San Francisco needs to take a broad approach to the city economy
EDITORIAL Local food is all the rage in San Francisco these days. The locavores and the slow-food people held a conference at Fort Mason a couple of weeks ago that drew huge crowds. Mayor Gavin Newsom is on board, and he loves to talk about creating a sustainable San Francisco. There are people in town who talk about energy independence, who talk about shopping locally, about building a city where people can live and work without using private cars.
We're all for it but in the wake of the wrenching meltdown in the financial markets, San Francisco needs to take a broad approach to the city economy. It's time to develop a comprehensive plan to turn San Franciscans (and their government, businesses, and institutions) into economic locavores.
There are three basic reasons why the housing, credit, and financial markets are in the worst crisis since the Great Depression. The first two are related: The complexity of the financial instruments and securities being traded has increased so dramatically that even the heads of big investment banks didn't know exactly what they were buying and selling. And the regulatory system under the George W. Bush administration has been unable and unwilling to keep up.
There's not a lot San Franciscans can do locally to fix either of those problems (other than work to elect Barack Obama in November).
But the third factor in the current crisis is the globalization of money and that's something San Francisco can address.
For years, most famously in Seattle in 1999, protesters in this country have clashed with major institutions like the World Trade Organization over globalization issues. For the most part, they've focused on trade on America losing jobs to low-wage companies, on big American chain stores selling goods made in third-world sweatshops, and on American money going to multinational corporations that prey on impoverished people and foul the environment. All of those are crucial issues but so is the globalization of finance, which has received less attention.
And we're not just talking about the stock market. The money San Franciscans deposit every day in local banks, the payments on mortgages and credit cards, the insurance premiums ... all that cash goes into a financial system that instead of reinvesting in communities is buying and selling complex international securities like credit default swaps and derivatives. The traders and top executives who make these markets get colossal paychecks and bonuses and most of us get nothing. Now that the whole house of cards is starting to topple, the small businesses and the people who need credit to buy cars or washing machines or bicycles or a house the ordinary residents of cities like San Francisco are the biggest losers.
The plan the White House has put forward is one of the grossest examples of corporate welfare in a generation and even the Democrats in Congress are hesitant to oppose it.
But if San Francisco is serious about building a sustainable city, the mayor and the supervisors ought to start working, now, to create a citywide policy for economic localism. Among the elements:
•Banks that do business with the city should be required to set aside a significant amount of their loan portfolio for local small-business and housing loans. (The Treasurer's Office can start with Bank of America, which currently holds the city's deposit and payroll accounts.) The Community Reinvestment Act is far too weak and rarely enforced; San Francisco, with the leverage of a $6 billion city budget, can do much better.
•Most city contracts go to companies outside of San Francisco. Local businesses need to get a strong preference.
•The San Francisco controller needs to start looking at the city's balance of trade what do we import, what do we export, and how can we use more local products?
•The city needs to use tax policy to encourage local enterprise and discourage the out-of-town chains that use San Francisco as a strip mine.
There's much more on the agenda, and there are plenty of people with good ideas. The crisis will define our political era; the city ought to be moving now to be in the lead.