The Special Interest Coalition that Thrives on Scarcity
Much of the unrest in the United States stems from unaffordability. Across every political contest from California to the East Coast, the affordability playbook is the same: “the cost of living is too high, and the opposition party is to blame.” The first part of this message ought to be beyond serious debate. The cost of housing, the biggest single expense most families face, has skyrocketed in recent decades. The median home price is now five times the median household income, double the ratio of home prices to household income in the 1980s. But the second part of this message is objectively false, because to the extent that a painfully escalated cost of living isn’t the result of bipartisan mistakes, it can be laid at the feet of progressives. Nowhere is this more evident than in expensive California, where progressives have wielded absolute power for a generation.
This is because in California, one political party completely dominates politics, and that party is funded and directed by a coalition of special interests that are all united by a single principle: the more scarcity exists, the more we thrive. Understanding the composition and unifying principles of this coalition offers valuable insight into what actually drives the progressive economic agenda, as opposed to its rhetoric.
This political consensus to deliver and perpetuate scarcity explains why Californians can no longer cost-effectively build anything. The generation of Californians who built the State Water Project, the University of California, and the transportation and energy infrastructure that enabled the state’s population to double from 10.6 million in 1950 to 21.5 million in 1975 is long gone. Regulations and restrictions on everything from irrigation and timber harvesting to land and energy development have brought infrastructure development to a standstill. The state now has a population of nearly 40 million people living with an infrastructure designed for 20 million people.
Who benefits?
You can start with public sector unions representing state and local government workers. With more than a million members and dues revenue estimated at around $1 billion per year, these unions are the most powerful special interest in the state. They have the power to target and defeat any politician who defies their agenda. For these unions, notwithstanding their rhetoric, societal failure is union success. If the educational system is failing, then raise taxes and hire more government employees who will join the teachers’ union and pay dues. More broadly, every time prices rise, more households are unable to survive without government benefits. The solution? Raise taxes, distribute more government benefits, and hire more government employees to administer them.
The inherent conflict between the interests of California’s public sector unions and the public interest not only drives a relentless expansion of government regardless of its effectiveness. It also drives a continuous reallocation of funds to more government programs to provide more education, healthcare, and welfare, taking funds away from maintaining and expanding what once was the most magnificent endowment of physical public infrastructure in the United States. As that infrastructure crumbles from excessive regulations, neglect, and overuse, the effects ripple throughout the economy. There is the direct effect of paying more for energy, water, shipping, and construction. But there is also the downstream impact: higher costs for everything that requires energy, water, shipping, or manufacturing. When infrastructure investments are neglected, everything costs more. Such is life in California.
If public sector unions are the senior political player in California, private sector unions also have substantial clout, particularly in heavy construction. One would hope California’s powerful trade unions would support more infrastructure investment, and they do. The problem is that these unions cannot count on statewide support for anything that might actually drive down the cost of living. If they want to guarantee their members jobs that will last for decades, offering employment stability, then they have to find projects that the scarcity coalition that they’re part of will support. This is why the two biggest projects supported by California’s trade unions are the bullet train and floating offshore wind. Together, these two projects will cost an estimated half-trillion dollars, take decades to complete, and will each then become a permanent economic drain on the citizens of California.
Which brings us to the environmentalist lobby, motivated by two very distinct and equally compelling rationales. The first, of course, is the belief that any consumption of water, energy, land, or other resources beyond what is absolutely necessary for human subsistence is wasteful and unsustainable. The endpoint of such a belief is universal misery, accompanied by catastrophic shortages if there is ever a serious disruption to energy and water supplies that are already deliberately stretched to their absolute limit. The other motivation for environmentalism in California, and presumably elsewhere, is a hidden agenda: anti-development activists don’t want California’s population to increase, nor do they want to allow the existing population to spread out. In the name of environmentalism, land development is so restricted that 95 percent of the population lives on 5 percent of the land. At nearly 5,000 people per square mile, California has the most densely populated urban areas in the U.S.
Environmentalists may provide the supposed moral framework for California’s scarcity coalition, but they’ve got plenty of help from special interests with more pecuniary concerns. Namely, the legal profession, public accounting firms, and financial brokerages. For these constituencies, the “climate crisis” is a gold mine. Altogether, trillions of dollars have already been spent on “carbon accounting,” a discipline fraught with infinite complexity, or on “carbon trading,” a practice so reliant on subjectively determined variables that corruption is both endemic and difficult to prove. Environmentalism is, of course, also a magnet for litigators, for whom California is an extremely litigation-friendly state.
Do you want to develop practical, cost-effective sources of energy, water supplies, or homes? Count on litigators, arm in arm with carbon accountants, to provide expert testimony for your opponents in court. They’ll stop you in your tracks. You are up against a business model.
Therefore, the only way a business can truly thrive in California is if it is big enough to view these obstacles as opportunities because they eliminate smaller competitors who lack the economies of scale necessary to, for example, hire a full-time compliance officer, an in-house legal team, or an entire department populated with experts who will attest to the environmental probity of their mega-projects. This is exemplified in the handful of giant development corporations that continue to prosper in California. With a politically engineered shortage of land and emerging competitors decamped to Texas, they can build large-scale, ultra-high-density “planned communities,” and they build them at a rate guaranteed to never meet demand, allowing high prices and high profits.
Another example of how environmentalism benefits some of California’s biggest businesses is the public utilities. Because these heavily regulated companies are required to limit their profits to a fixed percentage over their costs, they strongly support renewable energy. The retail price of electricity in California is $0.34 per kilowatt-hour. The national average is only $0.18 per kilowatt-hour. With the percentage of allowable profit fixed, these companies make twice as much money supplying electricity in expensive California than they’ll make elsewhere in the U.S., overall.
Finally, there is the stupefying power of California’s tech oligopolies, the oligarchs who run them, and the highly partisan employees who keep them running. Apart from a few high-profile dissenters, these companies overwhelmingly support progressive one-party rule in California. And why not? When the regulatory environment prioritizes reducing demand instead of increasing supply, what better way to “help” consumers and businesses navigate the scarcity and the complexity than through a plethora of surveillance, management, and reporting gadgetry? As tech OEMs supplying the chips, software, and connectivity for every “smart,” energy- and water-sipping appliance sold into the huge California market, trillions are for the taking.
The identity of interests that derives from a shared scarcity agenda yields remarkable agreement on almost any policy affecting infrastructure in California. Infrastructure, abundant and practical, is the key to lowering prices for almost everything. As expressed in votes by the state legislature, this unanimity is frighteningly reminiscent of a dictatorship, where democracy is an obvious facade. On a recent bill to increase state worker pensions—yet another union-inspired gambit to shovel even more state budget spending toward pay and benefits and away from infrastructure investment—there were only two no votes across both houses of the state legislature. On recent legislation to compel local governments to permit multifamily dwellings inside neighborhoods with single-family homes—a policy designed to make California’s urban areas even more densely populated and even more dysfunctional, while doing nothing to meaningfully relieve the housing shortage—there were only four no votes out of 120. This is sham democracy. It is government by special interests that no longer compete, united in the upside of scarcity.
When we speak of America’s rising cost of living in a national context, it is accurate to point out federal policy mistakes. But what’s happening in California is of equal weight, and ultimately may carry more lasting impact. Across the U.S., as we debate everything from woke ideology to monetary policy, the scarcity coalition quietly advances.
This article originally appeared in American Greatness.
Edward Ring is the director of water and energy policy for the California Policy Center, which he co-founded in 2013. Ring is the author of several books, including The Abundance Choice – Our Fight for More Water in California (2022), and The Analyst’s Cookbook: Making the Case for Abundance Using Numbers (2026).