7 ms·

This is great and all, but part of me is really cynical about corporate philanthropy like this. First off, all but $25 of the $500M will be loaned out to devel

This is great and all, but part of me is really cynical about corporate philanthropy like this. First off, all but $25 of the $500M will be loaned out to developers at below-market interest rates and the other $25 will be donated to related services. Good on Microsoft for committing capital that could be put to other uses, but this isn't a donation; it's philanthropic lending. Depending on the interest rates of these loans, they'll wind up keeping much of that principle. Yes, people will surely benefit from this, but this looks really conservative for such a headline. Corporate taxation is a hot-button issue these days, but one can't help but notice how easy it is to shun government for being wasteful in providing housing services while private industry is being applauded to essentially buy the process of welfare. And while there are heated debates about what major companies should contribute (or avoid contributing) in taxes, can we even agree that affordable housing sponsored by private money is a little contradictory here?

techsupporter 8y ago
FWIW, I completely agree. It is super frustrating that our local governments here, outside of Seattle and a handful of efforts elsewhere in the region, won't make the investments that are needed. But we need those investments, somehow, and I'm willing to let private businesses make them while we also have the public debate over getting our governments to get moving.
sandworm101 8y ago
It is even more evil than that. Those below-market interest rates will be deducted from MS's tax bill. In a few years, MS will be earning profits from these loans AND the government will be chipping in via the reduction in their corporate income tax. Frankly, given the amount of money each of the big tech companies are sitting upon, they should all be branching out into banking. Maybe charitable loans are a way of doing this without actually going through the hoops of becoming a bank.
- JumpCrisscross 8y ago
  > Those below-market interest rates will be deducted from MS's tax bill This is true of all charitable giving. They still make less money than if they invested their money at market rates. I don’t see why every good act requires a negative knee-jerk reaction.
  - sandworm101 8y ago
    Because saying that they are "pledging" 500m is disingenuous. The article should make clear exactly how much of a hit MS is taking ... if they are taking a hit. This is not the same as me pledging money to a charity and should not be described in such terms.
    - sigstoat 8y ago
      so complain that the nytimes journalists can't math. it isn't microsoft's job to explain their charitable giving in the least charitable possible terms. it isn't as though you go on dates and enumerate your moral failings.
- GoodJokes 8y ago
  Given the amount of money these companies are sitting they should just handover 10billion to the county. 136 billion in cash. Go eff off Microsoft and every other company like this.
ralusek 8y ago
It's potentially an interesting demonstration of how keeping an area capable of housing low-skill workers can be beneficial to keeping their own high-skill workers' neighborhoods staffed with those low-skill jobs. Something I always find really interesting, as a San Francisco resident, is that people seem to think that the market is incapable of resolving the problem of the purported loss of low-skilled workers to act as the baristas, servers, deliveries, etc, because rising cost of living drives those people out. But there are many obvious avenues in which this resolves itself, the most obvious of which is that the prices of those services simply rise until it becomes worthwhile for those people to commute further, or that they can start to move back into the city. Now, maybe this is yet an alternative to the more straightforward equilibrium, wherein some of the employers in the city begin to provide lower-skilled workers with housing for the benefit of their own workforce. I have no idea what Microsoft's motivation for doing this is, but it would be an interesting possibility.
- opportune 8y ago
  Also, providing tax-funded low cost housing as a community to make sure you don't lose your regional baristas and cooks is basically a tax payer subsidy to keep eating out affordable.
  - omeid2 8y ago
    if eating out becomes unafforadble, many jobs and countless hours of leisure will be lost. No one complains about making flying affordable with billions of dollar in aviation subsidies, from R&D, Airport and related infrastructure maintenance, to straight-out bailouts. I am not making a case against affordable aviation, but rather giving an example of the fact that many aspects of society is simply not directly-profitable but necessary for a healthy economy and community.
    - lotsofpulp 8y ago
      The correct solution in that case would be to give people cash, so that the subsidy is properly accounted for, otherwise it will be lost to corruption via various accounting tricks and games that politicians and vendors can play, and taxpayers will never get a true picture of their government (as is the situation now). See defined benefit pension benefits in lieu of cash pay.
walrus01 8y ago
I was sorely tempted to paste a URL to the Steve Ballmer "developers developers developers developers" video.
rectang 8y ago
Absolutely. This isolated charitable act does not undo the concentration of power arising from structural advantages benefiting corporations. It is merely a corporation granting a largesse.
ams6110 8y ago
Here's another take: possibly the loans are not just below market rate but loans that traditional lenders wouldn't make at all. "Affordable housing" is high risk housing because the buyers/tenants are lower income. If this fund will make possible projects that could not get financed otherwise, then it's a good deal for everyone.
- taurath 8y ago
  If it brings the price of housing down, then it’s good. If it gets a bunch of people into loans they can’t afford at the top of a record bull market, then it’s bad
  - jonknee 8y ago
    They aren't giving out mortgages for single family homes... > The loans could go to private or nonprofit developers, or to governmental groups like the King County Housing Authority. As the loans are repaid, Mr. Smith said, Microsoft plans to lend the money out again to support additional projects.
    - taurath 8y ago
      Yes, but to be affordable at least at first there has to be a subsidy for those middle income people to be able to afford it. Either you directly pay developers their profit that they don’t get by charging market rates (a subsidy), or they allow earners to get loans. Median price is 900k on the east side, and even at the top of middle income (124k, family of four) you can’t afford a house anywhere near that median. How do you fill that gap?
      - jonknee 8y ago
        Because they're not building single family homes in Medina? Multi family housing in various parts of the metro (including Snohomish county). The Seattle Times has more information including a bit more about geography: https://www.seattletimes.com/seattle-news/homeless/microsoft-pledges-500-million-to-help-develop-affordable-housing-in-seattle-and-on-eastside/ https://www.seattletimes.com/seattle-news/homeless/microsoft... The key is zoning and it sounds like they have some local buy-in from politicians (see the attached statement of mayors in that article). I'm skeptical that happens, NIMBYs have a way of stalling up zoning, but it's a still a step in the right direction.
conanbatt 8y ago
Because when the corporate company does it, it goes out of the pocket of the executives that make the decision. When the state does it, it goes out from the pocket of somewhere else and into their own.
- rectang 8y ago
  It's only money "belonging" to those corporate executives because we have arbitrarily decided to apportion absurd wealth to those individuals. What's more unjustifiable: taxation, or granting all the rewards of capitalism to a minuscule minority of the population?
  - deleted 8y ago
    [deleted]
  - antidesitter 8y ago
    All the rewards?
    - rectang 8y ago
      Yes, asymptotically. Wealth is ever more concentrated with each passing year -- and the pro-inequality ideology that underpins that ever-increasing concentration of economic power (and therefore political power) in the hands of the few admits no limits.
rjf72 8y ago
When a politician pushes for affordable housing, what is their motivation? We'd like to imagine it's altruistic and ideally in some cases it is. But in practice, there is near invariably a major political motivation. The 'job' of politicians is to accumulate votes, which lets them stay in office. And so the outcome of spending directed towards housing is, from their perspective, going to be measured in terms of the accumulation of votes. For one of the most clear examples of this, the Civil Rights Act was championed by LBJ. LBJ was for his part an overt and outspoken racist [1]. I mean a real and genuine racist, not somebody making politically incorrect comments here and there. But he felt that passing the Civil Rights Act would work to his, and his party's, political benefit. The reason I mention this is because I think you need to consider motivations when determining which system is more desirable. What is Microsoft's motivation? It's not the short term gain of capital, since they could earn more elsewhere. And it's also unlikely to be an extremely long term purpose, since those aren't the sort of ideas shareholders often look too kindly upon. I think it's probably similar to what somebody else mentioned. They want to ensure there is a stable supply of low-skill low-earning employees that can provide affordable labor for local companies (including Microsoft) and for their employees. And they're looking at achieving this in the not so distant future. I find this motivation much more desirable, since sustainability and progress is key. In politics there are many people will keep voting for parties that they perceive as giving them things, even when there is no tangible progress being made decade after decade. Because of this, progress becomes secondary to the act of being perceived as giving ostensibly towards achieving progress, especially as politicians are giving people things with other peoples' money. But for a company, success is going to be quantified in ways where progress is all that matters. If this affordable housing is ineffective, worsens the social situation in the city, or whatever else - then they will have effectively wasted half a billion dollars of their own money. They have a major incentive to make sure this works. The short version of this is that I definitely don't see affordable housing being sponsored by private interests as being contradictory. On the contrary I'd expect to see far better outcomes from the private than public sector on issues like this when there is a significant private industry benefit to be had from affordable housing. [1] - https://www.snopes.com/fact-check/lbj-voting-democratic/ https://www.snopes.com/fact-check/lbj-voting-democratic/
- selimthegrim 8y ago

techsupporter 8y ago

FWIW, I completely agree. It is super frustrating that our local governments here, outside of Seattle and a handful of efforts elsewhere in the region, won't make the investments that are needed. But we need those investments, somehow, and I'm willing to let private businesses make them while we also have the public debate over getting our governments to get moving.

sandworm101 8y ago

It is even more evil than that. Those below-market interest rates will be deducted from MS's tax bill. In a few years, MS will be earning profits from these loans AND the government will be chipping in via the reduction in their corporate income tax. Frankly, given the amount of money each of the big tech companies are sitting upon, they should all be branching out into banking. Maybe charitable loans are a way of doing this without actually going through the hoops of becoming a bank.

JumpCrisscross 8y ago
> Those below-market interest rates will be deducted from MS's tax bill This is true of all charitable giving. They still make less money than if they invested their money at market rates. I don’t see why every good act requires a negative knee-jerk reaction.
- sandworm101 8y ago
  Because saying that they are "pledging" 500m is disingenuous. The article should make clear exactly how much of a hit MS is taking ... if they are taking a hit. This is not the same as me pledging money to a charity and should not be described in such terms.
  - sigstoat 8y ago
    so complain that the nytimes journalists can't math. it isn't microsoft's job to explain their charitable giving in the least charitable possible terms. it isn't as though you go on dates and enumerate your moral failings.
GoodJokes 8y ago
Given the amount of money these companies are sitting they should just handover 10billion to the county. 136 billion in cash. Go eff off Microsoft and every other company like this.

ralusek 8y ago

It's potentially an interesting demonstration of how keeping an area capable of housing low-skill workers can be beneficial to keeping their own high-skill workers' neighborhoods staffed with those low-skill jobs. Something I always find really interesting, as a San Francisco resident, is that people seem to think that the market is incapable of resolving the problem of the purported loss of low-skilled workers to act as the baristas, servers, deliveries, etc, because rising cost of living drives those people out. But there are many obvious avenues in which this resolves itself, the most obvious of which is that the prices of those services simply rise until it becomes worthwhile for those people to commute further, or that they can start to move back into the city. Now, maybe this is yet an alternative to the more straightforward equilibrium, wherein some of the employers in the city begin to provide lower-skilled workers with housing for the benefit of their own workforce. I have no idea what Microsoft's motivation for doing this is, but it would be an interesting possibility.

opportune 8y ago
Also, providing tax-funded low cost housing as a community to make sure you don't lose your regional baristas and cooks is basically a tax payer subsidy to keep eating out affordable.
- omeid2 8y ago
  if eating out becomes unafforadble, many jobs and countless hours of leisure will be lost. No one complains about making flying affordable with billions of dollar in aviation subsidies, from R&D, Airport and related infrastructure maintenance, to straight-out bailouts. I am not making a case against affordable aviation, but rather giving an example of the fact that many aspects of society is simply not directly-profitable but necessary for a healthy economy and community.
  - lotsofpulp 8y ago
    The correct solution in that case would be to give people cash, so that the subsidy is properly accounted for, otherwise it will be lost to corruption via various accounting tricks and games that politicians and vendors can play, and taxpayers will never get a true picture of their government (as is the situation now). See defined benefit pension benefits in lieu of cash pay.

walrus01 8y ago

I was sorely tempted to paste a URL to the Steve Ballmer "developers developers developers developers" video.

rectang 8y ago

Absolutely. This isolated charitable act does not undo the concentration of power arising from structural advantages benefiting corporations. It is merely a corporation granting a largesse.

ams6110 8y ago

Here's another take: possibly the loans are not just below market rate but loans that traditional lenders wouldn't make at all. "Affordable housing" is high risk housing because the buyers/tenants are lower income. If this fund will make possible projects that could not get financed otherwise, then it's a good deal for everyone.

taurath 8y ago
If it brings the price of housing down, then it’s good. If it gets a bunch of people into loans they can’t afford at the top of a record bull market, then it’s bad
- jonknee 8y ago
  They aren't giving out mortgages for single family homes... > The loans could go to private or nonprofit developers, or to governmental groups like the King County Housing Authority. As the loans are repaid, Mr. Smith said, Microsoft plans to lend the money out again to support additional projects.
  - taurath 8y ago
    Yes, but to be affordable at least at first there has to be a subsidy for those middle income people to be able to afford it. Either you directly pay developers their profit that they don’t get by charging market rates (a subsidy), or they allow earners to get loans. Median price is 900k on the east side, and even at the top of middle income (124k, family of four) you can’t afford a house anywhere near that median. How do you fill that gap?
    - jonknee 8y ago
      Because they're not building single family homes in Medina? Multi family housing in various parts of the metro (including Snohomish county). The Seattle Times has more information including a bit more about geography: https://www.seattletimes.com/seattle-news/homeless/microsoft-pledges-500-million-to-help-develop-affordable-housing-in-seattle-and-on-eastside/ https://www.seattletimes.com/seattle-news/homeless/microsoft... The key is zoning and it sounds like they have some local buy-in from politicians (see the attached statement of mayors in that article). I'm skeptical that happens, NIMBYs have a way of stalling up zoning, but it's a still a step in the right direction.

conanbatt 8y ago

Because when the corporate company does it, it goes out of the pocket of the executives that make the decision. When the state does it, it goes out from the pocket of somewhere else and into their own.

rectang 8y ago
It's only money "belonging" to those corporate executives because we have arbitrarily decided to apportion absurd wealth to those individuals. What's more unjustifiable: taxation, or granting all the rewards of capitalism to a minuscule minority of the population?
- deleted 8y ago
  [deleted]
- antidesitter 8y ago
  All the rewards?
  - rectang 8y ago
    Yes, asymptotically. Wealth is ever more concentrated with each passing year -- and the pro-inequality ideology that underpins that ever-increasing concentration of economic power (and therefore political power) in the hands of the few admits no limits.

rjf72 8y ago

When a politician pushes for affordable housing, what is their motivation? We'd like to imagine it's altruistic and ideally in some cases it is. But in practice, there is near invariably a major political motivation. The 'job' of politicians is to accumulate votes, which lets them stay in office. And so the outcome of spending directed towards housing is, from their perspective, going to be measured in terms of the accumulation of votes. For one of the most clear examples of this, the Civil Rights Act was championed by LBJ. LBJ was for his part an overt and outspoken racist [1]. I mean a real and genuine racist, not somebody making politically incorrect comments here and there. But he felt that passing the Civil Rights Act would work to his, and his party's, political benefit. The reason I mention this is because I think you need to consider motivations when determining which system is more desirable. What is Microsoft's motivation? It's not the short term gain of capital, since they could earn more elsewhere. And it's also unlikely to be an extremely long term purpose, since those aren't the sort of ideas shareholders often look too kindly upon. I think it's probably similar to what somebody else mentioned. They want to ensure there is a stable supply of low-skill low-earning employees that can provide affordable labor for local companies (including Microsoft) and for their employees. And they're looking at achieving this in the not so distant future. I find this motivation much more desirable, since sustainability and progress is key. In politics there are many people will keep voting for parties that they perceive as giving them things, even when there is no tangible progress being made decade after decade. Because of this, progress becomes secondary to the act of being perceived as giving ostensibly towards achieving progress, especially as politicians are giving people things with other peoples' money. But for a company, success is going to be quantified in ways where progress is all that matters. If this affordable housing is ineffective, worsens the social situation in the city, or whatever else - then they will have effectively wasted half a billion dollars of their own money. They have a major incentive to make sure this works. The short version of this is that I definitely don't see affordable housing being sponsored by private interests as being contradictory. On the contrary I'd expect to see far better outcomes from the private than public sector on issues like this when there is a significant private industry benefit to be had from affordable housing. [1] - https://www.snopes.com/fact-check/lbj-voting-democratic/ https://www.snopes.com/fact-check/lbj-voting-democratic/

selimthegrim 8y ago