May 2, 2026

FORGETTING THE LESSON OF THE THIRD WAY:

Tiptoeing Towards Abundance?: Even when thriving markets are the goal, progressives have little interest in restraining the state. (Samuel Gregg, 4/01/26, Law & Liberty)

Given such opposition, it seems unlikely that supply-side progressivism will triumph anytime soon on the American left. That, however, raises the question of whether abundance liberalism could help facilitate some unexpected political realignments. Might, for example, there be opportunities for strategic or tactical alliances between abundanistas on the one hand, and classical liberals and fiscal conservatives on the other?

Those who believe in free markets have good reason to be disillusioned with the American right. It has been disturbing to witness the willingness of many conservative commentators and organizations once committed to free markets to contort themselves to conform to the latest economic nationalist policy. Equally problematic is some conservatives’ hard-to-disguise prioritization of acquiring power—or, in some instances, being seen in close proximity to it—over a principled adherence to economic liberty and limited government. Expediency has become the rule in far too many conservative circles, and the reputational cost is real.

But does this mean that classical liberals and fiscal conservatives can do business with those on the American center-left who are persuaded that there is value in abundance liberalism? Is there sufficient compatibility between, for example, their respective views of regulation to make substantive and lasting cooperation feasible?

I would not want to rule out the possibility of tactical or issue-specific alliances between supply-side progressives and free marketers. Politics often produces unlikely bedfellows, and it is possible to imagine partnerships focused on reducing excessive red tape. That said, there are good reasons to be skeptical about the prospects for any major collaboration, let alone a lasting political realignment.

One significant obstacle to any substantive alliance is the fact that abundance liberals are not fundamentally in the business of reducing the sway of government power throughout the economy. On the contrary, they think that a core goal of supply-side progressivism is to make the government more powerful through greater efficiency. A desire to engage in smart as opposed to ham-fisted industrial policy is different from being skeptical of industrial policy per se.

Moreover, the abundance liberals show little interest in a long-standing priority of American free marketers: reducing the size and growth of America’s ever metastasizing entitlement programs. Progressives are critical of Klein and Thompson’s willingness to prioritize other goals over maintaining and growing the welfare state. Yet that does not mean that anyone on the left is open to substantially reforming entitlement programs along the lines supported by President Clinton in the mid-1990s or affirming Clinton’s claim in his 1996 State of the Union address, “The era of big government is over.”

Debates over the size and reach of government bring us to another factor likely to obstruct any constructive conversation between supply-side progressives and free marketers: the reality that many influential segments of the progressive left—trial lawyers, public sector unions, environmentalists, government workers, university administrators, etc.—derive much of their power (not to mention, in some cases, their incomes) from precisely the type of complicated and growing nest of regulations that abundance liberals want to tackle. It is not clear why any of these actors would compromise critical foundations of their economic well-being and political power to enhance the abundance of goods throughout the economy. These hard political facts would raise real questions about the abundanistas’ ability to deliver on their side of any bargain that they made with fiscal conservatives.

Lastly, and most significantly, there is a basic incongruity between free marketers’ and supply-side progressives’ respective views of the state. Classical liberals and fiscal conservatives want strong and preferably constitutionally grounded limits on the state’s capacity to pursue interventionist policies. That is not the position of supply-side progressives.

Klein and Thompson, for instance, are careful to praise progressive totems such as the New Deal for its “boldness” and for cementing into policy-stone the belief that “the federal government must take an active role in managing the American economy and protecting workers.” But no serious free marketer is going to affirm either the New Deal or the notion that any government should—or even can—“manage” an economy that reached the size of approximately $31.49 trillion (nominal GDP) in 2025. Trying to make the government more efficient at directing economic life is not the same thing as making the state less economically intrusive.

These and related questions make any lasting rapprochement between free marketers and abundance liberals unlikely. And that creates challenges for both, not the least being the frustrations associated with relative political isolation for as long as the progressive left and nationalist right exercise hegemony over their respective spheres of American politics.

The “abundance” crew have forgotten the insight of the Third Way (Blair, Clinton, etc.): you can use First Way (capitalist) means to generate ever greater wealth to fund the Second Way’s ends (a secure social safety net)

AN ECONOMY EXISTS TO CREATE WEALTH, NOT JOBS:

Why Europe doesn’t have a Tesla (Pieter Garicano, 17th February 2026, Works in Progress)

What really sets Europe apart from states like California is different. Relative to income, it costs large companies four times more to lay off Germans and French than American workers, a difference arising entirely from different regulatory approaches. As a result, it virtually never happens: Americans are ten times more likely to be fired than Germans in any given year. In this respect, the European economy differs greatly from the American one. By American standards, a European business has to be exceptionally confident that it will want an employee for a long time before hiring them.

This may sound like a great virtue of European life, and in a way it is. But it has costs. If it is expensive to fire people, then companies may pay them less in order to balance out employment costs, or they may not employ people at all. To understand the innovation gap, however, there is a third effect that is even more important. If it is expensive to lay people off, employers avoid creating jobs that they might subsequently discontinue. Innovation involves experimentation and risk, so jobs in innovative areas of the economy are more likely to be discontinued than jobs elsewhere. High severance costs create a fundamental incentive for European businesses to avoid innovative areas and concentrate on safe, unchanging ones. In the long run, this is a recipe for decline.