Friday, 18 April 2014

Collision of the Dismal Science and Reality-Denying People

As the name of this site (SJREFUGEE - that is, San Jose Refugee) implies, my family and I are, shall we say, escapees from the San Francisco Bay Area.  We're of course not 'refugees' in the traditional sense of the word.  We chose to leave central California a while back for a number of issues, none of which was related to storm disasters or political persecution.  And we live a pretty nice life these days in Paris, which is one of the truly great cities of the world.

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But having lived the bulk of my adult life in the Bay Area, and still owning a property in Sunnyvale (it's a rental, and a hedge for our retirement), I try to keep up on the goings-on, out there.

By now, most everyone with even the slightest connection to the Valley, or to Tech, knows about the infamous "Google Buses" that have been the target of various attacks in San Francisco.  It's a backlash against the economic forces currently roiling the city.  

This article, published in the online journal TechNet, really encapsulates better than any I have ever seen the situation.  It's strongly San Francisco-centric, but an excellent synopsis.

The middle and late '00s, marked by the economic world-wide slow-down were not particularly kind to the Bay Area, with significantly worse unemployment compared to the rest of the US, and commensurate out-migration.  California more broadly saw a massive wave of people leaving for less costly places like Texas or Nevada.  

Of course, California and the Bay Area in particular have long been extremely expensive places to live.  Because buildable land is one thing that cannot be "made" in any significant quantities, the laws of supply and demand are pretty much iron-clad.  When our family first arrived in Los Angeles about 40 years ago, the property boom had really just started to take off.  But a family could reasonably expect to own a home on a middle-class salary.

All that had changed by the time I was out of school and working.  In 1994, when I took my final degrees and looked for my first market-rate housing, I was shocked by the prices of what were described as "entry-level" homes.  A tiny, 40 year old shack in Palo Alto, California (I was a Stanford student) that could be kindly described as "mid-century shabby chic" at that time would fetch between three and four hundred thousand dollars.  Using the old rules - where one's mortgage should not be more than three times one's annual salary, you can easily see why the Bay Area was near the bottom of the rankings in the US of home affordability.  With the great recession, home prices had fallen, significantly, and possibly for the first time in my lifetime.

Fast forward further, and there is today apparently another "tech bubble" growing in and around Silicon Valley, and housing prices are climbing again at dizzying rates.  That shabby chic Palo Alto rancher is now easily well north of a million dollars.  The Facebook Boom is of course good news in some respects for Bay Area governments, who finally can stop cutting services as payroll and property taxes rebound.  It's also good for tech workers and their adjacents.  But it's not universally good, and the down-side includes the pricing-out of many middle income residents, some of whom are relatively long-time residents.  This is particularly acute in San Francisco, which 10 years ago was not really part of the "tech" economy in any real way.

All of that has changed, with demographic changes that are not well-documented (for example, the famous work of sociologist Richard Florida, whose book The Rise of the Creative Class highlights stark differences between Gen-Xers and baby boomers, and the so-called "millennials".  My generation (decidedly Gen-X) preffered quieter, suburban settings.  A single family home with some land.  The millennials reject that, preferring the new urbanism of "walkable" neighbourhoods (I suspect, in no small part driven by a desire to avoid cooking their own food, and a greater desire to be able to go out on a Friday or Saturday, or perhaps even Thursday - the "new" Friday night, have a bit too much to drink, and be able to walk home without risking a DUI or worse) and density.  Hence, the movement of companies from the actual Valley to former warehouses and other artefacts of the old economy in San Francisco (e.g., Twitter).

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This makes a tight situation even more acute.  It used to be that participants in the new digital economy had to live in the Bay Area.  They now have to live in San Francisco.  When 8 million people desire to live in a three or four county-area, that's a problem.  When they want to live in a single city that is less than 50 square miles, that is a crisis.

There is a lot of teeth-gnashing going on, as people in San Francisco and beyond confront the following realities.

It is not possible to have, simultaneously, strong enironmental laws that severely restrict housing, activist preservationists who demand that the aesthetics of neighbourhoods remain unchanged, massive increases (even moderate ones) of people from other places, liberal immigration policies, and afforable housing that protects people of modest means.

You can have some of them, but to demand all is to square the proverbial circle.

So the result is people, who on virtually any other day would be championing ride sharing, attacking buses that shuttle workers from San Francisco to Mountain View.  You have people who on the one hand demand amnesty for illegal immigrants and push for softer immigration laws that will bring ever more people demanding that rules be put in place to ensure that newcomers cannot come to San Francisco.  

An interesting side effect - law of unintended consequences, if you will, is that 50 years of strict zoning (ostensibly for environmental reasons) in San Francisco have turned the city into one of the least "diverse" (measured by black and Latino residents) in the Bay Area.  In 1970, one in eight San Franciscans (13%) was black.  In 2010, that figure had been cut by more than half.  Similarly for Latinos, in 1970, about one in six (12%) was Hispanic.  That figure has grown of course to 15% in 2010, but pales in comparison to the state of California.  San Francisco added about 100,000 residents in the past 40 years, which means that it has added 36,000 Latino residents (using some basic algebra, the numbers have grown from 84,000 to about 120,000 in 40 years).

In California, the corresponding figures: total population in 1970 of 20 million.  Total in 2010 of 37 million.  In 1970, Hispanics made up about 12% of the total California population - an almost exact match for the city.  That amounts to about 2.4 million.  The current Hispanic population in California is now 13 million or so, more than one in three.  

So, over 40 years, the state has added about 10 million Latinos, an increase of 400 or so percent.  The city of San Francisco has seen its Latino population grow by 43%.  An order of magnitude less.

Thus, San Francisco's ostensibly "liberal" housing policies have resulted in a sort of quasi-ethnic cleansing.

One thing I find most interesting is the arguments one hears about how newcomers (and I am strongly suspicious that what they really mean are tech heads from Illinois, not border jumpers) are pushing out long-term residents, fundamentally changing the character of the city.  I suppose that this is true.  When I was living in San Jose, the "Metreon" (a chimeric shopping/entertainment/dining venture) opened just south of Market Street.  The area had long been somewhat dodgy.  Now, with the addition of Pacific Bell Park (or whatever it's called these days), the entire South of Market area, including large parts of the so-called "Mission District" - long home to Mexican and other Latin American residents - has changed entirely, with gleaming new apartments, "artisan" stores and restaurants with "hyper local" sourcing, and coffee shops proudly boasting of "fair trade" products.  

The latter is extremely ironic.

Many activists are demanding an end, and for the city to act to preserve the makeup of San Francisco.

It's a bit to me like conservatives elsewhere who cling to visions of what the country was like in 1950; trying to preserve in legislative amber some idealised view.  No one stops to ask who the people now demanding protection replaced.  For example, the Castro district, now the ostensible cultural centre of San Francisco's gay culture, at one point was the home to a socially conservative, blue-collar Irish Catholic community.  That is California - waves of newcomers push out to some degree their antecedents.  One of the little ironies of the TechNet piece is a focus on a "long-term" renter who is losing his home due to rent rises - who himself is an immigrant from China.  I suspect that few of the most timourous activists have roots in San Francisco going back even one generation.

They all replaced somebody for the most part.  So, who decides at what point in time to apply the amber?  People are very happy to preserve the status quo, but only after they've got their piece.  Wearing fair-trade hemp shirts does not innoculate you from human nature.

Solutions are not going to be easy, as the TechNet piece points out.  And people in San Francsico I suspect are finding out that the laws of demand, supply, and price are not subject to debate any more than gravity.

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