Hacker News Reader

Comment by maerF0x0 | Hacker News Reader

How could it be? Please explain your hypothesis a bit more.

A lot of high income people concentrated in one area leads to things like income inequality compared to everyone else. It also causes housing prices to rise which leads to homelessness which causes or worsens property crime, drug use, mental illness, and general desperation that can incite violent crime.

It only leads to housing prices rising (in the long-term), if NIMBY politics makes building new housing essentially illegal. There are plenty of examples of "boom towns" throughout history where prices may have rose initially, but didn't spiral out of control, and usually settled back to a reasonable baseline relative to wages.

We aren’t at the root cause yet. NIMBY politics are largely caused by the idea that housing is an investment rather a basic human need and depreciating asset which is a rather new idea in relation to “throughout history”. People generally don’t want to vote for things that harm their investments and building new housing harms the investment that all current homeowners have made.

If society thought of housing similarly to other large purchases like cars in that there was no expectation of profit, we would all be a lot better off.

Now what caused this housing as investment idea? I haven’t seen any research on this, but my guess would be as a form of forced retirement savings as it allows people to build net worth without the self-control normally required of saving. And the difficulty of that delayed gratification is really just human nature.

It's also the easiest way for most people to achieve high leverage. My friend got a $3000 down home loan in Colorado. $3k in for $450k. The leverage on that is astronomical. A 10% appreciation in value gives him 1500% growth in wealth, with no capital gains tax when realizing.

And you don't get margin called.

If you're going to think of leverage like that, leverage works both ways on expenses though.

150x leverage means 150x cashflow burden from taxation (> 100%!) and also maintenance costs of the property.

See https://news.ycombinator.com/item?id=35044028 where I laid out how a real estate purchase is really a mix of multiple investments packaged into one sale.

FWIW Calgary, AB is an example of tons of building doing a good job to manage housing cost increases. Something like tripled the population ~300k -> > 1M over 1990-2010s and house prices remained reasonable in the suburbs (which are still Calgary proper). One thing Calgary did well was "Infills" which basically was when someone would split their single family home into 2 properties, which may or may not share a wall. Sometimes they'd buy neighboring properties and do N parcels to N+1 (or >N) new homes. eg 2 neighboring parcels became 3 homes. Smoothly incrementing the density.

It could be a contributing factor, but SF seems to have more problems than other expensive cities with concentration of rich industries like Manhattan for finance or biotech/pharma in Boston and Cambridge. Maybe the rate at which income inequality changed is another part of this. There are probably also unhelpful policy differences in SF with respect to building more housing.

To what extent the crime policies contribute statistically I don't know, but for some of the more extreme mental illness cases (that disproportionately account for homeless people being actively aggressive), there is a disconnect between philosophical ideals and what practically would be better for everyone in the long run. Mental illness (especially when substance abuse is involved) can make someone resist help and they will be unlikely to improve unless they are forced into a facility. Where the line is for doing this is a tough question but if someone is routinely threatening people on the street or does something violent, it seems like SF policy is still opposed to it.

> SF seems to have more problems than other expensive cities with concentration of rich industries like Manhattan for finance or biotech/pharma in Boston and Cambridge.

I don't think people realize how much of an outlier SF is. Incomes are a good 25% or so higher than NYC and Boston. The percentage of the people who work in tech in SF isn't really comparably to any other city and their own high paying industries.

Though SF seems to have problems that Silicon Valley (defined as the area from Sand Hill to downtown San Jose) doesn't have. Mountain View, for example, has a big homelessness problem, but it doesn't really have a huge crime problem. The typical homeless family (and it's families in MTV, vs. drug addicts in SF) lives in an RV, has a single working parent, keeps to themselves, and does their best to send their kids to schools. SF schools are some of the worst in the nation, while Palo Alto schools are some of the best. San Mateo cops actually arrest people. All these places have a greater tech concentration, greater average incomes, and greater income disparity than SF, and geographically they're located just 50 miles south.

I think the problems with SF are largely cultural and political rather than technological or economic, though the economic issues are exacerbating it. It's an "anything goes" city and has been for 150+ years. The city values your ability to express yourself in any way you please, and that includes both healthy forms like street fairs, neighborhood scavenger hunts, or Bring Your Own Big Wheel, and less-healthy forms like being able to shit on the sidewalk when you please or stab someone who looks at you funny. And that filters down to the voting preferences of the electorate. You get what you ask for.

The South Bay has all the same problems of tech dominance, income inequality, insane housing prices, etc, but the cultural orientation is very different. People in the South Bay are generally there to work hard and build a better life for themselves and their descendants. Their time-orientation is much more long-term than SF culture. And that applies across the income spectrum - even poor, Hispanic, immigrant day-workers will do their best to make sure their kids do their homework. The type of tech industry that spills out of this also reflects this cultural orientation, with the South Bay doing much more foundational engineering research and SF being more focused on how to apply technical breakthroughs from 50 miles south in new and crazy ways.

The ideology of the progressive elites is rotten and badly misinformed.

it's not hard to come to a conclusion that the companies sucking up all the money might be causing all the poor people.

It was, admittedly, already pretty bad when the industry was mostly in the valley and peninsula. SF has been expensive for quite a long time.

Reply on news.ycombinator.com