Summary of Key Points
This article focuses on an important current economic trend in the United States—Abundance Economics, which emphasizes solving price issues by increasing supply rather than relying on subsidies. This consensus has become rare among both political parties in America. The article uses the recently passed housing bill as a starting point to explain the origins of this trend, the reasons behind its support from both parties, and its impact on future investment and policy directions. It concludes by highlighting that social consensus is a precursor to policy changes, urging readers to pay attention to broader social needs in order to seize opportunities.
What is Abundance Economics? Why has it suddenly become popular?
In simple terms, Abundance Economics suggests producing more goods to stabilize prices—for example, building more houses when housing prices are high or extracting and producing more energy when energy costs are high, rather than distributing money as subsidies (which only makes people richer and more eager to compete for limited resources, thereby driving up prices).
This concept is not new, but it has gained momentum in the past two years due to the book *Abundance* by Ezra Klein, the founder of VOX. Interestingly, although the author has Democratic leanings, the book has found resonance with Republican figures (such as those supported by the Koch brothers’ research institutes) and parts of the MAGA movement. Democrats themselves are also reflecting on their past policies, which is why both parties are now willing to discuss this topic.
The academic community has also begun to explore this idea of increasing supply, indicating a growing consensus that the previous approach of using environmental regulations and politically correct measures to limit production has led to high prices and needs to be changed.
Why have the two U.S. political parties reached a consensus on this issue?
Despite the severe political divisions in America, there is a rare agreement on increasing supply because both parties have suffered from the consequences of insufficient supply:
- Democratic reflection: In recent years, Democrats have implemented environmental policies and complex regulations that have restricted supply in housing and energy sectors, resulting in high housing and oil prices, which has led to public dissatisfaction. They realized this during the 2024 elections, realizing that they failed to address the real issues of the people.
- Republican support: Republicans have always advocated for reduced government intervention and a market-driven approach to increasing production (such as the “333 Plan” proposed by Benett, which aims to increase energy supply, lower oil prices, and reduce deficits).
The article uses a football analogy to illustrate this point: in the 1970s, when the U.S. manufacturing industry was strong, they could afford to be conservative (like leading by three goals); now that manufacturing is weaker, they need to “attack” (increase supply) if they want to have a chance of recovery.
What does the passing of the housing bill signify?
Two weeks ago, the U.S. Senate passed the housing bill with a vote of 85-5, which is almost a miracle in the context of divided American politics. This is not an isolated event but marks the first implementation of Abundance Economics:
- The core of the bill is to increase housing supply (e.g., by simplifying approval processes and encouraging home construction), directly addressing the issue of high housing prices.
- Such a large vote shows that both parties have truly reached a consensus, not just for show. In the future, similar policies may be introduced in energy and manufacturing sectors (e.g., streamlining factory construction procedures and relaxing energy extraction regulations).
This represents a structural shift from a focus on restricting supply to actively increasing it.
What impact does this trend change have on investment?
The article identifies several clear investment directions:
1. Capital goods exports: The U.S. needs to rebuild its manufacturing capacity (both domestically and in Southeast Asia), which will require a large number of industrial products such as injection molding machines and power equipment. China has already seen significant growth in these export sectors and may continue to benefit.
2. Opportunities in Southeast Asia: Southeast Asian governments are eager for foreign investment (FDI), and U.S. companies may relocate some of their production there, creating opportunities for related industries (such as infrastructure and manufacturing).
3. Long-term perspective: The current rise in interest rates due to the Federal Reserve’s tightening policies is a short-term setback, but once rates fall, the focus on increasing supply will become clearer and more attractive for long-term investment.
Chinese policies also reflect this trend: they have allowed some low-end exports (such as labor-intensive industries) while restricting high-end exports (to prevent technology leakage), which aligns with the U.S. effort to rebuild its manufacturing capacity.
Is social consensus more important than policy?
The article emphasizes that policy is a lagging indicator of social consensus. For example, China’s household responsibility system in the 1980s was driven by the common desire for prosperity among farmers; the current supply-side reforms in the U.S. are driven by public dissatisfaction with high prices.
When making investment decisions or analyzing policies, one should not rely solely on research reports or elite opinions but should consider broader social needs. For instance, Democrats in the U.S. once focused only on the demands of elites, ignoring the concerns of ordinary voters about rising prices; China’s reforms have been more successful because they align with the wishes of the majority.
The key to seizing opportunities is to avoid being either too sensitive (entering the market too early and becoming impatient) or too slow (failing to respond to changing trends). It is important to listen to the voices of ordinary people and observe real changes in demand.
Conclusion
Abundance Economics is not an abstract concept; it represents a common approach for both U.S. political parties to address price issues and will be a significant factor in global capacity rebuilding over the next few years. For us, paying attention to the implementation of this trend (such as more supply-side policies) and the resulting investment opportunities (capital goods exports, Southeast Asian industries) while recognizing the power of social consensus will help us grasp long-term trends.