
$4 toast: Why the tech industry is ruining San Francisco - 001sky
http://venturebeat.com/2013/08/21/4-toast-why-the-tech-industry-is-ruining-san-francisco/
======
onion2k
Toast might not be 'worth' $4 _to you_ , and certainly the raw materials of
toast don't cost $4, but that doesn't mean it doesn't provide $4 of value to
the person buying it. _That 's_ what you have to measure. To me, a good cup of
coffee and a nice breakfast in a quiet cafe with friendly staff is worth _at
least_ $4. And I choose to spend my money that way.

Valuing toast especially highly is not the problem with the tech industry.

The problem is inequality. While tech generates huge returns for investors
people in tech will earn a lot. What needs to happen is that money paid needs
to be spent - on toast or anything really - rather than being further
invested. By spending, money moves around the system, gets taxed, gets
_redistributed_ between everyone relatively fairly. If tech workers earn more
than they can reasonably spend then they end up investing it in houses and
companies, meaning the money stays with the few and pushes the poles apart -
the poor get poorer and the rich get richer. That's the problem.

If _everyone_ bought $4 toast then all the coffeeshop workers would earn more
and the tech workers would have less to spend on houses. That would be a good
thing.

~~~
oleganza
Lets also not forget that Fed prints tens of billions of dollars per month.
All this money has to go somewhere and today a good chunk of it goes to all
sorts of investors buying stocks and pre-IPO shares of tech startups. That's
the only logical explanation for crazy valuation of profitless Twitter,
Instagram, Snapchat and others. Also, the only explanation for why most people
producing real goods on factories and farms in US and all over the world are
getting poorer while guys coding services that waste money for _years_ still
get huge salaries.

I'm not saying that all of Silicon Valley is producing worthless stuff. I'm
saying there is a distortion on the market caused by "free money" (compared to
money that has to be saved and withdrawn from others, less profitable
activities). Without it SV would still be a great and pricey place, but not
hugely _at the expense of everyone else_ like it is today.

PS. Before we start a flame about "crazy libertarians", consider what's more
crazy: me questioning Fed's policies, or the fact that war in Iraq costed $6
trillion and killed 1 mln people
([http://en.wikipedia.org/wiki/Financial_cost_of_the_Iraq_War](http://en.wikipedia.org/wiki/Financial_cost_of_the_Iraq_War)).
That wouldn't be possible at all if the Fed couldn't create money out of thin
air. Once you deal with morality of this situation, only then please criticize
me about my opinion on QE and other monetary policies in general.

~~~
justincormack
This fairy story about all the money coming from the Fed's printing press is
basically a misunderstanding. The money was all created by the banking system
via leverage before the bubble, and the Fed basically stopped all that money
being destroyed at once via defaults. letting the people who got the money
created (printed if you like) by the private sector keep it.

~~~
001sky
_This fairy story about all the money coming from the Fed 's printing press is
basically a misunderstanding_

Excess liquidity reduces the scarcity value of money, and results in lower
quality thresholds for investment decisions. Thats pretty simple. If you want
to debate about liquidity, you need to look at who invests in the investors.
That is the place to measure liquidity that is relevant to distorting
investment decisions. In the case of non-public equity...its pretty clear VC
lps have too much cash. The Kaufman fund does research in this area and blames
poor LP performance for the below-RAROC returns on VC portfolios when
considered as an asset class. That should tell you something right there.

------
shalmanese
I found it worthwhile reading a differing perspective on the story:
[http://www.psmag.com/navigation/health-and-behavior/toast-
st...](http://www.psmag.com/navigation/health-and-behavior/toast-story-latest-
artisanal-food-craze-72676/)

~~~
001sky
This is brilliant. Somewhere between art-hitsorical and truly investigative
journalism of the phenomenon. Thanks for posting it up!

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guard-of-terra
I never realized USA was such a cheap place.

Here in Moscow, toast with coffee might easily run 10$ and that raises no
eyebrows.

~~~
brotchie
I had the same reaction!

Coffee and some good toast at a _nice_ Cafe in Brisbane (Australia third
largest city) would also run around $10.

~~~
klipt
Of course, the waiters in Australia also get paid a more decent minimum wage
than in the US.

------
johnchristopher
> [..] that cater to the bored and overprivileged, peppering their
> descriptions with buzzwords like “organic” and “fair trade” and “artisanal,”
> the most meaningless of them all.

Call me a socialist, a hippie or whatever but fair trade isn't something
meaningless.

~~~
goldenkey
The FLO (Fairtrade Labelling Organizations International) sets a floor price
of $1.40 per pound of coffee, which is supposed to be a "higher than market"
price, but is actually hardly more than what growers were being paid to begin
with. This is like assuring an employee that she will be earning more than the
$7.25 minimum wage entitles her to, and then only paying her $7.26 and a
lollipop.

In many cases, growers can make three or even four times as much per pound if
they don't sell within their Fair Trade contracts. This is like a Blockbuster
clerk being able to earn more cash if he just takes all the videos home and
charges admission to his living room.

For a nonprofit organization working to combat the exploitation of
impoverished countries, the FLO makes a rather tidy sum from licensing fees.
For every pound of Fair Trade coffee a retailer sells, they have to pay the
FLO 10 cents -- that's like Drew Rosenhaus collecting 50 bucks for every
Terrell Owens jersey that gets sold (this is hypothetical -- we are well aware
that no Terrell Owens jerseys are being sold).

In 2009, the FLO had a budget of $10 million, 70 percent of which was funded
entirely by those fees. In short, the anti-exploitation organization is using
Third World coffee growers to generate revenue, which as you may notice is
very nearly the literal definition of exploitation. This has led many in the
industry to argue that the FLO exists primarily to market Free Trade coffee,
rather than to protect the interests of growers. This is the same relationship
that Disney has with children.

On average, retailers are charged 65 cents more per pound of Fair Trade
coffee. That might not sound like a lot, until you remember how retail markup
works. Take a look at the $1.40 that the growers sell their beans for, and
compare that to the $9 or $10 you pay for a pound of decent, non-Billy-Bob-
Thornton-poop coffee. That's a 700 percent increase. If the retailers are
being charged 65 cents more on average for that Fair Trade label (almost an
additional 50 percent), then you can guarantee that's going to mean an
additional 300 to 400 percent price increase for you, because retailers need
to have a large enough markup to make a worthwhile profit. Otherwise, they'd
just filter day-old coffee from the break room through the manager's sock,
call it something with "Nicaraguan" or "Colombian" in the name, and sell that
to you.

~~~
matthewmacleod
_In many cases, growers can make three or even four times as much per pound if
they don 't sell within their Fair Trade contracts_

Am I missing something then? I don't understand why these coffee growers
wouldn't be doing so.

~~~
goldenkey
Long-term contracts

------
joepour
Whilst I agree, nobody should be paying 6 bucks for coffee and toast, you
haven't felt the pain of getting breakfast in Sydney! Makes $6 look like a
special!

~~~
prawn
Saw so many full breakfast specials advertised in London for $5-7. In
Australia, the big breakfast without a drink is often $18-22. A juice or
milkshake would be $6-8. I'd dream of $4 toast!

~~~
barrkel
You might get something described as breakfast at a greasy spoon for £3, but I
wouldn't recommend it. If you get coffee, it'll be a stewed hotplate at best.

£3 should definitely buy you a semi-decent coffee though:

[http://www.londontoolkit.com/blog/eats/coffee-shop-chains-
in...](http://www.londontoolkit.com/blog/eats/coffee-shop-chains-in-london/)

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mc32
If tech workers are the scapegoat for all the ills of SF, why aren't grossly
overpaid actors and actresses the scapegoats for the decadence in Hollywood?

No, Hollywood decadence is accepted, but you get techies with a small salary
multiplier and people get upset, you have the 100 to 10,000 (income)
multiplier in Hollywood and that's quite alright. I don't quite understand the
incongruence.

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aaron695
When people want to pay large sums of money for 'quality' quite frankly that's
great.

We are in a world with resources diminishing and a jobs market decreasing.

Artisan style products are our best bet at keeping it at bay for a while.

~~~
fractalsea
I can understand why this would benefit the jobs market, but in what way you
this help prevent "diminishing resources"? It's my understanding that quality
products tend to be more resource and energy intensive to create, unless
possibly in the case where these quality products are explicitly advertised as
eco friendly etc.

~~~
aaron695
Depends on the way you think about it.

People earn $x. They spend it on products. $x worth of fancy bread style thing
vs $x worth of plain bread style things, I'd guess the plain bread uses more
physical resources.

~~~
sanoli
Won't they end up eating the same amount of bread in the end? The expensive
stuff then would waste more physical resources.

------
xacaxulu
Vote with your wallet. Good or bad, you don't have to pay for it. Make toast
at home if you are really that into slightly burnt bread. It takes what, like
3 minutes to make coffee and toast at your house. And I really doubt that the
tech industry is ruining San Fran. Even if they were, toast prices at one
place you went to one time wouldn't be the first metric I'd grab.

~~~
icebraining
When you buy toast at a coffee shop, you're not just buying toast, you're also
"renting" a table in a social place. You can't make that at home.

------
lmm
Better that we spend our money on high-quality versions of "the simplest
facets of life", like coffee, than doing weird things that are just status
symbols, like opera.

And I don't think it's at all fair to say small businesses languish as a
result. Small businesses are booming by providing these things.

~~~
unfamiliar
I don't think the author meant literally or exclusively the opera. The point
was that people are spending money on vacuous things like the quality of toast
they eat, rather than on meaningful and intellectually nourishing experiences.

~~~
lmm
That's pure snobbery. By all means spend your money on the opera if you enjoy
it, but it's no more "meaningful" or "intellectually nourishing" than good
food.

~~~
ItendToDisagree
I think you'd have a hard time convincing most people that good music (of any
type) is less meaningful or intellectually nourishing than toast. Food is
finite, it fills you up for awhile. Music is not, it can stick with you for
quite some time, and change your life. Very infrequently does a meal mean as
much as music does to most people.

------
hkmurakami
> _I have a great business idea: luxury sanitation. White-glove garbage
> collectors and high-end toilet systems._

Except for the little fact that high end toilet systems are already a thing in
places like japan. (See Toto's offerings)

~~~
ericd
Which, ironically, are really, really great. I know it seems weird, but
everyone should try them if they get a chance. The Toto Washlet E200 is
~500-600 on Amazon, but it's worth every penny.

~~~
sanoli
Agree! Once you go crap-in-a-japanese-seat, you can't go back :)

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unlucky
This is a repost from 4 months ago. Original thread is here:
[https://news.ycombinator.com/item?id=6253248](https://news.ycombinator.com/item?id=6253248)

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ksec
This isn't a SF problem. It is a problem everywhere. Heck the much widen range
between the rich ( or the average in SF ) and the poor.

And you see this in much worst from in India, China. Luckily these place have
many other areas or choice for the "poor" to choose from.

Another example would be Hong Kong. Where NO ONE could afford to buy a flat. I
would love to see Rent compared in SF and Hong Kong.

------
cmb99
If the author only paid $4 to escape that ornery-looking, club-like loaf of
bread he baked at home, he should probably consider himself fortunate.

