something wrong with the California Environmental Quality Act. But I think where the reason I'm grounding us here, one is housing is a big deal. It has been interesting to me to see many of my friends on the left sort of yada, yada, yada housing. It's like, no, of course we all agree on that. I'm not sure we all agree. And I want to come back to the question of financing. But the reason I bring it up is I actually think power is incredibly important here. But power is very much related to process. And I think we all would probably agree that the way we do regulations now has created this feasting capacity for special interests. It's very easy for them to come in and delay. And in particular for corporate interests. And in particular for corporate interests because they can hire the lobbyists, the lawyers. But one of the reasons I'm very focused on the way we have created process vitocracy is it creates entry points for all kinds of incumbent players.

Ezra Klein

I want to throw this to you because this, I think, is where it gets even harder. Zephyr just said, look, one of the reasons you're going to have a higher cost of housing construction in upstate New York than Texas is we use union labor laws or use prevailing wage laws, Depending on what you're looking at. And the more I've dug into this, the more I have come to see that in blue states or under democratic governments, we have made the cost of public construction very high. The reason I started with an example about why is it more to make publicly subsidized affordable housing? Why does that cost more than market rate housing per square foot in California? Why is it much more than it costs in Texas? It begins to force you to confront all these rules the government has placed upon itself. They add delay and they add cost, which if it all then got done would be fine, but sometimes like in high-speed rail in California, it doesn't. How do you think about the cost of construction in a place like San Francisco?

Saikat Chakrabarti

First off, you know, just in the San Francisco versus Texas example that we're talking about, I just want to make like one sort of point there because Austin, which is a city that people Refer to a lot where they did a lot of streamlined permitting. Construction went up, rents went down. Really good. But it wasn't actually enough. The 50% of Austin's population still cost burdened by rent. And now construction slowed down because part of the reason costs went down was a lot of people left Austin at that time. It started having that migration out of Austin. And so now what happens, right? I think there's another example of just doing the permitting streamlining isn't going to be a silver bullet. But when you're talking about costs, there's not one simple answer. I think the optimism here that I have is you look at Europe, you know, Europe can build stuff way faster and way cheaper than us. They have a way more unionized labor force. And I think what I wish we had in America, I wish we had large union bargaining deals in a sectoral way, the way many European countries do, and do this at a society way. I wish we didn't have to jam all these requirements into legislation because we had actual societal solutions for it. But I think it's possible, you know, and the other thing Europe does is on a lot of these process questions, they empower their agencies to have more power to actually make decisions, Right? And sometimes we over-index on how much the process is getting in the way. Because what you see in a lot of cases is we add process, but stuff still gets built. You know, China in the 1980s, when it was going through massive amounts of development, bringing in American companies, made those companies jump through all kinds of hoops. You know, they had to train up Chinese workers that do joint ventures with Chinese companies. But there's this overall mindset, we actually have to get the stuff done that was different there. I think that's the bigger thing that's missing. It's, you know, even in Europe, they have timelines on how long these environmental reviews can take. And in America, the bigger thing that's happened is we've let open-ended lawsuits and this general kind of culture of letting things languish forever take over.

Zephyr Teachout

I actually do want to turn to green energy because I think it's really important. But I do want to pick up on what you're talking about, about the Second Avenue subway. And as you point out, Ezra, it's not because of labor costs, because comparable projects have similar labor costs in Europe. And real estate without telling the story of money and politics. Like one of the big differences between the United States and Europe during the period you're talking about is that we allowed for unlimited campaign spending. We basically made the job of politicians to be a fundraising job. And then in Citizens United, supercharged that by allowing corporate spending. So in New York, to be particular about housing and the subway, it meant that the Real Estate Board of New York has this outsized power in state politics and gets just a lot of giveaways That most people think didn't make that big a difference and led to really expensive per square footage housing. So that sort of occupied the space on housing. And then it led to New York state government under Andrew Cuomo first starving the subway. So then it had to spend all its money doing fixes that would have been much cheaper to fix earlier. And something that I do think you point out in the book, which is they also starved state capacity. You know, they really said, let's consult everything out and pay big consultants. But that is downstream from the centralized corporate power over politics. And I think one of the things that's underappreciated is how enervating big money politics is, is how it drains politicians

Ezra Klein

Work by subscribing to The New York Times. One of the things I am trying to do in the book and in my reporting across these domains, because look, rural broadband is different than Second Avenue Subway. Yes. Second Avenue Subway is different than high-speed rail. High-speed rail is different than building housing. You sort of go down the line. They're all different. Each unhappy policy is unhappy in its own way, to paraphrase Tolstoy. But one thing that I think about is the centralization versus a fracturing of power. Now, I don't disagree with you that oftentimes you'll dig into one of these things and you will find a lot of corporate power acting, ISPs in the world broadband example. And look, you're building high-speed rail, you're building a second avenue subway, you are inconveniencing all kinds of not just big businesses, but small ones. And that matters, right? I mean, I was covering this part of High Speed Rail. They spent years in litigation with a small mini storage facility that just didn't want to be moved. It's totally reasonable that that storage facility didn't want to be moved. In Europe, they moved the storage facility, right? They just have different laws around that kind of thing. But one thing that I have been fascinated by and that sort of led to some of the inquiry for me was that innervation you're talking about. Yes. How many politicians I talked to, and they would not all describe it to me as about corporate power, but they do describe it as there is a thing they want to do. And all they can do is tell me all the reasons they can't do it. The real estate board, the planning board, the fractured zones of authority between different councils in LA and the way that the LA municipal structure actually works. I talked during the fight for congestion pricing in New York City, the head of the MTA, and he was so frustrated by how much time he was spending working on environmental assessment with The Biden administration at that point, right? It's always a different story. But what you often see is we just don't give the people we've imbued with democratic authority, a mayor, a governor, honestly, even a president, as much power as you sort of think from The outside. It's innovating to them, but it's also, I think, confusing to the public. Obama promised a public option. Why couldn't he deliver it? Joe Biden said, I'd get this. Why didn't I get

Saikat Chakrabarti

Know, like break every single egg of the global economy, right? Yeah, I think it's not just about not pissing people off. I think it's a complete abdication of responsibility of leading. I think it's a lack of realizing that we need new ideas and we need an actual vision for how to do stuff. Because it's not just, you know, groups on the left. Like I went to a training when I was in Congress. That was a training on how to get ideas from corporate lobbyists, right? I tweeted about it and I pissed off some people. But it's really hard to push new ideas. What did they tell you in that training?

Ezra Klein

How do you get ideas from corporate lobbyists? It was very matter of fact. Don't they come to you? I would have assumed they come to you with ideas. They do come to you.

Saikat Chakrabarti

But in the training, it was like, you know, if you're writing a bill, here are the people you can contact to get expertise, right? Similar to what you encounter with the Dean campaign. And, you know, I think it's just this complete abdication of responsibility of your role to actually put out solutions that'll solve real problems. Like the culture is more, we'll figure out ideas from everybody that's around us and kind of cobble it together into this Frankenstein monster. In trouble with the Green New Deal. Like when we put the Green New Deal out, the week before we announced it, I think it was like 70 environmental groups wrote a letter saying they're going to denounce it because we were Pushing something new. Because at that time, the environmental groups were really focused on just keep it in the ground stuff. Was their disagreement substantive or was it we were not consulted? They would probably say it was substantive. I don't think I'm going to say it wasn't, but it was more the latter, right? Like it was more that we weren't operating the idea space that everyone else is operating in. But I'd say, you know, in general, like the pipeline example you brought up is a really interesting one, right? Because I think when you abdicate responsibility from actually pushing for new ideas and solutions, What you're saying is the interest groups, which I think often, as you're pointing Out, Zephyr, are the big corporate interests, they're going to fight it out. So in the case of the pipelines you're talking about, I'm sure there's interest groups on both sides. So 20 years later, we'll come to some resolution. But in the case of natural gas pipelines, we streamlined all that, right? We put permitting under FERC. We made it happen super fast. It was a huge, we have 3 million miles of natural gas pipeline in this country right now. We built it super fast because there wasn't really an opposing, a big enough opposing interest group. And so that's sort of what I see happening in a Democratic Party is there's a real resistance to putting out actual solutions and putting out real ways to solve these problems and just Deciding that we're going to take ideas from everyone.

Ezra Klein

And I agree with Zephyr that that tends to be the corporate powers that have more influence there. There's a part

Ezra Klein

But we have over time, in my view, denuded the state of expertise. Members of Congress have, I think it is shocking how small the staff of a House member who represents like a highly populous district and maybe runs an important committee really is. And I'm not saying that's the only reason they outsource a huge amount of their thinking and their work to corporate interests, to nonprofits. But there is this whole theory in political science called legislative subsidy, which is that the real power of lobbying or one of its real sources of power is that it is the provider Of expertise. And not only is it the provider of expertise, it is a provider of expertise from your former colleagues who you liked. They leave a congressional office because now they've got three kids and maybe one of the kids is in private school or all of them are or whatever it might be. We've held down congressional salaries. We've held down congressional staff sizes. That's all like high polling populist policy. And then people go into various forms of the private sector or the lobbying sector and sell back what they know to their former colleagues. And in my version of abundance, where state capacity is very big, we need to fund the government itself a lot more. Like, this is where I'm not a Doge person at all. I mean, I'm not a Doge person on a lot of levels, but my view is they want to destroy state capacity. Their view is that everybody would be more effective and productive in the private sector. Whereas I would like people working for Congress to be both more numerous and make a lot more money because we should have much of the very best expertise in the world helping Congress Figure out its decarbonization policies and helping, you know, in California, we should have the best rail engineers in the world helping on a major high-speed rail buildout.

Saikat Chakrabarti

The thing that we've sort of lost is a little bigger than just public financing. It's sort of public institutions that proactively go out and make stuff happen. We have a little bit of this now. We have it with DARPA, you know, on sort of research and development projects. And that's kind of public financing as well of those kinds of projects. But we've lost it for the entire sector of creating industries and creating infrastructure. And there was a loan program at the DOE that the IRA funded for clean energy projects that Jigar Shah ran. It's a great program, but it's a wait and see approach. So people apply for loans for projects they want to do. But there's all kinds of projects that just aren't happening. Like right now, a big bottleneck to expanding electric grids is transformer shortage because we only have a few companies that make transformers. And we only have one company that makes electric steel that we need for transformers. And no one's popping up to make new electric steel companies. So what I'm imagining is something like the RFC today, Reconstruction Finance Corporation would push them to expand production. If they don't do it, fund startups. And if they don't do it, put up state-owned corporations, right? And this is what China does. This is exactly what China does. China got these ideas from us. This was what we used to do. And other countries in Europe have versions of this. And it's key to know that it's not just like this one institution, if we put it in, it's going to fix everything.

Zephyr Teachout

Completely agree with you. And I want to say it's one point that I don't think I've seen anybody talk about in the book, but I thought was great is that you highlight a problem with the Golden Fleece Awards, you know, And the way in which we started. Do you want to say what those are? You'll remember exactly, but it's the award for the stupidest government program. Who was it?

Ezra Klein

I want to say it was William Proxmire, if I'm not wrong. But also you just saw Donald Trump doing it when he stood up and he says at the joint session of Congress speech, you know, all this money to make mice transgender, which we also was not What was being done. You can't, we don't know how to make mice transgender, but, but it's a common thing in politics. And you even hear it from Democrats sometimes, this sort of picking out of the thing that sounds embarrassing. And then what you do is you terrify agencies because they don't want to be the ones blamed for an embarrassing sounding thing. Absolutely.

Zephyr Teachout

And when you look at little things like, not little things, big local things, I should say, really important local things like the Second Avenue subway and procurement, the way in which, I mean, it's a way in which I think we've got corruption all wrong. We're like really focused on this massive compliance regime instead of focused on the big corruption issues as opposed to little corruption issues. But I think you're right. And I think that does take a cultural change to be willing to accept failure. A program that I think really worked was the Paycheck Protection Program. And the Paycheck Protection Program has gotten beaten up by so many different people by finding, you know, the examples of fraud. And there was a lot of fraud. And there was fraud. And it was worth it. It was absolutely worth it to support businesses around the country, to keep them open during COVID. It was worth it for the workers for those businesses. In order to do great things, you do actually have to do things wrong sometimes. And I really loved that point in the book.

Ezra Klein

You, that's an incredible avenue for corruption. But I'd be curious, as somebody who studied corruption a lot, how you think about this? Because we've created such slowness in our efforts to root out patronage and corruption. I'm not sure we have rooted out the patronage and corruption, but we've definitely created the slowness. Something seems wrong here in the equilibrium.

Zephyr Teachout

I'll just repeat, I guess, what I said before, which is I think we focused on the wrong kind of corruption, right? So that what you want is systems where there are lots of contractors and there is competitive bidding. So it actually really matters that there's lots of contractors. That's an anti-monopoly issue, by the way. And then when you have those lots of contractors, then you want systems that don't reward inside deals like campaign finance deals. But I think that we've thought we can root out corruption by doing micro checklist as opposed to looking at structures and systems and that we should look at structures and systems of Power as the big defenses against corrupt systems as opposed to the checklists. We need some checklists, by the way. Yeah, you can't have no rules. Right, you can't have no rules. And I do think that there's some innovative things happening with procurement. But as I understand, there is a real issue with only a few suppliers. That's one of the big corruption risks that we don't deal with through checklist compliance.

Ezra Klein

But the boundaries that everybody else seemed to respect have been norms. Where have you come to on this?

Saikat Chakrabarti

I think it's actually important to remember that for most of the cases in the 20th century, it wasn't under a war or some kind of emergency like that. You know, there was usually some political party that came into power, you know, in Western Europe or in South Korea that really just pitched the mission of let's get rich, know, let's Make society rich. Finland did this after the fall of the Berlin Wall in like the 80s and 90s. And that was pretty recent. So it's possible for a politics to come in and say the mission is our society has been kind of declining. We're stuck. People's wages have been stagnating. And we actually need to fix that. And I actually think the politics is already almost there. I think that's what people thought they're voting for with Obama and with Trump and to an extent with Biden. Biden really campaigned on a bit of a mission. And it was in a crisis. And it was in a crisis. Which increased people's ambitions by quite a bit. Yeah. And I think there's just been this general sense that whatever the current political order is, is not delivering the promise that people have had, you know, that America made of people In the post-war era. So we're looking for something new that's going to start delivering that again. So I think the real challenge actually is for a political leader to come in and really pitch the whole thing. You know, Operation Warp Speed happened during a crisis, but it wasn't big enough. You know, it's like one small mission. We have done a lot of little small missions. We just need Operation Warp Speed for everything. And it's through that mission that I think you figure out what the new rules institutions should be. It wasn't like we threw out all the rules during World War II. There was tons of paperwork. And the companies complained constantly about all the paperwork they had to do. But we had the War Production Board and, you know, Don Nelson would be going around trying to figure out what paperwork is actually creating a bottleneck and what paperwork is necessary.

Zephyr Teachout

It's now, I think, 10 years old, and it's only gotten worse, that wealthy people, there is real responsiveness to their interests. And there's almost no responsiveness to what the public wants in terms of the outcomes. And what happens in those emergency situations, I believe, is that the leaders forget all their responsiveness to their donors. And they do for a combination of reasons. One is they really care about people who are dealing with the flood and they really care. I mean, I don't think everybody's awful. They really care about serving those people. Campaign mode. And in the campaign mode, when half of the money is coming from people who are making $100,000 donations in the post-Citizens United world, like the imagination of leaders, of who they Are delivering for, the voices in their head are not the people who are really not sure where their next paycheck is going to come from, have to pay too much for an inhaler, have had a stagnant Wage. Their own sense of mission has truly been clouded by money in politics. And so breaking that, that's not an easy thing to break. But I mean, if Bernie Sanders had been president, right, if Bernie had won, I don't think any of us doubt that he would have felt like it was an emergency, that it's an emergency for working People in this country, in the sense that he would have figured out how to do what Pete Buttigieg did or Lena Kahn did or Jonathan Cantor did or Shapiro did in those moments, is to take the Tools of government to serve the working people of the country. So it's a hopeful story because it suggests we're not that far away. But it does suggest that we have to see the barriers as the way in which if you're in your mind, you're in a cocktail party with billionaires, it's going to be really hard to be mission driven About the bridge on a day to day basis.