303: Ezra Klein and Derek Thompson’s Abundance

Dear Friends

Last week, I introduced you to Sarah Uhieda’s poetry. This week, global organisation, One Young World gave her a well-deserved scholarship to attend their annual gathering. Earlier in the year, I suggested you read Nadia David’s Cape Fever – earlier this month Sarah Jessica Parker agreed (happily for Ms Davids, Ms Parker has a far greater reach than me). Thursday was South Africa’s Heritage Day; these were my musings.

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Let’s get going…

Two weeks ago, we explored Dan Wang’s Breakneck – an analysis of the approaches adopted by contemporary China and the US to socio-economic development.

This week we turn our attention to Ezra Klein and Derek Thompson’s Abundance; like Breakneck, it was shortlisted for the Financial Times Business Book of the Year, 2025. Like Breakneck, it explores how regulation, policy and institutions shape social outcomes. It does so in the context of the United States, but again, like Breakneck, it carries lessons we can apply in any context. I suggest you read both letters together.

Klein and Thompson weave together dozens of strands of research, doing us a great favour: if you’re curious, you can follow the tributaries; equally, you can get through Abundance pretty quickly, and after a few hours you’ll have a hawk’s view of what works and what doesn’t (If you are entrusted with unravelling a rat’s nest of policies and procedures, you’ll find one of those tributaries – Matthew Yglesias’s Making policy for a low-trust world – very useful).

Abundance’s objective is simple: to make visible how government (and for those of us in the private sector, approval processes) complexity slows, and often stops, much needed change.

Abundance starts: “This book is dedicated to a simple idea: to have the future we want, we need to build and invent more of what we need. That’s it. That’s the thesis” and ends “Abundance reorients politics around a fresh provocation: Can we solve our problems with supply?”

Those sentences may seem trite. They’re not. In lived life, they’re powerful.

If you’re a South African or New Zealander, you would have spent the past two months watching rugby. Twenty years ago, South African rugby crowds, and the national team, were largely white. Today, it is a radically different picture representing the hope of what South Africa could be. How did this happen? The way Rassie Erasmus describes it, quite simple: he built a pipeline to support and grow young black players.

In 2023, South Africa experienced 335 days of loadshedding. Today, on 27 September 2026, South African has not experienced loadshedding for 494 days. The solution, in part: make it easier for the general managers of power generation plants to get spare parts. Again, increase supply.

You’ll remember that our Breakneck letter started with China’s feats of engineering. Klein and Thompson do the opposite. They shine a light on mind-numbing examples of institutional sclerosis.

In just one example, California’s Employment Development Department has been working on a contract to modernise its technology stack for ten years. Just in case you missed that: ten years, not on modernising the stack, but on the contract to modernise it.

The same department had a process to check for fraud, often flagging tiny data discrepancies in the applications – in one period, 183,167 claims were flagged; only 804 were ultimately judged invalid.

We shake our heads, but we encounter examples every day, both as citizens and consumers. The best thing you can do for your business is to be its customer.

They comment, “One problem liberals are facing at every level where they govern is that they often add too many goals to a single project. A government that tries to accomplish too much all at once often ends up accomplishing nothing at all.”

I faced this several years ago as a media executive. South Africa has, rightly so, policy aimed at transforming the racial ownership of the economy. This policy is captured in sector codes, and as part of that, incumbent businesses get credit for helping black-owned businesses grow. It’s called Enterprise Development. I was excited. Electronic media always has surplus inventory. I knew many black-owned consumer-facing businesses that would benefit from free advertising. This was great – we could supercharge all sorts of businesses to success. But no. We were part of the ICT sector, so the rules said we could only support ICT businesses. We did as told: the sad truth being that ICT businesses are mostly B2B – far less responsive to radio advertising than consumer businesses.

As Klein and Thompson say, “Each individual decision is rational. The collective consequences are maddening”.

Their work on cities is fascinating. They tell us, via David Glaeser’s research, that Americans who live in cities of a million residents or more are 50% more productive than those who don’t, even when controlling for every other variable.

They conclude, “Cities are engines of creativity because we create in community. We are spurred by competition. We need to find the colleagues and the friends and the competitors and the antagonists who unlock our genius and add their own… This is not a dumb gift of density. Jamming a mass of people into a chosen place will not allow you to re-create what other groups of people have achieved elsewhere, as the Soviet Union found out again and again. Cities are not interchangeable. What each offers is a specific gift of the ecosystems of people and practice it has nurtured. Once deep communities of interest and industry form, they are difficult to dislodge, and they prove nearly impossible to replicate.”

Their insight echoes Wang’s analysis: part of China’s success rests in the fostering of communities of engineering practice.

It crystallised for me the existential problem posed by the short-term rental market. It is not only that locals are driven out of city centres, but also that you’re literally siphoning off the human energy that catalyses creativity and innovation. In this form, a service economy means that you are quite literally ‘in service’.

For those of us in business, it is a powerful provocation: don’t think of departments, think of communities and connections.

We’ll end here: if you’re entrusted with leading innovation, you know how bureaucracy strangles it. Often, you are required to detail to the last decimal point what you will achieve. The challenge, of course, is that if you’re trying to do something new, you just don’t know exactly what it will look like. It’s new. Meeting the requirements means you stay within the known, which means no innovation.

This is a wonderful tale to tell.

“The most popular COVID tests relied on a technology called polymerase chain reaction. Developed in the 1980s, PCR is a method for amplifying small DNA sequences, which can be used for paternity tests and disease diagnoses. When scientists were initially trying to figure out how to scale PCR, they needed bacterial enzymes that didn’t fail at high temperatures. Fortunately, two decades earlier, in the 1960s, biologists in Yellowstone National Park had isolated a hot-spring bacteria that thrived in boiling conditions. The bacteria they isolated was incorporated into PCR research and helped launch a revolution in diagnostics and genetics… Nobody building an effective medical test during a pandemic would ever stop to think, Well, first thing, let’s book a flight to Wyoming and take samples from geysers.”

Progress is rarely linear. Innovation seldom fits into a neat box. Every business, every organisation, should create space for serendipity.  

All the very best

Karl

PS: Here are some of Klein and Thompson’s references that caught my eye:

Aaron Bastani Fully Automated Luxury Communism (on the power of utopian thinking aka thinking big)
Gregory Nemet How Solar Energy Became Cheap
Jon GertnerThe Idea Factory: Bell Labs and the Great Age of American Innovation
Mariana Mazzucato The Entrepreneurial State: Debunking Public vs. Private Sector Myths
Paul Mango Warp Speed: Inside the Operation That Beat COVID, the Critics, and the Odds
William Howell and Terry Moe Presidents, Populism, and the Crisis of Democracy