Within U.S. politics, a longstanding divide has existed between progressive leaders who emphasize distributional policy—welfare, equality, and redistribution—and those who argue that economic growth itself must remain a central objective. Critics and supporters of Abundance (Ezra Klein and Derek Thompson, 2025) converge on a key claim: without robust growth and sustained supply expansion, redistribution alone cannot resolve structural scarcity, rising costs, or institutional gridlock. In this view, political conflict increasingly revolves around allocating shortages rather than producing abundance.
Nomi Prins’s Permanent Distortion: How the Financial Markets Abandoned the Real Economy Forever (2022) helps explain why this scarcity has become so persistent. Prins documents the hollowing out of the productive economy as financial markets, incentivized by monetary policy and asset inflation, decouple from real investment, innovation, and broad-based growth. This distortion directly exacerbates the constraints Klein and Thompson identify: weak supply, high prices, and political paralysis. Together, these dynamics form a vicious cycle in which financialized capitalism undermines productive capacity, scarcity intensifies distributional conflict, and the resulting politics further impede the very growth needed to restore economic and democratic stability.
Financial Distortion, Structural Scarcity, and the Limits of Redistribution in U.S. Political Economy
In Permanent Distortion: How the Financial Markets Abandoned the Real Economy Forever (2022), Nomi Prins advances a central claim that reshapes contemporary debates about inequality, welfare, and economic policy in the United States. She argues that since the 2008 financial crisis, central bank interventions—most notably quantitative easing and prolonged near-zero interest rates—have created a lasting distortion between financial markets and the real economy. Rather than stimulating productive investment, wages, and public goods, these policies have disproportionately inflated asset values and rewarded financial actors. The result is not merely uneven growth, but a structural imbalance that entrenches inequality in both welfare outcomes and economic opportunity.
Prins details how this financialization channels newly created money toward markets instead of households, workers, or public infrastructure. Corporations, flush with cheap capital, prioritize share buybacks, mergers, and executive compensation over long-term investment or job creation, while governments rely on rising debt to justify austerity in social spending. This dynamic weakens access to healthcare, education, housing, and transportation, even as stock indices signal economic “resilience.” Welfare inequality thus deepens: the material conditions of everyday life deteriorate for large segments of the population, while financial wealth concentrates at the top. The inflationary pressures that follow—especially on food, energy, and rent—fall most heavily on those least able to absorb them.
At the same time, equality in a broader sense erodes. Prins describes an “epic divide” in which financial institutions grow larger and more insulated through bailouts and consolidation, while the real economy faces deindustrialization, precarious employment, and declining social mobility. Wealth accumulation becomes increasingly detached from productive contribution, reinforcing class, racial, and regional disparities. Policies aimed at fairness or inclusion struggle to gain traction in an economy where the underlying structure continuously reallocates gains upward. In this environment, redistribution functions as a partial and fragile corrective rather than a durable solution.
These dynamics directly reinforce the argument advanced by both critics and supporters of Ezra Klein and Derek Thompson’s Abundance (2025): redistribution alone cannot resolve structural scarcity. Prins’s analysis shows that when financial systems undermine productive capacity and public investment, political efforts become trapped in zero-sum distributional conflict. Welfare programs and progressive taxation may alleviate immediate hardship, but they do not repair the supply-side weaknesses—housing shortages, infrastructure decay, constrained energy and industrial capacity—that generate scarcity in the first place. The hollowing out of the real economy thus fuels the very conditions that make redistribution politically contentious and economically insufficient.
Taken together, Permanent Distortion provides the missing structural link between financial policy and contemporary debates over growth versus redistribution. By demonstrating how distorted monetary systems exacerbate welfare inequality and block broad-based prosperity, Prins strengthens the case that sustainable equality depends not only on redistribution, but on restoring growth through real investment and supply expansion. Without addressing this foundational distortion, U.S. politics remains locked in a cycle of scarcity management rather than abundance creation.
Why Redistribution Fails Without Growth: Structural Scarcity and the Case for Building
Prins’ diagnosis of a hollowed-out real economy underpins a central argument in contemporary U.S. political economy: redistribution alone cannot resolve structural scarcity in the absence of growth and supply expansion. His account aligns closely with the Abundance thesis advanced by Klein and Thompson, which holds that many modern scarcities—most notably in housing, energy, and infrastructure—are not natural limits but the product of policy choices. In this view, progressive strategies that focus primarily on redistribution merely reallocate resources within a stagnating system, rather than addressing the deeper problem of an economy that is no longer producing enough real goods and capacity.
At the core of Prins’ analysis is the claim that financialization and central-bank-driven monetary distortion have created a false sense of abundance in asset markets while starving the real economy of productive investment. Easy money inflates prices and debt but fails to expand physical supply, leaving societies more vulnerable to shocks, shortages, and price spikes. Without sustained investment in infrastructure, production, and technology, growth remains weak, public debt mounts, and the material base required to support welfare systems erodes. Redistribution under these conditions cannot eliminate scarcity because it does not increase the underlying supply of jobs, housing, or essential services.
This diagnosis has direct political implications in the United States. Progressive responses to inequality and social unrest have often emphasized transfers, taxation, and corrective redistribution, assuming that fairness can be restored within the existing economic structure. Critics influenced by Prins and the Abundance framework argue that this approach overlooks how structural scarcity is produced and entrenched. When supply is constrained by underbuilding, regulatory inertia, or disinvestment, redistribution becomes fiscally fragile and politically combustible, especially as debt rises and growth remains insufficient to sustain expanding social commitments.
The resulting argument is not anti-egalitarian but conditional: equality is only durable when the economic pie is growing. Prins’ call for a “hard reset” toward real investment echoes the abundance agenda’s insistence on building—more housing, more energy capacity, more infrastructure, and more productive technology. Without such expansion, scarcity becomes permanent, redistribution becomes zero-sum, and inequality persists despite ever more aggressive fiscal measures. Growth and supply expansion, therefore, are not alternatives to redistribution but prerequisites for making it viable in the first place.
Financial Abundance and Real-Economic Decay in *Permanent Distortion
In Permanent Distortion, Prins argues that the Western economy—particularly that of the United States—has been fundamentally hollowed out since the 2008 financial crisis, a process accelerated by the pandemic of 2020. Central banks, led by the U.S. Federal Reserve, responded to successive crises with extraordinary monetary interventions, including quantitative easing and prolonged near-zero interest rates. While these policies stabilized financial markets, they also flooded the system with cheap money that largely bypassed productive economic activity, severing the link between finance and the real economy of labor, infrastructure, and tangible output.
At the core of this hollowing-out is financialization. Capital, Prins contends, increasingly seeks the fastest and least risky means of self-replication, flowing into equities, bonds, and speculative instruments rather than long-term investment in manufacturing, research, or workforce development. As a result, asset prices surged while real economic growth remained sluggish, reinforcing a structural imbalance in which corporate profits and investor wealth expanded even as wages stagnated and industrial capacity eroded. Deindustrialization and offshoring further weakened the domestic productive base, leaving large segments of the workforce concentrated in insecure, low-growth service-sector employment.
This distortion is compounded by sustained neglect of public investment. Reliance on central bank intervention fostered political complacency, allowing governments to underinvest in infrastructure, education, healthcare, and worker retraining. Despite rapidly rising debt levels, public borrowing was directed primarily toward financial stabilization and asset support rather than productivity-enhancing growth. The visible consequences—deteriorating infrastructure, fragile supply chains, and declining public services—underscore Prins’ claim that debt expansion has substituted for real economic renewal rather than enabled it.
The social and political consequences of this hollowed-out economy are central to Prins’ thesis. The widening gap between financial wealth and lived economic reality fuels populism, nationalism, and social unrest, while eroding trust in established institutions. As everyday economic conditions worsen for many despite record market highs, alternative systems—such as cryptocurrencies or virtual economies—gain appeal as perceived exits from a broken order. Prins situates these trends within a broader global imbalance, noting how dollar dominance exports volatility abroad while leaving the West increasingly exposed to shortages and systemic fragility at home.
Taken together, Permanent Distortion presents the hollowing-out of the real economy not as a cyclical problem but as a structural condition. Prins concludes that without a decisive “hard reset” toward productive investment and real growth, financial distortion will deepen, crises will recur, and the material foundations of economic stability will continue to erode.
Institutional Barriers to Abundance in Klein and Thompson’s Abundance (2025)
In Abundance (2025), Ezra Klein and Derek Thompson diagnose a central paradox of contemporary liberal societies: unprecedented technological and productive capacity coexists with pervasive scarcity in the goods that matter most to everyday life. Housing, clean energy, healthcare, and core infrastructure remain costly and constrained, not because of natural limits, but because of policy choices that systematically block supply. The authors frame these outcomes as “chosen scarcities”—self-inflicted shortages produced by institutions that have failed to adapt to new conditions, even as the material and technical means for abundance are readily available.
A major problem identified in the book is the accumulation of regulatory and procedural barriers that once served legitimate goals but now function as veto points against building. Zoning restrictions, NIMBY opposition, environmental review processes, and bureaucratic fragmentation have hardened into systems that make large-scale construction slow, expensive, or politically impossible. Klein and Thompson argue that “one generation’s solutions have become the next generation’s problems”: policies designed to protect communities, labor, or the environment now frequently undermine affordability, delay climate mitigation, and entrench inequality by restricting supply.
Closely related is what the authors see as a deeper ideological drift within modern liberalism—from a tradition oriented toward construction and expansion to one focused primarily on preservation and constraint. Earlier eras of liberal governance emphasized building: infrastructure, housing, energy systems, and public goods at scale. By contrast, contemporary liberal politics often prioritizes guarding against harm, managing risk, and adjudicating competing claims, while losing the institutional capacity to deliver tangible improvements in living standards. The result is a failure to provide what people most visibly need, which in turn fuels frustration, populist backlash, and declining trust in democratic institutions.
Finally, Abundance situates these policy failures within a broader social and political stagnation. Artificial scarcities intensify inflation, worsen mental stress, and sharpen distributional conflicts, even as other domains—information, consumer choice, and digital services—experience excess rather than shortage. This imbalance reinforces the sense that progress has stalled despite extraordinary tools for advancement. Klein and Thompson warn that unless liberal societies relearn how to build and coordinate at scale, optimism about abundance will continue to curdle into political despair, creating fertile ground for extremism and democratic erosion.
Financialization and the Hollowed-Out Economy Behind the Failures Diagnosed in Abundance (2025)
A central implication of Abundance by Ezra Klein and Derek Thompson becomes clearer when read alongside critiques of financialization such as those offered by Nomi Prins: the failure to achieve material abundance is not only regulatory or ideological, but also structural. The hollowing-out of the real economy—marked by the diversion of capital away from production and toward speculation—undermines the very capacity to build. This erosion transforms potential plenty into persistent scarcity, reinforcing the core problems Klein and Thompson identify across housing, energy, infrastructure, and supply chains.
Prins’s account of financialization explains why the call to “build” in Abundance runs into hard constraints. Capital that might have funded factories, workforce development, or infrastructure has instead flowed into stock buybacks, asset inflation, and globalized production networks. Offshoring and deindustrialization weakened domestic manufacturing and logistical resilience, leaving the United States poorly equipped to scale production when demand surged, as seen during pandemic shortages. In this context, even advanced technologies—such as renewable energy systems or electric vehicles—face bottlenecks in materials, skills, and supply chains. The result is inflation, delay, and the persistence of what Klein and Thompson describe as “chosen scarcities,” despite ample technological capability.
This hollowing-out also intensifies inequality, which in turn distorts the politics of abundance. Prins highlights how monetary policy and asset-centered growth disproportionately reward financial elites while wages stagnate and regional economies decay. Abundance links artificial shortages—especially in housing and infrastructure—to political despair and populist backlash; Prins provides the deeper economic mechanism. Regions stripped of investment lack both jobs and trust in institutions, while asset-rich constituencies resist change through NIMBYism and procedural vetoes. The politics of building thus becomes polarized and fragile, making ambitious supply-side reforms harder to enact.
Moreover, financial complacency fueled by cheap money compounds these failures. When central bank support masks weak real growth, governments face less pressure to invest in long-term productive capacity. Klein and Thompson argue that well-intentioned past policies have ossified into barriers to action; Prins shows how distorted financial incentives worsen this inertia by steering resources away from public-private investment in housing, green energy, and infrastructure. The outcome is a self-reinforcing cycle: underinvestment constrains supply, scarcity drives inflation, and crises multiply without structural renewal.
Finally, the rise of speculative alternatives—from cryptocurrencies to virtual economies—underscores the depth of the real-economy failure. Prins interprets these developments as escapes from a system perceived as broken, while Abundance warns of a society rich in virtual or informational excess but poor in physical necessities. Innovation and talent increasingly flow toward abstract or financialized domains rather than toward the hard work of building in the real world. This divergence amplifies the social and economic distortions Klein and Thompson describe, leaving abundance imaginable in theory yet elusive in practice.
China as Contrast, Not Blueprint: Scale and Speed in Abundance (Klein & Thompson, 2025)
In Abundance (2025), Ezra Klein and Derek Thompson repeatedly invoke China’s capacity to build at extraordinary speed and scale, but they do so in a narrowly circumscribed way. China functions in the book as an illustrative contrast rather than a normative model. Its infrastructure achievements—high-speed rail, urban transit, renewable energy deployment—are used to expose the depth of American dysfunction, not to endorse China’s political system or economic governance. The comparison is diagnostic, not aspirational.
China’s relevance in Abundance lies primarily in how starkly it highlights U.S. obstacles to building. The authors point to projects such as China’s rapid high-speed rail expansion to underscore how legal fragmentation, procedural vetoes, and prolonged litigation have slowed or stalled comparable American efforts, most notably California’s high-speed rail. The lesson drawn is not that authoritarian coordination is desirable, but that the United States has layered so many constraints onto decision-making that even widely supported projects struggle to advance. China’s speed serves as a measuring stick for American delay.
At the same time, Klein and Thompson stop well short of advocating macro-level state planning or centralized coordination of the kind that enables China’s efficiency. Critics have noted a tension here: while the book implicitly admires outcomes made possible by strong governmental coordination, its proposed remedies emphasize deregulation, streamlining, and institutional reform rather than explicit central planning. This reflects the authors’ attempt to remain within the boundaries of U.S. liberal-democratic norms, even when those norms contribute to fragmented authority and slow execution.
The urban elite sensibility that animates Abundance is partly shaped by this contrast. Many American cities governed by progressive coalitions struggle with visible disorder, housing shortages, and infrastructure decay, while major Chinese cities project an image—however curated—of cleanliness, modernity, and functional transit. This juxtaposition reinforces the authors’ argument that abundance is being thwarted less by material limits than by governance failures at home. Yet again, the contrast is aesthetic and operational, not ideological.
Klein and Thompson are careful to explain why China cannot be treated as a model to emulate wholesale. Deep ideological commitments to limited government, constitutional constraints, federalism, and local autonomy make centralized planning politically radioactive in the United States. Explicitly endorsing a “China-style” approach would trigger immediate backlash and risk discrediting the broader argument. By framing China as a case study rather than a template, the authors preserve political credibility and keep their proposals within the realm of what is plausibly achievable in an American context.
This caution is also institutional. China’s ability to act decisively flows from a centralized system that bypasses judicial review, local veto points, and pluralistic bargaining. Klein and Thompson acknowledge that the United States cannot—and should not—discard these features. Their project is therefore one of translation: extracting operational lessons about coordination, standardization, and execution speed, while expressing them in the language of liberal reform rather than state command.
Ultimately, Abundance uses China to sharpen its critique of American self-imposed scarcity. The comparison underscores how far U.S. governance has drifted from the capacity to build, even under favorable technological and economic conditions. But the book’s core claim remains firmly domestic: the challenge is not to adopt another country’s system, but to reform America’s own institutions so that democratic societies can deliver abundance without sacrificing their foundational values.
Respect for the State: Civil Service, Capacity, and the Limits of Learning from China in Abundance (2025)
In Abundance (2025), Ezra Klein and Derek Thompson draw attention to a striking cultural and institutional contrast: in countries such as China and Singapore, civil servants are socially respected, professionally prestigious, and often selected through rigorous national examinations, while in the United States the word “bureaucrat” is commonly used as an insult. This difference, the authors suggest, is not merely semantic. It reflects deeper divergences in how states value administrative competence, coordinate action, and sustain the capacity to build at scale. The erosion of respect for public administration in the U.S. becomes, in their account, a quiet but powerful contributor to institutional failure.
At the same time, Abundance is careful to avoid endorsing China’s political or economic system. Klein and Thompson repeatedly emphasize that their interest lies in operational outcomes—speed, scale, coordination, and execution—not in authoritarian governance. Yet this restraint produces a tension in the book. While China’s success in mobilizing capable bureaucracies and aligning incentives across agencies is implicitly admired, the authors’ proposed remedies lean toward deregulation and procedural streamlining rather than toward rebuilding centralized planning capacity or elevating the professional status of the civil service. The result can appear, to critics, as a partial or “vulgarized” borrowing of the Chinese experience: extracting techniques such as performance evaluation, accountability metrics, standardized approvals, and competitive recruitment, while stripping them of their institutional and ideological foundations.
This selective learning is shaped by uniquely American constraints. Decades of offshoring and financialization have weakened the real economy, while fragmented governance, racial and social divisions, platform-driven polarization, and deep suspicion of anything labeled “left-wing” have made coordinated state action politically hazardous. In the U.S. imagination—especially among generations shaped by the Cold War—“socialism,” “communism,” and “authoritarianism” are often conflated and understood primarily through the lens of the Soviet experience. China is therefore perceived not simply as a competitor, but as an existential ideological threat, supposedly opposed to American history, values, institutions, and the “American Dream.” Within this framework, any serious discussion of emulating Chinese governance risks being dismissed as un-American or subversive.
These anxieties help explain why Klein and Thompson frame China as a contrast rather than a model. Their strategy is defensive as well as analytical: by citing China’s administrative competence and build speed only to highlight U.S. dysfunction, they preserve political credibility while making their critique sharper. Yet this approach also limits how far the analysis can go. As commentators like Noah Smith have argued, the United States may be drifting into a “high-level equilibrium trap”—a condition in which a wealthy society becomes complacent, technophobic, and resistant to institutional change just as a rival embraces new technologies and organizational forms. In Smith’s account, Americans’ pessimism toward AI, nuclear power, and electrification reflects decades of slow growth, in which technological change feels like risk rather than opportunity, unlike in China, where rapid development has made change synonymous with improvement.
The stakes of this divergence are increasingly material. Smith warns that the decisive technologies of the twenty-first century are electrical—batteries, power semiconductors, electric motors—and that China now leads in many of these domains through deliberate industrial policy and administrative coordination. While progressives in the U.S. have contributed to delay through NIMBYism and bureaucratic friction, Republicans have often gone further, actively opposing electrification and clean energy support. Markets alone, Smith argues, cannot sustain national defense or industrial leadership when a rival state is willing to subsidize and plan strategically.
Seen in this broader context, Abundance occupies an uneasy middle ground. Like Ezra Vogel’s Japan as Number One during Japan’s rise in the late twentieth century, it reflects an American desire to learn from foreign success. But learning from China is far more difficult than learning from Japan, given the depth of ideological hostility and institutional incompatibility. Klein and Thompson’s emphasis on the cultural degradation of bureaucracy—on the fact that public servants are mocked rather than admired—may therefore be one of the book’s most consequential insights. Without restoring respect for competent administration and rebuilding state capacity, the United States risks remaining trapped between admiration for others’ achievements and an inability to reproduce them at home.
Final Thoughts
In essence, Prins’ critique of permanent financial distortion underscores the structural limits behind the problems highlighted in Abundance (Ezra Klein & Derek Thompson, 2025). A finance-dominated economy hollows out productive capacity, entrenches inequality, fosters complacency, and produces political gridlock, all of which prevent the realization of the “politics of plenty” that Klein and Thompson envision. While the book compellingly diagnoses these artificial scarcities and advocates for building and reform, it cannot, on its own, alter Washington, Wall Street, the political economy, or the deeply ingrained free-market and liberal-democratic ideologies that shape U.S. policymaking. Without addressing the systemic detachment and incentives Prins warns against—through what he calls a “hard reset”—the book’s agenda remains aspirational, highlighting the tension between potential abundance and the entrenched constraints of American institutions.
References
- Permanent Distortion: How the Financial Markets Abandoned the Real Economy Forever. Nomi Prins. 2022
- Abundance. Ezra Klein & Derek Thompson. 2025
- “Is the U.S. in a ‘high-level equilibrium trap’?”, Noah Smith. May 20, 2025. https://www.noahpinion.blog/p/is-the-us-in-a-high-level-equilibrium