NYT joins SFBG in questioning the new tech bubble

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Fallout from the new tech bubble has only gotten worse since we wrote about it in February.

While most of the mainstream media in San Francisco continues to parrot Mayor Ed Lee's belief that the new tech boom (and the tax breaks Lee extends to subsidize it) is good for everyone, The New York Times today ran a front page story raising concerns about its role in raising rents and hurting this city's diversity.

Not only did the Times finally join the Bay Guardian in challenging the relentless boosterism of Lee and the tech industry titans who helped place him in Room 200, but Times reporter Norimitsu Onishi even referenced our April 10 “Is Oakland Cooler than San Francisco?” cover package as capturing “the prevailing angst.”

As we also noted in our Feb. 14 cover package about the new tech bubble and its fallout (“The bubble is back”), Twitter's long-anticipated arrival in the mid-Market area this month has caused commercial landlords to jack up rents in the area, while the Google-busers and other tech workers who want to live somewhere cool have been driving residential rents through the roof.

The San Francisco Chronicle and their "pro-business" ilk have studiously ignored the trend, but it's gotten so bad that even Lee was forced to address it last week. As he unveiled his budget and plugged his proposal for an affordable housing trust fund, Lee said, “I know there are anxieties out there because rents are starting to sneak up.”

Yet so far, proposals by Lee and other politicians who pushed the Twitter tax break – mostly notably Sup. Jane Kim, whose District 6 constituents are being hit with higher rents – have done little to offset the damage caused by exempting Twitter from paying business taxes on the 1,800 new employees it is hiring as taxpayers pay for a new Muni line and police substation for them.

The Times was also able to get good interviews on the topic with Lee and his venture capitalist sponsor, Ron Conway – both of whom refused to return our calls for the Guardian stories – and got them to sound like the corporatist shills they are. Lee had the temerity to compare his corporate tax break to civil rights struggles: “It’s economic civil rights. You get people a job, you build their economic foundation, and then, if you set the right tone, they will start helping you build communities. We can’t do it with government-funded programs. We have do it with the private sector.”

Yeah, you certainly can't do it with government-funded programs if you're focused on cutting business taxes and funding corporate welfare programs, even as he acknowledges that government subsidies are necessary to build housing affordable by the working class of San Francisco.

And from Conway, the Republican billionaire, we get this bit of wisdom: “So this boom is going to be very, very sustainable and it’s going to have a permanent impact, a permanent positive impact, on the culture and economy of San Francisco.”

Sure, it's positive if you want San Francisco to be simply a city of rich people, served by working class people who get bused in from the surrounding suburbs, which seems to be Conway's plan. That, and making boatloads of money by having city taxpayers subsidize all the tech companies he's invested in.

That was the conclusion by the UC Berkeley economist that the Times interviewed, that despite all the happy talk from Lee and Conway, this boom is benefiting the upper middle class at the expense of the poor and middle class. And we at the Guardian are happy that we finally have another big media voice challenging the self-serving lies coming out of City Hall these days.

Comments

You may not realise this but your tone connotes the idea that you actually want these tech companies like Twitter and Facebook to fail, because you think that will preserve diversity here.

The problem is, there's no evidence for that. Detroit is a total economic failure and would give an arm and a leg to have the business success that the Bay Area has. But is it diverse? Quite the opposite - it's one of the most homogeneous cities in the US.

While the Bay Area, has all races, classes, nationalities and religions. The people that move here for our business opportunities truly cut across all divisions and stereotypes.

If you really care about this city, Steven, you'd want these companies to succeed, rather than snidely seek to undermine them. And if a few more failed artists and agitators have to live seven miles away in Oakland, is that really such a tragedy? It's not as if we have a shortage of bad (sorry, experimental) artists, tattooed lesbians or bearded, middle-aged activists, you know?

Posted by Guest on Jun. 05, 2012 @ 4:02 pm

My tone is simply skeptical of the boosterism and hand-outs being aimed at tech companies, as if they're this city's salvation. Frankly, I think my tone is appropriate for a journalist, but I'd question your tone and that of a mayor who seems to think he works for these companies and their investors rather than the average San Franciscan. I'm not rooting for these companies to fail any more than I'm supportive of waiving their obligation to pay taxes for the city services that they and their employees use. I'd just like to see our public servants focusing on providing public services and using this economic boom to actually improve the city's tax base, rather than declaring the death of "government-funded programs." If we really believe in the private sector and free market system as much as these economic conservatives think we should then we should all be wary of politicians who are willing to give favored companies a competitive advantage that the rest of us pay for, in more ways than one.

Posted by steven on Jun. 05, 2012 @ 4:20 pm

of SF voters chose him in the final analysis over the candidate who could barely find a pro-business word to say in his entire campaign. So regardless of your views of Lee's policies, it is clear that he has the majority of the city's residents behind him.

And the only real, sustainable way to "improve the city's tax base" is to encourage the kind of high-value businesses that are likely to grow, flourish and hire. Facebook and Twitter are probably the two most high profile companies right now and they are in SF and not in another county like Apple and Google. That's significant because, historically, SF has lost out to San Mateo and Santa Clara counties when it comes to these massive generators of wealth. While SF's homegrown big companies - Wells and BofA, have moved elsewhere for friendlier climes.

Like it or not, we're in a competitive climate and most other jurisdictions have lower taxes and less regulation. Yet we have Facebook and Twitter and a bunch of others vibrant businesses here. And yet all you see is deep pockets to raid.

If they didn't pay a penny in tax, there would still be a huge knock-on benefit for the city. Yet the SFBG can barely ever conceal it's distaste for any corporate entity that succeeds. Relish failure and envy success - that's really not a viable approach to civic funding, which is every city wants these companies. You have no idea how fortunate we are.

Posted by Guest on Jun. 05, 2012 @ 5:13 pm

Facebook is not located in San Francisco.

You may be thinking of its parasite, Zynga, the game development company that runs scam ads, online gambling, steals intellectual property and has an industry-wide reputation of mistreating employees.

Posted by Chris McNeil on Jun. 05, 2012 @ 6:25 pm

from it's success. Realtors are reporting substantial demand for homes convenient for freeways, trains and buses that commute to their HQ.

So, we still benefit, although obviously we don't get the payroll taxes - good reason to try and entice and retain such winning enterprises.

Posted by Guest on Jun. 05, 2012 @ 6:45 pm

Well if you're not rooting for the companies to fail than maybe you should have a talk with the person who created the image that went with this post -- a hand holding a pin about the pop the Facebook balloon.

The entire post is misleading. The Times wrote about the civic problems that arise along with higher income levels. Some people, unfortunately, get left behind. The statement "Not only did the Times finally join the Bay Guardian in challenging the relentless boosterism of Lee and the tech industry titans..." is downright hilarious. Anyone who reads the article can see how false it is.

Lee was elected on a pro jobs, pro business platform. He wasn't elected as a socialist who was going to raise taxes in order to create public sector jobs.

And as far as housing cost go, you can't have it both ways. You can't oppose 8 Washington and 555 Washington because they provided housing for the wealthy and then complain when the wealthy instead bid up costs withing the existing stock.

Posted by Troll on Jun. 05, 2012 @ 7:35 pm

Do we have data about how small, local businesses are doing these days? It appears that the restaurants, cafes, and bars are thriving. And I know that my retail business is finally starting to revive.

Posted by Guest on Jun. 05, 2012 @ 8:06 pm

Seriouslyu, compare SF's tax business tax rate to other cities. In San Jose, a business pays $18 per employee up to a max of $25,000 per year for the entire business. In Sf, the business will pay 1.5% of the total payroll, thus encouraging a business to keep wages low and to keep the payroll low. Lee is doing what makes sense, making it make sense for a business to stay here.

Like it or not BG, SF needs jobs, and not just cool artists. Jobs let people buy things, which generates sales taxes. Jobs let people buy and sell houses which generate transfer taxes, sales taxes and real estate taxes.

Posted by D.native on Jun. 05, 2012 @ 8:37 pm

He raised taxes and Republicans said it would destroy the economy. It didn't.

Posted by Troll II on Jun. 05, 2012 @ 8:49 pm

Maybe- how do you keep jobs in your city when you have other cities with much lower business taxes? Honestly, SF has seen thousands of big corporate jobs leave for cheaper climates- Chevron, BofA, and others.

SF is a great place to live etc, but not so much to run a business, especially compared to other cities.

Posted by D.native on Jun. 05, 2012 @ 9:05 pm

We have 1.3 million jobs for 800,000 city residents, I think it's dishonest to say lack of jobs is a problem requiring that we wave taxes for big corporations, who are here because San Francisco is a great city that doesn't compare with San Jose or San Ramon. There's no reason why we should be participating in this race to the bottom in terms of what we expect from rich individuals and corporations.

Posted by steven on Jun. 06, 2012 @ 8:39 am

surrounded by suburbs full of commuters. If you're suggesting that we have 500,000 too many jobs, that is ridiculous. Can you name one politician who wants to send jonbs away and lower the tax base, just so the city is more "diverse" (whatever that means)?

San Jose is now a bigger city than San Francisco, so why you believe that we're much more important is beyond me. It has more successful business and less crime. Maybe SF does have to try harder after all.

And I don't know any businessman who thinks either SF or California is "low tax". In fact, we have the highest taxes in the natiuon already.

Posted by Guest on Jun. 06, 2012 @ 8:50 am

Have you been to San Jose? Seriously, anyone who thinks San Francisco needs to compete with other Bay Area cities for who has the lowest taxes either doesn't understand how CEOs make decisions or they're just anti-government corporatist ideologues. San Francisco (and California) should have the highest corporate tax rates because our cost-of-living and the demand of people who want to be here are higher than in other places. Y'all should show a little more civic pride and quite groveling for corporate crumbs. 

Posted by steven on Jun. 06, 2012 @ 12:49 pm

being very close, and all the runoff benefits from that, San Francisco would probably be in a dire financial mess by now. The banks and financial institutions which built the city have mostly gone or relocated. While the high costs here make it tempting for innovative companies like Twitter to move just a few miles almost irresistable.

But the real problem is your parochial outlook. The real world-class thing about where we live is the entire Bay Area - a megalopolis of five million people. San Francisco is just a part of that and isn't even the biggest city any more nor the main driver of economic activity, which is 20 to 40 miles south of here.

It's a freak thing that the Bay Area has nine counties and countless cities, and that leads to balkanization and a "beggar thy neighbor" attitude to places just a few miles away. We should think BayArea-wide and not just about our own neighborhood. SF is a downtown without any suburbs, which makes it lob-sided and dependent.

That's why BART works so well - it actually serves the entire local community and brings towns and counties together rather than your approach of hating any where that's more than 5 miles away.

Posted by Guest on Jun. 06, 2012 @ 1:04 pm

Not a horrible place. Not SF, but not horrible. Pretty decent weather also.

As for how CEO's make decisions- they make it based on what makes the most sense for a company and what makes the most money for the company- not whether or not SF has a better art scene or better food scene. If you are a growing company, especially a tech company, an address in Palo Alto, Menlo Park, Cupertino, etc., has just as much prestige, if not more, than an address in SF. Couple that with lower taxes, why stay in SF- for the food trucks?

Posted by D.native on Jun. 06, 2012 @ 1:19 pm

What a ruse! 1.3 million jobs! Who knew? Certainly not the voters who elected Lee.

So there is no reason to study computer technology in school. Just learn to say 'Do you want fries with that?'. Encounter any problems and the SFBG will be working on assistance programs to help you along.

(Seriously, claiming a job 'ruse' is the kind of thing that would get the SFBG laughed out of town if anyone actually read this stuff)

Posted by Troll on Jun. 06, 2012 @ 9:01 am

Still no discussion of how we got from 8 supervisors down to 3, who is responsible for making the political calls that got us from there to here, and what steps we're going to need to take to hold those people accountable so that the task of rebuilding a coalition capable of contesting downtown can begin.

You all endorsed Nancy Pelosi, right, and I'm still anxiously awaiting to hear who was wearing what at the Golden Wheel awards!

Posted by marcos on Jun. 06, 2012 @ 1:47 pm

the constituency in this city where, as last year's election showed, at least 60% of voters are pro-Lee moderates.

So the current situation isn't an anomaly; the previous unrepresentative situation was.

Posted by Guest on Jun. 06, 2012 @ 2:05 pm

Great article! I live in the Mission where, in the past 4 years, rents have gone from ~$700 to a whopping $1000 a month (on average). If you're a working-class person of color, have disabilities of any sort, are on unemployemnt, etc. forget it! Most of my friends have been forced to move to Oakland. It's sad because the distance impacts our friendships & BART fare these days isn't exactly cheap. And what do we have to show for all this hardship? Glossy boutique and new Whole Foods stores (yet another now in Ingleside) that very few people can even begin to afford. Except the Google and Facebook employees that are bused in from Palo Alto every day.. I don't think it's bad that they want to live here, but they need to think about where their money is going. I never see these .com tycoons in the local bookstores, coffee shops, movie theaters, or even bars that have been around here more that 5 years let along a decade plus.

Posted by Guest Adobe reader on Jun. 07, 2012 @ 1:15 am