Managing Scarcity or Reducing It?
Political debates begin with the question, "Who should get these expensive things?" Vermont needs to begin one step earlier and ask, "Why is there so little of them?"
The elevator in the building where I live is broken. At first, it sounded like an ordinary maintenance problem. Then the explanation came. The replacement parts were not available in Vermont and had to be shipped from Boston. The specialized engineers qualified to install them would also have to come from Boston. It turns out that post-pandemic, there are no longer any technicians based in Vermont capable of performing this level of repair.
It was a minor inconvenience. But it also served as a useful reminder that many of the economic challenges facing Vermont are, at their core, problems of capacity. The problem was never that someone had failed to file the paperwork correctly or that the building manager lacked concern. It was simply that the parts did not exist nearby, and neither did the people needed to install them.
Increasingly, that observation seems to describe Vermont’s economy more generally. Things are simply scarce. Housing has become scarce. Skilled tradespeople are scarce. Childcare slots are scarce. Primary care physicians are scarce. Construction workers are scarce. Even the labor required to build the additional housing Vermont desperately needs has itself become scarce. When scarcity becomes widespread, governments inevitably intervene. The interesting question is how they intervene.
There are two fundamentally different approaches. One is to reduce scarcity itself by expanding capacity. More housing can reduce housing shortages. More childcare providers create additional childcare slots. More physicians increase access to healthcare. More electricians, plumbers and construction workers expand the state’s ability to build and maintain its infrastructure. The other approach accepts scarcity as immutable and focuses instead on redistribution. Housing vouchers, emergency motel programs, waiting lists, subsidies, eligibility rules and priority systems all attempt to distribute limited resources as equitably as possible.
Both approaches have their place. When families are sleeping in cars, emergency shelter is indispensable. When childcare costs threaten to force parents out of the workforce, subsidies may be entirely appropriate. Allocation matters, particularly in the short run. But allocation and production are not the same thing. If Vermont needs approximately 36,000 additional housing units, no amount of reallocating the existing housing stock eliminates that shortage. One hundred homes cannot house 36,000 households. Arithmetic is stubborn like that.
This distinction helps explain why so many of Vermont’s debates seem so repetitive. Each year legislators debate homelessness, housing affordability, childcare, workforce recruitment and demographic decline. Yet these discussions often revolve around how existing resources should be distributed rather than why the resources remain scarce in the first place.
The pattern is not confined to housing. Vermont’s unemployment rate has remained among the lowest in the nation for years, which economists would ordinarily read as evidence of a healthy economy. Here it reflects something different: employers across sectors simply cannot find workers. Restaurants shorten their hours because they cannot fully staff their kitchens. Manufacturers postpone expansion because skilled tradespeople are unavailable. Hospitals struggle to recruit nurses and physicians. Construction companies turn away projects for lack of carpenters, electricians, plumbers and heavy equipment operators.
The shortage of workers, in turn, reinforces the shortage of housing. Even if Vermont decided tomorrow to build thousands of additional homes, someone would have to construct them. Housing scarcity and labor scarcity are not separate problems. They feed one another, creating a cycle that becomes increasingly difficult to break.
Childcare tells the same story. Vermont has invested substantial public resources in making childcare more affordable, an entirely reasonable objective. But affordability alone cannot create childcare slots if providers cannot hire enough qualified staff or if facilities lack the capacity to expand. Parents remain on waiting lists not because policymakers have failed to recognize the problem, but because there simply are not enough places available. Healthcare presents a similar picture. Vermont debates reimbursement rates, insurance coverage and hospital financing with intensity, yet beneath those discussions lies an unexamined constraint: there are simply too few primary care physicians, too few specialists in many fields and too few nurses to meet growing demand. As the state’s population ages, that imbalance is likely to become more pronounced, not less.
These examples differ in their particulars, but they share a common structure. Public debate frequently focuses on allocating scarce resources more fairly, while comparatively less attention is devoted to increasing the supply of those resources in the first place. That is not a criticism of Vermont’s policymakers. In many cases, allocating scarcity is exactly what government must do. Families cannot wait years for new housing to be built or for additional physicians to complete their training. Emergency programs exist because emergencies are real. The danger arises because Vermont has allowed emergency management to become a permanent policy.
The state’s emergency motel program illustrates the point precisely. It began as a temporary response to an immediate crisis during the COVID-19 pandemic. Over time, however, it evolved into a central component of Vermont’s homelessness policy, not because anyone believed motels were an ideal solution, but because the underlying shortage of permanent housing remained unresolved. Temporary measures have a way of becoming enduring institutions when the structural conditions that created them persist.
This pattern extends beyond social policy. Municipal governments devote increasing resources to maintaining aging infrastructure rather than expanding it. Economic development agencies compete aggressively to recruit workers from elsewhere because the state’s own demographic trends no longer generate sufficient labor force growth. Colleges and universities throughout New England prepare for declining enrollments as smaller birth cohorts reach college age. Each institution adapts rationally to scarcity. Collectively, however, they reveal an economy increasingly organized around managing constraints rather than overcoming them.
Preserving Success Can Create New Problems
If scarcity has become Vermont’s defining economic challenge, why is it so difficult to reduce? Part of the answer lies in the remarkable success of policies adopted decades ago. Beginning in the 1970s, Vermont consciously rejected the development model that reshaped much of suburban America. Through Act 250, agricultural land conservation, environmental regulation and an emphasis on compact village centers, the state sought to protect its landscapes and communities from sprawling growth. Few Vermonters today would argue that those goals were mistaken. Indeed, they are among the reasons people continue to choose Vermont as a place to live, retire and visit.
Success, however, creates its own paradox. Policies that restrict development do not distinguish between “good” and “bad” demand. They constrain supply regardless of who wants to move into the state or why. When Vermont was losing population and struggling economically, those constraints imposed relatively modest costs. In the 2020s, however, Vermont has become a desirable destination. Remote workers, retirees and second-home owners all compete for a limited supply of housing and commercial space. The very qualities that preservation policies helped protect have made the state more attractive, while those same policies have made it more difficult to accommodate those who are attracted.
Economists sometimes describe this as a supply constraint, but the political implications are more subtle than the phrase suggests. The question is not whether Vermont should build more of everything everywhere. It is whether the state even has institutions capable of distinguishing between growth that strengthens Vermont and growth that undermines it. That distinction matters because political debate often becomes trapped in false choices. One side warns that relaxing development rules will “Jersey Vermont.” The other argues that any new housing is inherently beneficial because it increases supply. Both perspectives capture part of the truth, but neither is sufficient. Vermont’s challenge is not choosing between preservation and growth. It is finding ways to increase housing, infrastructure and productive capacity without sacrificing the landscapes and communities that make the state distinctive.
Seen from that perspective, many contemporary policy debates begin to look different. Housing is no longer simply a question of affordability; it becomes a question of whether Vermont can produce enough homes for the people it needs. Childcare is no longer only about subsidies; it becomes a question of expanding providers and facilities. Healthcare is not only about insurance coverage; it is also about training, recruiting and retaining medical professionals. Even transportation and infrastructure become questions of capacity rather than maintenance.
Vermont’s politics often focuses on the immediate demands of distribution. Who should receive assistance first? Which community should receive the next investment? How should scarce resources be allocated most fairly? Those are necessary questions, and governments cannot avoid them. But they crowd out the important question: how do we make these resources less scarce in the first place?
That shift in perspective does not diminish the importance of equity. On the contrary, a society with abundant housing, abundant childcare and abundant economic opportunity has far more room to pursue equitable outcomes than one in which any gain for one household comes at the expense of another. Scarcity intensifies conflict because it turns public policy into a series of difficult choices over who receives limited resources. Expanding capacity does not eliminate those choices, but it changes their character.
Beyond Managing Scarcity
One reason Vermont’s current debates often feel so frustrating is that the state’s institutions have become remarkably effective at managing the consequences of scarcity. Emergency motel programs reduce the immediate hardships of homelessness. Childcare subsidies help families afford care that remains difficult to find. Workforce recruitment campaigns bring in new employees where possible. Police officers, paramedics, social workers and nonprofit organizations work every day to manage the visible consequences of housing shortages, addiction and mental illness.
None of these efforts should be dismissed. They reflect genuine compassion and considerable public commitment, and they prevent many situations from becoming far worse. The difficulty is that successful management creates the illusion that the underlying problem is being solved. If housing remains scarce, homelessness will remain difficult to eliminate. If construction capacity remains limited, housing shortages will persist even when demand is obvious. If the state continues producing fewer young workers than its economy requires, employers will continue competing for an insufficient labor force. Effective administration can soften these pressures, but it cannot remove them.
That distinction may ultimately define Vermont’s next decade. For much of the twentieth century, Vermont’s central political challenge was protecting the state from excessive growth. Today, its challenge is ensuring that growth occurs where it strengthens rather than weakens the communities Vermonters value. Those are not the same problem, and they require different institutional instincts.
This is why the familiar slogan “Don’t Jersey Vermont” deserves to be understood not as a policy prescription but as a caution. It reminds Vermonters of what they wish to avoid. It says little about what they hope to become.
Every society needs institutions that preserve what is valuable. But every society also needs institutions capable of creating new capacity when circumstances change. Vermont has spent decades refining the first set of institutions. The second task has become increasingly urgent.
The goal is not to build endlessly or to abandon the principles that have shaped Vermont’s landscape and civic culture. The goal is to recognize that scarcity itself carries costs. Housing shortages affect labor markets. Labor shortages affect economic growth. Economic stagnation affects public finances. Demographic decline affects schools, colleges and healthcare systems. These are not isolated policy failures. They are different expressions of the same structural constraint.
The elevator in my building will eventually be repaired. The parts will arrive from Boston. The specialized engineers will complete the installation, and life will return to normal. Yet the episode illustrates something larger. Small places inevitably rely upon larger places for certain kinds of specialized capacity. The question is where that dependence becomes excessive. At what point does importing capacity cease to be an efficient feature of a small-state economy and become a symptom of an economy that no longer produces enough of what it needs?
That, it seems to me, is the question Vermont should be asking. Not simply how to distribute scarce housing more fairly, but how to produce enough housing that scarcity itself begins to recede. Not simply how to recruit workers from elsewhere, but how to become a place where more young people can afford to stay, build careers and raise families. Not simply how to preserve Vermont’s character, but how to ensure that preserving what we value does not unintentionally prevent us from creating what we still need.
Political debates often begin with the question, “Who should get what?” Increasingly, Vermont may need to begin one step earlier and ask, “Why is there so little of it?” That is not merely a question about housing, childcare or healthcare. It is a question about the state’s political economy. And it may prove to be the most important economic question Vermont faces in the years ahead.