
The Bay Area’s tech boom in historical and social context - coldseattle
https://www.citylab.com/equity/2018/07/the-dark-side-of-the-silicon-gold-rush/564140/
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aresant
The principal issue, full stop, in the Bay Area and most of California is
housing.

There are two solutions to this:

1) Build more. But this is outrageously difficult due to a well-meaning
political view of safety / fairness / etc. These restrictions employ an awful
lot of bureaucrats for enforcement but add $10s of thousands in fees and
delays for builders, that are IRR driven and would rather concentrate their
efforts in more favorable markets (1)

2) Prop 13. For those unfamiliar this essentially locks in property taxes at
the owner's basis (with a maximum 2% adjustment for inflation). Meaning if in
Silicon Valley you bought a house for $250,000 in the 1990s that's now worth
$2,000,000 you're paying about $3,000 a year on taxes instead of $30,000 a
year in taxes your next door neighbor is paying that just bought in. Oh and if
you sell your house, and then buy a new house that's less than you sold your
old house for, you get to transfer the low tax basis! This was put into law
due to the "sentiment that older Californians should not be priced out of
their homes through high taxes" which I think is noble, but it's also not
realistic or fair. In many Bay Area neighborhoods you have a bizarre
composition of young families hanging by their fingernails to pay for these
"entitlements" for the retirees, and then the retirees that have a gigantic
financial incentive to stay put which minimizes inventory and inflates home
prices.

\- - - -

1 - [http://www.lao.ca.gov/reports/2015/finance/housing-
costs/hou...](http://www.lao.ca.gov/reports/2015/finance/housing-
costs/housing-costs.aspx)

2 -
[https://en.wikipedia.org/wiki/California_Proposition_13_(197...](https://en.wikipedia.org/wiki/California_Proposition_13_\(1978\))

~~~
almost_usual
I think the transferring of the low tax basis is bogus but Prop 13 does
protect blue collar families. I personally know someone who works for a low
hourly wage and now owns his home he bought in the 1970s. If he did not have
those tax protections he would lose the home he raised his family in and have
to move immediately.

I understand it's frustrating to outsiders who are new to the city and are
trying to "make it" but forcing families out of their homes isn't right.

~~~
nerfhammer
_on average_ prop 13 _overwhelmingly_ benefits wealthy homeowners. So why not
add an income level qualification to prop 13 so that it only benefits people
that actually need it?

~~~
sanderjd
This might well be a good thing to do, but it should be noted that income
qualifications come with their own entire bag of tricky problems and potential
perverse incentives.

What income level do you set it at? Is it a cliff or phased out? If the
latter, what does the curve look like? How does it change with inflation? Are
these questions set up front or negotiated by politicians at some frequency?
How is wage vs. capital-based income handled? These are the kinds of tricky
questions that come up (and are usually not answered very well) with any
program that attempts to inject some income-based fairness into some
government system.

So I think the answer to your "why not?" is that it will be hard to get it
right and is likely to become a political football that may end up making
things worse in some way. But the argument for doing it may still be stronger
(it seems so to me, without knowing much about it), I'm just saying that there
is also a fairly strong counterargument to this sort of thing.

~~~
pimmen
If you would get it wrong, such as setting the income level too high, how
would it be worse than now?

And it’s not set in stone, why not try? You would increase tax revenue and
thus have more resources to deal with the problens. And there’s lots of
examples across the world that have done this and can share experiences of
what to look out for.

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guiomie
True story: 2 mid-level engineers both working at a FANG, and we can barely
afford a 3bdr/2.5bath in Sunnyvale/Santa Clara without burning thru 30-40% of
our monthly income (including RSUs).

Having bid on a few houses, I'm amazed by how opaque the market is here.
Houses will be listed 30% less than expected selling price and when you do
make an offer, the seller will come back with a higher price to all those who
made an offer... I suspect some collusion on the part of the real estate
agents.

~~~
nradov
New homeowners anywhere in the country frequently stretch their monthly
budgets to that range based on the expectation that their incomes will
eventually increase while mortgage payments remain fixed.

The housing market is fairly efficient and with so many participants effective
collusion would be implausible. Asking prices are essentially meaningless,
just the starting point in a negotiation.

~~~
kjeetgill
They point is that they're FANG employees and they probably make FAR above
what most anyone else can be expected to. 30-40% of their monthly income is
means that anyone outside of FANG is priced out. They feel the pressure but
hey, they'll be fine. Anyone short of FANG will really feel it.

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spikels
Completely missing is any mention of the housing supply shortage.

If Bay Area governments had simply gotten out of the way developers would have
build more than a million new units of housing over the past 40-50 years. Real
home prices would have only have increased slightly due to the increased costs
of building up.

Instead we got only a tiny fraction of the housing needed to meet demand and
huge rent/price increases resulting the highest cost of living in the world.
This is a mad-made problem.

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ohthehugemanate
Very interesting read.

When we discuss inequality, I think there are a lot of assumptions made that
make it hard to really judge. For example, TFA trots out the high number of
people on minimum wage, and the high percentage of people below the poverty
line. This is misleading, because it misses out on some key ways that
"capitalism raises all boats," which are tricky to measure.

Off the top of my head...

The first is the commodification of goods. Fifty years ago, a washing machine,
refrigerator, and color TV were high end, luxury goods, available only to the
relatively wealthy. Living on minimum wage today, you likely have access to
all of these things. Food, education, clothing, building materials, and
luxuries are all cheaper (by hours of labor) than ever before.

The second is the quality of goods. That washing machine, fridge, and color TV
that your local Best Buy employee uses are all unimaginably better than their
equivalents 50 years ago. It's a washing machine with multiple programmable
spin cycles. The fridge has controllable temperature, no freon, uses less
energy, and is quieter. The color TV is a flat screen 42" with a remote
control. This is also really hard to nail down, and it is a serious limitation
for inflation measures, many of which are based on a fixed basket of goods -
ignoring that the quality of a "raincoat" or "dental care" changes greatly
over time.

The third is the invention of new goods. That person on minimum wage today
also likely has Internet access, maybe even in their pocket. They have
Netflix, GMaps, spreadsheets, online travel agents, and wikipedia. In concrete
terms, this access to information and services is an infinite improvement over
30 years ago.

Finally, these comments ignore the historical context. Yes, some 12% of
Americans are below the poverty line, and that's awful. 50 years ago, it was
above 20%... and in the meantime, the population exploded. According to the US
Census, the number of people below the poverty line has remained flat at about
40,000 since 1959, despite the population as a whole doubling in the same
time. That's an amazing feat. It's terrible to have 12% of people in poverty -
but let's not forget that we're moving in the right direction.

So, yes, it sucks that a lot of people are on minimum wage, and we should work
to improve that. It's terrible that 12% of people in this country live in
poverty. But the enormous improvement in what minimum wage MEANS in concrete
terms, and the downward trend of extreme poverty, are largely due to the
success of places like San Francisco. These measures are not the "dark side of
capitalism" that TFA suggests.

~~~
losteric
12% is 40 _million_ people in poverty. 40,000,000.

Progress is good, but it's not victory. America is far from healthy.

Medical costs have skyrocketted beyond reason, housing is rising, food costs
are rising, and now we're starting a trade war with the nation that supplies
cheap consumer goods possible.

Netflix is cheap - so what? People in poverty were not complaining about
boredom.

~~~
CamelCaseName
Wow, that's 110% of the population of Canada.

Simply staggering.

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rdiddly
_" It illuminates the basic crisis and contradiction of the San Francisco Bay
Area, which is an example of capitalism at its most innovative and dynamic,
and simultaneously the site of severe inequality and failing public policies
and infrastructure."_

No contradiction there. Inequality was always both a feature and a bug of
capitalism. Inequality is kind of the whole motivation for participating in
capitalism. People start or invest in businesses because they want a little
bit more "inequality" in their bank account. It's not to enrich everybody
equally.

If you make widgets for $4.50 and sell them for $5 each to a million people,
you just extracted $0.50 from a million people and made yourself $500,000.
Inequality. It's weird how people have this blind spot where they fail to
integrate the big bad word "inequality" they see in the headlines, with the
supposedly good and morally harmless act of making oneself rich a.k.a.
unequal. I guess it's a disconnect between the micro & macro scales.

A rising tide of _water_ will lift all _actual_ boats, but a 'rising tide' of
money doesn't lift all boats, unless there's some intervention in a more
socialist direction, such as progressive taxation, to make the money act more
like water. Water spreads out flat and covers all ground equally, that's how
it manages to lift all boats.

~~~
TACIXAT
>If you make widgets for $4.50 and sell them for $5 each to a million people

You've identified a want and delivered a product to a million people. What is
the proper compensation for that? Should people not be allowed to identify
wants and address them for profit?

I think the error in your view is that any sale is predatory, when in reality
both the consumer and seller can profit. One gains something they need or want
and the other gets money. Sure, buying consumer crap isn't going to lift you
out of poverty, but you're still getting a benefit from the transaction.

~~~
rdiddly
I'm not trying to outrage you, nor do I necessarily care what's "proper" or
"allowed" or "right/wrong" since literally nobody making policy decisions is
asking me about it anyway. I'm saying quite literally, and as blandly as
possible given my way of talking (and even more blandly after an earlier
edit), that in selling to people, you extract wealth from them, which creates
wealth inequality. The more you do it, the more unequal it gets. Pretty
straightforward, I thought.

~~~
TACIXAT
I'm not outraged and it's pretty silly to assume I am. That said, what if a
factory owner in China makes widgets and sells them to Americans. Is that
increasing inequality?

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ucaetano
America is still paying the price of Robert Moses' folly.

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suprgeek
The housing and culture aspects mentioned are the very small tip of the dark
side iceberg.

Some of the other aspects: 1) The weaponization of profiling and targeting
capabilities

2) Complete eradication of of the cultural notion of "Privacy" :- most people
coming of age today think nothing of sharing the most private info in search
of a few baubles (Likes, discounts, whatnot)

3) Pervasive and inescapable monitoring in every facet of our lives

In short - all of the preconditions are there for a venal system that might
give rise to a (technologically)ultra-capable fascist.

