
Cory Doctorow: How startups of Silicon Roundabout are gradually being flattened - mysterywhiteboy
http://www.theguardian.com/cities/2014/mar/07/tech-firms-belong-old-street-hackney-council
======
pjc50
Nothing in London is quite so profitable as property development. I suppose
this is the continuation of the process of sweeping away the derelict bits of
Hackney for the 2012 Olympics.

It would be nice if economic activity wasn't quite so concentrated in
unaffordable London. But I can feel the wave of money washing over the built
environment even out here in Cambridge ("Silicon Fen"); it's just about
commutable to North London, so buildings have been going up with the clear aim
of selling to middle eastern or Chinese investors. It has its positive aspects
- many of the cleared buildings were in terrible condition, ugly, or (as in
Hackney) suffering from asbestos. But the new ones are still unaffordable. I'm
fleeing to Edinburgh while watching professional couple friends get priced out
of buying their first home.

Property booms cannot go on forever:
[http://www.theguardian.com/world/2014/feb/28/home-
ownership-...](http://www.theguardian.com/world/2014/feb/28/home-ownership-
greece-property-market) but we lack the leadership to resist this or to try
and distribute industries more evenly across the country. (Mediacity is a
token attempt at building a media cluster in Manchester while kneecapping the
BBC and looting its buildings).

~~~
lmm
Industry goes where it wants - if we try and stop these companies from basing
themselves in London, the competition isn't other parts of the UK, it's Berlin
or Singapore or Shanghai. Central planning of industry has a pretty poor
history.

~~~
barrkel
It's less about industry than about foreign investors seeing London property
as a store of value. There's a whole class of people living in properties as
"guardians" at discounted rent simply to avoid the property seeming abandoned:

[http://online.wsj.com/news/articles/SB1000142405270230454950...](http://online.wsj.com/news/articles/SB10001424052702304549504579319373775553890)

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mysterywhiteboy
Article was removed - but google is all-seeing:

[http://webcache.googleusercontent.com/search?q=cache:www.the...](http://webcache.googleusercontent.com/search?q=cache:www.theguardian.com/cities/2014/mar/07/tech-
firms-belong-old-street-hackney-council)

~~~
camillomiller
Well, I guess some editor's being grilled for letting this paragraph pass
through.

>Maybe not one as hot as Silicon Valley, but a least something to add much-
needed diversity to the capital's industrial base – which presently consists
largely of companies that launder war criminals' money, and companies that
exchange this laundered money for empty luxury flats.

While one can agree, Doctorow's sarcasm isn't clear and that sounds like a
pretty unsubstantiated claim, even by the guardian's admirably liberal
standards.

~~~
mherdeg
That sentence is still present in today's published version of this article,
[http://www.theguardian.com/cities/2014/mar/10/slow-death-
of-...](http://www.theguardian.com/cities/2014/mar/10/slow-death-of-silicon-
roundabout) .

~~~
camillomiller
That's a good thing. Still wondering why it was pulled, then

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gaius
Gentrifiers complaining that they've been out-gentrified.

There were people living in Hackney and Dalston before the hipsters moved in
and starting pricing them out of the neighbourhoods they grew up in, but what
goes around, comes around.

~~~
gutnor
Also, silicon roundabout is at 5 min walking distance of the heart of the city
of London, so any kind of success would have priced them out. The council is
doing what their own success would have been doing in a few years.

It would have required tremendous effort by the government to maintain the
right balance of cheap business place and accommodation required to let the
community survive. 100 meters away from one of the world finance capital ( and
only sector still working in the UK ) that's an impossible challenge.

You cannot bootstrap a startup community too close to such location. You need
some room for the community to create a culture and some momentum.

~~~
gaius
We have had a lot of Silicon-whatsits in the UK. Silicon Fen in Cambridgeshire
and Silicon Glen somewhere in Scotland. There's a big electronics scene in
Bristol.

Tho' this is something that it's impossible for governments to do, really, all
the money will be creamed off by "advisers" and "consultants", small companies
given impossible bureaucratic hoops to jump through, etc. The best thing the
government can do is just take a step back.

Or my pet harebrained scheme: resurrect the original Acorn Archimedes and buy
a million of then, requiring that all govt departments use indigenous British
computing technology...

~~~
ses
Acorn machines were great.... ah happy days. The A3010s with their stylish
green function keys!

On a serious note, I dispute that government can't have a positive impact in
stimulating the technology industry in the UK. In fact if we held on to more
manufacturing businesses (through state-ownership, tax cuts etc.) we'd have a
more diverse and robust economy. But the current government's so called
schemes to foster business and innovation are typical of this administration -
there's little substance to them at all. And successive British governments
have failed to truly work with businesses and really listen to their needs
rather than launching grand initiatives without prior consultation to real
business owners.

------
onmydesk
This is what is wrong with the UK. Bubble property prices all over the
country. And relative to incomes it is ALL OVER the country.

Everyone over 40 has a buy to let portfolio and those under 40 are stuck in
rented property with few rights. Did you know in the uk if you rent you can be
evicted for no reason at all? And if you will not or can not pay bubble prices
for property you have to rent, live in poorly maintained housing and
presumably never have children.

This is happening NOW and it is a disgrace.

Unbelievably it is being encouraged by the government with schemes to prop the
bubble up further! But they are only a year away from an election now and its
the older people renting out property who are most likely to vote and so the
young just have to deal with it.

Actual wealth creation that can come from government support of startup hubs
is the furthest thing from this governments mind. We're all too busy getting
rich from doing nothing all day in someone else's office and waiting for the
young to pay off our multiple properties mortgages for us to actually do
anything creative or beneficial.

Im here and it makes me sick.

This government by the way, which is manipulating the housing market in such
an anti capitalist way, is actually the more capitalist party of the two.

~~~
mpclark
> Everyone over 40 has a buy to let portfolio and those under 40 are stuck in
> rented property with few rights.

Never seen it put so pithily, and yes, that's exactly how it feels.

~~~
marvin
Norway is mostly the same these days. Maybe it's a Northern European
phenomenon. Of course, there is an upside to this: By renting, you are not
taking on the risk of a fall in real estate prices. But I'm not sure if the
fewer rights make up for it. You can't be "evicted" for no reason over here,
but to my understanding it is legal to have renting contracts with a 1-month
notice to termination. So it's more or less the same situation.

~~~
mpclark
I get the feeling that the government in the UK is managing the economy solely
to make sure house prices do not fall as that would cause a national crisis at
this point. Under any other circumstances they would surely have collapsed by
now.

The other problem is that the rental stock in the UK is managed almost
exclusively by amateur landlords, which leads to petty restrictions (no pets,
no smoking, no drilling, no decorating etc), attempts to sell houses out from
under the occupier ("You don't mind if we show some people round every now and
then, do you?" The hell I don't!) and hard-to-quantify risks (I know somebody
with an older landlord who is now undergoing another round of treatment for
cancer; putting the human tragedy aside, should they start looking for another
place now, or can they wait a while?)

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kasbah
Nice little bit of criticism of the Hackney council and I like the summary of
the startup scene in general:

    
    
      A common pattern in startups is to go to work for one, 
      watch it implode and team up with a colleague or two to 
      move on to another startup; repeat several times until you 
      have agglomerated a bunch of people you know, like and 
      trust; then do your own startup with them. 

The statement that foreign students paying vast sums to study in UK is an
"education bubble" is made kind off hand though and I would love to hear Cory
expand on that idea.

As far as I can tell this is on the rise and is central to most university
budgets. What could happen to "burst" this supposed "bubble"?

~~~
Xophmeister
International students pay full fees here, whereas UK/EU students are
subsidised somewhat. I don't know if international student fees are "central"
to university budgets, in comparison with domestic fees and funding, but
they're obviously very important. Increasingly so, in recent years, as
domestic fees have gone up considerably, which has seen a decrease in home
student numbers.

Anyway, the bubble would burst when the decreasing value of a UK (or any)
degree is overtaken by the increasing cost of it. Bear in mind that the cost
of a degree isn't just the tuition; the cost of living is substantial in the
UK (particularly in London) and that's making the option of studying here less
and less attractive.

~~~
tehwalrus
When I started uni, the home/EU fees were £1000 a year[1]. My friends in class
who were applying as international (non-EU) students had to pay £24k per year
to attend the same courses.

The Government did pay universities the "teaching grant" per home student, to
top up the fees, but when tuition fees settled at £9k per year that number was
chosen in order to eliminate most of the teaching grant[2], so assuming that
universities _were_ getting topped up to £9k per home student, foreign
students were worth 2.5x the home ones.

I know for sure that the universities compete to get as many foreign students
in as possible, which was why all the fuss when they revoked London Met's
ability to give student visas - they were attacking their funding, basically.

[1] they have since tripled twice, although remember repayments are like a
sort of tax (the government lends you the money in the first place, and you
pay back 9% of your income above £15k).

[2] I think science students still get it and arts students don't, or
something, because this government is insane.

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dabeeeenster
I've worked in the area since 2004. Although I agree with the points he is
making, I don't really see the author coming up with any solutions. The
problems are rooted in the right to private property.

I'm also fairly certain that Hackney have an issue with corruption. The way to
flip properties in the area is to buy up a building with a B1 use (office),
then apply to planning permission to build a residential penthouse or two on
the top of the building. Build the flats, sell them for an insane amount of
money to a couple of bankers, job done. I've been told off the record by
estate agents that certain people have "more luck" with these applications
than others, but what can you do?

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spiralpolitik
This is nothing new and its been like that since the early 80s when Thatcher
sold off the council housing stock at rock bottom prices. An area of London
gets popular, money moves in pushing prices up and people out. City government
does nothing. Rinse and repeat. All this has happened before, all this will
happen again.

At the end of the 90s it was Notting Hill, now its Shoreditch, Spitalfields
and Whitechapel with the gentrification wave pushing itself out east with
Bethnal Green next in line.

Ultimately this will be the demise of the UK economy as all the money and jobs
will focus on the southeast leaving the rest to fend for themselves.

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RyanMcGreal
"This article has been removed as it was launched early. It will be reinstated
at the correct launch time."

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blueskin_
Looks like it's been memory-holed.

[http://webcache.googleusercontent.com/search?q=cache:www.the...](http://webcache.googleusercontent.com/search?q=cache:www.theguardian.com/cities/2014/mar/07/tech-
firms-belong-old-street-hackney-council)

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JonnieCache
They're also throwing out all the communities who are living "unauthorized" in
warehouses and commercial units.

[https://www.youtube.com/watch?v=SVL50gwSLlE](https://www.youtube.com/watch?v=SVL50gwSLlE)

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mattgibson
This is not some weird oddity due to council mismanagement, it's just the
latest example of one of the greatest naturally occurring scams in history.

The process that's occurring is Ricardo's law of rent:
[https://en.wikipedia.org/wiki/Law_of_Rent#The_Law_of_Rent](https://en.wikipedia.org/wiki/Law_of_Rent#The_Law_of_Rent)

It's counter intuitive, but brilliant once you realise how it works. Put
simply, when a company makes more money due to the location they're in, the
landlord gets all of the extra profit, not the company that does the work.
Every time the company's profits rise, the rent will go up by the same amount.
Free money without working if you own land, and very bad for capitalism.

In the case of Old Street, it used to be that there was little advantage to
being there, so rents were cheap (not much competition). That attracted lots
of startup types and now, the area confers a significant advantage due to the
network of companies and people. The choice for a new startup is :

a) Old Street, where recruitment costs (for example) will be lower, or

b) Somewhere Rubbish, where you pay e.g. an extra 20k per year for
recruitment.

If the rents are the same, everyone will want Old street for the 20k
advantage, so the landlords play them off against each other: the offices go
to the highest bidder. Whilst the extra rent you pay to be there is less than
20k, it makes sense to pay it as you're still ahead, so people keep upping
their bids until the rent reaches ($rent_for_rubbish_place + 20k). The
landlord gets it all for doing nothing!

It's a scam because it operates outside of free market capitalism: you can't
manufacture more land at Old street roundabout (or move it there from
elsewhere), so supply does not increase when the price rises. Not a free
market. Also no jobs created by the price rises.

The solution to the scam is land value tax (LVT), which would reclaim the
unearned money from the landlords (whilst leaving them their fairly earned
money from providing the buildings). LVT done right would make corporation tax
unnecessary whilst causing no price rises and no job losses. A massive boost
for the economy. Seriously. No hyperbole - it works counter intuitively due to
the fact that its not a free market in the first place.

Winston Churchill was strongly in favour of LVT and described land as 'the
greatest of all monopolies'. He thought that taxing it was one of the most
important political ideas of the century, so it warrants a bit of reading:
[http://www.landvaluetax.org/current-affairs-
comment/winston-...](http://www.landvaluetax.org/current-affairs-
comment/winston-churchill-said-it-all-better-then-we-can.html)

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Bigkate
my best guess for where the roundabout people will move to is Deptford - if
they can cope with moving to "sowth louwdon" \- home of two separate hack-
spaces spc.com and a new men-in-sheds being set up by the peabody trust
[http://menssheds.org.uk](http://menssheds.org.uk) and Goldsmiths college

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w_t_payne
Come to Brighton instead!

Brighton is to London what California is to NY. I.e. full of hippies and
"creative" types.

~~~
w_t_payne
Or the Medway Towns: Full of weird, strange people ... but still dirt cheap &
commutable to/from London.

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lifeisstillgood
Ooops:

This article has been removed as it was launched early. It will be reinstated
at the correct launch time.

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mistakoala
Interesting. Why would The Graun bin the article?

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pjc50
"This article has been removed as it was launched early. It will be reinstated
at the correct launch time."

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oneeyedpigeon
Where did you get that text from?

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pjc50
It appeared when I clicked on the link. Maybe it's UK-only or something.

~~~
oneeyedpigeon
Weird - I'm in the UK and just see a generic 404.

~~~
oneeyedpigeon
Ah - I'm looking at the beta of the new design, which is in every way far
superior, except for this one :)

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stuaxo
Removed article ?

