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TLDR: It’s the land, stupid. Just as it has been since advent of agriculture: the landed class holds power over all productivity, and as productivity rises the
by ethanbond 4y ago
TLDR: It’s the land, stupid. Just as it has been since advent of agriculture: the landed class holds power over all productivity, and as productivity rises the landed will reap more of its reward, ensuring desolate poverty immediately adjacent to extreme productivity.
Productivity improvements (from tech, public investment, private investment, and sheer population scale) are not evenly distributed, but they raise the value of nearby land which everyone must stomach the costs of, from individual laborers and teachers to grocery stores and coffee shops.
Cost of rent rising with productivity obviously ensures impoverishment of people who cannot achieve the higher productivity, and the diminishment of living standards even for people who can (see: Palo Alto residents qualifying for public housing assistance with $200k+ household incomes).
The people who primarily win as productivity rises is not the people producing but those who own the land on which producers live and work. It’s a story as old as time. Land is power (see: feudalism; the Queen of England whose wealth and status was from dynastic landlording).
It’s not even a new problem in SF. Post gold rush people were asking the same questions, one of whom was Henry George who wrote a great book on this land-oriented (and sector-agnostic) view.
Of course California, being already controlled by the landed class, has gone off the rails in the opposite direction with Prop 13 ensuring that landlords have pretty much perpetual rent seeking authority over the entire state’s productive power, whether it be generated by nature, technology, or institutions. Note the conspicuous absence of the productive power of people who simply sit on a piece of land, and their conspicuous accrual of wealth and power.
This dynamic causes poverty to grow with progress, only to be mitigated by enormous public expenditures to hide the effects of it.
- acapybara 4y agoNo need to put up with this! Smart people are everywhere. We can build together remotely. We can make our own companies. If we need to, we can make our own money systems.
- ethanbond 4y agoAll of which require land. You are seeing the exact same effects in places that are highly desirable for remote work. People bring their NYC or SF incomes to places like Austin, Raleigh, Bozeman, etc. and all the same stuff albeit different intensities. Land is finite and it’s an absolute necessity for all productivity.
- deleted 4y ago[deleted]
- blep_ 4y agoWhat work can be done remotely but not from a rented apartment in a LCOL area?
- ethanbond 4y agoAn LCOL area that successfully attracts people doing high wage work (remote or not) actually becomes a high cost of living area. That’s the point. If you are a landlord in a city where median income is $50k/yr and you find out a whole lot of people earning $400k/yr are moving there, what do you do? Unless you’re a complete dummy or want to run a charity for $400k+ earners, you raise rent.
- closeparen 4y agoThere’s not actually that much of a constituency for being on top of the world economically and then living in the exurbs of a third string metro. Some, sure. But by and large people are going to put the kind of incomes that are possible in tech towards living in nice places. And that’s gonna put upward pressure on land values there. Even more so considering how few nice places there are in America.
- anonuser123456 4y agoLand value tax!
- nostrademons 4y agoSort of. This dynamic occurs to the extent that there is a widespread monied middle-class that is competing for housing which doesn't exist. Each person needs a home; there are more people than homes; therefore the people bid up the prices of homes to consume all of their available income. It didn't exist when the monied class was limited to entrepreneurs, VCs, and other capitalists. Back around 2005 or even 2010 when average engineer salaries were $150K instead of $500K and "Silicon Valley wealthy" meant Jobs/Page/Brin/Zuckerburg/etc. and the founders whose companies they bought, average home prices were about 1/3 of what they were now. In fact, the monied class often became the landed class as they traded tech wealth for land. I know one old-money brand-name tech family with land holdings in the Bay Area that are roughly twice the size of San Francisco. There could be 2 million people living on that land; instead there are about 12, because the family in question would rather keep it as conservation ranchland than developed urban area. It's the same story of commoditization & inflation that economists have known for centuries. When only a few people have money, they have the power. When everybody has money, nobody has money, and the money all goes to people who own the scarce goods they need.