Tech Oligarchs and the California Housing Crisis

Silicon ValleyLet them pay.

Silicon Valley tech oligarchs are concerned about housing in California.

Let them pay.

Housing prices in the areas of their shiny new tech campuses are skyrocketing to unaffordability for many of the longer term residents and are raising the price of housing for their employees.  As the pro-developer LA Times had to admit, “The housing crunch, particularly acute in Bay Area cities such as San Francisco and San Jose, is a problem that the tech industry helped create by attracting well-paid new workers who can outbid longtime residents.”

So let them pay.

The tech oligarchs are not interested in rent control or rent stabilization ordinances to protect the longtime residents.  They’re not funding efforts to repeal the Costa Hawkins and Ellis Acts, which restrict the ability of cities to rent-stabilize apartments.  They want the housing crisis to be solved by taking zoning control away from cities and by allowing developers to run riot without any municipal controls, under the misguided notion that by building enough luxury housing, affordability will “trickle-down” to the peons.

And so the tech oligarchs are funding “Yimby” (“Yes in my back yard”) pro-developer groups which support Sacramento-mandated levels of density, engineered to maximize profits, overriding the individually crafted General Plans of distinctive communities throughout the state.  Those who see through the true nature of these AstroTurf groups have perceptively tweaked “Yimby” to “Wimby” (“Wall St. in my back yard”).  Not surprisingly, these tech oligarchs and their Wimby/Yimby puppets are the loudest voices in support of Sen. Scott Wiener’s SB827, which would allow indiscriminate densification throughout the state, using “mass transit” as an alibi.  (“Mass transit” as defined by Wiener is a bus four times an hour during rush hour.)

One of the tech CEO’s who is a major donor to one of Yimby groups recently said, “Technology companies have such insane margins that they’re one of the few sectors that can continue to be viable in this environment.”

Of course, tech employees outbidding existing residents, who are priced out of the market, is a major cause of displacement.  Despite some cosmetic changes to the bill as an afterthought to blunt criticism, SB827 cannot avoid all the impacts of gentrification and displacement in its mission to address the needs and desires of the tech oligarchs.

Let them pay.

While one might expect Ayn Rand toting, latte quaffing tech masters-of-the-universe to thumb their noses at concepts like “Community” and “Livability,” especially if they stand in the way of their G-d given rights to profiteer, this position is not as easy to reconcile with the self-styled persona of Sen. Scott Wiener, representing some of the most liberal parts of San Francisco.  It’s downright odd that someone who by rights should be thumbing his nose at the 1% (or in this case, the 1% of the 1%) is freely regurgitating Reaganomic trickle-down talking points; but Wiener, whose largest donor base comes from developers and the real estate lobby, seems to be going the extra mile in making a fair bid to be known as Sacramento’s patron saint of crony capitalism.

Wiener and his cabal of self-styled progressives act as if the “law of supply and demand” is not a variable and disputable economic or sociological principle – or as if induced demand doesn’t exist in a flexible market – but is some kind of immutable natural law, which would put Newton and Kepler to shame.  To have those closer to Marx suddenly embracing Mundell and Laffer is the kind of cognitive dissonance which ordinarily causes heads to explode, and, quite frankly, I’m not sure that hasn’t been the case here.

And yet, considering the tech corporations’ “insane margins” and considering Sen. Wiener’s proven lack of squeamishness when it comes to taxing ordinary Californians (gas tax, anyone?), he should have no problem looking to corporations for major funding to solve the housing crisis which they, in no small part, helped to create.

But then again, the key phrase about Sen. Wiener’s lack of squeamishness when it comes to imposing taxes seems to be “ordinary Californians.”  He has demonstrated he doesn’t have a problem with that, but taxing the “insane margins” of the tech corporations is probably not regressive enough for him.  Ordinary Californians simply can’t spread money around Sacramento the way the oligarchs can.  So when Wiener says, “It’s about damn time that the tech sector started to engage in housing policy,” it sounds perforce like he’s looking towards future campaign donations rather than actual housing solutions.

It also looks like Wiener is less concerned with the implications of increasing income inequality, which plays a major role in the housing crisis.  Rather than try to deal with the problem of income inequality which the tech oligarchs are creating, Wiener and his Yimby cronies attempt to deal with a symptom of income inequality instead of its actual cause.  Let’s tackle housing, not the income inequality creating the housing crisis; and let’s put a target on single-family housing, which can generate untold profits if we upzone it, by labelling it as “racist.”

One would hope that Wiener, whatever wing of whatever party he belongs to, would be interested in dealing with the issue of income inequality, but this is the same guy who said: “I could care less how much money developers make.”  Of course not.  Should we really be surprised that the by-right upzoning of his bill represents one of the single largest wealth transfers from the public to the private sector in California history?  Should we be shocked that Wiener and his self-righteous cronies are doing nothing to address the growing income disparity of ordinary Californians with the tech oligarchs and their “insane margins”?  Is it really surprising that he won’t even begin to think about how all that money he is gifting to developers could be used to help build subsidized affordable housing, for example?

Let the developers pay, too.

One of the many built in fallacies and policy errors within SB827 is its attempt to use mass transit as an alibi to densify.  Public transportation should serve the needs of urban planning, not the other way around.  If Wiener wants to look for causes of the housing crisis to fix, then he should – as the LA Times did – draw the nexus between massive job creation and increased housing demands.  And policy should be determined accordingly.

Consequently, in addition to doing a better job taxing the “insane margins” of tech companies, no massive projects should be approved under CEQA until and unless a concurrent solution for the accompanying housing impacts are dealt with.  This would mean eliminating statements of “overriding considerations” which allow agencies to effectively not have to deal with housing impacts.  It would also mean that the tech corporations would be asked to step up and take responsibility for the problems they are creating, as they create them.

Let them pay.

If, as a result, tech companies threaten to move to Merced or Modesto or Fresno or Victorville – or out of state, for that matter – let them. Economic justice demands not caving to all the demands of the corporate oligarchs.  Economic development needs to be spread throughout the state and throughout the country and encouraging economic development in struggling areas is a good thing.  If the jobs magnet is creating the housing crisis, then part of the solution should lie in job creation in areas in which housing is abundant and affordable.  Instead of trying to cram everyone into a few megalopolises, while the tech oligarchs live in their dachas on massive landed estates, we should literally be working to spread the wealth and share in the “insane margins.”  As much as I love California, I’d also love to see new life breathed into Detroit and other rust belt cities, for example.

At some point we’re also going to have to consider the ultimate implications of the spirals of growth that Wiener and the oligarchs are assuming should be the natural state of things.  Now is as good a time as ever.  The notion of never-ending growth is the very definition of unsustainability.

My guess is that not bending over backwards to kiss the collective tochuses of the oligarchs would be bad for the collective treasuries of the reelection campaigns of a good number of Sacramento politicians, but standing up to the tech corporations and demanding a fair share of their “insane margins” is good policy which would actually make a difference in providing real solutions to our state’s housing crisis.  This is just another reason why we need to embrace the principles of subsidiarity and devolve power from the special interest puppets in Sacramento.

Additional measures to solve the housing crisis include:

  • Repealing the Costa-Hawkins and Ellis Acts, thereby untying cities’ hands and allowing them to implement more effective rent stabilization measures.
  • Bringing back redevelopment agencies, which Sacramento abolished in a massive money-grab, in order to focus on creating affordable housing.
  • Giving cities more leverage in negotiating with corporations for fair-share public benefits, including housing.
  • Empowering cities and local agencies through subsidies to create more subsidized affordable housing; solving the pension crisis (as well as wasteful Sacramento spending) and devoting the resources created in the process to housing.
  • Acknowledging that top-down, one-size-fits-all mandates are not suitable for a state as diverse and wide-ranging as California, instead encouraging regional cooperation and individualized solutions which respect the unique DNAs of California’s diverse communities.

The tech oligarchs’ dystopian vision has been brilliantly exposed by urban scholar Joel Kotkin, who has discussed the implications of densified urban living for workers and plebeians, who are regarded by the tech corporations and the politicians who serve them at best as modern-day serfs.  In attempting to deny the importance of quality-of-life issues (except for themselves) or any concept of living in a community with real community character (because they are believers in profit über alles), the oligarchs and their politicians are dehumanizing the very people they are supposed to serve and who have made them rich.  To them we are only widgets, stats or marks.

Let them pay.

Even if they’re not so good at logic or policy, Yimby groups seem to be talented at chanting.

So here’s a new one for them.  In the spirit of the classic scene in “The Bad News Bears in Breaking Training,” the Yimbys who are truly interested in real housing solutions might want to consider a new chant, directed at the developers, the tech corporations and their “insane margins”: “Let them pay!  Let them pay!  Let them pay!”

ice-mayor of Beverly Hills