7 ms·

How New York and San Francisco's Tight Housing Markets Are Hurting the Economy

80 points by raldi 12y ago

robrenaud 12y ago
> Reducing land-use constraints in high-productivity New York, San Francisco and San Jose to the level of the median city would expand their labor forces, boosting U.S. gross domestic product by 9.5 percent, according to estimates from a new study by the University of California at Berkeley's Enrico Moretti and the University of Chicago's Chang-Tai Hsieh. That seems so implausible. The combined population of NYC, SF, and SJ is merely 3% of the US population. I am sure that fraction bunches above its weight, and nearby residents surely contribute too. But how much more effective would NYC/SF/SJ be if they were cheaper to live in?
- raldi 12y ago
  It's not that the current residents of those cities would become more productive; it's that people currently living elsewhere are less productive in those other places than they would be if they moved to NY, SF, or SJ. So if those cities built lots more homes, people would rush in from elsewhere, and those newcomers would be more productive in their new locations than they were in their old ones, increasing US GDP 9.5%.
  - adventured 12y ago
    It's the ~$1.7 trillion boost to GDP that is difficult to believe. The entire GDP of all of California combined is $2 trillion. It's blatantly obvious that 9.5% GDP boost is a fraudulent number.
    - raldi 12y ago
      It's possible that there are errors in the reasoning, but I think you're taking things a step too far with "blatantly obvious" and "fraudulent". Why not read the study and look for oversights?
      - adventured 12y ago
        It is blatantly obvious. When you're talking about a sum almost as large as California's entire economy, I don't believe it can be anything but obvious.
        NhanH 12y ago
        Thought experiment: If alien landed on NYC and SF, then decided to abduct everyone in the two cities and wipe out the cities, how much of a reduction in US GDP it would be for the next year?
    - bane 12y ago
      GDP affects the entire country not just these localities and cities network into and recruit huge areas around them. NYC isn't Boulder, CO. It has global reach, and actions taken in New York can affect the movement of money all over the planet. An example, suppose somebody can suddenly afford to live in NYC, where they get a job moving commodities through an import/export business. Their contribution to NYC's GDP is minor: salary and profit on the deals they make. By getting this person into position to make these deals, American commodity producers suddenly get additional access to global markets they might not have had otherwise and suddenly corn from Stoy, Illinois is finding its way to China and Wheat from Russell, Kansas is ending up in Germany. Moving those commodities employs truckers, truck manufacturers, ship crews, cargo container companies, shipping companies, etc. and all of those additionally network and recruit other industries: fuel, navigation, refrigeration, packaging, etc. So while our NYC broker friend might only contribute a fraction of a fraction of a percent to NYC's economy (maybe not even a million dollars all told), his impact on the U.S. economy is vastly magnified. He may single-handedly connect enough sellers to enough buyers to keep hundreds of people fully employed and cause tens of millions of dollars of value to be created and distributed. The alternative to him not being in place? The crops go to waste, or the farmers are simply paid to not grow them.
      - adventured 12y ago
        You're talking about a sum equal to the entire economy of New York City and SF combined. A boost to NYC and SF through some (even a lot of) population expansion, will not exceed the total existing GDP of all of NYC + SF. It's an absurd premise.
        bane 12y ago
        No, I'm saying that the national GDP contributions of a city like NYC far exceed that city's local GDP contribution. In other words, NYC does not exist as a closed system. You don't seem to understand that.
        ThrustVectoring 12y ago
        Estimates for positive externalities per dollar of salary range from -0.5 to 2.0, depending on political assumptions on what the value of, say, banking and teaching is. Like, it helps, but it doesn't seem like the numbers still add up.
- Cowen 12y ago
  According to some napkin math with these figures[0], the three metro areas combined account for 11.7% of US GDP in 2012. So yeah, I'm not sure what estimate they're using for the growth multiple from liberalizing land-use constraints, but if they're predicting a near doubling of the combined metro economies, it's safe to assume it's pretty high. I do agree that land-use restrictions are currently holding all three cities back, my Friday night napkin math (read: probably wrong, way oversimplified math) just thinks their estimates are a little optimistic. EDIT: Another question would be what's the time frame for this addition to GDP? 9% growth in one year is insanely great. 9% growth over ten years is insanely bad. [0] http://en.wikipedia.org/wiki/List_of_cities_by_GDP http://en.wikipedia.org/wiki/List_of_cities_by_GDP
  - eastbayjake 12y ago
    > Another question would be what's the time frame for this addition to GDP? The actual paper[1] simply says that "lowering regulatory constraints in New York, San Francisco, and San Jose cities to the level of the median city would expand their work force and increase U.S. GDP by 9.5%", so whatever timeframe it would take to reduce those regulatory constraints. (In SF that sounds like a project measured in decades, although maybe the imbalance in supply and demand will cause a breaking point that forces the city to engage with real solutions to the problem.) [1] http://eml.berkeley.edu//~moretti/growth.pdf http://eml.berkeley.edu//~moretti/growth.pdf
  - raldi 12y ago
    Which part of this chain do you think is the weak link? 1. If SF had typical land-use policies, it could build enough homes to accommodate twice its current population 2. If they did that, they'd be able to fill those homes with people 3. Those people, upon arriving, would have approximately the same productivity as current San Franciscans 4. SF would thus double its contribution to the US GDP
    - robrenaud 12y ago
      It's not as though those contributions come for free though. If talent leaves other places to go to NYC/SF/SJ, those other places become less productive.
- cstanley 12y ago
  This reminded me of a cover page Economist article in early April called "Space and the City" http://www.economist.com/news/leaders/21647614-poor-land-use-worlds-greatest-cities-carries-huge-cost-space-and-city http://www.economist.com/news/leaders/21647614-poor-land-use... In the article: "The costs of this misfiring property market are huge, mainly because of their effects on individuals. High housing prices force workers towards cheaper but less productive places. According to one study, employment in the Bay Area around San Francisco would be about five times larger than it is but for tight limits on construction" ... "Lifting all the barriers to urban growth in America could raise the country’s GDP by between 6.5% and 13.5%, or by about $1 trillion-2 trillion." Conclusion... not completely implausible
capkutay 12y ago
San Francisco has bigger issues with class/job sector warfare instigated by city politicians. "The tech industry has come like a train wreck into this neighborhood and into this city," [0] Theres this backwards mentality purporting the idea that market-rate housing development will drive out long-time residents. In reality, its the lack of market-rate development that leads to tech workers out-bidding low-income families for apartments (especially in areas like the mission). 0: http://www.sfexaminer.com/sanfrancisco/campos-to-propose-moratorium-on-market-rate-housing-in-the-mission/Content?oid=2928953 http://www.sfexaminer.com/sanfrancisco/campos-to-propose-mor...
- MBlume 12y ago
  So when is David Campos up for reelection? How quickly can we mobilize to eliminate him? ETA: Next year, 2016, so we have about a year and a half.
  - capkutay 12y ago
    I don't want to turn this thread into a political debate, but I'll just leave this here: http://www.sfhac.org/stop-the-mission-moratorium/ http://www.sfhac.org/stop-the-mission-moratorium/
  - raldi 12y ago
    It takes less than five minutes to register to vote by mail in San Francisco, and doing so means you're a lot more likely to vote, and to do so while carefully reading a voter guide. Here's how: https://www.reddit.com/r/housingforsf/comments/22xoht/help_hfsf_register_to_vote_by_mail_and_tell_us/ https://www.reddit.com/r/housingforsf/comments/22xoht/help_h...
    - patmcguire 12y ago
      And remember: for any position where there's a primary, the Democratic Primary is the election, so if you want to count, register accordingly
      - 12y ago
davidf18 12y ago
Harvard economist Howard Glaeser, Nobelist Paul Krugmann (citing Glaeser), FT Columnist and book author Tim Harford, and others have spoken for years about how limited land use through zoning density restrictions and overuse of historic landmark status has artificially increased the cost of housing and offices. Here is a recent column by Glaeser regarding the issue of affordable housing in NYC: http://www.nydailynews.com/opinion/build-big-bill-article-1.1913739 http://www.nydailynews.com/opinion/build-big-bill-article-1....
- mortehu 12y ago
  Norway uses an alternative strategy to get housing to the poor called the "housing allowance"[1]. Instead of paying developers to build lower quality housing, money is given directly to poor people for the purpose of paying rent. The prevents having a bimodal price distribution like the one observed in New York. 1. http://www.husbanken.no/english/what-is-housing-allowance/ http://www.husbanken.no/english/what-is-housing-allowance/
  - nazgulnarsil 12y ago
    sooo tax dollars go into the pockets of the land owners....and that extra money bids the price of land up more....and the land owners have a further incentive to vote against any zoning changes.
    - nerfhammer 12y ago
      And yet somehow still infinitely better than extreme rent control based purely on incumbency
      - def_illiterate 12y ago
        I think it would be better that the landlords were not the beneficiaries of this type of subsidy, though. I'd prefer to see them have to compete, and this doesn't attack the problem from that end.
dustinupdyke 12y ago
One could certainly build a corollary statement to read, "tight housing markets limit worker options". I mean, seriously, how many people are limited by location based restraints to pursue the career of their dreams? This is 2015. Some of us would have thought that by now, location would be a factor mitigated by technology.
- brandonmenc 12y ago
  > location would be a factor mitigated by technology Do you want to be surrounded by people on the cutting edge of tech? They all congregate in one or a few places, and you have to move where they are to reap the benefits of community. People will always seek to associate in meatspace, regardless of society's tech level.
  - wpietri 12y ago
    Having lived in SF 15 years, I think that advantage is steadily declining. When I moved here, people came here because this was the place where all the interesting technology happened. It was hard to keep up. But now, the number one reason to move here isn't the technology. It's access to capital. Since Bubble 1.0, the Internet has become an excellent distributor of technology. But VCs still aren't interested in getting on planes.
    - kilbuz 12y ago
      I recently moved to SF from a large Midwestern city. I don't know what things used to be like here, but I would say number of job opportunities here compared to where I moved from are somewhere between 20x and 50x. Maybe that's confounded by the access to capital. Not to mention living here is nice for many other reasons.
      - wpietri 12y ago
        Well, the competition is higher, and a lot of the jobs available right now are not funded by revenue, they're funded by investment. So I think the current picture is misleading. It is a swell place to live, though. But even that advantage has declined a fair bit. 20 years ago, a lot of places in the midwest were cultural deserts. Books, movies, magazine, ideas: all severely restricted. The Internet has changed that. And San Francisco is rapidly losing the diversity of culture that was a big draw for me.
ChuckMcM 12y ago
That is an interesting take on it. When you combine it with the article on 'mega cities' [1] it makes you wonder if the bay area is destined to either embrace it or die. [1] http://arstechnica.com/science/2015/05/megacities-demand-lots-of-energy-but-result-in-lots-of-gdp/ http://arstechnica.com/science/2015/05/megacities-demand-lot...
wpietri 12y ago
Is there some reason the assumptions in the cited paper aren't insane? After a quick skim, they seem to be saying that if we only move a bunch of people from places Sheboygan to New York City, increasing the population of the latter from 8.4 to 15 million, then those former Sheboygan slackers will suddenly be as productive as the current New Yorkers. There are a host of reasons I find that unpersuasive.
cromwellian 12y ago
Population of SF = 837,000 Size of SF = 239 sq mi Population of NYC = 8,400,000 Size of NYC = 469 sq mi 10x the people on 2x the land. SF looks more like a suburbs in many places than a city. The reality is, the city has two choices: 1) Build up, change the city skyline and look 2) Keep SF's "look" frozen, and watch as limited supply continues to drive prices sky high
- 31reasons 12y ago
  We need Hyperloop so that you can live in LA and work in SF!
  - harimau 12y ago
    Um, it's not that different down here. http://www.laweekly.com/news/its-official-la-is-the-most-unaffordable-rental-market-in-america-5005485 http://www.laweekly.com/news/its-official-la-is-the-most-una... http://projects.scpr.org/longreads/high-rent-few-options/ http://projects.scpr.org/longreads/high-rent-few-options/
    - 31reasons 12y ago
      You can find $1200/month apartments all over LA (may be not Santa Monica). Is that true for SF ?
- raldi 12y ago
  San Francisco's population density is 7,000 people per square kilometer. There are many beautiful, beloved cities throughout the world that manage to accommodate far greater density numbers: * Barcelona: 16,000 * Buenos Aires: 14,000 * Central London: 13,000 * Manhattan: 25,846 * New York City (overall): 10,100 * Singapore: 7,600 * Paris: 22,000 * Central Tokyo: 14,500 Here's a map of the zoning ceilings throughout San Francisco: http://i.imgur.com/Tn7CSTX.jpg http://i.imgur.com/Tn7CSTX.jpg Every yellow block in that picture is zoned 40-X, which means that buildings taller than four stories are not welcome. If we raised that to six stories (as is the norm, e.g., throughout most of Paris), we could easily accommodate hundreds of thousands of new residents.
stevewepay 12y ago
Wouldn't it actually encourage people to relocate outside of NYC/SF, which would be good for the economy, according to the article? The drastic difference in house prices would mean that you could sell your house here, and move to an equivalent house with many hundreds of thousands of dollars in your bank account.
ronnier 12y ago
I'm living in Tokyo right now and I own a home in Seattle. In terms of housing and job market, Dallas, Texas is hard to beat. In Dallas the pay was good (the average engineer will make a lot more money in Dallas than in Tokyo, and not really much difference between Seattle and Dallas) and the home prices in the Dallas area were amazing. Build a new home that's 2 to 3 times the size of a 40 year old home in Seattle and half (or more) of the price. Tokyo is out of the question - The quality of life here stinks. I'm paying $3,100 for a 700 sqft apartment in Shinjuku surrounded by an ocean of concrete (there are other good things here though). There are big downsides to Dallas which make it not ideal for living. In the end I'd pick Seattle as the best quality of life based on home pricing, pay, the natural environment, and low crime. An interesting note between Seattle and Dallas was the speed at which things are built. I've talked to builders who built in both areas and the amount of bureaucracy in Seattle is absurd compared to Dallas. One builder who's building fast food restaurants said he'd build out a store in Dallas before he could get bast the bureaucracy in the Seattle area -- I wonder how that compares to SFO and NYC?
Animats 12y ago
Read the actual paper[1], not the Bloomberg article, to see the tortured method by which they compute this. The authors claim that the problem is that excessive wages in these key cities are holding down GDP, and if the cities had more people, wages would drop and GDP would go up. They write: "This output effect is driven to a large extent by three cities -- New York, San Francisco and San Jose – which experienced some of the strongest growth in labor demand over the last four decades, thanks to growth of human capital intensive industries like high tech and finance (Moretti, 2012). But most of the labor demand increase was manifested as higher nominal wages instead of higher employment. The resulting increase in overall wage dispersion negatively impacted aggregate growth. In contrast, Southern cities also experienced rapid output growth, but much of this growth showed up as employment growth and only a small amount as an increase in the nominal wage." It's a "trickle down" paper. Wages are seen as a problem, not as the output. [1] http://eml.berkeley.edu//~moretti/growth.pdf http://eml.berkeley.edu//~moretti/growth.pdf
- raldi 12y ago
  I don't see what any of this has to do with trickle-down economics, which was about reducing tax rates for the rich on the premise that they'd throw nice parties and maybe hire you to serve cocktails.
mpdehaan2 12y ago
The whole notion of some cities being more productive is flawed. They produce more because they are more dense, but more productive per capita is a "citation needed". (Also, I'm not quite sold on productivity being the best possible measure of quality of life either). Having more businesses realize they can be located in diverse places is better for everyone - cheaper real estate, less congestion. More importantly, many "high tech" companies can be distributed, allowing workers to work anywhere. Living in the most congested, expensive area, or enforcing a long commute on yourself doesn't have to be the case. In fact, it's not the case - though it seems common for folks from these areas to assume they are so perfectly great that this must be true.
m0llusk 12y ago
These whole reason these cities exist is because of a long term strategy of making room for newcomers, so it makes sense that moving away from that causes complications.

80 points by raldi 12y ago

> Reducing land-use constraints in high-productivity New York, San Francisco and San Jose to the level of the median city would expand their labor forces, boosting U.S. gross domestic product by 9.5 percent, according to estimates from a new study by the University of California at Berkeley's Enrico Moretti and the University of Chicago's Chang-Tai Hsieh. That seems so implausible. The combined population of NYC, SF, and SJ is merely 3% of the US population. I am sure that fraction bunches above its weight, and nearby residents surely contribute too. But how much more effective would NYC/SF/SJ be if they were cheaper to live in?

raldi 12y ago
It's not that the current residents of those cities would become more productive; it's that people currently living elsewhere are less productive in those other places than they would be if they moved to NY, SF, or SJ. So if those cities built lots more homes, people would rush in from elsewhere, and those newcomers would be more productive in their new locations than they were in their old ones, increasing US GDP 9.5%.
- adventured 12y ago
  It's the ~$1.7 trillion boost to GDP that is difficult to believe. The entire GDP of all of California combined is $2 trillion. It's blatantly obvious that 9.5% GDP boost is a fraudulent number.
  - raldi 12y ago
    It's possible that there are errors in the reasoning, but I think you're taking things a step too far with "blatantly obvious" and "fraudulent". Why not read the study and look for oversights?
    - adventured 12y ago
      It is blatantly obvious. When you're talking about a sum almost as large as California's entire economy, I don't believe it can be anything but obvious.
      - NhanH 12y ago
        Thought experiment: If alien landed on NYC and SF, then decided to abduct everyone in the two cities and wipe out the cities, how much of a reduction in US GDP it would be for the next year?
  - bane 12y ago
    GDP affects the entire country not just these localities and cities network into and recruit huge areas around them. NYC isn't Boulder, CO. It has global reach, and actions taken in New York can affect the movement of money all over the planet. An example, suppose somebody can suddenly afford to live in NYC, where they get a job moving commodities through an import/export business. Their contribution to NYC's GDP is minor: salary and profit on the deals they make. By getting this person into position to make these deals, American commodity producers suddenly get additional access to global markets they might not have had otherwise and suddenly corn from Stoy, Illinois is finding its way to China and Wheat from Russell, Kansas is ending up in Germany. Moving those commodities employs truckers, truck manufacturers, ship crews, cargo container companies, shipping companies, etc. and all of those additionally network and recruit other industries: fuel, navigation, refrigeration, packaging, etc. So while our NYC broker friend might only contribute a fraction of a fraction of a percent to NYC's economy (maybe not even a million dollars all told), his impact on the U.S. economy is vastly magnified. He may single-handedly connect enough sellers to enough buyers to keep hundreds of people fully employed and cause tens of millions of dollars of value to be created and distributed. The alternative to him not being in place? The crops go to waste, or the farmers are simply paid to not grow them.
    - adventured 12y ago
      You're talking about a sum equal to the entire economy of New York City and SF combined. A boost to NYC and SF through some (even a lot of) population expansion, will not exceed the total existing GDP of all of NYC + SF. It's an absurd premise.
      - bane 12y ago
        No, I'm saying that the national GDP contributions of a city like NYC far exceed that city's local GDP contribution. In other words, NYC does not exist as a closed system. You don't seem to understand that.
        ThrustVectoring 12y ago
        Estimates for positive externalities per dollar of salary range from -0.5 to 2.0, depending on political assumptions on what the value of, say, banking and teaching is. Like, it helps, but it doesn't seem like the numbers still add up.
Cowen 12y ago
According to some napkin math with these figures[0], the three metro areas combined account for 11.7% of US GDP in 2012. So yeah, I'm not sure what estimate they're using for the growth multiple from liberalizing land-use constraints, but if they're predicting a near doubling of the combined metro economies, it's safe to assume it's pretty high. I do agree that land-use restrictions are currently holding all three cities back, my Friday night napkin math (read: probably wrong, way oversimplified math) just thinks their estimates are a little optimistic. EDIT: Another question would be what's the time frame for this addition to GDP? 9% growth in one year is insanely great. 9% growth over ten years is insanely bad. [0] http://en.wikipedia.org/wiki/List_of_cities_by_GDP http://en.wikipedia.org/wiki/List_of_cities_by_GDP
- eastbayjake 12y ago
  > Another question would be what's the time frame for this addition to GDP? The actual paper[1] simply says that "lowering regulatory constraints in New York, San Francisco, and San Jose cities to the level of the median city would expand their work force and increase U.S. GDP by 9.5%", so whatever timeframe it would take to reduce those regulatory constraints. (In SF that sounds like a project measured in decades, although maybe the imbalance in supply and demand will cause a breaking point that forces the city to engage with real solutions to the problem.) [1] http://eml.berkeley.edu//~moretti/growth.pdf http://eml.berkeley.edu//~moretti/growth.pdf
- raldi 12y ago
  Which part of this chain do you think is the weak link? 1. If SF had typical land-use policies, it could build enough homes to accommodate twice its current population 2. If they did that, they'd be able to fill those homes with people 3. Those people, upon arriving, would have approximately the same productivity as current San Franciscans 4. SF would thus double its contribution to the US GDP
  - robrenaud 12y ago
    It's not as though those contributions come for free though. If talent leaves other places to go to NYC/SF/SJ, those other places become less productive.
cstanley 12y ago
This reminded me of a cover page Economist article in early April called "Space and the City" http://www.economist.com/news/leaders/21647614-poor-land-use-worlds-greatest-cities-carries-huge-cost-space-and-city http://www.economist.com/news/leaders/21647614-poor-land-use... In the article: "The costs of this misfiring property market are huge, mainly because of their effects on individuals. High housing prices force workers towards cheaper but less productive places. According to one study, employment in the Bay Area around San Francisco would be about five times larger than it is but for tight limits on construction" ... "Lifting all the barriers to urban growth in America could raise the country’s GDP by between 6.5% and 13.5%, or by about $1 trillion-2 trillion." Conclusion... not completely implausible

capkutay 12y ago

San Francisco has bigger issues with class/job sector warfare instigated by city politicians. "The tech industry has come like a train wreck into this neighborhood and into this city," [0] Theres this backwards mentality purporting the idea that market-rate housing development will drive out long-time residents. In reality, its the lack of market-rate development that leads to tech workers out-bidding low-income families for apartments (especially in areas like the mission). 0: http://www.sfexaminer.com/sanfrancisco/campos-to-propose-moratorium-on-market-rate-housing-in-the-mission/Content?oid=2928953 http://www.sfexaminer.com/sanfrancisco/campos-to-propose-mor...

MBlume 12y ago
So when is David Campos up for reelection? How quickly can we mobilize to eliminate him? ETA: Next year, 2016, so we have about a year and a half.
- capkutay 12y ago
  I don't want to turn this thread into a political debate, but I'll just leave this here: http://www.sfhac.org/stop-the-mission-moratorium/ http://www.sfhac.org/stop-the-mission-moratorium/
- raldi 12y ago
  It takes less than five minutes to register to vote by mail in San Francisco, and doing so means you're a lot more likely to vote, and to do so while carefully reading a voter guide. Here's how: https://www.reddit.com/r/housingforsf/comments/22xoht/help_hfsf_register_to_vote_by_mail_and_tell_us/ https://www.reddit.com/r/housingforsf/comments/22xoht/help_h...
  - patmcguire 12y ago
    And remember: for any position where there's a primary, the Democratic Primary is the election, so if you want to count, register accordingly
    - 12y ago

davidf18 12y ago

Harvard economist Howard Glaeser, Nobelist Paul Krugmann (citing Glaeser), FT Columnist and book author Tim Harford, and others have spoken for years about how limited land use through zoning density restrictions and overuse of historic landmark status has artificially increased the cost of housing and offices. Here is a recent column by Glaeser regarding the issue of affordable housing in NYC: http://www.nydailynews.com/opinion/build-big-bill-article-1.1913739 http://www.nydailynews.com/opinion/build-big-bill-article-1....

mortehu 12y ago
Norway uses an alternative strategy to get housing to the poor called the "housing allowance"[1]. Instead of paying developers to build lower quality housing, money is given directly to poor people for the purpose of paying rent. The prevents having a bimodal price distribution like the one observed in New York. 1. http://www.husbanken.no/english/what-is-housing-allowance/ http://www.husbanken.no/english/what-is-housing-allowance/
- nazgulnarsil 12y ago
  sooo tax dollars go into the pockets of the land owners....and that extra money bids the price of land up more....and the land owners have a further incentive to vote against any zoning changes.
  - nerfhammer 12y ago
    And yet somehow still infinitely better than extreme rent control based purely on incumbency
    - def_illiterate 12y ago
      I think it would be better that the landlords were not the beneficiaries of this type of subsidy, though. I'd prefer to see them have to compete, and this doesn't attack the problem from that end.

dustinupdyke 12y ago

One could certainly build a corollary statement to read, "tight housing markets limit worker options". I mean, seriously, how many people are limited by location based restraints to pursue the career of their dreams? This is 2015. Some of us would have thought that by now, location would be a factor mitigated by technology.

brandonmenc 12y ago
> location would be a factor mitigated by technology Do you want to be surrounded by people on the cutting edge of tech? They all congregate in one or a few places, and you have to move where they are to reap the benefits of community. People will always seek to associate in meatspace, regardless of society's tech level.
- wpietri 12y ago
  Having lived in SF 15 years, I think that advantage is steadily declining. When I moved here, people came here because this was the place where all the interesting technology happened. It was hard to keep up. But now, the number one reason to move here isn't the technology. It's access to capital. Since Bubble 1.0, the Internet has become an excellent distributor of technology. But VCs still aren't interested in getting on planes.
  - kilbuz 12y ago
    I recently moved to SF from a large Midwestern city. I don't know what things used to be like here, but I would say number of job opportunities here compared to where I moved from are somewhere between 20x and 50x. Maybe that's confounded by the access to capital. Not to mention living here is nice for many other reasons.
    - wpietri 12y ago
      Well, the competition is higher, and a lot of the jobs available right now are not funded by revenue, they're funded by investment. So I think the current picture is misleading. It is a swell place to live, though. But even that advantage has declined a fair bit. 20 years ago, a lot of places in the midwest were cultural deserts. Books, movies, magazine, ideas: all severely restricted. The Internet has changed that. And San Francisco is rapidly losing the diversity of culture that was a big draw for me.

ChuckMcM 12y ago

That is an interesting take on it. When you combine it with the article on 'mega cities' [1] it makes you wonder if the bay area is destined to either embrace it or die. [1] http://arstechnica.com/science/2015/05/megacities-demand-lots-of-energy-but-result-in-lots-of-gdp/ http://arstechnica.com/science/2015/05/megacities-demand-lot...

wpietri 12y ago

Is there some reason the assumptions in the cited paper aren't insane? After a quick skim, they seem to be saying that if we only move a bunch of people from places Sheboygan to New York City, increasing the population of the latter from 8.4 to 15 million, then those former Sheboygan slackers will suddenly be as productive as the current New Yorkers. There are a host of reasons I find that unpersuasive.

cromwellian 12y ago

Population of SF = 837,000 Size of SF = 239 sq mi Population of NYC = 8,400,000 Size of NYC = 469 sq mi 10x the people on 2x the land. SF looks more like a suburbs in many places than a city. The reality is, the city has two choices: 1) Build up, change the city skyline and look 2) Keep SF's "look" frozen, and watch as limited supply continues to drive prices sky high

31reasons 12y ago
We need Hyperloop so that you can live in LA and work in SF!
- harimau 12y ago
  Um, it's not that different down here. http://www.laweekly.com/news/its-official-la-is-the-most-unaffordable-rental-market-in-america-5005485 http://www.laweekly.com/news/its-official-la-is-the-most-una... http://projects.scpr.org/longreads/high-rent-few-options/ http://projects.scpr.org/longreads/high-rent-few-options/
  - 31reasons 12y ago
    You can find $1200/month apartments all over LA (may be not Santa Monica). Is that true for SF ?
raldi 12y ago
San Francisco's population density is 7,000 people per square kilometer. There are many beautiful, beloved cities throughout the world that manage to accommodate far greater density numbers: * Barcelona: 16,000 * Buenos Aires: 14,000 * Central London: 13,000 * Manhattan: 25,846 * New York City (overall): 10,100 * Singapore: 7,600 * Paris: 22,000 * Central Tokyo: 14,500 Here's a map of the zoning ceilings throughout San Francisco: http://i.imgur.com/Tn7CSTX.jpg http://i.imgur.com/Tn7CSTX.jpg Every yellow block in that picture is zoned 40-X, which means that buildings taller than four stories are not welcome. If we raised that to six stories (as is the norm, e.g., throughout most of Paris), we could easily accommodate hundreds of thousands of new residents.

stevewepay 12y ago

Wouldn't it actually encourage people to relocate outside of NYC/SF, which would be good for the economy, according to the article? The drastic difference in house prices would mean that you could sell your house here, and move to an equivalent house with many hundreds of thousands of dollars in your bank account.

ronnier 12y ago

I'm living in Tokyo right now and I own a home in Seattle. In terms of housing and job market, Dallas, Texas is hard to beat. In Dallas the pay was good (the average engineer will make a lot more money in Dallas than in Tokyo, and not really much difference between Seattle and Dallas) and the home prices in the Dallas area were amazing. Build a new home that's 2 to 3 times the size of a 40 year old home in Seattle and half (or more) of the price. Tokyo is out of the question - The quality of life here stinks. I'm paying $3,100 for a 700 sqft apartment in Shinjuku surrounded by an ocean of concrete (there are other good things here though). There are big downsides to Dallas which make it not ideal for living. In the end I'd pick Seattle as the best quality of life based on home pricing, pay, the natural environment, and low crime. An interesting note between Seattle and Dallas was the speed at which things are built. I've talked to builders who built in both areas and the amount of bureaucracy in Seattle is absurd compared to Dallas. One builder who's building fast food restaurants said he'd build out a store in Dallas before he could get bast the bureaucracy in the Seattle area -- I wonder how that compares to SFO and NYC?

Animats 12y ago

Read the actual paper[1], not the Bloomberg article, to see the tortured method by which they compute this. The authors claim that the problem is that excessive wages in these key cities are holding down GDP, and if the cities had more people, wages would drop and GDP would go up. They write: "This output effect is driven to a large extent by three cities -- New York, San Francisco and San Jose – which experienced some of the strongest growth in labor demand over the last four decades, thanks to growth of human capital intensive industries like high tech and finance (Moretti, 2012). But most of the labor demand increase was manifested as higher nominal wages instead of higher employment. The resulting increase in overall wage dispersion negatively impacted aggregate growth. In contrast, Southern cities also experienced rapid output growth, but much of this growth showed up as employment growth and only a small amount as an increase in the nominal wage." It's a "trickle down" paper. Wages are seen as a problem, not as the output. [1] http://eml.berkeley.edu//~moretti/growth.pdf http://eml.berkeley.edu//~moretti/growth.pdf

raldi 12y ago
I don't see what any of this has to do with trickle-down economics, which was about reducing tax rates for the rich on the premise that they'd throw nice parties and maybe hire you to serve cocktails.

mpdehaan2 12y ago

The whole notion of some cities being more productive is flawed. They produce more because they are more dense, but more productive per capita is a "citation needed". (Also, I'm not quite sold on productivity being the best possible measure of quality of life either). Having more businesses realize they can be located in diverse places is better for everyone - cheaper real estate, less congestion. More importantly, many "high tech" companies can be distributed, allowing workers to work anywhere. Living in the most congested, expensive area, or enforcing a long commute on yourself doesn't have to be the case. In fact, it's not the case - though it seems common for folks from these areas to assume they are so perfectly great that this must be true.

m0llusk 12y ago

These whole reason these cities exist is because of a long term strategy of making room for newcomers, so it makes sense that moving away from that causes complications.