Cory Doctorow: How startups of Silicon Roundabout are gradually being flattened
theguardian.com
theguardian.com
It would be nice if economic activity wasn't quite so concentrated in unaffordable London. But I can feel the wave of money washing over the built environment even out here in Cambridge ("Silicon Fen"); it's just about commutable to North London, so buildings have been going up with the clear aim of selling to middle eastern or Chinese investors. It has its positive aspects - many of the cleared buildings were in terrible condition, ugly, or (as in Hackney) suffering from asbestos. But the new ones are still unaffordable. I'm fleeing to Edinburgh while watching professional couple friends get priced out of buying their first home.
Property booms cannot go on forever: http://www.theguardian.com/world/2014/feb/28/home-ownership-... but we lack the leadership to resist this or to try and distribute industries more evenly across the country. (Mediacity is a token attempt at building a media cluster in Manchester while kneecapping the BBC and looting its buildings).
Causes a guaranteed bubble as you can't make more land, so price rises are not followed by increased production causing the price to fall again.
http://online.wsj.com/news/articles/SB1000142405270230454950...
There's a strong case for having a proper property tax (to central govt) in London. If we're going to have a boom then then at least we should benefit from it.
Admittedly there's hardly anyone in Parliament I trust even to be basically competent in this kind of planning, let alone honest.
And Edinburgh isn't exactly cheap.... (compared to London it is though!)
Let's face it: some of the offices around Old City Roundabout are pretty grim. Bad plumbing, windows overlooking someone's wall or a dumpyard, barely working HVAC, you name it. What is that the startups have to lose? If all those old office blocks will be demolished and will be replaced with a shiny new one, that's fine. Sure, Last.fm will need to move elsewhere and a new tenant in the building most likely will be KPMG, DLA Piper or RBS, but it's not that that hypothetical Last.fm will have nowhere to move. There are still plenty of cheap grim office property around (in Croydon, for example) but the borough only wins from getting rid of the old ones.
All in all, if a London startup ecosystem is here to stay, gentrification is too unimportant of a problem to kill it.
Many of our 'leadership' (1/3 of MPs in fact: http://pastebin.com/1249K1N4) have large buy to let portfolios and don't give a toss if the economy crumbles if it makes them richer.
http://webcache.googleusercontent.com/search?q=cache:www.the...
>Maybe not one as hot as Silicon Valley, but a least something to add much-needed diversity to the capital's industrial base – which presently consists largely of companies that launder war criminals' money, and companies that exchange this laundered money for empty luxury flats.
While one can agree, Doctorow's sarcasm isn't clear and that sounds like a pretty unsubstantiated claim, even by the guardian's admirably liberal standards.
There were people living in Hackney and Dalston before the hipsters moved in and starting pricing them out of the neighbourhoods they grew up in, but what goes around, comes around.
It would have required tremendous effort by the government to maintain the right balance of cheap business place and accommodation required to let the community survive. 100 meters away from one of the world finance capital ( and only sector still working in the UK ) that's an impossible challenge.
You cannot bootstrap a startup community too close to such location. You need some room for the community to create a culture and some momentum.
Tho' this is something that it's impossible for governments to do, really, all the money will be creamed off by "advisers" and "consultants", small companies given impossible bureaucratic hoops to jump through, etc. The best thing the government can do is just take a step back.
Or my pet harebrained scheme: resurrect the original Acorn Archimedes and buy a million of then, requiring that all govt departments use indigenous British computing technology...
RiscOS will run on the Raspberry Pi (made in Wales) if that counts :)
On a serious note, I dispute that government can't have a positive impact in stimulating the technology industry in the UK. In fact if we held on to more manufacturing businesses (through state-ownership, tax cuts etc.) we'd have a more diverse and robust economy. But the current government's so called schemes to foster business and innovation are typical of this administration - there's little substance to them at all. And successive British governments have failed to truly work with businesses and really listen to their needs rather than launching grand initiatives without prior consultation to real business owners.
I like Bristol. 90 mins from the big smoke, decent airport and railway hub, more chilled and counter-culture than South/South-East, closer to countryside, climbing and surfing. Has a history of new and high-tech like chip fabs and renewables. Oh and its not the North :)
They run regular event to try to pull together a startup community, and it's extremely well attended, to the point where they've had to restrict numbers for some of the meetings. It'll be interesting to see what comes out of it - it's only been going for a year or so, but seems to be growing rapidly and it does seem like there's an increasing number of actual startups rather than just people talking about it.
Croydon, despite its reputation has the advantage of lots of cheap low grade office space (though the cheapest stuff in the main business district is gradually being demolished to create space for new high grade expensive high rises, but there are also a couple of "retail parks" in the midst of a sea of cheap office buildings and warehouses a few minutes walk/bus out of the town centre), there's at least one local data centre from a good provider, and it's very well connected to central London and the South coast.
Everyone over 40 has a buy to let portfolio and those under 40 are stuck in rented property with few rights. Did you know in the uk if you rent you can be evicted for no reason at all? And if you will not or can not pay bubble prices for property you have to rent, live in poorly maintained housing and presumably never have children.
This is happening NOW and it is a disgrace.
Unbelievably it is being encouraged by the government with schemes to prop the bubble up further! But they are only a year away from an election now and its the older people renting out property who are most likely to vote and so the young just have to deal with it.
Actual wealth creation that can come from government support of startup hubs is the furthest thing from this governments mind. We're all too busy getting rich from doing nothing all day in someone else's office and waiting for the young to pay off our multiple properties mortgages for us to actually do anything creative or beneficial.
Im here and it makes me sick.
This government by the way, which is manipulating the housing market in such an anti capitalist way, is actually the more capitalist party of the two.
Never seen it put so pithily, and yes, that's exactly how it feels.
The other problem is that the rental stock in the UK is managed almost exclusively by amateur landlords, which leads to petty restrictions (no pets, no smoking, no drilling, no decorating etc), attempts to sell houses out from under the occupier ("You don't mind if we show some people round every now and then, do you?" The hell I don't!) and hard-to-quantify risks (I know somebody with an older landlord who is now undergoing another round of treatment for cancer; putting the human tragedy aside, should they start looking for another place now, or can they wait a while?)
Selling piles of bricks to one another for ever increasing prices is plainly unsustainable and yet it has become the basis for the UK economy.
We need that money to go into entrepreneurial activity the likes of which a startup hub is well placed to encourage.
This story of property investment trumping entrepreneurial activity is a microcosm of the story of the UK economy as a whole since the housing bubble started 10+ years ago.
The UK desperately needs a free market oriented government. Traditionally the conservatives were that party but it appears no longer. They have just continued to damage the UK as the party before them.
It is appalling.
I agree the economy should be less reliant on the housing bubble, but I'm not convinced that technology / start-ups are the only way to achieve this. The 'start-up' hubs you mention are just as likely to become another black-hole which the government throws money at with no real strategy in place.
That is simply not true. Evicting anyone is a long, drawn-out process, even if they stop paying the rent!
I know it has happened to me and many others I have spoken to. What sort of an environment is that in which to lead a settled life? Many many priced out tenants have had to move their kids from school to school as incompetent landlords discover they got their sums wrong and have to sell up.
If you are a 'problem tenant' and stop paying rent there are difficult processes to go through in order to force an eviction. But I am not talking about the far less common case of non payment of rent from a difficult person. I am talking about decent families being forced out of their home as the norm.
That is a disgrace.
The relationship between you and the landlord is the same as any buyer and seller of goods. If say Cadbury's decided to stop making your favourite chocolate bar, would you feel your rights had been trampled? Or if a shop decided to stop carrying some product you loved. Or if your favourite TV show got cancelled.
Or perhaps if the macro environment changes, should the landlord subsidize you when the bank is charging him more? Will the plumber give him a discount because he is a good guy? Will the supplier also give the plumber that discount because he's doing some work for a good guy who charges his tenants less than the going rate?
And what if the landlord's personal circumstances change and he or she desperately needs the money? Say they are no longer able to work?
I know that it is disruptive to move house, but in all likelihood the landlord isn't a monster, just someone who's trying to save for their retirement and has been scared out of pension funds by the smash and grab raid launched in 1997 (which I'll note the current lot haven't reversed).
Housing is not optional so the relationship is not the same as anything else.
There is a choice. Buy what you cannot afford and pray the cost of borrowing doesn't increase or live at the mercy of an amateur landlord. Some choice.
A correction is sorely needed so that choice instead becomes rent or buy. Not as it currently is, rent or commit financial suicide.
While buying is not an option for the financially responsible renting should be more like it is on the continent. Rent increases there can only be as high as inflation and the tenant is treated like a paying customer.
The situation is shocking here, that is undeniable.
noun 1. the action of expelling someone from a property; expulsion. "the forced eviction of residents" synonyms: expulsion, ejection, ousting, throwing out, drumming out, driving out, banishing, banishment, removal, dislodgement, displacement, clearance;
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You're plainly part of the over 40 cohort with buy to let property otherwise you wouldn't be so keen to bend rational thought in knots in order to make yourself feel better about the damage you cause to decent people.
If anyone else is reading this, here we see an example of how the damage continues to be done. There are many with a vested interest in the harmful status quo and so they pretend everything is fine for as long as they benefit.
I note you make no mention of societies in the rest of europe where renting is the norm and where work has been done to help remove exploitation from the system. Presumably you aren't in favour of that either so long as you're alright jack.
You are quite a sick individual and you will waste no more of my time. Your tenants have my sympathy.
Nope, neither. Just, umm, sane. I suppose you blame all this on Thatcher too...
Ah, language.
A common pattern in startups is to go to work for one,
watch it implode and team up with a colleague or two to
move on to another startup; repeat several times until you
have agglomerated a bunch of people you know, like and
trust; then do your own startup with them. As far as I can tell this is on the rise and is central to most university budgets. What could happen to "burst" this supposed "bubble"?
Anyway, the bubble would burst when the decreasing value of a UK (or any) degree is overtaken by the increasing cost of it. Bear in mind that the cost of a degree isn't just the tuition; the cost of living is substantial in the UK (particularly in London) and that's making the option of studying here less and less attractive.
The thing is, the perceived value of education is largely based around prestige. Unless the cost of studying in the UK suddenly sky-rockets or there is some scandal that damages the reputability of all UK universities there isn't going to be a "bust" scenario.
It just doesn't seem very likely. I can envision a slow decline but no sudden fluctuations. Maybe I am mis-interpreting what "bubble" means?
The Government did pay universities the "teaching grant" per home student, to top up the fees, but when tuition fees settled at £9k per year that number was chosen in order to eliminate most of the teaching grant[2], so assuming that universities were getting topped up to £9k per home student, foreign students were worth 2.5x the home ones.
I know for sure that the universities compete to get as many foreign students in as possible, which was why all the fuss when they revoked London Met's ability to give student visas - they were attacking their funding, basically.
[1] they have since tripled twice, although remember repayments are like a sort of tax (the government lends you the money in the first place, and you pay back 9% of your income above £15k).
[2] I think science students still get it and arts students don't, or something, because this government is insane.
I'm also fairly certain that Hackney have an issue with corruption. The way to flip properties in the area is to buy up a building with a B1 use (office), then apply to planning permission to build a residential penthouse or two on the top of the building. Build the flats, sell them for an insane amount of money to a couple of bankers, job done. I've been told off the record by estate agents that certain people have "more luck" with these applications than others, but what can you do?
At the end of the 90s it was Notting Hill, now its Shoreditch, Spitalfields and Whitechapel with the gentrification wave pushing itself out east with Bethnal Green next in line.
Ultimately this will be the demise of the UK economy as all the money and jobs will focus on the southeast leaving the rest to fend for themselves.
http://webcache.googleusercontent.com/search?q=cache:www.the...
The process that's occurring is Ricardo's law of rent: https://en.wikipedia.org/wiki/Law_of_Rent#The_Law_of_Rent
It's counter intuitive, but brilliant once you realise how it works. Put simply, when a company makes more money due to the location they're in, the landlord gets all of the extra profit, not the company that does the work. Every time the company's profits rise, the rent will go up by the same amount. Free money without working if you own land, and very bad for capitalism.
In the case of Old Street, it used to be that there was little advantage to being there, so rents were cheap (not much competition). That attracted lots of startup types and now, the area confers a significant advantage due to the network of companies and people. The choice for a new startup is :
a) Old Street, where recruitment costs (for example) will be lower, or
b) Somewhere Rubbish, where you pay e.g. an extra 20k per year for recruitment.
If the rents are the same, everyone will want Old street for the 20k advantage, so the landlords play them off against each other: the offices go to the highest bidder. Whilst the extra rent you pay to be there is less than 20k, it makes sense to pay it as you're still ahead, so people keep upping their bids until the rent reaches ($rent_for_rubbish_place + 20k). The landlord gets it all for doing nothing!
It's a scam because it operates outside of free market capitalism: you can't manufacture more land at Old street roundabout (or move it there from elsewhere), so supply does not increase when the price rises. Not a free market. Also no jobs created by the price rises.
The solution to the scam is land value tax (LVT), which would reclaim the unearned money from the landlords (whilst leaving them their fairly earned money from providing the buildings). LVT done right would make corporation tax unnecessary whilst causing no price rises and no job losses. A massive boost for the economy. Seriously. No hyperbole - it works counter intuitively due to the fact that its not a free market in the first place.
Winston Churchill was strongly in favour of LVT and described land as 'the greatest of all monopolies'. He thought that taxing it was one of the most important political ideas of the century, so it warrants a bit of reading: http://www.landvaluetax.org/current-affairs-comment/winston-...
Brighton is to London what California is to NY. I.e. full of hippies and "creative" types.
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