The price of power, an abundance origin story, and what civil service reform actually looks like

What we're reading, July 29, 2026

Here’s what caught our attention over the last week:

1. Ignoring the price signal - Willow Latham-Proenca

2. The Hostile Turn in Administrative Procedure, and the Ad Hoc Exceptions — Dylan Matthews

3. Actually Existing State Capacity Reform — Matt Clancy

4. The Two McNamaras - Saloni Dattani

5. The Effects of U.S. Public R&D on Global Growth — Dylan Matthews

And Alex, Jordan, and Nisha are all traveling this week.

Ignoring the price signal — Willow Latham-Proenca

How much do prices affect how much electricity we use? It’s an increasingly relevant question, since changing when people and firms use electricity – usually to try to spread out short-term peaks – is often one of the first proposed responses to the current energy crunch. It would also seem to have an obvious answer – if electricity prices go up, from an Econ 101 perspective, use should go down. Some go so far as to say that exposing customers (and their devices) to real-time prices should even be enough to organize meaningful demand response, without virtual power plants or other middlemen.

However, it turns out people really like electricity. A new paper this month finds that prices matter less than you’d think – Kudela and coauthors find that price increases do little to change demand (a 10% rise in the electricity price cuts consumption by under 2% on average, over the short term). Even more surprisingly, the most careful studies reviewed find prices have next to no effect at all on electricity use. They also find that elasticity is higher over the long run than the short term – consistent with users adapting to higher prices through capital improvements, rather than behavioral change (think a more efficient dryer, not waiting until midnight to dry your clothes).

The findings here are not just surprising but also policy-relevant, implying both that price transparency won’t do much to smooth demand without paired technology improvements, and that firm capacity (generation that can be called on at times of peak demand) will likely continue to be needed, especially over the short term. To be clear, this isn’t an argument against peak-shifting as part of a larger energy abundance strategy (particularly when intra-day price-sensitivity can be programmed into automated devices), but it is a reality check on how most people think about and use energy.

Speaking of paired technology improvements, Massachusetts launched a residential vehicle-to-grid pilot program this month – exactly the sort of demand-smoothing technology the Kudela paper implies we’d need to actually get electricity demand to follow supply.

The Hostile Turn in Administrative Procedure, and the Ad Hoc Exceptions — Dylan Matthews

“Abundance” as a movement has a set of diagnoses of what’s wrong with US public policy, and how to fix it, but it also has a historical narrative behind it, which goes something like this: the US used to be able to build stuff, fast. Starting in the 1970s, we lost our ability to build stuff. Zoning got tighter, permitting energy projects got harder, red tape got thicker all around.

Alex Mechanick, a professor at Johns Hopkins and veteran of the Biden regulatory shop, calls this shift “the hostile turn,” and has a useful new post outlining what it actually consisted of. Drawing on Paul Sabin’s book Public Citizens (for my money, the single most important text on American abundance politics) he argues that the slew of new substantive rules in the ‘70s did not, by itself, lead to this sclerosis. The Clean Air Act and the Vehicle Safety Act did not, on their own, make it impossible to build. The hostile turn, instead, consisted in a set of procedural obstacles, sometimes set up in substantive laws like the National Historical Preservation Act, and sometimes in purely procedural measures like the National Environmental Policy Act (NEPA), “statutes that tied the hands of agencies through more and more onerous procedures, rather than a focus on regulating on the basis of scientific and economic expertise.”

That much of the story is probably familiar; NEPA in particular is a common target of criticism from abundance folks. But for Mechanick, the lesson is that procedural problems demand a procedural solution, and that begins by rethinking and revamping the Administrative Procedures Act (APA), the so-called “constitution” of administrative law in the US. This is a move that most commentators don’t make, and Mechanick takes it to some interesting places.

Actually Existing State Capacity Reform — Matt Clancy

Compared to some of the other areas we work on, improving “state capacity” can seem a bit nebulous. The end goal of improving the productivity of government is laudable, but what, specifically, does that mean? With that question in mind, I enjoyed Jen Pahlka’s rundown of North Carolina’s recently passed Public Modernization Workforce Act.

One concrete way of making government more productive is via civil service reform. Prior to the new bill, finding new job opportunities in the North Carolina government was byzantine, giving calibrated feedback to workers wasn’t happening, retaining high performers with pay increases was challenging, and letting go of poor performers was extremely protracted and difficult. The Public Modernization Workforce Act streamlines much of this process, and introduces a lot of new innovations to help recruit, retain, and effectively manage civil service talent: a track to more easily make temporary workers permanent, a pilot testing upward feedback (where reports rate the performance of their managers), and setting in motion a review of the underlying classification and compensation system. As Pahlka notes (and we agree), hopefully the Federal Government and other state governments can learn from North Carolina’s experiment.

The Two McNamaras - Saloni Dattani

I enjoyed reading Oliver Kim’s article on the two lives of Robert McNamara: one as US secretary of defense and chief escalator of the Vietnam War, the other as World Bank president and crusader against global poverty. He suggests that though it’s tempting to contrast these as different sides of the same man, they shared common threads: a drive for quantification, a bureaucratic command approach, and the ambition to reorganize large institutions. In Vietnam, he used the Hamlet Evaluation System, which graded 12,000 hamlets each month and fed the results into an IBM mainframe that invariably showed the US winning. At the Bank, he more than tripled the staff and turned an institution run by engineers into one run by economists; yearly lending grew from about $1 billion in 1968 to $13 billion in 1981.

In both eras, he seemed to focus more on what was easily measurable rather than strategically relevant. The North Vietnamese were willing to absorb losses that American planners had not anticipated, and land reform was not considered relevant until much later. The Bank did some good, virtually eradicating river blindness in West Africa, for example, but also drew criticism, with a culture of lending with little regard for how the money would be used.

Archives suggest that McNamara privately believed by November 1965 that the Vietnam War could not be won, but continued selling it publicly for years, boasting enemy body counts. Asked later why he stayed silent, he offered the excuse that his loyalty lay with the president. Oliver concludes, “if there is a thread we can trace through his career, from the Pentagon to the Bank, it is that no amount of technocratic skill can substitute for ethical judgment. McNamara was one of the 20th century’s great systems builders—a man who could tame vast bureaucracies, enlarge them, rationalize them. That doing what was right might require sometimes stepping outside the system simply did not compute.”

The Effects of U.S. Public R&D on Global Growth — Dylan Matthews

Last week, I mentioned a big Congressional Budget Office report estimating the economic impact of federal spending on non-defense research and development efforts (think basic and applied science at the National Science Foundation or National Institutes of Health, more engineering-like work at ARPA-H or ARPA-E, etc.). That report leaned heavily on the work of economists Andrew Fieldhouse and Karel Mertens, whose recent American Economic Review paper constitutes some of the best evidence we have on the economic returns to R&D spending in the US.

Now, Fieldhouse and Mertens have teamed up with three other researchers (Gustavo De Souza, Ishan Nath, and Valerie Ramey) to extend their work and estimate the global impact of US R&D spending. It stands to reason that science and engineering in the US should have effects abroad. When Bell Labs researchers invented the transistor, it didn’t take long for that to be powering radios in Japan. The team finds that the US captures only about half the returns to US-based R&D, with the other half benefiting the rest of the world. The US-only returns are already enormous, and well worth it even if you only care about US well-being. But if, like us at Coefficient, you try to look at well-being worldwide, this finding suggests US R&D is an even better deal than we thought.

One more thing

Finally, in case you missed it, Jordan published a new website last week, Ordinary Abundance, which commenter Zac Hill described as “almost the inverse of a memento mori - a reminder of the sheer infinitude of life, its almost banal fecundity of possibility.” Read Jordan’s blog post about it here.