Forget the flowers, what you'll need in San Francisco is a load of money for the rent

San Francisco is a great city. Today it's a great city filled with billionaires, something that rather explains its problems (or why they're not being sorted out). But San Francisco, in one respect, isn't unique but just the best example of how to truly, utterly screw up your housing markets.

We arrived in San Francisco by train. Sorry, we arrived in San Francisco on a bus (an hour late bus) because the train doesn't go to San Francisco, it finishes in Emeryville on the other side of the bay. So we arrived at a bus station, a bus station without a taxi rank (I guess because the sort of people who arrive in San Francisco on a bus aren't the sort of people who use taxis). It seems that, for all its progressive credentials, San Francisco's relationship with public transport - at least the sort that brings people into and out from the city - is not great. As, it seems, Google employees discovered with their benign employer laid on buses to work.

Anyway. Having got a taxi (big thanks to the bloke in the bus ticket office who rang for one - pretty sure it's not the first time), got to our hotel and settled in by having some nice pasta and a hugely expensive bottle of white wine, we'd a city to explore. And what better way to do this exploring that by buying a bus ticket!

The Big Bus was great. For a couple of days we'd access (at a good San Francisco price) to their buses as they toured round San Francisco. And some of these buses have a guide - in our case a thirtysomething Jewish guy with a beard and ready wit. As we went round the city he described the sights, elaborated on the history and pointed out things we might not have otherwise noticed.

So the bus is going up Market heading towards the Tenderloin as our guide starts to talk about the rent - and why it's so damned high. All this is nicely mixed in with the history of the great San Francisco earthquake and fire of 1906. Pointing to some early 20th century apartment buildings, our guide, says: "there are SROs, let me tell you about SROS".

SRO is an acronym for 'single room occupancy' and it's a form of tenure where, for your rent, you get a room with a basin. Pretty good stuff if you're a single, sort of itinerant, construction worker looking for somewhere to sleep whilst you rebuild the earthquake and fire ravaged San Francisco. Cheap, fits the bill and better than a washing line. But in 2019?

Our guide asked us to guess what the rent is for one of these SROs. The usual to-and-fro banter ensued concluding with a shocked silence when he said; "$700-800 a month." If you want a room with a private bathroom, it's over $1000. It really is an obscene amount of money to rent a room in a boarding house. Yet this is the consequence of policies that prevent new high rise development, constrain the development boundaries of the city and provide a myriad of excuses and justifications for stopping or slowing new housing development. Unless - as our guide pointed out - you're rich enough to afford to pay the $7,500 monthly rent in a new development near the (splendid but ever-so-slightly pastiche) San Francisco City Hall.

There are a pile of reasons why the rent's so high in San Francisco but most of them are down to the combination of creating thousands of new, exciting and well-paid jobs but not building the thousands of homes needed to house the people who're taking up those exciting and well-paid jobs. This is why folk in Chinatown are complaining about the lack of housing, why there's twice as many homeless than in Chicago despite San Francisco being a third of the Windy City's size, and why folk in the Mission were stoning buses taking Google employees to work.

Just witness the madness of trying to get a launderette listed as a historical landmark just to stop a housing development!

The first hurdle came when the Planning Commission ordered a detailed historical review, based on a claim that various community groups had offices on the property in the 1970s and 80s, so the site might qualify for preservation. The resulting 137-page study cost Tillman $23,000 and delayed him an additional four months. It found that the laundry didn't merit landmark status.

But Tillman's project was still far from being approved. City law says that any individual or group, no matter where they live, can pay a $617 fee to appeal a decision by the Planning Commission. In this case, the challenge came from an organization called Calle 24, which declined Reason's interview request.

Calle 24 is one of several neighborhood groups determined to stop gentrification in the Mission, a neighborhood that's home to a working-class...

I'm not sure whether Tillman has got to build his apartment block yet but it beggar's belief that, in a city with an acute housing shortage, it can take best part of a decade to get permission to build some of those much-needed homes. When I talk of the stupidity of planning, this is what I'm thinking of - an endless parade of hoops and jumps that must be negotiated just to start digging the foundations for a development.

The city responds to its housing problems with a veritable first aid kit - rent controls, ordinances on building standards, grand affordable housing strategies and much else besides. Except, of course, for the thing that really would make a difference - allowing more dense development in San Francisco suburbs and using the city's economics and political clout to get more land released for housing in the Bay Area generally.

San Francisco is a particularly egregious example and, in its defence, is constrained by its geography - being stuck on a peninsula limits the scope for development. But the same issues - rents soaring, lack of development and lots of supposed solutions that don't actually face up to the supply problem - can be seen right across the world: New York, London, Madrid, Barcelona, Edinburgh, Auckland, Sydney, city after city where urban growth is bounded and reasons not to develop outnumber reasons to let people build. And in all of these places the result is high prices, rising rents, overcrowding and dissatisfaction with city and national authorities response to the problems.

If your policies for housing in a growing city don't include making more land available, allowing higher buildings and apartments in suburbs and ending daft zoning restrictions then you are failing - it shouldn't take a national government, as has happened in New Zealand and is happening in the UK and US, to tell local places that they're strangling their success with over-restrictive green belts, urban growth boundaries and that parade of reasons - environmental, heritage, landscape, bats, shadows, chimneys - not to develop. None of this will suddenly make these cities cheap places to live, the cost of success has always been higher rents, but it will start to make the liveable again.

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Build homes people want to live in (it is that simple)

Hardly a day passes without another seemingly creative solution to the UK's (well mostly London's) housing problems being presented. And, since nearly all these creative solutions don't involve increasing the supply of land for housing where people want to live, nearly all of the solutions are wrong. It really is that simple - more land, more homes, more affordable housing:

A 2016 academic analysis by David Albouy, Gabriel Ehrlich and Yingyi Liu estimated that, in general, rents decrease by 3 percent for each 2 percent increase in the housing stock

As the author, Patrick Wolff, here points out (talking about San Francisco and Silicon Valley):

The Bay Area must increase its total housing stock by 50 percent over the next 20 years to bring affordability down to a reasonable level.

Wolff also reminds us that this degree of growth is perfectly possible:

Detroit and Texas grew far faster during their booms, as did our own Bay Area in the 20 years following World War II.

As, of course, did London in the 1930s. I don't have the detailed figures to hand for London, it's not growing as fast as the Bay Area and growth may be slowed a little by Brexit, but there's already an undersupply (high rents tell us this). So let's go with Wolff's 50% and reduce a bit to, say, 40%. There are currently about 3.27m households in London and I'll assume they're all housed. Using Wolff's model London will need 1.3m new homes over 20 years to meet demand and address the problem of affordability (which is 65,000 per year). The current London plan proposes fewer than 50,000 per year resulting in a shortfall on demand of 320,000. The absolute effect of this will be higher rents and house prices. And remember that all this assumes London's growth is lower than San Francisco's - if the city matches that growth it will need a further 300,000 homes just to keep pace.

I'm not going to set out what should be done - everybody knows. We just need to ask why we're not doing it.

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Smart Tech Cities - the new company town

This is a vision of the urban future in which the tech companies’ own workers and whatever other people with skills the machines haven’t yet replaced are a new class of urban serfs living in small apartments, along with a much larger class of dependent persons living on “income maintenance” and housing or housing subsidies provided by the state.

So suggests geographer, Joel Kotkin in a critique of how the tech world is shifting from the dull and prosaic world of engineering to the far more exciting - and disturbing - game of designing cities and social environments. Kotkin suggests that we are entering a world akin to Aldous Huxley's 'Brave New World' with a scientific caste system dominated by elite engineers. For me the comparator is Yevgeny Zamyatin's 'We'. Most folk assume the novel was a critique of Soviet Russia but, in reality, it was an attack on Taylorism (an idea very popular with the Soviets, so they banned the book anyway):

We is set in the future. D-503, a spacecraft engineer, lives in the One State, an urban nation constructed almost entirely of glass, which assists mass surveillance. The structure of the state is Panopticon-like, and life is scientifically managed F. W. Taylor-style. People march in step with each other and are uniformed. There is no way of referring to people except by their given numbers. The society is run strictly by logic or reason as the primary justification for the laws or the construct of the society. The individual's behaviour is based on logic by way of formulas and equations outlined by the One State.

In the tech dystopia described by Kotkin, we see the concept of engineering turned into an ideology - everything can be planned, organised, directed if only we have enough data, the right algorithms and the proper systems. It is, as it were, the logical direction of scientific management, of the utilitarian idea of science and engineering.

Thus we see utilitarian, socialist (at least in the 'ordering of life' rather than the 'owning of assets' sense) and management science combined to create a sort of interventionist sociology underwritten by experts and controlled through surveillance. The giant tech enterprises seek to build company towns populated no doubt by sleeker and geekier versions of the man in Tennessee Ernie Ford's "16 Tons":

I was born one mornin' when the sun didn't shine
I picked up my shovel and I walked to the mine
I loaded sixteen tons of number nine coal
And the straw boss said "well, bless my soul"

You load sixteen tons, what do you get?
Another day older and deeper in debt
Saint Peter, don't you call me 'cause I can't go
I owe my soul to the company store

It is not government's job to indulge this corporatism, yet the tech god kings seem able to control:

In Google, the longstanding idea of the corporate family, traceable to Peter Drucker’s “The Concept of the Corporation” (1946), may reach both its modern peak and its creative limit. Can one work in a giant lizard tank while doing acute, innovative work that serves the world outside the glass? Every family leader wants to build a generous homestead, but imaginative life is more often at home in walkups, in the messy parts of town.

The idea of business management as sociological experiment - social engineering, if you prefer - begins with folk like Peter Drucker and, for much of its time, has taken the form of seeking to shape corporate culture and values, drawing away from the mere number-crunching utilitarianism of Taylor. Instead this new corporate utilitarianism sought to shape the attitudes and outlook of the worker in anticipation that this would better meet the corporate objectives of the firm. Ideas like happiness and embeddedness arrive from social psychology as means of securing greater commitment from workers to the objectives of the firm. It is a short journey from here to the sort of world Zamyatin describes of lives ordered and directed towards to production and a managed life:

This “smart” urbanity revolves around surveillance and relentless data-gathering. Swarms of monitoring sensors inside and outside buildings and on streets will be constantly on duty. Google would collect data about everything from water use to air quality to the movements of Quayside’s residents, using that data to run energy, transport, and all other systems. In this controlled environment, consent over pillaging personal data “goes out the window straight away”...

Kotkin goes on to observe that the workers within the literal corporate bubble will find encouragement to be content (games, relaxation, approved food and drink, entertainments) but not to be distracted from the purpose of their lives - production for the corporation and the government measured in GDP, GVA and other tools of scientific economics. Above all this means that the environment will be antagonistic to the idea of children:

“Sometimes I’ll be walking through the city and I’ll see a child and think, ‘Hey, wait a second. What are you doing here?’” said Courtney Nam, who works downtown at a tech start-up. “You don’t really see that many kids.”

Cities respond by tarting up parks - even putting in some new ones - and talking about being child-friendly but the truth is that, for the corporate behemoths, children are a nuisance. And, for the foreseeable future, these corporates can import the people they need to do the work - ship 'em in, given a shovel and point them at the coal mine without worrying about providing childcare, schools or the expensive paraphernalia of bringing up families. Some other place, the rural mid-west, India, China, Mexico, will do the crappy distracting job of education and the tech biggies can float into the universities and select the very best and brightest to come and work in their shiny tech centres.

We need to change how we think about cities and local economies. Instead of seeing them as, so to speak, producers of producers, we should see them first as places to live and play, to do the things beyond the day job. Above all cities, suburbs, towns should be run by people not corporations - even if that corporation comes with the badge "city council". As Kotkin concludes:

When a city manager suggests that changes are dictated by data collected by the smart city operators, rather than popular sentiment, democracy itself has been unplugged.

This is the time to reclaim cities suited to human aspiration. We need to do this before control is ceded to a small tech elite that profits by shaping our future, stealing our privacy and nudging us toward a new era of mass serfdom.

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Sorry Lord Turner but it's planning not technology that's driving up urban land values

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It does make me rather cross when the great and good - doubtless living is a splendid multi-million pound home that benefits from rising urban land values - completely fail to understand that it is planning restrictions that causes the problem. Just that, nothing else.

Here's Adair Turner doing just this:

In many countries, the majority of that wealth – and the lion’s share of the increase – is accounted for by housing and commercial real estate, and most of that wealth resides not in the value of the buildings, but in the value of the urban land on which it sits.

That might seem odd. Though we live in the hi-tech virtual world of the Internet, the value of the most physical thing – land – is rising relentlessly. But there is no contradiction: The price of land is rising because of rapid technological progress. In an age of information and communication technology (ICT), it is inevitable that we value what an ICT-intensive economy cannot create.

This is arrant nonsense. Land is expensive in London because it is scarce and it is especially scarce because we've put all sorts of restrictions on using that land including identifying large tracts of land around the city where you can't build. Another bunch of folk want to make it even worse by stopping tall buildings, banning basements and preventing changing use from commercial to residential.

Planning reforms won't make London's land cheap but it would stop that mad rise in values Lord Turner speaks of. For sure you could 'fix' the problem his way - put up interest rates, make it harder to buy and beyond the means of all but folk like Adair. Except that wouldn't solve the problem because the problem is planning. It really is that simple.

If you want to read a better written, better informed and thoughtful piece on this problem turn aside from Turner's ignorant wibble and read this piece by Kim-Mai Cutler about San Francisco's housing problems. I don't entirely agree with Kin-Mai's assessment but at, unlike Lord Turner, she appears to know what she's talking about.

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In many countries, the majority of that wealth – and the lion’s share of the increase – is accounted for by housing and commercial real estate, and most of that wealth resides not in the value of the buildings, but in the value of the urban land on which it sits.

CommentsView/Create comment on this paragraphThat might seem odd. Though we live in the hi-tech virtual world of the Internet, the value of the most physical thing – land – is rising relentlessly. But there is no contradiction: The price of land is rising because of rapid technological progress. In an age of information and communication technology (ICT), it is inevitable that we value what an ICT-intensive economy cannot create.

Read more at http://www.project-syndicate.org/commentary/adair-turner-explains-how-a-fresh-wave-of-automation-is-transforming-employment-and-much-else#krA8CFrE7IHDSafr.99

How public monopoly prevents transport innovation

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For perhaps the wrong reasons we're focused again on issues relating to public transport. And this is done knowing that the majority of Brits favour the nationalisation of the railways and, I assume, believe that mayors or councils should run the buses, trams and tubes.

The problem is that we're in a time of new opportunity and change that challenges the dominant idea that city transportation schemes need to be planned. That challenge sits in our pocket or our handbag.

Just as we've seen with financial transactions, governments and the agency businesses that feed off the granting of monopolies are resistant to the disaggregated and dispersed self-service models emerging as a result of the smartphone's growing ubiquity. And in doing so we do the public a disservice.

Before I talk about some specifics - drawing on US examples where the challenge to public transportation monopoly is more developed - here's a section of Boris Johnson's 'tribute' to union boss, Bow Crow:

"Whatever our political differences, and there were many, this is tragic news," he said.

"Bob fought tirelessly for his beliefs and for his members.

"There can be absolutely no doubt that he played a big part in the success of the Tube, and he shared my goal to make transport in London an even greater success. It's a sad day."

Now I'm sure that these were nice words about the boss of a key London 'stakeholder' but it beggars belief to say that a union forcing costs up and resisting change or efficiency is in the interests of London's transport systems.

So to San Francisco where there have been a series of battles around what are know as "tech buses" - these are services, provided by Silicon Valley business, that take workers from the city out into the valley for work. And they are unpopular with users of existing (more expensive and less reliable) public transport systems. Resulting in a variety of bus-based class warfare:

This December, several anti-bus rallies were held in the Mission District by a group that called themselves the San Francisco Displacement and Neighborhood Impact Agency. The group blocked buses and held up signs with statements like “Warning: Two-Tier System.” One man made headlines by dressing up, and, after claiming he worked for Google, berating the protestors with appalling class rhetoric. But it turned out he was really just an imposter, having worked previously as an Occupy organizer. Another protest in Oakland led — as ones there often do — to bus vandalism.

Note the words 'two-tier system' - hipster techie folk who earn good money out in the valley get a lovely shiny bus service whereas the other folk have to make do with late, dirty buses. And it spills over into the Bay Area's gentrification rows:

“In case you’re wondering why this happened, we’ll be extremely clear. The people outside your Google bus serve you coffee, watch your kids, have sex with you for money, make you food, and are being driven out of their neighborhoods. While you guys live fat as hogs with your free 24/7 buffets, everyone else is scraping the bottom of their wallets, barely existing in this expensive world that you and your chums have helped create."

The problem isn't American capitalism though. The problem is the municipal monopoly - the unholy alliance between the city government and unions to deliver an inefficient, expensive and unresponsive transportation system:

Muni, the city’s local bus, rail, and cable car service, is similarly inefficient. A study last May found that its on-time ratings hovered around 50 percent due to rail cars that regularly broke down. These delays cost an estimated $50 million in productivity — yet Muni has California’s second-highest paid transit workers.

The government-run rail that follows a similar route as the tech buses is Caltrain. Today, its customers endure a plodding, 90-minute ride from San Francisco to San Jose. This same trip takes under an hour by automobile, helping explain why some companies now bus in their employees.

Those 'tech buses' are a response to a failed service monopoly (and that monopoly's owner - the city council - has got its rents from the 'tech buses' by charging them a fee to stop at a bus stop) that doesn't meet the needs of local commuters. Looking a little deeper we find that the San Francisco authorities want to stamp out any innovation - not just the 'tech buses' but the growing use of ridesharing, a business that threatens the lucrative taxi monopoly (a license in San Francisco is over $250,000, in New York the coveted 'medallion' sells at touching $1m).

Indeed the business threat of this 'sharing economy' (we've seen the same regulatory response to Airbnb, for example) is repeated across other US cities - Seattle, for example, has threatened rules that would limit the numbers of drivers using services like Uber and Lyft, and one Seattle councillor proposes that the cab drivers become 'unionized city employees'.

Back in San Francisco, where Uber started, the debate is stuck at finding ways to control these new private transportation systems, to force the 35,000 people using the 'tech buses' back onto the old creaking public system and to regulated cabs rather than find a neighbour to share your ride with.

For Britain (outside London) the situation remains more flexible with a mixed economy of provision as well as the widespread availability of mini-cabs as well as Hackney cabs. There are moves by public transport authorities towards more directed and planned models such as 'quality bus contracts' and local councils jealously guard the revenue generator that is the taxi trade. But what isn't happening - with one or two striking exceptions - is the exploration of new economy solutions to urban transportation. Indeed the debate, such as it is, seems to me moving more towards greater use of monopoly power to prevent innovation than towards actually meeting the transport needs of local residents.

But then, so long as we think union bosses like Bob Crow are part of the solution rather than an obstacle to better services we will be stuck in this dead debate. Even worse if we persist with the 'Big City Boss' approach to delivering those services that Boris Johnson (drifting ever nearer to Bloomberg's urban fascism) seems to prefer. The development of better transport really isn't down to pouring billions of borrowed money into the ground and cosy deals between union bosses and city mayors.

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A reminder that regulation of personal choice by the state doesn't work...

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The oh so clever nannying fussbuckets who run San Francisco thought they'd got one over on Ronald McDonald:

The politicians bragged that they had instituted a de facto ban on the Happy Meal when they passed the law. Their assumption was that the crafty corporate types had programmed kids to incessantly nag their parents to buy meals that the nanny state had decreed unhealthy by dangling a plastic toy in front of impressionable youngsters.

Once the evil plastic toy was gone, Little Johnny and Little Sue would be clamoring for tofu burgers, carrot sticks, and spinach soufflé. The evil McDonald’s Empire would be brought to its knees.

Now leaving aside the gross immorality of this interference in personal choice, it seems that those running McDonald's are smarter than those running San Francisco (no surprise there):

Happy Meal sales haven’t slowed down, McDonald’s is making even more money, and parents are now spending an extra 10 cents per kid every time they stop by the golden arches.

How can that be?

McDonald’s simply started charging separately for the toys allowing them to continue hawking the dreaded Happy Meal. It essentially allowed Ronald McDonald’s bosses to institute a price increase by not having to package a toy with the meal.

And to cap it all Ronnie's mates are giving the extra revenue to their house charity that helps seriously ill children and their families. 


You see New Puritan regulation of personal choice doesn't work. Minimum prices for booze promotes smuggling, home production and moonshine. Smoking bans push smoking and drinking into "smoky-drinkies", the 21st century equivalent of the speakeasy. And officious attempts to target the food preferences of ordinary folk will result in much the same.


It really is time we started treating people like grown ups. So, for perhaps the first time in my life (and maybe the last) I shall say well done to McDonalds!


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