A conversation with Jim Pethokoukis on anti-growth politics

We're both obsessed with the excesses of a 1970s movement.

Image by Sebastian Ganso from Pixabay.

I recently spoke with Jim Pethokoukis, an American Enterprise Institute scholar who writes Faster Please, a newsletter about economic growth and what Jim calls “pro-progress culture.” At first this might sound like an odd label. Is everyone not “pro-progress?”

Surprisingly, not. It’s often fashionable to fret over the excesses of growth and technology. One of my favorite pieces from Faster Please was a review of the Smithsonian’s Futures exhibit, which, despite its name, contained quite a lot of material from the 1970s. And much of it was focused on anti-growth messages like “consume less” or “sustainable cycles, rather than endless growth.”

Here at Full Stack Economics, we’ve also written about the anti-growth politics of the the 1970s⁠. My colleague Tim wrote about how a 1970 California law was used to stunt the growth of the University of California, Berkeley. I wrote about how we can’t seem to build things quickly anymore.

The latter piece caught Jim’s eye, and I answered some questions for him in both a paywalled piece here, and some additional questions in last week’s roundup (which is not paywalled.) Below I’ve reproduced a few of my favorite answers to his questions.

Jim Pethokoukis⁠: You wrote that "Sometime in living memory, the built environment of the U.S. began to freeze in place. I’d mark the time roughly at 1970, but it’s a process, not a single seminal event." What happened circa 1970?

Alan Cole: It would be too simple to just answer with the National Environmental Policy Act (NEPA), which went into effect on January 1, 1970. Really, it was part of a larger movement that included legislation, intellectual work, activism, and court rulings. The idea was that growth⁠ came with costs that are too often ignored or underappreciated, and that the best remedy was to allow private citizens with knowledge of these costs to challenge changes to the built environment through litigation.

Of course, they were right to identify a problem. Scientists have shown that things like air pollution were harmful. And economists have shown that externalities⁠—costs of a decision that aren’t incurred by the decisionmakers themselves⁠—are likely to be underweighted.

So these people living around 1970 witnessed economic growth with adverse side effects, like big highways going through cities with cars that burned leaded gasoline. They saw the Cuyahoga River fire (1969). They wrote books like Silent Spring (1962). They created institutions like Earth Day (1970). They sat in trees (1969) to prevent construction projects.

But too often, they took simplistic intellectual shortcuts: they came to equate growth generally with environmental damage, and built a kind of anti-growth intellectual movement characterized by works like The Population Bomb (1968) or The Growth Machine (1976).

Relatedly, they built a perspective that action was generally harmful, and inaction was generally better. So they focused on a legislative and judicial doctrine that would mostly help groups prevent new things that could be harmful. This includes acts like NEPA (1970) or the National Historic Preservation Act (1966). And it includes legal precedents like Citizens to Protect Overton Park v. Volpe (1971).

This movement was a mixed bag. It is a good idea to address externalities. But they made their legal remedies too broad, allowing them to be used by all kinds of change-averse people, or even genuine malefactors, to preserve the status quo using environmental reasoning as a fig leaf. Today, you have rival energy producers crying crocodile tears to stall new green energy production⁠—and using the court system to do it.

In the long run, it was wrong to equate action or growth with environmental damage, and inaction or stagnation with environmental protection. Technology became cleaner. Economic growth became less energy intensive. Renewable energy sources became more competitive. Today, new things are often more environmentally friendly than old things, and environmentalists focused on climate change increasingly see inaction⁠—not action⁠—as the real problem.

Jim Pethokoukis, Faster Please. Photo by the American Enterprise Institute.

What's the idea behind "citizen voice" and where does it go wrong?

The idea is that people should participate in local governance by attending meetings and speaking up. In its ideal form, this is imagined as Norman Rockwell’s Freedom of Speech painting. In its farcical form, it is imagined as the citizens of Pawnee in Parks and Recreation making unreasonable demands and throwing things.

But even when public comment isn’t obviously farcical, it is subject to some biases: the people who show up are not necessarily representative of the people as a whole. Furthermore, meetings are all talk, no skin in the game. People can exaggerate or falsify their preferences.

And finally, requests for public meetings can be used as a stalling tactic by those who support the status quo.

You argue that long review processes tilt the playing field toward the status quo. Should institutions and processes be biased toward change? Neutral? What would that look like?

The easy answer might be “neutral,” which is arguably a tautology. But I might even tilt a little bit toward change for some purposes. Jeff Bezos has often written that if a change is reversible, you should make it quickly and see if you like it:

Some decisions are consequential and irreversible or nearly irreversible – one-way doors – and these decisions must be made methodically, carefully, slowly, with great deliberation and consultation. If you walk through and don’t like what you see on the other side, you can’t get back to where you were before. We can call these Type 1 decisions. But most decisions aren’t like that – they are changeable, reversible – they’re two-way doors. If you’ve made a suboptimal Type 2 decision, you don’t have to live with the consequences for that long. You can reopen the door and go back through. Type 2 decisions can and should be made quickly by high judgment individuals or small groups.

I’ll acknowledge that something like the Golden Gate Bridge is an irreversible change, and it should be planned carefully. But the Van Ness bus lane took more than a decade of review. That’s far too much.

You point to California and its CEQA as an example of NIMBY-empowering analysis paralysis. Is there a state that does an especially good job at limiting the harms of review processes? What are they doing right?

State and local governments have latitude on smaller projects, like housing, to make building processes easier or harder. Since there are so many different levels of government, and so many different ways that construction can be restricted, there’s no one way to compare them. But you can look at aggregate numbers and see that states like Texas and Florida have more than pulled their weight on housing.

For bigger projects that trigger NEPA review, there actually aren’t any state-level solutions, even if they wanted them. Consider Vineyard Wind: that’s a project that the state government commissioned. It’s not just that they want to allow it, they actively solicited it. But because there’s a federal permitting process, it’s subject to NEPA lawsuits anyway.

You wrote "it is well and good to have the government handle large externalities, or quantifiable ones. But by expanding government’s scope to handle small externalities, and unquantifiable ones, they’ve created a system where few things are doable as-of-right, everything is up for debate, and people are incentivized to exaggerate or even fake grievances." Are there reforms that could lower transaction costs and make it easier for individuals to handle small externalities themselves?

One school of thought on dealing with busybodies is that you can use higher levels of governance to preempt local laws that restrict development. While this works somewhat⁠—California has tried it⁠—it inspires resistance and the local governments often find new ways to block things.

So that’s why I’ve become more interested in the idea of bottom-up reforms rather than top-down ones. Here’s the basic idea: as much as possible, you want to give formal rights to specific people, and make those rights tradable or alienable. That way, if you want to do something, you have a clear, specific list of rights-holders you need to buy off or get permission from.

The best exploration of this idea comes from a friend of mine named John Myers. Consider, for example, side setbacks on houses⁠. The idea is that people dislike having neighbors build right up to the property line, so they pass laws limiting how much space you have to leave. In suburbs, this rule works fine. But closer in to cities, where indoor square footage is very valuable, many people might prefer to build more tightly than setback rules allow. Myers would reform this by allowing the next-door neighbors to waive the setback on their side, perhaps in exchange for a payment. Effectively, where possible, you bring back Coasean bargaining.

Your infrastructure solution is "reining in lawsuit-based case-by-case input processes and returning towards clearly-defined laws and executive decisions by elected officials." Is this politically feasible? Would it be worth enacting clearly-defined laws that tilt heavily toward the status quo as a concession in order to get rid of lengthy review processes?

In many cases, absolutely. Here’s a crazy one: consider the process where somebody wants to build something new on a street, but then the incumbent homeowners and businesses on the block fret about whether that will make it harder for them to find their free street parking and block the whole development.

Why not just give them the parking? Make the spaces officially theirs. Give each of them a deed, or perhaps two. Yes, that seems strange⁠—it’s like you’re giving up the public’s resources to private homeowners. But if homeowners have some kind of informal street parking right that’s so strong that they can bring it up in meetings and use it to stop other people building on other lots, then the public has already ceded control of the street to homeowners anyway. If you make that arrangement formal, the homeowners will no longer fear losing their precious spots, and might be less hostile to new neighbors. And those who don’t value the spots highly might be able to sell them!