WHAT AN ECONOMY IS:

Now we have "America is Running Out of Everything" by Derek Thompson in The Atlantic. Thompson highlights the many shortages -- semiconductors, shipping containers, workers -- affecting the recovering global economy, including here in the United States. The following insight, in particular, seems to be a real eye-opener: "The one lesson of the Everything Shortage is: You cannot redistribute what isn't created in the first place. The best equality agenda begins with an abundance agenda."

Still, it's strange that it took a pandemic to teach the lesson of the Everything Shortage. No less a left-wing economic authority than Paul Krugman has famously said: "Productivity isn't everything, but, in the long run, it is almost everything. A country's ability to improve its standard of living over time depends almost entirely on its ability to raise its output per worker." Raising the productivity of workers and thus the productive capacity of the US economy must be at the heart of any "abundance agenda."

So what might such an agenda look like? Klein and Thompson suggest the sorts of things most economists would probably agree with: housing and labor market deregulation, more immigration, more science research (including new ways to spend that money, such as a greater emphasis on innovation prizes). I like those ideas, too.

But "supply-side" progressives must go further, such as looking at environmental policies that stymie the development of new nuclear and geothermal energy sources. Supply-side progressives also need to think more seriously about how taxes affect innovation and the high-impact entrepreneurship that gives us the mega-companies of the future (as well uberbillionaires). In the new working paper "The Effects of Taxes on Innovation: Theory and Empirical Evidence," Harvard University economist Stefanie Stantcheva writes that "the efficiency costs from reduced innovation may need be taken into account when setting taxes and to pinpoint the factors on which the magnitudes of these costs depend."

I'm skeptical that many of the recent tax proposals coming from progressives are thinking seriously about the "efficiency costs from reduced innovation." And if you're looking for more of my "abundance agenda" ideas, keep reading Faster, Please!

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