This has a ton of great information and background but could definitely use some splitting up and organizing IMO. I don't know anybody but the most dedicated who could spend the hours it would take to digest this. It reads almost like a wikipedia page.
> This has a ton of great information and background but could definitely use some splitting up and organizing
Page length issues seem to bother a lot of people.
I wrote a long one-page web article myself recently, and everybody said it was too long and needed to be split up and organized.
So I split the article at the section headings into separate web pages.
Everybody who had complained earlier said that my "reedit" was now much better. But really I didn't make any change other than splitting it into separate web pages.
Now, I do understand the value of paragraphs, spacing, and section headings. It's much easier visually. But I never understood the distaste for long web pages. (Obviously, it should be related material, like a story.)
It seems that some readers prefer 5 separate web pages (that must be read contiguously) rather than a single page with five section headings. Maybe I'm in the minority, but I prefer the single page.
I actually did read through the entire article in one sitting, but to be honest I'm surprised I did. My time spent is usually too fractured to permit this long a focus on anything that isn't either work or passive entertainment.
I can see how one can become dependent on more episodic consumption, designed to give clear break points and bring one comfortably back into the context at a later point when ready to continue. Those crutches would be comforting even if one ends up "binging" on the entire piece anyway.
Perhaps the problem was the navigation of the page?
Perhaps there's something psychologically satisfying about being able to finish five smaller reading tasks than one larger reading task?
I have found that if the text doesn't fit on one screen, it's more enjoyable for me to read the content as an ePub than as a long scrolling web page.
This doesn't mean I enjoy reading "news" sites which split the content into 25 pages of one paragraph each, just so they can squeeze a dozen more adverts into the page.
Reading such long-form content and then being able to process + critique it is an important life skill many of us have sadly lost.
I don't think the article is unnecessarily verbose, in fact I think it successfully covers many inter-connected issues by only illustrating the relevant depth without burdening the reader with the superfluous.
It's actually a really quite incredible piece of work, and arguably the best thing ever published on TechCrunch.
"Reading such long-form content and then being able to process + critique it is an important life skill many of us have sadly lost."
Sadly everything seems to be going the way of buzzfeed and infographics. You think you are getting information, but its the equivalent of a newspaper headline, compared to getting all the details.
Well, the 30-70% of population that are homeowners do have homebuilding on their radar - they're investors in the housing stock and have an incentive to cap/limit supply.
I think building more upscale condos/housing will attract even more money, and there will be a positive feedback loop, so the housing will become even more expensive. This can be observed in Manhattan.
Downvotes for this are unwarranted. This is a plausible mechanism, even if it's wrong, and should be engaged with.
The key thing is the margin for "even more expensive". Fundamentally, yes, development makes cities more valuable / expensive, in aggregate (after all, that's why cities exist in the first place). The key thing is how many units that value is spread out over. If you tear down a slum and replace it with $1M condos in a supply-constrained market, rents will rise.
But, there are a limited number of people who can afford to buy 7-figure condos, and it is possible to build enough housing to saturate that demand all the way down the curve. If you're actually able to tear down a single-family unit and replace it with 4-unit low-rise apartments, and rent / sell them at a decent price since people want to move into the city, and all your competitor landlords can do the same, you'll see more units, more total dollars going to landlords, and lower prices per unit.
The key thing is to make it cheap to build. Excessive regulation of the kind the article talks about often does the exact opposite - they make it so you can build, eventually, but it's only worthwhile if you can be sure of extracting large rents. Even worse, the high value of land & rent in a supply-constrained environment puts a lot of vested interests in keeping supply low, in a vicious circle.
A sure sign you're trapped in that vicious circle is if developers have "community engagement" and "affordable housing" dollars to throw around.
> But, there are a limited number of people who can afford to buy 7-figure condos
Of course, but if the total possible supply of 7-figure condos in SF is smaller than the total number of people who want to buy 7-figure condos in SF, then it would indeed be possible to fill the city with nothing but 7-figure condos and have thusly dramatically increased the price of housing!
The only thing that has grown faster than tech is the mobility of the international rich. For every techie with $500K for a 2br, there are ten internationalists with a suitcase of cash.
Techies are just the new middle-class. Asking for affordable housing here is like asking for it at Vail, Jackson Hole or Geneva.
Well, yes, if we take middle class at face value (the middle two quartiles of income) that's an insane claim. Of course techies aren't the middle class, we're very comfortably in the top 10% of incomes, if not the top 5%.
Purchasing power with the past middle class though is a different story. My parents are firmly middle class - but looking at the cost of housing and other factors, to afford a similar lifestyle to what they gave me growing up, living in similar places, now requires an income level far in excess of what they made.
It's in fact much closer to what I make now.
So the more accurate (and less insane sounding) claim is that to afford the middle class lifestyle of the past now requires a higher-than-middle-class income. This gap varies depending on where you are.
The thing is Manhattan has a very similar dynamic to San Francisco. Rent control has artificially reduced the supply of Manhattan real-estate which has most definitely helped drive the overall cost way up. Ironically in order to protect poorer residents, Manhattan has effectively driven the middle class out of the city.
tl;dr poor people don't want to be forced out of their homes or have their affordable local businesses shut down, and rich people want to make/keep a lot of money (partly by pushing poor people out of their homes and closing their affordable local businesses)
From my perspective SF does not have a housing crisis. They quite obviously have a culture crisis. Two opposed socioeconomic groups are at war, each trying to push the other out of the city. Housing remains plentiful, though obviously not affordable. You want to make housing really affordable? Introduce a large drug trade and a couple dozen gangs to bring up the mortality and crime rates, and you'll see those housing prices rocket downwards.
If you would rather live in a city with plentiful, affordable housing - 16% of which is abandoned or unliveable - come on over to my side of the country. You might want to bring a car and some pepper spray, though.
Very interesting, that Piketty's "Capital in the 21st Century" is introduced in this article:
A lot of other VCs and founders are also digesting Thomas Piketty’s new book, “Capital in the 21st Century.” With more than 200 years of data, it chronicles an inexorable rise in inequality that was punctuated in the middle of the 20th century by the Great Depression and World War II followed by 30 years of evenly-spread prosperity. Ultimately, it advocates a globally-coordinated tax on wealth.
I know that it's taboo on HN to get overly political, but I think because of Piketty's work we should talk about it (particularly, because Piketty's new piece is so groundbreaking [1] and incredibly well-backed with data). What do you guys think of his "global wealth tax" -- tax on capital (including real property), in the context of the new SV riches?
I don't like the idea of a tax on wealth - it seems like it would discourage savings, as you have to use it or lose it. If I save up a nest egg, my tax bill shouldn't increase as my nest egg increases, eventually reaching an equilibrium where I have to keep working just to keep my savings constant. Much better would be a much higher top marginal tax rate like the one we had pre-Reagan, and including investment gains in that.
Including capital gains in regular income taxes _would_ be a tax on wealth, though, wouldn't it? Certainly more so than it is now.
To avoid discouraging savings, the wealth tax could be progressive. The tax on the average citizen's savings is negligible but rentiers pay a substantial portion.
I think an inheritance tax is especially important to prevent the formation of generational wealth.
It would only be a tax on capital gains, not on the principal. And philosophically, why should investment income be treated any differently than income gotten due to effort?
Property tax is a sort of wealth tax. It goes to fund local services that the occupants of that house presumably consume, though.
It's an effective tax on principal if you tax nominal capital gains. If you want it to be a tax on actual "income" in real terms it needs to be a tax on real (i.e. inflation adjusted) capital gains. How much of a tax on principal it is depends on the inflation rate, of course; right now it's not much of one, but back in the 70s it would have been a bigger deal.
Inflation itself is a tax on holding currency or currency-denominated assets, and that's certainly an important point. The combination of inflation and a capital gains tax would seem to produce an implicit tax on wealth in general, right?
It would be somewhat better to move to a progressive consumption tax by making money invested tax deductible but taxing the entire proceeds from the sale of investments.
I'd like to see all taxes replaced by a wealth "tax" in the form of a voluntary--not coerced--payment to the state for the service of recognizing and protecting one's ownership of a piece of property. Payment would be encouraged by the fact that if an individual failed to pay the tax for some property, someone else could take it from them, pay the tax, and become the legally recognized owner, leaving the original possessor with no legal recourse.
And you see no coercion in this ill-conceived scheme? "This tax is 'voluntary', but if you don't pay it someone will certainly come along and take your property from you." What world do you live in exactly?
That kind of concept would work with enough mobility to just leave states you disapprove of. I like to think a huge amount of political inertia in the last 30 years has been due to the lack of any new frontiers to settle. And it is hard to voluntarily withdraw from a state if that also means you have to somehow get accepted into another one, since almost every square inch of habitable land on Earth is state controlled, even Antarctica.
There's a foundation of some sort in San Francisco that introduced it to me. It's a quite interesting idea. The TLDR is capitalism for what you produce, and socialism for natural resources.
I'd like to see it tried out somewhere if it hasn't been already.
Ah, the good old days of feudalism. When the only rich people were the ones with private soldiery to protect their assets. Everyone was better off when we all had our freedom, eh? Or at least, some people were better off, the vast majority died in squalor, unable to protect what was theirs from the local tyrant/"noble".
To provide a counterpoint:
We already exist in the society you describe.
You can choose to not pay your taxes and the government won't protect your assets from being seized. Now logically, under your system the person with the greatest military might would be able to seize your assets and defend them him/herself (or pay taxes). However, as the entity with the biggest military might will always be the government, ipso facto we have exactly the same situation as we do under the current law, where the government will start seizing assets if you don't pay your taxes...
The only alternative in a might-makes-right kind of libertarian society, is that individual entities (rich people/corporations/etc) start gathering enough military might to challenge the government and hence keep their tax money to themselves.
So best case scenario, we end up with a detente where the government and the hypothetical powerful force agree not to fight. Due to economies of scale, I'd be willing to bet that the cost of maintaining such a force is waaayyyy more than any taxes levied. Given that this force also gives the owner the ability to tell the government to go away, they'll have effectively declared independence and started their own little dictatorship (whether corporate or otherwise). The only difference is that nobody gets to vote for the new corporate overlords. They just have to obey or leave (until there's nowhere to flee to). This kind of libertarianism is better called neo-feudalism.
Worst case scenario, we have regular open warfare in our own back yards. What a great society to live in, where we're all just trying to stab each other in the back. Progress and civilization indeed...
Therefore the right of the government to enforce taxation for the betterment of society as a whole is absolutely essential to having a "civilization" at all. Those who cannot remember the past are condemned to repeat it.
"I've thought a lot about this, actually; it was not a casual remark. I think the fundamental question is not whether the government pays for schools or medicine, but whether you allow people to get rich.
In England in the 1970s, the top income tax rate was 98%. That's what the Beatles' song "Tax Man" is referring to when they say "one for you, nineteen for me."
Any country that makes this choice ends up losing net, because new technology tends to be developed by people trying to make their fortunes. It's too much work for anyone to do for ordinary wages. Smart people might work on sexy projects like fighter planes and space rockets for ordinary wages, but semiconductors or light bulbs or the plumbing of e-commerce probably have to be developed by entrepreneurs. Life in the Soviet Union would have been even poorer if they hadn't had American technologies to copy.
Finland is sometimes given as an example of a prosperous socialist country, but apparently the combined top tax rate is 55%, only 5% higher than in California. So if they seem that much more socialist than the US, it is probably simply because they don't spend so much on their military."
(I know that in the US anything even vaguely leftist gets called "socialism", but Thomas Piketty, the author, is a genuine strong supporter of the French Socialist Party, and the focus of the book is explicitly on government action to prevent anyone from getting 'too' rich. I think it's a fair criticism.)
EDIT: To those not familiar with British history, things got really bad during the 1970s. Inflation peaked at 27%. The government went bankrupt and had to go "cap-in-hand" to the IMF for a bailout. Garbage piled up in the streets because the sanitation workers were on strike. Bodies piled up because the gravediggers were on strike... (http://en.wikipedia.org/wiki/Winter_of_Discontent). I don't want to get into an argument about Thatcher, but everyone at all familiar with the history agrees that the country was in a mess.
And yet England did well; the golden years of British innovation are the '50s and '60s when this policy was in effect. Whereas come Thatcher and the '80s and the lowering of taxes you see the destruction of British industry, ruination of national infrastructure (the railways are still recovering from that era's underinvestment), and even what felt like a cultural collapse.
the golden years of British innovation are the '50s and '60s
The golden years of British innovation where in the 50s and 60s all right but 1850s and 1860s, maybe even earlier. By the end of the WWII Britain was a shade of its former self completely eclipsed by the US. Although to be fair, tax policy probably wasn't the decisive factor.
Not quite so. The trends in the industrial north were already strikingly negative by '79, and the fears of the coal miners in that pre-Thatcher era were important factors in the fall of the Heath and Wilson ministries.
England / the UK is a mess at the moment. They are heavily in debt. They keep on cutting benefits to the poor and allowing the rich to pay even less tax. According to your argument everything should be getting better because of this, but I assure you it is not.
Do we have rubbish piling up on the streets, dead people piling up not being buried? Do we have rolling power cuts due to strikes?
Are we all on a 3 day week? Massive inflation and interest rates?
The UK is turning the corner after the disastrous spend spend spend! Socialism of the last decade.
The disastrous spending of recent decades has been private spending funded by borrowing not public spending (although arguably the government should have tried to be more counter-cyclical than it was). The recovery happening at the moment is due to borrowing restarting and accelerating and is also the first steps towards the next crisis.
> (although arguably the government should have tried to be more counter-cyclical than it was)
That's a very polite way of acknowledging that the UK government ran a massive deficit-funded spending campaign throughout one of the fattest and longest boom cycle in history.
Public borrowing was small compared to private borrowing, it would have been better to take action to limit bank lending to cool the housing market than to drastically cut public spending. And I don't think many political leaders would have borrowed much less, under the Tories I think both spending and taxes would have been lower which wouldn't have produced better results.
I'm interested to see what's around that corner. What is the average price of a London home at the moment - 12x salary? Foreigners are still flocking in, and the market mania seems to be increasing with sellers increasing prices 7% a month. I find it hard to believe this isn't leading to some sort of catastrophe. This site keeps track of the UK housing market: http://www.housepriceviews.com/
I am not pretending everything is perfect, but economically the UK is projected by the IMF to grow faster than any other developed G7 Economy in 2014; and at twice the rate of the Eurozone [1]
Debt is high, but the key metric of net debt as a proportion of GDP is decelerating and is forecast by the Office of National Statistics to level out over the next few years and be falling within 3-4 years. [2]
The UK has made cuts to social and welfare budgets, but these cuts are actually smaller than across the Eurozone. Social spending has risen faster since 2000 in the UK than anywhere in the OECD. [3]
There are still issues with wealth disparity (poor vs rich and South-east versus the rest of the country), tax avoidance (mainly corporate), and challenges with reforming the welfare state so that benefits are there for the those that genuinely need whilst not creating a disincentive to those that work. However, saying the UK is mess at the moment, is do dismiss the facts.
Your comments are not very helpful,as you are quoting growth rates from arbitrarily selected starting points.
The main measure of an economy is GDP per capita. Apart from cyclical fluctuations, the main drivers of GDP per capita are are investment and productivity.
In the UK both of these are below that of the major developed economies.
As for the current growth of the economy-all is not well, as there is a large current account deficit, which is being funded by borrowing from overseas and is not sustainable.
The tax rates the rich pay are lower, but the overall percentage of the tax take paid by the rich is higher. The richest 1% paid 20% of total tax in 1997, 24.4% in 2007 and 29.8% now.
The UK competes with many other places for where the rich want to live. France has had a disaster with their recent proposed 75% tax rate.
The same goes for entrepreneurs - would you register your startup in the USA if the tax rates, especially on capital gains were massively higher than elsewhere? It's also a question of VC capital - would they let you.
It's better for the USA to get it's cut of Facebook's success rather than drive Facebook into a tax haven and get nothing.
yea the race to the bottom pretty much defines human progress. It is a great thing. That is why $100 today can get you what a king could not get 200 years ago.
Actually I think it is technological progress that drives what you have described. Take some things that have remained unchanged in the same time period. The price of land, property or gold for example. $100 will get you a lot less of those.
Wages going down for the majority, while a few get a lot richer is hardly what I would describe as progress.
"new technology tends to be developed by people trying to make their fortunes"
How about the internet? The web? Nuclear energy? All of this has been payed for by taxpayers.
EDIT: I am getting a couple of down votes, so I am assuming people are asking for some sources. Most of the research, for internet at least, was actually funded by the department of defense [1]
No, some/most of the research underpinning the first iteration of these cherry picked technologies was paid for by the government, but the development of them into the ubiquitous form in which you and I are benefiting from them on a daily basis was purely private capitalist endeavour. Surely there's a role for government in all this, but it doesn't follow that socialism (never mind all the random crazy ideas people call socialism) is a good idea.
It's funny how the idea the fact that government provided some early foundations for the Internet somehow awards them full credit for it, doesn't apply to the private inventions such as electricity and the telephone without which the government couldn't have invented the Internet.
> Surely there's a role for government in all this, but it doesn't follow that socialism (never mind all the random crazy ideas people call socialism) is a good idea.
Who said this? I was merely pointing out that "new" technology, as appeared in the quote I responded to, it actually usually kickstarted by taxpayer money. I am not interested in where it went from there.
Said what exactly? The comment you were responding to is titled "How can you dismiss socialism so casually?"
> I am not interested in where it went from there.
Well, that's awfully convenient, isn't it? If we only consider technology that's developed by the government it's much easier to reach the desired conclusion.
> No, some/most of the research underpinning the first iteration of these cherry picked technologies was paid for by the government, but the development of them into the ubiquitous form in which you and I are benefiting from them on a daily basis was purely private capitalist endeavour.
First, you're understating the government contribution. DARPA didn't just research network theory. They built a network. TCP/IP was designed under contract. Also, that point undermines the original argument, which is that entrepreneurs are necessary for innovation. Once the technology exists, development is something that can be done with a rate-regulated monopoly. AT&T wired up every person in America under such a regime.
I'm not saying that this would be my preferred model, but its one that works just fine.
This is important to understand: the internet was already the largest computer network in the world -- and very engaging and worthwhile for a smart person -- before the private sector of the economy started to influence it significantly.
For at least a year after I started on the internet in Dec 1991, any use of the internet for "commercial activity" was disallowed (and did not happen enough for a person to notice it). Spam had not been invented yet; the entire marketing profession seemed unaware of the existence of the internet; the main form of promotion I can remember is announcements of academic and technical conferences; it was OK to make a "work wanted" post on Usenet only if you wanted to become an employee ("W-2") -- contractors ("1099") and one-man consulting shops were prohibited from using the internet to look for clients.
Although a few private-sector companies (UUNET for example although started as a non-profit in 1987 became a for-profit in 1989) were influencing the internet at this time, the influence was minor compared to the influence of governments, governmental contractors (notably BBN and Mitre) and universities.
And again, the internet was already very valuable and very able to enrich people's lives -- provided that those people were willing to use command-line interfaces.
Spending your enormous profits on tax-deductible R&D in the name of empire-building sounds a lot more appealing when most of your obscene executive salary or dividend payout would go to the IRS.
"new technology tends to be developed by people trying to make their fortunes."
Please don't buy into the propaganda. I think you are confusing invention with smart packaging and marketing what was already developed. None of the technology we see today were bootstrapped by individuals or private investors. As a counter argument I will direct you to this talk.
This is a false equivalency. There would still be entrepreneurs if our top tax rate was twice as a high as it is now, or more. Everyone wants to get rich, and everyone believes that they need eleventy billion dollars in order to be happy. But most entrepreneurs and inventors make things because they like to make things. Most successful ventures start with a question, "Is X possible?" or "Wouldn't it be cool if...?". Some of the people who ask these questions also put a lot of focus on money because it's a convenient measuring stick for success in our society. This doesn't mean that paying slightly more in taxes would cause them to stop wondering and experimenting, though it might seem that way.
I find it hard to believe that there would be no facebook if Mark Zukcerberg was worth $15B instead of $30B, or no Apple if Steve Jobs had paid a few billion more in taxes. If money is the ultimate goal, then why are so many billionaires joining Bill Gates in giving their fortunes away?
During Eisenhower's time the top tax rate in the US was over 90%. We didn't become the Soviet Union, gravediggers didn't strike and innovation continued. I don't know if a 90% tax rate is necessarily socialist, but it wasn't the end of capitalism either. The idea that higher taxes stifle innovation is unproven and unproductive. If the super rich were willing to pay just 10% more, perhaps the super poor would have the opportunity to hold up their end of the deal as well. This real estate issue and the other symptoms of income inequality could become manageable problems instead of simmering conflicts.
I think I would probably draw the line at 50% ... if more than half of what you bring in is taken away, I just feel that's too much... That said, I would probably tax everyone at 50%, nuke corporate taxes, and ensure laws that ensure disbursements from companies to shareholders (that is then taxed, without exception)... from that, I would reduce military spending, cut most social services, and cut everyone a check for the same amount each month based on the revenues/spending.
Corporate person-hood, and corporate taxes don't really make so much sense.. I'd be in favor of limiting corporations, and pushing for disbursements to the owners... Limiting corporations from holding onto unutilized and under-utilized assets and capitol. Make it work, or give it back to the shareholders/owners.
I think that these things could really simplify legal/tax structures, and reduce a lot of government bureaucracy... Some people just wouldn't work.. more power to them. Some people will want more, and there will be competition in the workforce... I'd also be in favor of either open trade, or trade sanctions with countries that don't have similar environmental protection requirements to our own. Yes, that means that smart phones may double in price, but I think actions like that would help a lot more than simply putting up military bases all over the world.
It sounds so simple to have a flat tax, but actually it hurts lower earners disproprotionately because they are using a higher percentage of their income for living expenses rather than luxury. In other words, 50% of 50,000 per year is more difficult to budget than 50% of 2,000,000 per year.
Plus this whole issue of 'companies returning money to shareholders' is again only favoring the rich. It will be a long time before any significant portion of my income comes from dividends and capital gains. To make money in this way, you have to have a huge amount of capital invested already. Just to prove this point, if you made a very nice 10% per year before taxes on your investments, you would have to have 100,000 invested to make an extra 10,000 per year. If you are only making 50,000 per year, that would take a 20% contribution to your pre-tax retirement account for TEN years before you reached that level of invested capital. Sure, it would happen a little faster because of compounded interest and reinvested earnings, but I think my point is clear.
If you read carefully, parent included a stipend ("cut everyone a check for the same amount each month based on the revenues/spending"). Flat tax plus a stipend produces a progressive overall tax rate.
Edited to add: It's worth noting, though, that you can't produce every possible progressive tax rate curve with this method. It's certainly possible to prefer some curve that is unattainable this way. But a simplistic "a tax flat in dollars is regressive in utility" isn't applicable.
I always liked the basic income plus flat tax combination - simple and fair. Due to the means testing of various aid programs the tax system if often regressive and always confusing for low income earners. Exactly the opposite of what we should all want.
Well, different people mean things that are too different by "fair" to really treat it as an objective quality here without being more specific. But I agree that such a system has appeal.
First off, I mentioned a basic income (not by name, but implied by verbiage). Second The point of companies returning monies to share holders, is to simplify tax/business structures. The income given to shareholders as profit is then taxed at 50%.. not favoring anyone.. it's a straight across the board flat tax + basic income for every adult.
I'm in favor of a much simplified structure, applied evenly, as fairly as possible, and much smaller government needed to operate it. A lot of spending comes down to complicated bureaucracies, reducing those is a big step. Another benefit of a basic income, is it would allow the revocation of a lot of welfare and stimulus programs, and their own layers of corruption and bureaucracy.
I'm also in favor of cutting the overall defense and operations budgets by at least 2/3 ... There's a lot of ways the federal government could be much more effective, and reduce expenditures at the same time.
And although I don't know how much I feel it is the government's place, a baseline healthcare system could even be funded in a much better way than Obamacare. I tend to lean libertarian, but I'm a pragmatist. I just want solutions that are responsible, and have a chance at making things better, while avoiding as much chance for corruption and bureaucracy as possible. Not to mention reducing the footprint of the federal government, and reducing the impact of corporate protectionism along the way.
> Corporate person-hood, and corporate taxes don't really make so much sense.
Corporate personhood (as far as I understand) is required by limited liability, which makes a lot of sense to me. Separating a company's debts from the owners' debts (and preventing creditors from going after the owners of a company when it goes bankrupt) is very encouraging for new and small businesses. The debts of the company become separate from the debts of its owners. It encourages people to start businesses and take loans, not having to worry that they'd lose everything if their startup goes under (at least theoretically).
I mean, corporations should not be able to donate to political lobby groups, and campaigns. If an employee or shareholder wants to put their money in, so be it. Corporations should have very limited power, not treated like a person legally. You can have the protections you speak of without allowing political sway.
OMHO one of the biggest arguments for corporate personhood is they are tax paying entities... if you reduce corporations to only allow shared ownership and limited liability, while also limiting the holding of underutilized assets and capital, it would even out. I'm not talking about liability, I'm talking about holdings, taxes and political sway.
> I mean, corporations should not be able to donate to political lobby groups, and campaigns.
While I agree with the idea itself, I don't think you can prevent that realistically. In the end, it's not "corporations" that donate money, but the people in charge of those corporations. If those people (the CEOs, VPs, board members and so on) want to make a donation, they can always do so privately (and most of them certainly have the money to do it).
>>I think I would probably draw the line at 50% ... if more than half of what you bring in is taken away, I just feel that's too much...
I feel this is the heart of the issue, that people think of money and wealth as "mine" vs. "not mine." It's the whole American individualism at play, where it's you vs. everyone else, where you getting richer is a Good Thing, even if (or maybe especially if) it increases the gap between you and others.
Whereas a much healthier mindset is "mine" vs. "ours." You have money that belongs to you and you have money that belongs to your community. This community can be a neighborhood, a city, a state or even a country. Once you flip this mental switch, you realize that the taxes you pay are not really taken away from you, but rather shared with everyone in your community (of which you are a part).
It's easier to see where "my" money is going. I'm doing the spending. I don't however, have a clue, where "our" money is being spent. So why would I donate money to the cause?
True.. but in capitalism, if you earned something, it's yours... if you make two sandwiches for your son, does that mean you have to give one to the community? Why does the same apply to money?
I understand that taxation is necessary. I also understand that people like to keep what they earn. I draw this line at half... and I would draw that same line for the wealthiest (who bend current tax law to pay far less than half) to the poorest, who would recieve a basic income (along with everyone else) to subset the half that they earn and get to keep.
The top tax rates also do not serve as a disincentive to all types of investment and entrepreneurship.
For instance, consider Mark Zuckerberg. By and large, Mr. Zuckerberg will owe his taxes when he decides to cash out. But why should he cash out? An entrepreneur can build a multi-billion-dollar company up from nothing, earn a comfortable salary doing it, and as long as he is reinvesting all of the business's profits and not cashing out, not pay significant taxes!
"but semiconductors or light bulbs or the plumbing of e-commerce probably have to be developed by entrepreneurs."
Steve Blank's "Secret History of Silicon Valley" [1] reveals just how heavily the Silicon and other semiconductors in Silicon Valley depended on DoD funding, and SV likely wouldn't be where it is without that funding. Parenthetically, 'Secret History' is also just plain fun and fascinating to watch.
The plumbing of the internet exists because of DoD's ARPA (now DARPA) project to connect and share expensive computing resources.
Entrepreneurs may be part of the equation, but ignoring the significant government role in the technology we have seems likely to lead to wrong conclusions.
This reminds me of the claim that the NIH discovers most drugs in the US.
It is true that the NIH conducts basic research that often identifies biologic targets, but there is a huge difference between discovering a lead compound and actually bringing it to market. That difference is about $1B. That money has to come from somewhere and the free market is a great place to get it.
Just moved back to Sweden from the US and was surprised to see my income tax go down by 4-5%. I feared I had to take a pay cut by 25-30%, but with the lower income tax and 25% pension, I'm actually slightly better off now. The levelling difference is the 25% sales tax on pretty much everything except food and books.
It's not the military! America is extremely inefficient/bureaucratic in various mainline institutions. Military is %5 of GDP, health care is %17/%18 of GDP. A typical socialized medicine country like finland or canada pays about %11 of GDP for healthcare. If the USA brought health care to match socialized medicine costs, it would pay for the military plus more. Pretty much the majority of the USA's federal budget goes towards social security, medicare and medicaid.
Even though the USA pays the most in the world for it's military, I was surprised how little of the GDP it actually was.
>Finland is sometimes given as an example of a prosperous socialist country
It's poor example considering that Finland is not a socialist country, they have the same capitalistic economy and democratic government that US and most of Europe have.
Tax on real estate doesn't really work - see England/London: the council tax is simply imposed on the tenants (not even included in rent! has to be paid separately).
Although council tax is paid by tenants (as it's a tax on residents rather than owners) it impacts rents. The burden of council tax is thereby shared by both tenants and landlords.
Two similar apartments on opposite sides of the same street can have significantly different market rents just because they are in different boroughs, and those boroughs have vastly different council taxes. The classic example in London used to be Wandsworth vs. Lambeth.
Council tax, although based on properties, is meant to be a tax on residents, to put towards local services like police and rubbish collection. It was created after a previous tax (dubbed the 'poll tax'), which taxed each individual, regardless of the size of their abode, caused protests.
Window tax[0] also does not work. Driving around the country you will see houses with broken out or boarded up windows so the owners didn't have to pay the tax. The tax was repealed in 1851 but the damage from it can still be seen.
Because some people want to pretend that a village idiot is as valuable as an Einstein to society.
We are all drastically more wealthy than our parents and grandparents. We have it far better. But for socialists, this is not enough. They despise "inequality" and wealth.
Some people want to think that a village idiot doesn't deserve to live a miserable life because he is a village idiot.
You're certainly pulling a lot of strawmen here. Come to think of it, almost reminds me of Fox News. They have a habit of demonizing the other group, just to make themselves feel better.
Care to point out where exactly in my reply it was that I was demonizing him? I was drawing parallels with a news outlet that has a habit of engaging into similar misrepresentations of situations.
You're not demonising him as such, you're grossly misrepresenting what he wrote, presumably to further your own agenda.
The idea that he would think that a village idiot deserves to live a miserable life is entirely in your head, and quite at odds with the second paragraph of his comment.
I was trying to say that the inequality and "hatred" towards inequality and wealth(both claims unsubstantiated, with emotionally charged language)he is attributing to "socialists"(used as almost a slur in his text, also, wrong, social democracies are the wealthiest systems around) is in his head. You are the one misrepresenting my argument.
And just because we have it "better", doesn't mean everyone has at least a reasonable standard of living. Einstein should be earning a lot more, but a village idiot also deserves to not live in dire poverty.
"We are all drastically more wealthy than our parents and grandparents."
I doubt that is true based on inflation adjusted income. True, due to progress in science and technology, you have better medical care, faster computers, cars with more horsepower and Flatscreen TV panels.
But on inflation adjusted income, job opportunities, and retirement age and social security benefits the baby boomer generation was likely the peak. Trust me, the likelihood that we are just going downhill from now is quite high.
>They despise "inequality" and wealth.
Maybe. I despise Kim Il Song. He is wealthy and his country has inequality.
"We are all drastically more wealthy than our parents and grandparents. We have it far better. But for socialists, this is not enough. They despise "inequality" and wealth."
Only if by 'we' to mean the top 20% of American society.
Moreover, inflation has been uneven: food (including in restaurants) and electronics have plummeted, but the costs of education and healthcare have skyrocketed, and housing has skyrocketed in areas with good job opportunities. It's easy to cut back on new electronics and restaurants, but a lot harder to cut back on housing and healthcare. Cutting back in education gets your stuck in a poverty trap.
So things don't necessarily look so bright for the median worker, especially after 6 years of persistently high unemployment.
I can't dig up a source for that part right now, but it's out there in the CPI statistics.
"The median worker's wages have been essentially stagnant since 1970"
This kind of language is exactly why you think only 20% of Americans are wealthier than our parents and grandparents. Money ≠ wealth. Compare the number of people today who have access to washers, dryers, irons, microwaves, a kitchen, cars, cell phones, and so on to previous generations. Even if wages have remained stagnant the average standard of living is almost always increasing. You can even live in an apartment, own many or all of those items I listed, and still be classified as living in conditions of poverty.
I'm not saying poverty doesn't exist. But I am saying the definition of poverty is constantly being adjusted because humans are so great at creating more wealth. Instead of an absolute metric for poverty or a standard of living, we use a subjective one that changes as humans acquire more wealth.
If you haven't already, I'd highly recommend Paul Graham's essay "How to Make Wealth"[1]. He covers this subject very well.
Because people think its bad, and it feels unfair. People don't need any better reason to try to address it.
Fundamentally, wealth can only be created against the backdrop of social order. If you gave Zuck $10 million, far more capital then he started Facebook with, and sent him to Somalia, he would not be a billionaire today. He would've been killed and his money taken. Any business he built would've been taken from him. Because he's not skilled in war, and without social order that's the only skill that matters.
Each person equally contributes to the social order, and therefore each person has equal say in the structure of that society. That's the basis for liberal democracy. If people feel that inequality undermines the social order, they are entitled to do something about it.
If people feel that inequality undermines the social order, they are entitled to do something about it.
Sure. But if they're proposing cures worse than the disease, we should try to talk them out of it, not just play on their feelings of "unfairness" to win political battles.
Inequality is the offspring of transcendence. I guess it's human nature to be jealous if superiority, hell I get jealous of friends, but most of them deserve what they have. People like to pick on the rich kids as the pinnacle of inequality.
- What other solutions to the problem of wealth being used for political influence have been proposed?
- Would lobbying/fundraising reform be a better focus, rather than attempting to make everyone, regardless of their contribution to the economy, have equal amounts of wealth?
- When was the last time nationwide wealth equality was proposed? What were the results? What about previously? What about before that?
I think the policy is intended to harm rich people rather than benefit poor people. "I want to see my enemy suffer" rather than "I want to make my side better". That could be done with a basic income or similar policies, and could easily be paid for with normal taxes on income. It would also redistribute wealth over time.
Sorry to be blunt, but that's how "supply and demand" is really supposed to work. If Seattle supplies the same quality of housing for half the cost of San Francisco, buyers/renters should flock to Seattle, thereby reducing demand in SF and eventually causing SF housing prices to come down until the market finds an equilibrium. Trying to lobby for "below-market-price" housing is always going to be a losing game; the only long-term solution is to make the market price lower.
Unfortunately, competition among cities to attract residents is not like competition in other industries. A lot of people are stuck in a relatively small geographical area their whole lives due to employment, their children's education, various kinds of emotional attachment, and the sheer difficulty of uprooting themselves from a familiar neighborhood. This creates a captive market, severely limiting the effectiveness of inter-city competition. And of course, whenever there's a captive market, there's somebody who profits from it. In the case of SF's housing market, entrenched neighborhood groups and "below-market-price" renters enjoy benefits at the expense of newcomers to the city. Perhaps they actually deserve those benefits. Still, it's unfair to everyone else.
But there's one group of people who can afford not to be bound by the usual excuses that keep people stuck in a captive market. That's us, the techies. We don't need to be in any particular city in order to write code. Most of us are young and don't have kids. Few of us have any "root" in the Bay Area, so we couldn't care less about being uprooted [1]. There is no reason for us to be a part of San Fran's captive housing market. We can pack up and leave, all 8% of us if possible. That would be "supply and demand" doing its work.
Of course, there are a few problems with this proposal, including the fact that there really is such a thing as social networking of the offline kind. The Bay Area undoubtedly has one of the best tech "scenes" in the world. But I see it as a problem that needs to be fixed, not merely an advantage that we're free to exploit. HN, for example, requires everyone to move to the Bay Area, perhaps for a good reason. But in doing so, they directly contribute to, and exacerbate, the hideous distortion of the Bay Area's housing market. It's like mandating that everyone meet at a particular Starbucks. It makes sense when everyone you want to meet is already a regular of that Starbucks, but when the manager of Starbucks begins to take advantage of its captive clientele, you should seriously start considering an alternative.
Remember, the only vote that the market respects is a vote with your feet, i.e. a realistic threat to do business with a competitor.
[1] Disclaimer: I've lived in at least seven different cities in three continents, and harbor no particular emotional attachment to any of them. Apparently I'm incapable of developing an emotional attachment to geographical coordinates. But I must confess that I kinda like it that way.
The reason to live in SF is to take part in its vibrant culture. That's why people live there and take the busses to the boring parts of the peninsula.
There is high demand for what the city offers.
There's also high demand for face-to-face meetings with people to assess and establish trust. There is no replacement for that, and why experience tends to cluster together, whether tech here, or entertainment in the South.
That is true, and it explains why demand is higher than it would otherwise be. Since California generally tries to restrict supply through zoning laws, it's no surprise that prices are increasing. The Bay Area does more to restrict supply than the rest of California.
Where I disagree is that I think of those things as having two faces. On the one hand, a vibrant culture and a large group of trustworthy colleagues increase people's quality of life. On the other hand, they reduce mobility, distort markets, and therefore reduce people's quality of life.
And the hacker in me wonders whether it might be possible to reduce the negative side while keeping most of the positive side.
I live in Santa Clara, but I still get to access the city's culture on weekends -- music, theater, cuisine, et al. Many techies don't even get off their shuttles until 7pm or more, so I wonder how many actually partake in the local culture on weekdays, and how many eat and then sleep.
I suppose if you're in your 20s and without children, it makes a bigger difference, but I find I don't often have the time to do anything until the weekend anyway, and so there would be little use paying high rents when 60% of the time, I'm just crashing there and spending all my time elsewhere.
The Caltrain stops at midnight though. Make sure you don't have too much fun and stay out late or else you'll miss your transportation back. Driving is too unsafe and gets tiring as well due to distance and parking. Somehow, the majority of residents in the bay area are okay with this the status quo.
We're not okay with it. We just have to put up with it because the entire system is ridiculous. Seems like ridesharing services are one of the ways we've attempted to deal with it. I can envision in the future private weekend shuttles that ferry partygoers from S.F. to other places, so people don't have to deal with the terrible parking situation in the city, and the fact that BART and Caltrain stop far too early.
Vibrant culture requires a critical mass of arty types, though - people who are highly sensitive to rental prices and uninterested in commuting. SF is a lot more epensive now than it was when I moved there in the mid-90s; back then you could throw a cosy little rave party for $500 or rent a small apartment for $1000/month.
Yes, that's me. I work for a SV company but you'd have to pay me a LOT more for me to actually move and live down there. Remote work should certainly be a part of the solution to this SF housing crisis.
Unfortunately the tech sector is fairly well paid so we are the least likely to move since we will gain the least from a move, whereas middle-income wage earners will gain the most from a move since they'll be able to afford rental units that won't cost them 90% of their monthly wages. The middle-wage earners are significantly less mobile since their profession is likely to be deeply rooted in their current location. They are feeling much more of the pain than people in the tech sector.
Most of us in the tech sector are young and single and least likely to go house hunting, so the expensive housing is painful for us, but probably affects us the least.
The difficulty in development makes it not supply-and-demand. If it were pure capitalism SF would be filled with skyscrapers and the much beloved homeless people would be sent back to Detroit.
I agree with much of what you've said. I've lived in the bay area for 7 years, and SF for 3. I like a lot of the people here. I like a lot of the companies here. I like the weather. But if I had no obligations, I would move tomorrow. I've lived in a half-dozen states and two countries. The state and local governments here are the second-worst I've lived under.[1] SF is unbelievable. There are insane violent vagrants roaming around Market street and the Tenderloin. MUNI is a nightmare, and BART is noisy enough to cause hearing damage.[2] Almost any public area is extremely dirty. One can't walk more than a block without encountering the smell of waste.
The biggest thing preventing tech workers from moving is that some interactions simply must be done in-person. Often this requirement is due to culture, not technological limitations. Still, there are significant advantages to in-person interactions. People are much more likely to pay attention to each other. There can be interesting and beneficial chance encounters. And of course, the likelihood of anything getting recorded or leaked is lower.
I think that as remote work becomes more feasible (both technologically and culturally), more tech workers will move out of the bay area. There are simply too many incentives to leave.
1. The worst being Guam, which couldn't keep electricity running for more than 12 hours a day. Great beaches, though.
2. Oh, and who had the bright idea to put cloth seats on BART? That person has probably caused the spread of more disease than Typhoid Mary.
Speaking of trains, the west coast really needs high-speed railways.
After all, teleconferencing all the time is not the only alternative to everyone living in the same city. People could actually travel for important meetings from time to time.
A best-of-the-class high-speed train (300mph+, not the pathetic 200mph version they're talking about) should be able to get you from Portland to SF, or from LA to SF, in two hours flat. Even better, you'll be able to work during those two hours.
I was surprised to find out (in 2009, may have since changed) that there wasn't a daily train between SF (and surrounds, pop 8M) and LA (and surrounds, pop 20M). I had to get a bus to Bakersfield before I could hop on a train.
That's mostly a problem with the terrain geography in the area (trains can't easily cross the grapevine without a tunnel underneath it or a much longer travel time).
My Bakersfield train ended up in Oakland, and I had to get the bus over the bridge to finish the journey. There didn't appear to be a train direct from LA to the same location. Again, this was a few years ago, so things may have changed. Or it may have been seasonal.
I wonder what would happen if the tech industry giants pooled their resources to build a metropolis elsewhere, wherever they could found a county and just go to town without restrictions on building height or whatever.
And then they could uproot their workforces (and if you took the combined employees of Yahoo, MS, Google, Apple, AOL, Facebook, etc, you would have moved the employee base) and move there, it would probably be the most futuristic city on the planet.
I mean, they wouldn't - or they already would have - because it isn't economically feasible. But that always comes off as a buzz kill since we just end up trying to grow new businesses like cancer into the ancient ruins of lost revolutions we call "historical preservation".
Yeah, there's nothing more appealing than creating a nation of geeky males in their 20s. You know what dating down in MV is like? Well, that'd be way worse.
You realize that's not going to work, right? Besides, California isn't a lifeless chunk of rock with no economy and roving bands of killer robots. It's "ruined" in the sense that it's trendy to hate on Californians, Texans, New Yorkers, and anyone from "not here."
Who knows, maybe the ex-Californians will vote yes on Prop 1 so we can keep our buses.
I didn't know that Texans were on the move. I thought that there was an influx of Californian/New Yorker exiles moving to Texas and the rest of the southwest.
> I've lived in at least seven different cities in three continents, and harbor no particular emotional attachment to any of them.
That does help explain why you see locations as essentially fungible. :)
> Apparently I'm incapable of developing an emotional attachment to geographical coordinates.
There's coordinates, and there's community. Places become keys for personal/shared experiences and history, people build up neighbors and networks that provide society, help mitigate risk, and introduce opportunity (and the fewer resources you have, the more important that is).
> We don't need to be in any particular city in order to write code.
Certainly not to write code. To raise money, on the other hand, it seems to be pretty advantageous. Whether that's about dev convenience or VC convenience, though, is probably a key question worth exploring.
The larger point about making other choices than the Bay Area is one I'm very on board with. There are times I wish I lived there and opportunities that have tempted me, but it's also clear to me that SF and the Bay at large have some structural problems and don't have good policy for protecting/fostering the stuff that's important about communities. For the most part, I've chosen to move in other orbits and it's been rewarding.
Yeah, I'll just pack myself up, pack up all my family, including people who are sick or disabled, then pack up my career and my employer and shuttle 'em off to some low-cost area so I don't have to pay SF's absurdly inflated real estate prices. Sounds great and ENTIRELY realistic.
Well, aside from the strawman about somehow convincing your employer to move as well, then that IS more realistic that paying SF's absurdly inflated real estate prices, yeah. The alternative is for you to use the power of the government to prevent all the people who want to move into your neighborhood from doing so, is that fair and realistic? Some people think so, but I disagree. That's just telling one group of people that they can't do something in order to prop up the lifestyle of another group of people.
You have the freedom to choose someplace affordable before you move there. Telling someone who's already been living in SF, with roots dug in, maybe owns some property or has a long-term job there to just up and move is incredibly selfish. Moving is incredibly expensive.
The problem is not the new people moving in and the solution is not to stop them, the solution is to address the pressure those new residents create that is driving the old residents out. Entire families shouldn't be uprooted and have their lives thrown into disorder just because some twenty-something wants to live in SF for a year or two while they're working at a startup, and that twenty-something shouldn't have to practically evict some low-income family to find an apartment.
It's called supply and demand. It's called life. Things change. The world doesn't revolve around families that "shouldn't be uprooted and have their lives thrown into disorder".
If those families wanted to be able to stay there permanently at a fixed rate of housing expenses, they should have purchased the property. Can't afford to buy? Then deal with the risks of renting.
Their desire for low rent that keeps them comfy and entails no inconveniences has no validity. That's just a wish. That's immature. This is not grade school and not everyone gets a trophy for simply showing up.
Seattle rents are also going up quite a lot, and there's also quite a furor about rents here.
There's a LOT of upper-end housing supply due to come in soon - tens of thousands of units. Amazon is taking a lot of heat about it, since they chose to build in the city and their workers usually do as well.
I love the Mountain View burrowing owl reference. Here's a '96 usenet news article I posted about the endangered burrowing owls I would bike past every day in Mountain View. It just happened to be right where SGI was about to build their new HQ, and is now the heart of the Google campus. I had just moved to Silicon Valley from Canada when I posted this....
i find it interesting that there's always such willful disregard for analytical inclusion of los angeles, the 2nd largest city/metro in the US, with a housing market that dwarves all other metro areas but new york.
los angeles leads the nation in out-of-whack median rent/median income ratios. what does that suggest to me? that it's one of the last of the major US cities with poor and lower-middle class people living in it.
“Increasing the supply is not going to increase the number of affordable units; that is a complete and utter fallacy,” said Jaimie Ross, the president of the Florida Housing Coalition.
As the article explains, the reason is that builders are going to prefer to build "luxury" units to "affordable" ones. So having a whole bunch of construction is not necessarily going to lead to anything affordable. A construction boom may bring the high end rents down a little bit, but they'll still be out of reach of most people.
Reasonably regulated market where people are free to pursue economic opportunities but with oversight that protects the underclass and underprivileged?
We have a reasonably regulated market. What we don't have is a system where people get to live where they want to live without regards to what they can afford.
SF renters need to back up the U-Haul truck and find new places to live where they can afford it. They are not "entitled" to live in SF simply because they want to.
The problem is, you're asking people who've lived in a place for generations just to up and move because yuppies want easier access to bars and fancy coffee shops. Surely you can understand why this isn't so simple, I hope.
People who have roots are getting uprooted because they declined or couldn't get in on the sweet tech boom dollars. A lot of the locals are pissed.
I live in Brooklyn, and I live in a part of Brooklyn that really, if they figured out I worked in Tech, I wouldn't be shocked if they showed up with torches and pitchforks as a warning to others.
I understand the problem. I just don't give it any validity. The renters think their wishes and desires to live in a specific area are more important than other people who wish to live in that same area. It comes across as immature and whining.
It's not just renting. It's income as well. There are lots of folks whining about how others make more money and how that "isn't fair". It's a broad theme of people complaining and having a sense of entitlement.
you don't think it's unfair that a landlord can upend your life and make it complete hell just so they can get tenants who are willing to pay more?
This isn't about moving, this is about completely changing lives. How to get to work, who's in the neighborhood, what's the neighborhood flavor like... it's more than just "living in a specific area" it's about living life.
Income inequality is another issue all together. No, it's not fair that a fast food joint has the guys who flip burgers and run the cash register do all the work and get literally the least amount of money the business can legally give them. And yes, they could just go look for other jobs... if there were any. In a lot of places, there just isn't other work. For others, their particular field may have been decimated. A friend of mine was a bar certified lawyer in corporate finance. ... when he graduated in 2008.
Yeah. life isn't fair, and maybe part of it is roughing it. But another part of it is also recognizing that the system has been inadvertently rigged towards the relatively wealthy and hyper wealthy.
There's reasons why there are protests in the streets of the Bay Area, and tone deaf responses like this are one of them.
An actually affordable unit may be one which was constructed to appeal, marketting-wise, to someone making $100,000/year, and instead is sold for a somewhat lower profit to someone making $60,000/year, because there are fewer $100k people than there are $100k units. "luxury" and "affordable" are in quotes for a reason: the difference is language, veneer, and floor tile, which are trivial expenses relative to the location-scarcity of the land & permits. A $3,500/month rental unit in SF might sell for $70,000 in suburban Cleveland with an identical interior.
LA is full of people working low-end jobs (e.g. waiting tables) while they try and break into the movie business. So I'd expect a pretty weird income distribution where the median doesn't necessarily reflect everything that's going on.
I think this quote really nails the mentality in the city:
> As political scientist and longtime San Francisco observer Richard DeLeon puts it:
San Francisco has emerged as a “semi-sovereign city” — a city that imposes as many limits on capital as capital imposes on it. Mislabeled by some detractors as socialist or radical in the Marxist tradition, San Francisco’s progressivism is concerned with consumption more than production, residence more than workplace, meaning more than materialism, community empowerment more than class struggle. Its first priority is not revolution but protection — protection of the city’s environment, architectural heritage, neighborhoods, diversity, and overall quality of life from the radical transformations of turbulent American capitalism.
> protection of the city’s environment, architectural heritage, neighborhoods, diversity, and overall quality of life from the radical transformations of turbulent American capitalism
...and ironically creating some of America's highest market rents in the process.
Sure it's semi-ridiculous to frame this in terms of left "progressivism", especially as the waterfront battles are being fought by rich people who live in skyscrapers who do not want other skyscrapers blocking their views.
But I think the sentiment is broadly popular because it gets the heart of why people fall in love with San Francisco. It's not just the community (whatever community), it's the housing stock, the 'perfect' density, the hills, the views, the shops and restaurants, the smell of the air. That's what makes San Francisco San Francisco. One hundred years ago, Los Angeles looked a lot like SF. But they replaced 90% of the victorians, they flattened the hills, they built freeways everywhere. San Francisco was spared that, largely because the people fought back, and now the people want to fight to preserve what was saved.
I'm of mixed-feelings about it. The Bay Guardian always warns of "Manhattanization", but the alternative endpoint is turning into a huge version of Carmel By The Sea.
I guess my problem is I rather like Manhattan and if rents got cheaper in the process it seems like wins all around to me :-)
I understand that other people don't feel that way, but at the same time I think if people were told the choices, which is basically Manhattanization and $1500/mo rent or stay the course and pay $3k/mo, people on the whole would pick the former.
But because it's framed in terms of 'preserving our heritage', it's easy for people to wishfully think that they can keep things the same for free.
Keep in mind this didn't just start up when Twitter moved into town. It's a long war that has been fought for 50-60 years now, and the preservation forces have won nearly every battle and aren't planning on surrendering.
I upvoted kijin's comment. If you want to build another Manhattan full of gigantic buildings with computer cubicles and tiny apartments, do it in LA or somewhere, because it's probably never going to happen in SF.
Is this really what would happen? I guess if they could mass produce them all at once it might. But it seems like every new condo or apartment building that is built in SF is more expensive than everything else already available.
New construction is unlikely to push down rents anywhere in the current market environment in SF. But it does limit upward pressure on rents elsewhere. The bigger supply also is likely to lead to big price cuts during the next crash.
And new construction becomes old within a few years. There are plenty of perfectly serviceable condo towers of unfashionable age in downtown Chicago with very reasonably priced apartments.
The problem is that they are rent-controlled. The article actually states that those newer properties are majority market-based. The gap between the market rate and the rent-control rate actually increases. This puts pressure on landlords to increase rents for these rent-controlled tenants using 1 of the 8 means prompting evictions. This is what is causing the unrest, despite allocating a significant percentage of new developments to affordable housing.
The standard NIMBY-ism is "Yes, please Manhattanize and lower rents! But not in my neighborhood, do it in other parts of town". (repeated by all residents of the city)
Just look at BART. Very popular in the polls, approved in a landslide, dismal ridership. Why? Because everybody thought that other people riding BART was a great idea- they had no intention of riding themselves.
Your BART example is the opposite of NIMBY-ism: wanting/allowing something in your back yard that is not used by you.
NIMBY-ism about BART was manifested by the peninsula towns, which refused to allow BART in the first place (due to misguided fears of easy access to their towns by transients, potential criminals, etc.)
It's still the NIMBY-ism mentality though. "I want this change, and I want other people to bear the brunt of it", i.e. other people will be the riders.
How are the riders, who willfully chose to do so, some how bearing the "brunt"?
As opposed to those whose homes and businesses were Eminent Domain'd to make way for the construction, their nearby neighbors who now have loud above-ground train noise beginning at 5am, etc.
By being the ones to make the lifestyle change and travel by public transit. Sure, public transit isn't torture, but the point is person A is always eager to volunteer person B for change that benefits person A. (And person B feels the same way about person A)
Also, I doubt much eminent domain was exercised/abused during the construction. Have you noticed the way the tracks weave, go underground here, run in the middle of a freeway there? Terminals in the outskirts of town? They certainly exercised that power, but it's not like BART runs right through the middle of town.
SF would really only need to build up to the density of Brooklyn to house everyone reasonably, no need for Manhattanization (at least for a few decades).
No, not really - the prevalent winds are from the west, and to the west is half a world of ocean. Pretty much any pollutants from SF itself are going to get blown east in short order.
Of course, they have a fog problem, but that's a different matter!
I've lived here 10 years and there has been smog for 2 weeks of that time (during the mega drought this winter, when there was no wind or precipitation for months straight).
The air in SF is very clean. The prevailing winds come from the very-wide pacific ocean and blow all the pollution across the Bay into Oakland and Berkeley.
It does however have a fog problem, because those nice clean prevailing winds are quite cold and moisture condenses rise when encountering the hills along the coast. This is in fact the major source of water for the coastal giant sequoias.
"Coast redwoods (Sequoia sempervirens) are distributed along a narrow band of California's northern coast. During the summer these red giants take advantage of the fog to capture water out of the air—and summer is the critical growing season for the trees, despite being California's dry season."
Los Angeles is the California city that is known for its smog problem. The US is big, so its easy to get the various cities confused.
It doesn't help that California is huge. San Francisco to Los Angeles is a 381 Mile (613.16 km) journey... which is 20% longer than the distance between Paris, France and Amsterdam, Netherlands.
Its merely a means for the very rich to protect themselves. They simply limit who can live near them by dressing it up in fancy sound good, do good, terms. Protecting the environment, protecting history, and all, is just nice speak for keeping people we don't want away.
As to one highly rated post about the benefits of socialism, it never has or will work. Socialism and capitalism are little different in the end, the first merely concentrates wealth and power in the hands of politicians directly, the later just adds another class that benefits.
> Protecting the environment, protecting history, and all, is just nice speak for keeping people we don't want away.
I think this is a pretty groundless claim. San Francisco has been one of the most tolerant cities of alternative lifestyles and even homeless people compared to any other American city.
It's easy to claim that the rich just want their gated communities, but if you can't even address the claim that they want to preserve the existing quality of the city without claiming a hidden ulterior class motive then how are we supposed to have an honest dialogue? You can't just unilaterally declare a whole group of people to be lying about their motivations and expect anything productive come out of it.
Someone better educated than me, please comment, but this sounds something like Paris. The old section of Paris has a great deal of law protecting its preservation. Would it be progress to tear down the Eiffel tower, or the Arc de Triomphe?
When it was first built, the Eiffel Tower was decried as destroying the beauty of the city. And the Etoile of boulevards radiating from the Arc were built as part of one of the biggest demolish-all-the-history public works projects of all time.
If those laws had been on the books in 1850, or if the Paris of that time had subscribed to modern-day SF's change-nothing philosophy, the city you love would not exist in anything like its current form.
This seems like a perfect example of the adage that "Europeans think 100 miles is a long distance, Americans think 100 years is a long time." Those particular Paris icons are extremely recent, relatively speaking. If Paris's timeline were fit into that of San Francisco, the Eiffel Tower would have been completed in 2001.
The fact remains, much of the Paris we love today was only made possible by their willingness in the 1800s to tear out so much of their history and build something better.
Yes, but the Etoile neighborhood is rather sterile if you ask me, with the big streets and lack of businesses. There is the Champs-Elysee with car dealships and over-priced cafes, and then the other boulevards with embassies and high-end apartments. It's all pretty and well done, but who's to say it wouldn't be a vibrant, diverse older neighborhood like the Marais if they'd left it.
> Sorry, this isn’t a shorter post or that I didn’t break it into 20 pieces.
Sorry, I didn't read it because you're a lazy writer who can't be bothered to consolidate the piece into a cohesive, easy-to-digest narrative. Oddly enough, I should be fish in a barrel, -- a mid 20s moving to SF for career; yet you couldn't take the time to work on maintaining my attention for more than a couple bullet points. The hilarious part is that you self-righteously reject that which you ultimately give in to, ("sorry [...] that I didn’t break it into 20 pieces") presumably under the continuing theme of "look at me for being better at not being better than people."
So yeah, sorry I didn't read. Let me know how your blog post does.
This is by far the most comprehensive overview of the Bay Area's messed up development priorities I've seen in one place. Kim-Mai Cutler does a great job stringing all the threads of the housing crisis together.
I don't think San Francisco can build its way out of outrageous rents alone. The other cities in the Bay Area need to step up and provide the type of urban housing close to transit that people want. No more surface parking lots next to train stations.
Agreed -- an amazingly good piece. I doubt that many will actually read all of it, but if you're curious about why San Francisco is in the state it's in, Kim-Mai Cutler gives you no excuses for not educating yourself.
Also, for those that believe there is no alternative: the East Bay remains the best kept secret in San Francisco. When we moved here from the City for schools, we were braced for a let-down -- but having been here for six years, we know now that we will never return to the City, even when the kids are grown and gone...
Sssh. The last thing we need is the SV army marching over here and ruining our half-priced rent, real cultural/economic diversity, better food/weather/everything, etc. Sssh.
Crap -- you're right; sorry. Never mind, everyone! It's terrible over here -- crime is even worse than they say (I'm writing this while being carjacked), the cities can't function (two Occupy protestors have been camped on my front lawn since last year, and 911 redirects me to a recording), and the commutes are horrific (I have started working the graveyard shift just to avoid traffic). So save yourselves -- stay in the West Bay!
That would be limited to west oakland which has always been extremely politically insular (tied up in racism and racial politics from last century). The east bay at large, especially the suburbs, is quite welcoming to tech and success.
And yet the residents of Istanbul (and New York, London, Tokyo, Paris...) don't go around thumping their chests with superfluous capitalization of the word "city".
Having only lived in the SF Bay Area for a few years now, everyone I know that lives in the SF Bay Area refers to San Francisco simply as "the city". They say things like "I went to the city this weekend", etc. So while I agree with the silly capitalisation, I also think it's a losing battle.
It's also not a behaviour unique to the SF Bay Area; when I lived in a fairly rural area (pop. < 10K spread over quite a few miles), the largest city nearby was often referred to as "the city" by everyone that lived outside the largest nearby city (which was Kansas City where I lived).
Oh, brother. I -- like everyone else in the Bay Area -- also say "the East Bay", "the Peninsula", "the North Bay", "the South Bay" and "the Central Valley" -- even though all of these things are just nouns with minimal adjectives that aren't unique to the Bay Area. (Hell, even "Bay Area" isn't unique to the Bay Area.) So yes, I (again, like everyone around here) say "the City" -- and I know that New Yorkers and Londoners and many others say the same when they're talking about their burg. But this story wasn't a story about New York or London or whatever -- it was about San Francisco, which to me is the City. And if you can find it within yourself to abide my my use of the City in this context, I'll return the favor when we're talking about where you live by letting you refer to it as you do!
Geographic regions should be capitalized when they refer unambiguously to only one place. A capitalized "the City" implies that "the City" only refers to San Francisco, which is pretty pompous to many other people around the Globe.
If this were a Bay Area-only forum, however, it would be justified, as "the City" is pretty unambiguously SF within the Bay Area.
It's weird; I grew up in a San Jose suburb and never once heard of San Francisco referred to as "the city" or "The City". I heard "Frisco", of all things, and "SF", but never "the city".
Agreed - great reporting. Well researched, objective articles like this are very rare even on subjects as fascinating as this. Surprised to see it in Techcrunch - seems more like something you'd find in the New Yorker.
The solution won't come from the region (i.e., more Bart station apartments in Dublin will not solve The SF problem). Now Oakland...that's a different story since the Bart ride between the two downtowns is a mere 12 mins or so. Now if only Oakland can solve its historic racism and negative perception problems and, therefore, get projects funded by the banks [pause for bankers' cough]. Not to get (more) political...but prop 13 makes all that NIMYBYism possible (and economically feasible when they sue to hold up projects). Oh and it encourages people to keep their homes even when they don't live there and rent them out because rents are rising faster than the property taxes. Just saying
BART apartments in Dublin aren't replacements for apartments in San Francisco, but they would help workers get to work quicker, blunting displacement issues (Imagine riding the bus three hours a day for a $10/hour job.)
However, a vibrant downtown Mountain View with transit-oriented development at the Caltrain stop would be a good replacement for at least some of the tech industry people who commute down from SF now. But that train station is a parking lot.
I think that SF's proud antiquity is coming back to bite it. The older generations fought against development for decades, now the demand for property is so high they can't afford to live here anymore.
One of the things the article addresses is the fact that other communities need to build affordable housing, not just SF.
I for one am going to speak to some local political figures. If you live in any city in the SF bay area, you may as well do the same. Write a letter. Express your interest in the creation of apartments in the city. Because if you build housing in the area, people will live there.
Almost every city in the Bay Area has a range of affordable housing programs - from public housing to income restricted rentals and ownership opportunities to rental and purchase assistance programs. Some are federal, some state, some local and many are operated by non-profits.
Just search for the city and "affordable housing".
And yet rents continued to climb, even between the dotcom bubble and the recent boom, when there was a downturn. plus many programs have a gap between abject poverty and the working poor/lower middle class americans.
Lower rents and increased availability benefit almost everybody.
Just to play devil's advocate here, what if affordable housing diminished? Would the higher rent prices put pressure on employers to raise incomes and salaries? It seems right now affordable housing is for employees who receive minimum wage. These employers are paying artificially low wages for the luxury of having their business in the Bay Area. If these employees had such a living wage, then they could find market rents that they could afford. They might have to commute longer than they currently do, but so do the infamous tech workers. More than enough of tech workers who are making 6 figures are commuting more than an hour. It might be in air-conditioned buses with wi-fi and door-to-door but once again this puts pressure on the transportation agencies to step up their games to support more travelers.
"But this paper conflates correlation with causation. He argues that when there is a decline in new housing units, there is also a decline in price."
I knew this was going to happen: people have heard a trite sound-bite about "counter-intuitive" statistical logic so many times that they ignore that correlation is usually a pretty damned good signal for a causal relationship.
To wit: of course there's a correlation between price and new housing units -- because it is causally related. When prices go up, developers have greater incentives to build. More importantly, in a city with as high a density as San Francisco (and yes, folks, it is dense -- the second-densest city in the US, in fact), with as many architectural challenges (seismic, geographic, etc.) the limiting factor for new construction is land and materials, not red tape.
Nobody wants to hear this, but it's true. The fixed costs of building here are so high that developers won't do it unless rents go up. That's why new construction costs upwards of $4k for a 1-bedroom unit, and why new construction in SF doesn't place any real downward pressure on rents -- except (perhaps) in the very long term. At best, you're treading water. Developers don't build into a falling market.
But really, the best response for the people who keep asserting that "building up" is the magical solution is to point to Manhattan: it's the densest city in America, yet it's just as expensive as San Francisco, if not more so.
There are no magic bullets. San Francisco is expensive because there's a lot of money chasing a tiny little bit of land. You don't need a dissertation to explain it.
To quote XKCD #552, "Correlation doesn't imply causation, but it does waggle its eyebrows suggestively and gesture furtively while mouthing 'look over there'." :)
You can't just hand-wave away red tape as a factor. If you read the whole article (granted it is ridiculously long) she points out that SF has one of the greatest divergences between building cost and housing cost. That in most markets building cost approximates housing cost but in SF housing cost is 140% above base housing costs. That is the cost of zoning and other red tape.
While developers may not build into falling markets it it disingenuous of you to say that additional housing stock at market price doesn't help, where do you think the people occupying those shiny new market-price rentals would go if they were not there, I'm guessing not Oakland...
I think you are mistaking rising rents for lack of downward pressure. It's possible to have both at the same time as long as the influx of people exceeds the growth in supply.
"You can't just hand-wave away red tape as a factor...in most markets building cost approximates housing cost but in SF housing cost is 140% above base housing costs. That is the cost of zoning and other red tape."
I read the whole article. The source she cites for that factoid is an article that excludes apartments from its analysis. It deals only with single-family housing. Oops:
I've also read a whole bunch of other stuff on it, and it doesn't agree with the assertion. An example of what architects and developers have to say about it:
The biggest consistent complaint that I read from developers is subsidy for low-income housing, which is onerous, but still only 12%. This guy suggests that average bureaucratic costs are ~30%.
"where do you think the people occupying those shiny new market-price rentals would go if they were not there, I'm guessing not Oakland..."
The article has a table that points out that SF has built something like 200% of the anticipated demand for high-end construction. If that's to be believed, the answer is: they'd be just as empty as they are today.
No need to hate on Oakland. Crime has gone down and gentrification has definitely occurred there as shown in the article. A 40% decrease in blacks has changed the ethnic landscape thereby changing the diversity in another bay area city.
> the limiting factor for new construction is land and materials, not red tape.
I strongly disagree. Land and materials aren't creating 3 story height restrictions close to mass transit.
> the best response for the people who keep asserting that "building up" is the magical solution is to point to Manhattan: it's the densest city in America, yet it's just as expensive as San Francisco, if not more so.
If Manhattan had tried to stop new construction at all costs or limit the height of new building for the past 30 or 40 years, do you think prices there now would be lower, higher or about the same as they are now?
Thank you. I think people are far too quick to imply every problem is caused by bureaucratic over regulation.
Manhattan is also the counter example that always comes to mind for me. If you have a lot of relatively well off people chasing the same thing the prices are going to be high no matter what.
Urban rents generally only come down if the economy crashes or an area becomes undesirable (i.e. a lack of people people willing to pay the prices).
I would love to see examples of an urban area (i.e. not a suburb) where rents went down MAINLY because of building new units, even while demand and the economy remained strong.
> with as many architectural challenges (seismic, geographic, etc.) the limiting factor for new construction is land and materials, not red tape
Are you kidding me? There are plenty of other cities in seismically active regions where they've built upwards with great success. All of you people who blame earthquakes for SF's inability to build upwards should put your money where your mouth is and get rid of all the red tape - then we'll see what really happens.
> But really, the best response for the people who keep asserting that "building up" is the magical solution is to point to Manhattan: it's the densest city in America, yet it's just as expensive as San Francisco, if not more so.
Wow, how is it that so many people forget basic economics whenever the topic of Bay Area housing comes up? Prices demand both on supply and demand. You are making the (false) assumption that demand is the same in SF and Manhattan.
"Wow, how is it that so many people forget basic economics whenever the topic of Bay Area housing comes up? Prices demand both on supply and demand."
Excellent question!
Because "supply and demand" is a lot like "correlation does not equal causation" in the lexicon of internet debate: most people are parroting something they heard once but don't quite understand.
The econ-101 supply/demand curve requires a perfectly competitive market for a homogenous product -- neither of these applies to the SF housing market. The products are not homogenous, and the current landowners have dramatically more influence on the prices than the consumers.
So yeah, how is it that so many people forget basic economics? And what does it have to do with housing prices here, anyway?
> Because "supply and demand" is a lot like "correlation does not equal causation" in the lexicon of internet debate: most people are parroting something they heard once but don't quite understand.
While I admire your attempt to recycle the "refute a commonly used argument on the basis of its commonality" strategy, that simply doesn't cut it when you're making fallacious claims.
While you can try making dubious arguments regarding economics, you can't hand-wave away the fact that buildings in SF can be much taller than they currently are while adhering to safety codes for a seismically active region.
> The econ-101 supply/demand curve requires a perfectly competitive market for a homogenous product -- neither of these applies to the SF housing market.
Which "econ-101 supply/demand curve" are you referring to, exactly? I hope you're not referring to the perfect competition supply/demand curve, because that's irrelevant here. Price is influenced by supply even if competition isn't perfect.
"I hope you're not referring to the perfect competition supply/demand curve, because that's irrelevant here."
No kidding. That's exactly what I said: homes aren't commodities, the market isn't anywhere near "perfectly competitive", the demand is inelastic, and the supply is primarily constrained by the availability of land. Thus "building skyscrapers" is not an axiomatic solution to any of this: it costs more to build upward, which exacerbates the non-commodity nature of the good; landowners have even more competitive power in the market; availability is still constrained by an extremely limited natural resource (land).
What happens is that prices go up, landowners build upward until prices stagnate, then landowners stop building. When prices go up again, landowners build upward again. All building happens in response to rising prices, so it's never a force for downward pressure on prices unless demand declines unexpectedly.
There you go again, making fallacious claims. Demand for housing is definitely not inelastic.
> What happens is that prices go up, landowners build upward until prices stagnate, then landowners stop building.
Wrong again, landowners will build upwards until the cost of building upwards outweighs the gains in terms of expected rent. There is no reason the rent couldn't decrease and still result in a net increase in profit for the landowner. After all, you would be renting out more units on the same land.
> Are you kidding me? There are plenty of other cities in seismically active regions where they've built upwards with great success. All of you people who blame earthquakes for SF's inability to build upwards should put your money where your mouth is and get rid of all the red tape - then we'll see what really happens.
You mean the "red tape" meant to ensure that buildings don't collapse on you while you work, or in your sleep as the ground the building is built on turns into quicksand?
Or maybe the "red tape" that exists to ensure that there is adequate transportation and services to support increased density.
I think what would happen is a lot of shitty housing would be built that would kill a lot of people and bring the city to a halt during the next sizable earthquake.
> You mean the "red tape" meant to ensure that buildings don't collapse on you while you work
No, I mean the red tape that allows anyone to block the construction of a new building just because they don't like how it will look. Work on your reading comprehension, I have no problem with building codes to ensure safety.
It's the 2nd-densest large city in the US, but that's because the dense core city is its own incorporated area, as opposed to most other American cities, which annexed many suburban areas throughout the 20th century. And most American cities are some of the least dense in the world— San Francisco doesn't even rate on a list of world cities:
San Francisco doesn't even rate on a list of world
Can somebody give me a perspective on how much they pay for housing ? I did a quick craigslist search expecting studios to be 2500 a month but it only took me a minute to find a very reasonable 950 A month studio apt.
That's because you're way out on the edge of the city in a commuter ghetto and by the looks of it you'd still be paying more than $2/SF to live in squalor (that unit is a dump, sorry). I apologize for the negativity but no one should be paying that much to commute without a nice spec (floors, kitchen and bath). You deserve better than that kitchen.
You're not being negative. I'm just trying to understand the extent of the problem. I'm a student, and I've lived in worse than that for about $820. (It was right next to campus).
According to google maps, this was about 10 minutes away from the heart of San Francisco (when there was no traffic). I'm guessing google doesn't paint the whole picture, and it really is as far as you say it is.
Personally, if I had gotten a job in downtown SF with 6 figures, and no family, I'd have no problem living there and saving up. It doesn't look THAT bad does it? It's even got an outside area. Just my opinion though.
I lived a block away from that apartment. Note 2 things - theres only 2 or 3 of those available in the entire city (and you have to compete for them), you will have a slumlord-style landlord who won't tolerate any noise or usually a single guest, your fixtures won't work, there will be stabbings and shootings within a block of you (not west/east oakland, but enough to have to be careful at night).
Look into a small place downtown or downtown/Uptown Oakland which is a lot closer on Bart than many places in the city. It might be 10 mins driving but there's a lot to consider. Always visit the city and spend time getting a feel before you commit to a place.
Rents are really high in SF and increasing, but I've noticed most of the stories like to quote the outliers when they talk about rent.
I moved to the city 3 years ago and you could find a nice 1 bedroom in Noe/Mission/Glen Park (southern part of the city, but still pretty desirable) for $2000-$2300 no problem.
Rents have gone up from there, but I've seen a number of units listed recently, in the same area, for $2400-2700.
If you want to spend $5000 for a one bedroom, you can do it, but it's not quite as bad as some of the articles make it out to be. In fact, a friend just rented a 3-bedroom house last year for $4500/month in a very desirable neighborhood.
In general, anything to the south/east of 280 is not a very desireable place to live. Less safe, farther from things, less nice houses etc. That's generalizing of course, but its much more of a lower- and working-class area, and not where young tech people typically want to be living.
It looks like the listed apartment is in the Excelsior district. I've heard that the Excelsior is the up-and-coming hidden gem in SF; reasonably safe and yet rents haven't yet gone up. Transportation does suck, but I wouldn't be surprised if it becomes the hot yuppie area in a few years.
(Somewhat un-PC thing that a real estate agent told me when I first moved to the Bay: "Go where the lesbians are. They tend to sniff out the best value in real estate, and when they move in, the neighborhood usually becomes more community-oriented, safer, and cleaner." I've heard a couple times that the Excelsior has recently developed a large lesbian population.)
"But in places where zoning regulations create artificial limits on home production, the final prices to home buyers jump far above construction costs. In the 1980s and 1990s, they found that virtually all of San Francisco’s home prices were at least 140 percent above base construction costs."
The papers she's citing here exclude apartments from the analysis. They're talking about single-family homes:
"The housing price data used in this paper to create the relationship between home prices and construction cost comes from the American Housing Survey (AHS). We focus on
observations of single unit residences that are owner occupied, and exclude condominiums and cooperative units in buildings with multiple units even if they are owned"
Probably not incredibly relevant to a discussion of rental prices.
Quite ironic how a blog constantly zooming in on the successes and ecosphere of the Valley attempt to explain the problem. The reason people are flocking to Silicon Valley is partially found in the overly-positive media reporting by Techcrunch and the like.
Sometimes the fastest solution to a problem is to get everyone in a room with a whiteboard and deal with it. There are ways to collaborate online, but none are as efficient as person to person. Also not everyone has a good internet connection or home office condusive to working 8 hours a day. I'm not saying people can't work from home ever, just that its not practical for the vast majority.
Sure, but you need 2-10 people no 30 000. You definitely make remote teams work from remote offices.
Also is the problem with executives in companies like Google. I believe a lot of them bought properties and they have no incentive to change the market dynamics. They working against company best interest.
You could always just buy or move to a place with good internet. Comcast Business class 50/10 is about $99/month. It's still a bit cheaper than commuting.
Some do, actually, but the reason why startups are in Silicon Valley is because that's where the VC are. VCs want to be able to drive their Tesla from Atherton or Marina to check how the company is doing.
So a startup can hire remote tech workers, but it still needs to be somewhere with capital in order to pays those remote workers. And most VCs are in SV, in particular VCs willing to invest tens of millions in a startup.
I'm afraid you missed the point of the article. Tech workers can work from anywhere, and many of them, after trying out several places, really want to live in SF. SF has an undeniable attraction in its vibrant city life.
Speaking from personal experience, I ran a business with 15 employees. Most of our experienced employees did work remotely, but working remotely wasn't all that hot for new hires without the right skills. It was very difficult to train people over the phone. It turns out that, for us, training was easier when working in the office.
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[ 2.9 ms ] story [ 310 ms ] threadPage length issues seem to bother a lot of people.
I wrote a long one-page web article myself recently, and everybody said it was too long and needed to be split up and organized.
So I split the article at the section headings into separate web pages.
Everybody who had complained earlier said that my "reedit" was now much better. But really I didn't make any change other than splitting it into separate web pages.
Now, I do understand the value of paragraphs, spacing, and section headings. It's much easier visually. But I never understood the distaste for long web pages. (Obviously, it should be related material, like a story.)
It seems that some readers prefer 5 separate web pages (that must be read contiguously) rather than a single page with five section headings. Maybe I'm in the minority, but I prefer the single page.
I can see how one can become dependent on more episodic consumption, designed to give clear break points and bring one comfortably back into the context at a later point when ready to continue. Those crutches would be comforting even if one ends up "binging" on the entire piece anyway.
Perhaps there's something psychologically satisfying about being able to finish five smaller reading tasks than one larger reading task?
I have found that if the text doesn't fit on one screen, it's more enjoyable for me to read the content as an ePub than as a long scrolling web page.
This doesn't mean I enjoy reading "news" sites which split the content into 25 pages of one paragraph each, just so they can squeeze a dozen more adverts into the page.
I don't think the article is unnecessarily verbose, in fact I think it successfully covers many inter-connected issues by only illustrating the relevant depth without burdening the reader with the superfluous.
It's actually a really quite incredible piece of work, and arguably the best thing ever published on TechCrunch.
Sadly everything seems to be going the way of buzzfeed and infographics. You think you are getting information, but its the equivalent of a newspaper headline, compared to getting all the details.
The over-regulation of home building by cities is an issue not really on the public's radar, unfortunately.
The key thing is the margin for "even more expensive". Fundamentally, yes, development makes cities more valuable / expensive, in aggregate (after all, that's why cities exist in the first place). The key thing is how many units that value is spread out over. If you tear down a slum and replace it with $1M condos in a supply-constrained market, rents will rise.
But, there are a limited number of people who can afford to buy 7-figure condos, and it is possible to build enough housing to saturate that demand all the way down the curve. If you're actually able to tear down a single-family unit and replace it with 4-unit low-rise apartments, and rent / sell them at a decent price since people want to move into the city, and all your competitor landlords can do the same, you'll see more units, more total dollars going to landlords, and lower prices per unit.
The key thing is to make it cheap to build. Excessive regulation of the kind the article talks about often does the exact opposite - they make it so you can build, eventually, but it's only worthwhile if you can be sure of extracting large rents. Even worse, the high value of land & rent in a supply-constrained environment puts a lot of vested interests in keeping supply low, in a vicious circle.
A sure sign you're trapped in that vicious circle is if developers have "community engagement" and "affordable housing" dollars to throw around.
Of course, but if the total possible supply of 7-figure condos in SF is smaller than the total number of people who want to buy 7-figure condos in SF, then it would indeed be possible to fill the city with nothing but 7-figure condos and have thusly dramatically increased the price of housing!
Techies are just the new middle-class. Asking for affordable housing here is like asking for it at Vail, Jackson Hole or Geneva.
Y'all missed the bus.
Purchasing power with the past middle class though is a different story. My parents are firmly middle class - but looking at the cost of housing and other factors, to afford a similar lifestyle to what they gave me growing up, living in similar places, now requires an income level far in excess of what they made.
It's in fact much closer to what I make now.
So the more accurate (and less insane sounding) claim is that to afford the middle class lifestyle of the past now requires a higher-than-middle-class income. This gap varies depending on where you are.
From my perspective SF does not have a housing crisis. They quite obviously have a culture crisis. Two opposed socioeconomic groups are at war, each trying to push the other out of the city. Housing remains plentiful, though obviously not affordable. You want to make housing really affordable? Introduce a large drug trade and a couple dozen gangs to bring up the mortality and crime rates, and you'll see those housing prices rocket downwards.
If you would rather live in a city with plentiful, affordable housing - 16% of which is abandoned or unliveable - come on over to my side of the country. You might want to bring a car and some pepper spray, though.
A lot of other VCs and founders are also digesting Thomas Piketty’s new book, “Capital in the 21st Century.” With more than 200 years of data, it chronicles an inexorable rise in inequality that was punctuated in the middle of the 20th century by the Great Depression and World War II followed by 30 years of evenly-spread prosperity. Ultimately, it advocates a globally-coordinated tax on wealth.
I know that it's taboo on HN to get overly political, but I think because of Piketty's work we should talk about it (particularly, because Piketty's new piece is so groundbreaking [1] and incredibly well-backed with data). What do you guys think of his "global wealth tax" -- tax on capital (including real property), in the context of the new SV riches?
[1]: The book is being received as "the most important economiscs text of the decade" by a lot of high-placed economists, etc.: http://en.wikipedia.org/wiki/Capital_in_the_Twenty-First_Cen...
Doesn't the estate tax fully cover this case?
To avoid discouraging savings, the wealth tax could be progressive. The tax on the average citizen's savings is negligible but rentiers pay a substantial portion.
I think an inheritance tax is especially important to prevent the formation of generational wealth.
Property tax is a sort of wealth tax. It goes to fund local services that the occupants of that house presumably consume, though.
This is a very strange economic theory you've got going here.
http://en.wikipedia.org/wiki/Georgism
There's a foundation of some sort in San Francisco that introduced it to me. It's a quite interesting idea. The TLDR is capitalism for what you produce, and socialism for natural resources.
I'd like to see it tried out somewhere if it hasn't been already.
To provide a counterpoint: We already exist in the society you describe. You can choose to not pay your taxes and the government won't protect your assets from being seized. Now logically, under your system the person with the greatest military might would be able to seize your assets and defend them him/herself (or pay taxes). However, as the entity with the biggest military might will always be the government, ipso facto we have exactly the same situation as we do under the current law, where the government will start seizing assets if you don't pay your taxes...
The only alternative in a might-makes-right kind of libertarian society, is that individual entities (rich people/corporations/etc) start gathering enough military might to challenge the government and hence keep their tax money to themselves.
So best case scenario, we end up with a detente where the government and the hypothetical powerful force agree not to fight. Due to economies of scale, I'd be willing to bet that the cost of maintaining such a force is waaayyyy more than any taxes levied. Given that this force also gives the owner the ability to tell the government to go away, they'll have effectively declared independence and started their own little dictatorship (whether corporate or otherwise). The only difference is that nobody gets to vote for the new corporate overlords. They just have to obey or leave (until there's nowhere to flee to). This kind of libertarianism is better called neo-feudalism.
Worst case scenario, we have regular open warfare in our own back yards. What a great society to live in, where we're all just trying to stab each other in the back. Progress and civilization indeed...
Therefore the right of the government to enforce taxation for the betterment of society as a whole is absolutely essential to having a "civilization" at all. Those who cannot remember the past are condemned to repeat it.
/rant over :p
"I've thought a lot about this, actually; it was not a casual remark. I think the fundamental question is not whether the government pays for schools or medicine, but whether you allow people to get rich.
In England in the 1970s, the top income tax rate was 98%. That's what the Beatles' song "Tax Man" is referring to when they say "one for you, nineteen for me."
Any country that makes this choice ends up losing net, because new technology tends to be developed by people trying to make their fortunes. It's too much work for anyone to do for ordinary wages. Smart people might work on sexy projects like fighter planes and space rockets for ordinary wages, but semiconductors or light bulbs or the plumbing of e-commerce probably have to be developed by entrepreneurs. Life in the Soviet Union would have been even poorer if they hadn't had American technologies to copy.
Finland is sometimes given as an example of a prosperous socialist country, but apparently the combined top tax rate is 55%, only 5% higher than in California. So if they seem that much more socialist than the US, it is probably simply because they don't spend so much on their military."
http://paulgraham.com/resay.html
(I know that in the US anything even vaguely leftist gets called "socialism", but Thomas Piketty, the author, is a genuine strong supporter of the French Socialist Party, and the focus of the book is explicitly on government action to prevent anyone from getting 'too' rich. I think it's a fair criticism.)
EDIT: To those not familiar with British history, things got really bad during the 1970s. Inflation peaked at 27%. The government went bankrupt and had to go "cap-in-hand" to the IMF for a bailout. Garbage piled up in the streets because the sanitation workers were on strike. Bodies piled up because the gravediggers were on strike... (http://en.wikipedia.org/wiki/Winter_of_Discontent). I don't want to get into an argument about Thatcher, but everyone at all familiar with the history agrees that the country was in a mess.
The golden years of British innovation where in the 50s and 60s all right but 1850s and 1860s, maybe even earlier. By the end of the WWII Britain was a shade of its former self completely eclipsed by the US. Although to be fair, tax policy probably wasn't the decisive factor.
England / the UK is a mess at the moment. They are heavily in debt. They keep on cutting benefits to the poor and allowing the rich to pay even less tax. According to your argument everything should be getting better because of this, but I assure you it is not.
Do we have rubbish piling up on the streets, dead people piling up not being buried? Do we have rolling power cuts due to strikes? Are we all on a 3 day week? Massive inflation and interest rates?
The UK is turning the corner after the disastrous spend spend spend! Socialism of the last decade.
That's a very polite way of acknowledging that the UK government ran a massive deficit-funded spending campaign throughout one of the fattest and longest boom cycle in history.
Debt is high, but the key metric of net debt as a proportion of GDP is decelerating and is forecast by the Office of National Statistics to level out over the next few years and be falling within 3-4 years. [2]
The UK has made cuts to social and welfare budgets, but these cuts are actually smaller than across the Eurozone. Social spending has risen faster since 2000 in the UK than anywhere in the OECD. [3]
There are still issues with wealth disparity (poor vs rich and South-east versus the rest of the country), tax avoidance (mainly corporate), and challenges with reforming the welfare state so that benefits are there for the those that genuinely need whilst not creating a disincentive to those that work. However, saying the UK is mess at the moment, is do dismiss the facts.
[1] http://news.sky.com/story/1238991/imf-sees-uk-growth-remaini...
[2] http://www.bbc.co.uk/news/business-25944653
[3] http://www.telegraph.co.uk/news/politics/10574376/Graphic-Br...
The main measure of an economy is GDP per capita. Apart from cyclical fluctuations, the main drivers of GDP per capita are are investment and productivity.
In the UK both of these are below that of the major developed economies.
As for the current growth of the economy-all is not well, as there is a large current account deficit, which is being funded by borrowing from overseas and is not sustainable.
The UK competes with many other places for where the rich want to live. France has had a disaster with their recent proposed 75% tax rate.
The same goes for entrepreneurs - would you register your startup in the USA if the tax rates, especially on capital gains were massively higher than elsewhere? It's also a question of VC capital - would they let you.
It's better for the USA to get it's cut of Facebook's success rather than drive Facebook into a tax haven and get nothing.
And the race top the bottom continues.
Wages going down for the majority, while a few get a lot richer is hardly what I would describe as progress.
How about the internet? The web? Nuclear energy? All of this has been payed for by taxpayers.
EDIT: I am getting a couple of down votes, so I am assuming people are asking for some sources. Most of the research, for internet at least, was actually funded by the department of defense [1]
[1] http://www.internetsociety.org/internet/what-internet/histor...
It's funny how the idea the fact that government provided some early foundations for the Internet somehow awards them full credit for it, doesn't apply to the private inventions such as electricity and the telephone without which the government couldn't have invented the Internet.
Who said this? I was merely pointing out that "new" technology, as appeared in the quote I responded to, it actually usually kickstarted by taxpayer money. I am not interested in where it went from there.
Said what exactly? The comment you were responding to is titled "How can you dismiss socialism so casually?"
> I am not interested in where it went from there.
Well, that's awfully convenient, isn't it? If we only consider technology that's developed by the government it's much easier to reach the desired conclusion.
First, you're understating the government contribution. DARPA didn't just research network theory. They built a network. TCP/IP was designed under contract. Also, that point undermines the original argument, which is that entrepreneurs are necessary for innovation. Once the technology exists, development is something that can be done with a rate-regulated monopoly. AT&T wired up every person in America under such a regime.
I'm not saying that this would be my preferred model, but its one that works just fine.
For at least a year after I started on the internet in Dec 1991, any use of the internet for "commercial activity" was disallowed (and did not happen enough for a person to notice it). Spam had not been invented yet; the entire marketing profession seemed unaware of the existence of the internet; the main form of promotion I can remember is announcements of academic and technical conferences; it was OK to make a "work wanted" post on Usenet only if you wanted to become an employee ("W-2") -- contractors ("1099") and one-man consulting shops were prohibited from using the internet to look for clients.
Although a few private-sector companies (UUNET for example although started as a non-profit in 1987 became a for-profit in 1989) were influencing the internet at this time, the influence was minor compared to the influence of governments, governmental contractors (notably BBN and Mitre) and universities.
And again, the internet was already very valuable and very able to enrich people's lives -- provided that those people were willing to use command-line interfaces.
Just because government money was involved doesn't mean the government developed the technologies, nor that profit wasn't a prime motive.
That was pretty good incentive to pipeline money to Bell Labs or the PARC: http://www.slate.com/blogs/moneybox/2012/07/24/xerox_parc_an...
And look where that got us.
Please don't buy into the propaganda. I think you are confusing invention with smart packaging and marketing what was already developed. None of the technology we see today were bootstrapped by individuals or private investors. As a counter argument I will direct you to this talk.
http://www.ted.com/talks/mariana_mazzucato_government_invest...
I find it hard to believe that there would be no facebook if Mark Zukcerberg was worth $15B instead of $30B, or no Apple if Steve Jobs had paid a few billion more in taxes. If money is the ultimate goal, then why are so many billionaires joining Bill Gates in giving their fortunes away?
During Eisenhower's time the top tax rate in the US was over 90%. We didn't become the Soviet Union, gravediggers didn't strike and innovation continued. I don't know if a 90% tax rate is necessarily socialist, but it wasn't the end of capitalism either. The idea that higher taxes stifle innovation is unproven and unproductive. If the super rich were willing to pay just 10% more, perhaps the super poor would have the opportunity to hold up their end of the deal as well. This real estate issue and the other symptoms of income inequality could become manageable problems instead of simmering conflicts.
Corporate person-hood, and corporate taxes don't really make so much sense.. I'd be in favor of limiting corporations, and pushing for disbursements to the owners... Limiting corporations from holding onto unutilized and under-utilized assets and capitol. Make it work, or give it back to the shareholders/owners.
I think that these things could really simplify legal/tax structures, and reduce a lot of government bureaucracy... Some people just wouldn't work.. more power to them. Some people will want more, and there will be competition in the workforce... I'd also be in favor of either open trade, or trade sanctions with countries that don't have similar environmental protection requirements to our own. Yes, that means that smart phones may double in price, but I think actions like that would help a lot more than simply putting up military bases all over the world.
Plus this whole issue of 'companies returning money to shareholders' is again only favoring the rich. It will be a long time before any significant portion of my income comes from dividends and capital gains. To make money in this way, you have to have a huge amount of capital invested already. Just to prove this point, if you made a very nice 10% per year before taxes on your investments, you would have to have 100,000 invested to make an extra 10,000 per year. If you are only making 50,000 per year, that would take a 20% contribution to your pre-tax retirement account for TEN years before you reached that level of invested capital. Sure, it would happen a little faster because of compounded interest and reinvested earnings, but I think my point is clear.
http://en.wikipedia.org/wiki/Negative_income_tax#Flat_tax_wi...
Edited to add: It's worth noting, though, that you can't produce every possible progressive tax rate curve with this method. It's certainly possible to prefer some curve that is unattainable this way. But a simplistic "a tax flat in dollars is regressive in utility" isn't applicable.
I'm in favor of a much simplified structure, applied evenly, as fairly as possible, and much smaller government needed to operate it. A lot of spending comes down to complicated bureaucracies, reducing those is a big step. Another benefit of a basic income, is it would allow the revocation of a lot of welfare and stimulus programs, and their own layers of corruption and bureaucracy.
I'm also in favor of cutting the overall defense and operations budgets by at least 2/3 ... There's a lot of ways the federal government could be much more effective, and reduce expenditures at the same time.
And although I don't know how much I feel it is the government's place, a baseline healthcare system could even be funded in a much better way than Obamacare. I tend to lean libertarian, but I'm a pragmatist. I just want solutions that are responsible, and have a chance at making things better, while avoiding as much chance for corruption and bureaucracy as possible. Not to mention reducing the footprint of the federal government, and reducing the impact of corporate protectionism along the way.
Corporate personhood (as far as I understand) is required by limited liability, which makes a lot of sense to me. Separating a company's debts from the owners' debts (and preventing creditors from going after the owners of a company when it goes bankrupt) is very encouraging for new and small businesses. The debts of the company become separate from the debts of its owners. It encourages people to start businesses and take loans, not having to worry that they'd lose everything if their startup goes under (at least theoretically).
OMHO one of the biggest arguments for corporate personhood is they are tax paying entities... if you reduce corporations to only allow shared ownership and limited liability, while also limiting the holding of underutilized assets and capital, it would even out. I'm not talking about liability, I'm talking about holdings, taxes and political sway.
While I agree with the idea itself, I don't think you can prevent that realistically. In the end, it's not "corporations" that donate money, but the people in charge of those corporations. If those people (the CEOs, VPs, board members and so on) want to make a donation, they can always do so privately (and most of them certainly have the money to do it).
I feel this is the heart of the issue, that people think of money and wealth as "mine" vs. "not mine." It's the whole American individualism at play, where it's you vs. everyone else, where you getting richer is a Good Thing, even if (or maybe especially if) it increases the gap between you and others.
Whereas a much healthier mindset is "mine" vs. "ours." You have money that belongs to you and you have money that belongs to your community. This community can be a neighborhood, a city, a state or even a country. Once you flip this mental switch, you realize that the taxes you pay are not really taken away from you, but rather shared with everyone in your community (of which you are a part).
I understand that taxation is necessary. I also understand that people like to keep what they earn. I draw this line at half... and I would draw that same line for the wealthiest (who bend current tax law to pay far less than half) to the poorest, who would recieve a basic income (along with everyone else) to subset the half that they earn and get to keep.
For instance, consider Mark Zuckerberg. By and large, Mr. Zuckerberg will owe his taxes when he decides to cash out. But why should he cash out? An entrepreneur can build a multi-billion-dollar company up from nothing, earn a comfortable salary doing it, and as long as he is reinvesting all of the business's profits and not cashing out, not pay significant taxes!
Steve Blank's "Secret History of Silicon Valley" [1] reveals just how heavily the Silicon and other semiconductors in Silicon Valley depended on DoD funding, and SV likely wouldn't be where it is without that funding. Parenthetically, 'Secret History' is also just plain fun and fascinating to watch.
The plumbing of the internet exists because of DoD's ARPA (now DARPA) project to connect and share expensive computing resources.
Entrepreneurs may be part of the equation, but ignoring the significant government role in the technology we have seems likely to lead to wrong conclusions.
[1] http://steveblank.com/secret-history/ [2] "Where Wizards Stay Up Late: The Origins Of The Internet ", Katie Hafner
It is true that the NIH conducts basic research that often identifies biologic targets, but there is a huge difference between discovering a lead compound and actually bringing it to market. That difference is about $1B. That money has to come from somewhere and the free market is a great place to get it.
Even though the USA pays the most in the world for it's military, I was surprised how little of the GDP it actually was.
It's poor example considering that Finland is not a socialist country, they have the same capitalistic economy and democratic government that US and most of Europe have.
Two similar apartments on opposite sides of the same street can have significantly different market rents just because they are in different boroughs, and those boroughs have vastly different council taxes. The classic example in London used to be Wandsworth vs. Lambeth.
Council tax, although based on properties, is meant to be a tax on residents, to put towards local services like police and rubbish collection. It was created after a previous tax (dubbed the 'poll tax'), which taxed each individual, regardless of the size of their abode, caused protests.
[0] http://en.wikipedia.org/wiki/Window_tax
Not any more it isn't.
We are all drastically more wealthy than our parents and grandparents. We have it far better. But for socialists, this is not enough. They despise "inequality" and wealth.
Some people want to think that a village idiot doesn't deserve to live a miserable life because he is a village idiot.
You're certainly pulling a lot of strawmen here. Come to think of it, almost reminds me of Fox News. They have a habit of demonizing the other group, just to make themselves feel better.
Thank you for being the better person and not joining in.
The idea that he would think that a village idiot deserves to live a miserable life is entirely in your head, and quite at odds with the second paragraph of his comment.
I was trying to say that the inequality and "hatred" towards inequality and wealth(both claims unsubstantiated, with emotionally charged language)he is attributing to "socialists"(used as almost a slur in his text, also, wrong, social democracies are the wealthiest systems around) is in his head. You are the one misrepresenting my argument.
And just because we have it "better", doesn't mean everyone has at least a reasonable standard of living. Einstein should be earning a lot more, but a village idiot also deserves to not live in dire poverty.
people pretend that wealth does not increase the cost of living for the poor, but it does. And the poor should not be penalized for this.
Even the village idiot should have a place to sleep, though the very valuable Einstein bought all the houses.
But on inflation adjusted income, job opportunities, and retirement age and social security benefits the baby boomer generation was likely the peak. Trust me, the likelihood that we are just going downhill from now is quite high.
>They despise "inequality" and wealth. Maybe. I despise Kim Il Song. He is wealthy and his country has inequality.
Only if by 'we' to mean the top 20% of American society.
The median worker's wages have been essentially stagnant since 1970: http://www.nytimes.com/imagepages/2013/01/13/opinion/13green...
Moreover, inflation has been uneven: food (including in restaurants) and electronics have plummeted, but the costs of education and healthcare have skyrocketed, and housing has skyrocketed in areas with good job opportunities. It's easy to cut back on new electronics and restaurants, but a lot harder to cut back on housing and healthcare. Cutting back in education gets your stuck in a poverty trap.
So things don't necessarily look so bright for the median worker, especially after 6 years of persistently high unemployment.
I can't dig up a source for that part right now, but it's out there in the CPI statistics.
This kind of language is exactly why you think only 20% of Americans are wealthier than our parents and grandparents. Money ≠ wealth. Compare the number of people today who have access to washers, dryers, irons, microwaves, a kitchen, cars, cell phones, and so on to previous generations. Even if wages have remained stagnant the average standard of living is almost always increasing. You can even live in an apartment, own many or all of those items I listed, and still be classified as living in conditions of poverty.
I'm not saying poverty doesn't exist. But I am saying the definition of poverty is constantly being adjusted because humans are so great at creating more wealth. Instead of an absolute metric for poverty or a standard of living, we use a subjective one that changes as humans acquire more wealth.
If you haven't already, I'd highly recommend Paul Graham's essay "How to Make Wealth"[1]. He covers this subject very well.
[1] http://www.paulgraham.com/wealth.html
For tl;dr of that book, by the same author, is here: http://www.vanityfair.com/society/features/2011/05/top-one-p...
Fundamentally, wealth can only be created against the backdrop of social order. If you gave Zuck $10 million, far more capital then he started Facebook with, and sent him to Somalia, he would not be a billionaire today. He would've been killed and his money taken. Any business he built would've been taken from him. Because he's not skilled in war, and without social order that's the only skill that matters.
Each person equally contributes to the social order, and therefore each person has equal say in the structure of that society. That's the basis for liberal democracy. If people feel that inequality undermines the social order, they are entitled to do something about it.
Sure. But if they're proposing cures worse than the disease, we should try to talk them out of it, not just play on their feelings of "unfairness" to win political battles.
- What other solutions to the problem of wealth being used for political influence have been proposed?
- Would lobbying/fundraising reform be a better focus, rather than attempting to make everyone, regardless of their contribution to the economy, have equal amounts of wealth?
- When was the last time nationwide wealth equality was proposed? What were the results? What about previously? What about before that?
Also see the zero-sum fallacy (http://lesswrong.com/lw/2gd/fight_zerosum_bias/). "Some people being richer necessarily means I am poorer."
Sorry to be blunt, but that's how "supply and demand" is really supposed to work. If Seattle supplies the same quality of housing for half the cost of San Francisco, buyers/renters should flock to Seattle, thereby reducing demand in SF and eventually causing SF housing prices to come down until the market finds an equilibrium. Trying to lobby for "below-market-price" housing is always going to be a losing game; the only long-term solution is to make the market price lower.
Unfortunately, competition among cities to attract residents is not like competition in other industries. A lot of people are stuck in a relatively small geographical area their whole lives due to employment, their children's education, various kinds of emotional attachment, and the sheer difficulty of uprooting themselves from a familiar neighborhood. This creates a captive market, severely limiting the effectiveness of inter-city competition. And of course, whenever there's a captive market, there's somebody who profits from it. In the case of SF's housing market, entrenched neighborhood groups and "below-market-price" renters enjoy benefits at the expense of newcomers to the city. Perhaps they actually deserve those benefits. Still, it's unfair to everyone else.
But there's one group of people who can afford not to be bound by the usual excuses that keep people stuck in a captive market. That's us, the techies. We don't need to be in any particular city in order to write code. Most of us are young and don't have kids. Few of us have any "root" in the Bay Area, so we couldn't care less about being uprooted [1]. There is no reason for us to be a part of San Fran's captive housing market. We can pack up and leave, all 8% of us if possible. That would be "supply and demand" doing its work.
Of course, there are a few problems with this proposal, including the fact that there really is such a thing as social networking of the offline kind. The Bay Area undoubtedly has one of the best tech "scenes" in the world. But I see it as a problem that needs to be fixed, not merely an advantage that we're free to exploit. HN, for example, requires everyone to move to the Bay Area, perhaps for a good reason. But in doing so, they directly contribute to, and exacerbate, the hideous distortion of the Bay Area's housing market. It's like mandating that everyone meet at a particular Starbucks. It makes sense when everyone you want to meet is already a regular of that Starbucks, but when the manager of Starbucks begins to take advantage of its captive clientele, you should seriously start considering an alternative.
Remember, the only vote that the market respects is a vote with your feet, i.e. a realistic threat to do business with a competitor.
[1] Disclaimer: I've lived in at least seven different cities in three continents, and harbor no particular emotional attachment to any of them. Apparently I'm incapable of developing an emotional attachment to geographical coordinates. But I must confess that I kinda like it that way.
There is high demand for what the city offers.
There's also high demand for face-to-face meetings with people to assess and establish trust. There is no replacement for that, and why experience tends to cluster together, whether tech here, or entertainment in the South.
Where I disagree is that I think of those things as having two faces. On the one hand, a vibrant culture and a large group of trustworthy colleagues increase people's quality of life. On the other hand, they reduce mobility, distort markets, and therefore reduce people's quality of life.
And the hacker in me wonders whether it might be possible to reduce the negative side while keeping most of the positive side.
I suppose if you're in your 20s and without children, it makes a bigger difference, but I find I don't often have the time to do anything until the weekend anyway, and so there would be little use paying high rents when 60% of the time, I'm just crashing there and spending all my time elsewhere.
Most of us in the tech sector are young and single and least likely to go house hunting, so the expensive housing is painful for us, but probably affects us the least.
The biggest thing preventing tech workers from moving is that some interactions simply must be done in-person. Often this requirement is due to culture, not technological limitations. Still, there are significant advantages to in-person interactions. People are much more likely to pay attention to each other. There can be interesting and beneficial chance encounters. And of course, the likelihood of anything getting recorded or leaked is lower.
I think that as remote work becomes more feasible (both technologically and culturally), more tech workers will move out of the bay area. There are simply too many incentives to leave.
1. The worst being Guam, which couldn't keep electricity running for more than 12 hours a day. Great beaches, though.
2. Oh, and who had the bright idea to put cloth seats on BART? That person has probably caused the spread of more disease than Typhoid Mary.
After all, teleconferencing all the time is not the only alternative to everyone living in the same city. People could actually travel for important meetings from time to time.
A best-of-the-class high-speed train (300mph+, not the pathetic 200mph version they're talking about) should be able to get you from Portland to SF, or from LA to SF, in two hours flat. Even better, you'll be able to work during those two hours.
And then they could uproot their workforces (and if you took the combined employees of Yahoo, MS, Google, Apple, AOL, Facebook, etc, you would have moved the employee base) and move there, it would probably be the most futuristic city on the planet.
I mean, they wouldn't - or they already would have - because it isn't economically feasible. But that always comes off as a buzz kill since we just end up trying to grow new businesses like cancer into the ancient ruins of lost revolutions we call "historical preservation".
Who knows, maybe the ex-Californians will vote yes on Prop 1 so we can keep our buses.
That does help explain why you see locations as essentially fungible. :)
> Apparently I'm incapable of developing an emotional attachment to geographical coordinates.
There's coordinates, and there's community. Places become keys for personal/shared experiences and history, people build up neighbors and networks that provide society, help mitigate risk, and introduce opportunity (and the fewer resources you have, the more important that is).
> We don't need to be in any particular city in order to write code.
Certainly not to write code. To raise money, on the other hand, it seems to be pretty advantageous. Whether that's about dev convenience or VC convenience, though, is probably a key question worth exploring.
The larger point about making other choices than the Bay Area is one I'm very on board with. There are times I wish I lived there and opportunities that have tempted me, but it's also clear to me that SF and the Bay at large have some structural problems and don't have good policy for protecting/fostering the stuff that's important about communities. For the most part, I've chosen to move in other orbits and it's been rewarding.
The problem is not the new people moving in and the solution is not to stop them, the solution is to address the pressure those new residents create that is driving the old residents out. Entire families shouldn't be uprooted and have their lives thrown into disorder just because some twenty-something wants to live in SF for a year or two while they're working at a startup, and that twenty-something shouldn't have to practically evict some low-income family to find an apartment.
If those families wanted to be able to stay there permanently at a fixed rate of housing expenses, they should have purchased the property. Can't afford to buy? Then deal with the risks of renting.
Their desire for low rent that keeps them comfy and entails no inconveniences has no validity. That's just a wish. That's immature. This is not grade school and not everyone gets a trophy for simply showing up.
There's a LOT of upper-end housing supply due to come in soon - tens of thousands of units. Amazon is taking a lot of heat about it, since they chose to build in the city and their workers usually do as well.
https://groups.google.com/forum/#!topic/rec.birds/vPvrRW_fVX...
http://www.nytimes.com/2014/04/15/business/more-renters-find...
los angeles leads the nation in out-of-whack median rent/median income ratios. what does that suggest to me? that it's one of the last of the major US cities with poor and lower-middle class people living in it.
“Increasing the supply is not going to increase the number of affordable units; that is a complete and utter fallacy,” said Jaimie Ross, the president of the Florida Housing Coalition.
As the article explains, the reason is that builders are going to prefer to build "luxury" units to "affordable" ones. So having a whole bunch of construction is not necessarily going to lead to anything affordable. A construction boom may bring the high end rents down a little bit, but they'll still be out of reach of most people.
The "invisible hand" just doesn't care about marginal actors. Who cares if there's people being displaced? Free markets!@#*(_!@)#
jesus I need a drink
SF renters need to back up the U-Haul truck and find new places to live where they can afford it. They are not "entitled" to live in SF simply because they want to.
People who have roots are getting uprooted because they declined or couldn't get in on the sweet tech boom dollars. A lot of the locals are pissed.
I live in Brooklyn, and I live in a part of Brooklyn that really, if they figured out I worked in Tech, I wouldn't be shocked if they showed up with torches and pitchforks as a warning to others.
It's not just renting. It's income as well. There are lots of folks whining about how others make more money and how that "isn't fair". It's a broad theme of people complaining and having a sense of entitlement.
This isn't about moving, this is about completely changing lives. How to get to work, who's in the neighborhood, what's the neighborhood flavor like... it's more than just "living in a specific area" it's about living life.
Income inequality is another issue all together. No, it's not fair that a fast food joint has the guys who flip burgers and run the cash register do all the work and get literally the least amount of money the business can legally give them. And yes, they could just go look for other jobs... if there were any. In a lot of places, there just isn't other work. For others, their particular field may have been decimated. A friend of mine was a bar certified lawyer in corporate finance. ... when he graduated in 2008.
Yeah. life isn't fair, and maybe part of it is roughing it. But another part of it is also recognizing that the system has been inadvertently rigged towards the relatively wealthy and hyper wealthy.
There's reasons why there are protests in the streets of the Bay Area, and tone deaf responses like this are one of them.
> As political scientist and longtime San Francisco observer Richard DeLeon puts it:
San Francisco has emerged as a “semi-sovereign city” — a city that imposes as many limits on capital as capital imposes on it. Mislabeled by some detractors as socialist or radical in the Marxist tradition, San Francisco’s progressivism is concerned with consumption more than production, residence more than workplace, meaning more than materialism, community empowerment more than class struggle. Its first priority is not revolution but protection — protection of the city’s environment, architectural heritage, neighborhoods, diversity, and overall quality of life from the radical transformations of turbulent American capitalism.
...and ironically creating some of America's highest market rents in the process.
But I think the sentiment is broadly popular because it gets the heart of why people fall in love with San Francisco. It's not just the community (whatever community), it's the housing stock, the 'perfect' density, the hills, the views, the shops and restaurants, the smell of the air. That's what makes San Francisco San Francisco. One hundred years ago, Los Angeles looked a lot like SF. But they replaced 90% of the victorians, they flattened the hills, they built freeways everywhere. San Francisco was spared that, largely because the people fought back, and now the people want to fight to preserve what was saved.
I'm of mixed-feelings about it. The Bay Guardian always warns of "Manhattanization", but the alternative endpoint is turning into a huge version of Carmel By The Sea.
I understand that other people don't feel that way, but at the same time I think if people were told the choices, which is basically Manhattanization and $1500/mo rent or stay the course and pay $3k/mo, people on the whole would pick the former.
But because it's framed in terms of 'preserving our heritage', it's easy for people to wishfully think that they can keep things the same for free.
I upvoted kijin's comment. If you want to build another Manhattan full of gigantic buildings with computer cubicles and tiny apartments, do it in LA or somewhere, because it's probably never going to happen in SF.
And new construction becomes old within a few years. There are plenty of perfectly serviceable condo towers of unfashionable age in downtown Chicago with very reasonably priced apartments.
Just look at BART. Very popular in the polls, approved in a landslide, dismal ridership. Why? Because everybody thought that other people riding BART was a great idea- they had no intention of riding themselves.
NIMBY-ism about BART was manifested by the peninsula towns, which refused to allow BART in the first place (due to misguided fears of easy access to their towns by transients, potential criminals, etc.)
As opposed to those whose homes and businesses were Eminent Domain'd to make way for the construction, their nearby neighbors who now have loud above-ground train noise beginning at 5am, etc.
Also, I doubt much eminent domain was exercised/abused during the construction. Have you noticed the way the tracks weave, go underground here, run in the middle of a freeway there? Terminals in the outskirts of town? They certainly exercised that power, but it's not like BART runs right through the middle of town.
(Left the Bay ten years ago)
Ok, I live in Europe, but I was under the impression that SF had a bit of a smog problem.
Of course, they have a fog problem, but that's a different matter!
Perhaps you are thinking of Los Angeles?
It does however have a fog problem, because those nice clean prevailing winds are quite cold and moisture condenses rise when encountering the hills along the coast. This is in fact the major source of water for the coastal giant sequoias.
"Coast redwoods (Sequoia sempervirens) are distributed along a narrow band of California's northern coast. During the summer these red giants take advantage of the fog to capture water out of the air—and summer is the critical growing season for the trees, despite being California's dry season."
http://www.scientificamerican.com/article/fog-that-nourishes...
Giant Redwoods = Giant Sequioa = sequoiadendron gigantium
Seems like there is some imprecise naming going on which is why I wasn't sure.
Los Angeles is the California city that is known for its smog problem. The US is big, so its easy to get the various cities confused.
It doesn't help that California is huge. San Francisco to Los Angeles is a 381 Mile (613.16 km) journey... which is 20% longer than the distance between Paris, France and Amsterdam, Netherlands.
best described as "an open sewer"
Someone thought that all that protection was free?
Its merely a means for the very rich to protect themselves. They simply limit who can live near them by dressing it up in fancy sound good, do good, terms. Protecting the environment, protecting history, and all, is just nice speak for keeping people we don't want away.
As to one highly rated post about the benefits of socialism, it never has or will work. Socialism and capitalism are little different in the end, the first merely concentrates wealth and power in the hands of politicians directly, the later just adds another class that benefits.
I think this is a pretty groundless claim. San Francisco has been one of the most tolerant cities of alternative lifestyles and even homeless people compared to any other American city.
It's easy to claim that the rich just want their gated communities, but if you can't even address the claim that they want to preserve the existing quality of the city without claiming a hidden ulterior class motive then how are we supposed to have an honest dialogue? You can't just unilaterally declare a whole group of people to be lying about their motivations and expect anything productive come out of it.
If those laws had been on the books in 1850, or if the Paris of that time had subscribed to modern-day SF's change-nothing philosophy, the city you love would not exist in anything like its current form.
Further reading: http://en.wikipedia.org/w/index.php?title=Eiffel_Tower&mobil...
http://en.wikipedia.org/wiki/Haussmann's_renovation_of_Paris
Sorry, I didn't read it because you're a lazy writer who can't be bothered to consolidate the piece into a cohesive, easy-to-digest narrative. Oddly enough, I should be fish in a barrel, -- a mid 20s moving to SF for career; yet you couldn't take the time to work on maintaining my attention for more than a couple bullet points. The hilarious part is that you self-righteously reject that which you ultimately give in to, ("sorry [...] that I didn’t break it into 20 pieces") presumably under the continuing theme of "look at me for being better at not being better than people."
So yeah, sorry I didn't read. Let me know how your blog post does.
I don't think San Francisco can build its way out of outrageous rents alone. The other cities in the Bay Area need to step up and provide the type of urban housing close to transit that people want. No more surface parking lots next to train stations.
Also, for those that believe there is no alternative: the East Bay remains the best kept secret in San Francisco. When we moved here from the City for schools, we were braced for a let-down -- but having been here for six years, we know now that we will never return to the City, even when the kids are grown and gone...
Oh, brilliant, I'll be right over! WE ARE THE 99%! ARISE YE WORKERS FROM YOUR SLUMBER!
http://en.m.wikipedia.org/wiki/City_of_London
It's also not a behaviour unique to the SF Bay Area; when I lived in a fairly rural area (pop. < 10K spread over quite a few miles), the largest city nearby was often referred to as "the city" by everyone that lived outside the largest nearby city (which was Kansas City where I lived).
It's "I went into The City" that I will not abide.
In fact, I've never seen anyone refer to any city that way except a minority of people in and around SF.
This is why South Park characterized residents of the city as "in love with the smell of their own farts."
http://www.usingenglish.com/forum/threads/17423-Rule-for-cap...
Geographic regions should be capitalized when they refer unambiguously to only one place. A capitalized "the City" implies that "the City" only refers to San Francisco, which is pretty pompous to many other people around the Globe.
If this were a Bay Area-only forum, however, it would be justified, as "the City" is pretty unambiguously SF within the Bay Area.
I have no idea what changed.
However, a vibrant downtown Mountain View with transit-oriented development at the Caltrain stop would be a good replacement for at least some of the tech industry people who commute down from SF now. But that train station is a parking lot.
I for one am going to speak to some local political figures. If you live in any city in the SF bay area, you may as well do the same. Write a letter. Express your interest in the creation of apartments in the city. Because if you build housing in the area, people will live there.
Just search for the city and "affordable housing".
Lower rents and increased availability benefit almost everybody.
I knew this was going to happen: people have heard a trite sound-bite about "counter-intuitive" statistical logic so many times that they ignore that correlation is usually a pretty damned good signal for a causal relationship.
To wit: of course there's a correlation between price and new housing units -- because it is causally related. When prices go up, developers have greater incentives to build. More importantly, in a city with as high a density as San Francisco (and yes, folks, it is dense -- the second-densest city in the US, in fact), with as many architectural challenges (seismic, geographic, etc.) the limiting factor for new construction is land and materials, not red tape.
Nobody wants to hear this, but it's true. The fixed costs of building here are so high that developers won't do it unless rents go up. That's why new construction costs upwards of $4k for a 1-bedroom unit, and why new construction in SF doesn't place any real downward pressure on rents -- except (perhaps) in the very long term. At best, you're treading water. Developers don't build into a falling market.
But really, the best response for the people who keep asserting that "building up" is the magical solution is to point to Manhattan: it's the densest city in America, yet it's just as expensive as San Francisco, if not more so.
There are no magic bullets. San Francisco is expensive because there's a lot of money chasing a tiny little bit of land. You don't need a dissertation to explain it.
While developers may not build into falling markets it it disingenuous of you to say that additional housing stock at market price doesn't help, where do you think the people occupying those shiny new market-price rentals would go if they were not there, I'm guessing not Oakland...
I think you are mistaking rising rents for lack of downward pressure. It's possible to have both at the same time as long as the influx of people exceeds the growth in supply.
I read the whole article. The source she cites for that factoid is an article that excludes apartments from its analysis. It deals only with single-family housing. Oops:
http://www.nber.org/papers/w8835.pdf?new_window=1
I've also read a whole bunch of other stuff on it, and it doesn't agree with the assertion. An example of what architects and developers have to say about it:
http://markasaurus.com/2013/10/22/why-can%E2%80%99t-develope...
The biggest consistent complaint that I read from developers is subsidy for low-income housing, which is onerous, but still only 12%. This guy suggests that average bureaucratic costs are ~30%.
"where do you think the people occupying those shiny new market-price rentals would go if they were not there, I'm guessing not Oakland..."
The article has a table that points out that SF has built something like 200% of the anticipated demand for high-end construction. If that's to be believed, the answer is: they'd be just as empty as they are today.
I strongly disagree. Land and materials aren't creating 3 story height restrictions close to mass transit.
> the best response for the people who keep asserting that "building up" is the magical solution is to point to Manhattan: it's the densest city in America, yet it's just as expensive as San Francisco, if not more so.
If Manhattan had tried to stop new construction at all costs or limit the height of new building for the past 30 or 40 years, do you think prices there now would be lower, higher or about the same as they are now?
Manhattan is also the counter example that always comes to mind for me. If you have a lot of relatively well off people chasing the same thing the prices are going to be high no matter what.
Urban rents generally only come down if the economy crashes or an area becomes undesirable (i.e. a lack of people people willing to pay the prices).
I would love to see examples of an urban area (i.e. not a suburb) where rents went down MAINLY because of building new units, even while demand and the economy remained strong.
Are you kidding me? There are plenty of other cities in seismically active regions where they've built upwards with great success. All of you people who blame earthquakes for SF's inability to build upwards should put your money where your mouth is and get rid of all the red tape - then we'll see what really happens.
> But really, the best response for the people who keep asserting that "building up" is the magical solution is to point to Manhattan: it's the densest city in America, yet it's just as expensive as San Francisco, if not more so.
Wow, how is it that so many people forget basic economics whenever the topic of Bay Area housing comes up? Prices demand both on supply and demand. You are making the (false) assumption that demand is the same in SF and Manhattan.
For example, Tokyo.
> with as many architectural challenges (seismic, geographic, etc.) the limiting factor for new construction is land and materials, not red tape
Excellent question!
Because "supply and demand" is a lot like "correlation does not equal causation" in the lexicon of internet debate: most people are parroting something they heard once but don't quite understand.
The econ-101 supply/demand curve requires a perfectly competitive market for a homogenous product -- neither of these applies to the SF housing market. The products are not homogenous, and the current landowners have dramatically more influence on the prices than the consumers.
So yeah, how is it that so many people forget basic economics? And what does it have to do with housing prices here, anyway?
While I admire your attempt to recycle the "refute a commonly used argument on the basis of its commonality" strategy, that simply doesn't cut it when you're making fallacious claims.
While you can try making dubious arguments regarding economics, you can't hand-wave away the fact that buildings in SF can be much taller than they currently are while adhering to safety codes for a seismically active region.
> The econ-101 supply/demand curve requires a perfectly competitive market for a homogenous product -- neither of these applies to the SF housing market.
Which "econ-101 supply/demand curve" are you referring to, exactly? I hope you're not referring to the perfect competition supply/demand curve, because that's irrelevant here. Price is influenced by supply even if competition isn't perfect.
No kidding. That's exactly what I said: homes aren't commodities, the market isn't anywhere near "perfectly competitive", the demand is inelastic, and the supply is primarily constrained by the availability of land. Thus "building skyscrapers" is not an axiomatic solution to any of this: it costs more to build upward, which exacerbates the non-commodity nature of the good; landowners have even more competitive power in the market; availability is still constrained by an extremely limited natural resource (land).
What happens is that prices go up, landowners build upward until prices stagnate, then landowners stop building. When prices go up again, landowners build upward again. All building happens in response to rising prices, so it's never a force for downward pressure on prices unless demand declines unexpectedly.
There you go again, making fallacious claims. Demand for housing is definitely not inelastic.
> What happens is that prices go up, landowners build upward until prices stagnate, then landowners stop building.
Wrong again, landowners will build upwards until the cost of building upwards outweighs the gains in terms of expected rent. There is no reason the rent couldn't decrease and still result in a net increase in profit for the landowner. After all, you would be renting out more units on the same land.
You mean the "red tape" meant to ensure that buildings don't collapse on you while you work, or in your sleep as the ground the building is built on turns into quicksand?
Or maybe the "red tape" that exists to ensure that there is adequate transportation and services to support increased density.
I think what would happen is a lot of shitty housing would be built that would kill a lot of people and bring the city to a halt during the next sizable earthquake.
No, I mean the red tape that allows anyone to block the construction of a new building just because they don't like how it will look. Work on your reading comprehension, I have no problem with building codes to ensure safety.
It's the 2nd-densest large city in the US, but that's because the dense core city is its own incorporated area, as opposed to most other American cities, which annexed many suburban areas throughout the 20th century. And most American cities are some of the least dense in the world— San Francisco doesn't even rate on a list of world cities: San Francisco doesn't even rate on a list of world
And it's still only half as dense as Brooklyn.
https://sfbay.craigslist.org/sfc/apa/4423411641.html
According to google maps, this was about 10 minutes away from the heart of San Francisco (when there was no traffic). I'm guessing google doesn't paint the whole picture, and it really is as far as you say it is.
Personally, if I had gotten a job in downtown SF with 6 figures, and no family, I'd have no problem living there and saving up. It doesn't look THAT bad does it? It's even got an outside area. Just my opinion though.
http://www.huffingtonpost.com/2013/05/29/san-francisco-media...
I moved to the city 3 years ago and you could find a nice 1 bedroom in Noe/Mission/Glen Park (southern part of the city, but still pretty desirable) for $2000-$2300 no problem.
Rents have gone up from there, but I've seen a number of units listed recently, in the same area, for $2400-2700.
If you want to spend $5000 for a one bedroom, you can do it, but it's not quite as bad as some of the articles make it out to be. In fact, a friend just rented a 3-bedroom house last year for $4500/month in a very desirable neighborhood.
(Somewhat un-PC thing that a real estate agent told me when I first moved to the Bay: "Go where the lesbians are. They tend to sniff out the best value in real estate, and when they move in, the neighborhood usually becomes more community-oriented, safer, and cleaner." I've heard a couple times that the Excelsior has recently developed a large lesbian population.)
The papers she's citing here exclude apartments from the analysis. They're talking about single-family homes:
http://www.nber.org/papers/w8835.pdf
"The housing price data used in this paper to create the relationship between home prices and construction cost comes from the American Housing Survey (AHS). We focus on observations of single unit residences that are owner occupied, and exclude condominiums and cooperative units in buildings with multiple units even if they are owned"
Probably not incredibly relevant to a discussion of rental prices.
Also is the problem with executives in companies like Google. I believe a lot of them bought properties and they have no incentive to change the market dynamics. They working against company best interest.
So a startup can hire remote tech workers, but it still needs to be somewhere with capital in order to pays those remote workers. And most VCs are in SV, in particular VCs willing to invest tens of millions in a startup.
Also, prop 13 is the worst thing ever. Reading that section was really depressing.