By Michael Gibson
Monday, April 08, 2019
It’s not what celebrants want to hear when the champagne is
exploding out of shaken bottles of Dom, the confetti is falling, and their
stock is up 8.7 percent at the market’s close, but I have an announcement to
make: San Francisco is past its prime and the fires of creation have abated.
With all the millionaires newly minted by Lyft’s IPO, and
with those set to be minted by Uber’s and Palantir’s and AirBnB’s, you might
expect this enclave to become the next Babylon of American capitalism. While
our moralists in the media — Nellie Bowles, Emily Chang, et al. — busily
tsk-tsk the greed and the lust and the hypocrisy and the hubris, there is a
story here they miss: The city’s current concentration of wealth likely doesn’t
represent the beginning of a golden-if-sinful era, but the end.
Magnificent in the distance, San Francisco is now
shockingly ugly up close. In the decade I have lived here, the city has
achieved the seemingly impossible: It has combined the expensive and the bland
and the appalling into a new form of decadence. To the untrained eye, it looks
magical: a city of the future, a city of gasps. Then, slowly, it reveals itself
to be a city of lies, one that dismisses the idea of city living.
The distant future Silicon Valley sells with the zeal of
a crusader — all the lip service it pays to making the world a better place —
shimmers like fool’s gold, monopolistic surveillance capitalism cloaked in the
language of the common good. Billboards off the highway announce the coming of
artificial intelligence as new nonprofits pop up to defend us against HAL and
Skynet, but in reality “AI” is machine learning — pattern-recognition software
parsing out subtle statistical connections to win board games and show you
better ads.
With a devilish consistency, this city sets you up for
disappointment.
Running a venture-capital fund that invests as early as
possible in startups, I now see fewer and fewer companies choosing to come
launch here. When we opened our doors in 2015, maybe 80 percent of our
investments were in Bay Area companies. Last year, half of them were, and we
expect to see that number decrease even more in the years ahead.
Andreessen-Horowitz, the famed Silicon Valley VC firm, has announced that it’s
becoming more or less a hedge fund, presumably to focus on later-stage
opportunities. Peter Thiel, who had lived here since the mid 90s, has now
decamped to Los Angeles, and says there is a less than 50 percent chance the
next great tech company will arise in an increasingly expensive, conformist
Silicon Valley.
“Silicon Valley is now more fashion than opportunity,”
Thiel told the Swiss newspaper Zeitung.
“The heads are the same.”
Lack of independent thought aside, the Economist has identified the source of
the problem: You can’t build a successful startup from a garage if a garage
costs a million bucks. The flow of new creations is being choked off first and
foremost because there are fewer cheap places for new things to start.
The median rent for a one-bedroom apartment in San
Francisco recently hit $3690 per month, 30 percent greater than in New York
City. Over the last decade, the Bay Area has added 722,000 jobs but built only
106,000 new homes. Proposition M, passed in the 1980s to avoid
“Manhattanization,” limits the supply of office space. The city’s average Class
A asking rent has risen 124 percent since 2010 to over $80 per square foot.
The legendary urbanist Jane Jacobs once remarked that new
ideas come from old buildings, the types of places you can alter without
permission because no one cares about them. This is one reason why so many
garage startups and garage bands and artists spilling paint in discarded
warehouse lofts have left their mark on the world. The true creative class
can’t afford to rent expensive new studios.
But in San Francisco, the true creative class can’t
afford to rent any space anymore.
The artists have fled. Sadie Valeri, an artist who has
been painting and drawing in San Francisco for over 20 years, recently
announced that she is closing her famed Potrero Hill atelier. “Our studio lease
is ending,” she wrote in an email to her students last month. “And we have been
informed that our rent will be increasing significantly to more than we can
afford.”
There is no longer a San Francisco music scene, either.
The house the Grateful Dead lived in at 710 Ashbury Street during their
formative years in the 1960s is surrounded by Victorian townhouses that today
sell for $3 million and more. A tourist review of the location puts it well:
“Unless you knew who lived there, you wouldn’t know.”
If you can stomach all that blandness, I wish you luck
with the appalling. Up and down the city’s disorienting hills, you notice
homeless men and women — junkies, winos, the dispossessed — passed out in the
vestibules of empty storefronts on otherwise busy streets. Encampments of tents
sprout in every shadowy corner: under highway overpasses, down alleys. Streets
are peppered with used syringes. Strolling the sidewalks, you smell the faint
malodorous traces of human excrement and soiled clothing. Crowded thoroughfares
such as Market Street, even in the light of midday, stage a carnival of indecipherable
outbursts and drug-induced thrashings about which the police seem to do
nothing.
The confused mumble, the incoherent finger-pointing
tirade, the twitch, the cold daemonic stare, the drunken stumble and drool —
these are the rhythms of a city on the edge of a schizophrenic explosion.
The cause of this blight is codified nostalgia and greed.
(Nellie Bowles where are you?) Baby Boomer civil servants act as urban
taxidermists stuffing and mounting a dead city so it always resembles the past.
The San Francisco Chronicle tells us
that there is indeed a mayor, and maybe even a chief of police, but it is not
known who is actually in charge. Housing and zoning committees obscure
responsibility for governance. But somewhere in the bureaucratic hierarchy
faceless city functionaries administer labyrinthine regulations that benefit
the rich over the poor, the old over the young, the here over those to come,
the past over the future.
In one of the more comical examples of this sclerosis, a
real-estate developer worked for five years and paid hundreds of thousands of
dollars to show that a proposed housing development wouldn’t cast shadows on a
nearby playground or destroy the historic character of the laundromat it sat
atop. In another, it took two years for a woman to open an ice-cream shop.
And yet the days pass in a foggy calm. Coit Tower, the
Painted Ladies, both bridges, and Alcatraz all stand serene. It is not a city
of urgency and restless insomnia, not a city of any discernable power. It never
roars like New York or snaps cold like Chicago. It is a pastel city that
optimizes its sleep with a device.
I’m not holding my breath for a revolution.
San Francisco has been overwhelmingly Democratic since
the 1950s. The last Republican mayor won an election in 1956. It is a one-party
city touting a civic philosophy with its back to the wall. From afar city
Democrats pay lip service to helping the poor. But up close the facts tell a
different story. None of their policies in the last half-century have done much
to rescue the poor from poverty. Inflexible limits on the housing supply push
marginalized groups even further to the margins. The stratospheric cost of
housing has flung minority families to the outer edges of the Bay Area,
reinforcing segregation. A UC Berkeley study found that a 30 percent increase
in the median rent led to a 28 percent decrease in the number of minority
households in a neighborhood. Whole neighborhoods from the city have decamped
to the hinterlands of Antioch and Vallejo. Stories of three-hour commutes from
Stockton have become more common.
Alas, the media seems to have never taken an economics
class, much less read Paul Krugman. It is quite simply baffling. Housing
restrictions have made the situation worse and worse for decades. No one seems
to notice that the same debates play out time and again to no positive end.
Instead, for commentary, reporters invariably trot out someone who disguises
greed with the piety of a San Franciscan born and raised. Ah, those picturesque
locals! Whatever sad story they tell, they shamelessly aim to limit the housing
supply, inflating the prices of their own properties. Meanwhile, the media
prints their moralistic scolding of the gentrifiers, i.e. anyone with an urge
to build affordable housing. No one seems to care about the unseen: the people
who never get to live here because the apartments they would live in aren’t
ever built, the bookstores unopened, the dance steps untried, the poetry never
recited because the rent’s too damn high.
Cities are nearly immortal; though they decline, they
rarely die. But creative clusters can and do bite the dust. They are fragile,
fleeting things. Rome survived the fall of a civilization and two world wars;
Ancient Athens and Quattrocento Florence dazzled and faded. Now, San Francisco
has passed its prime and settled into a sad late-middle age.
“Cities that become dominated by a single industry,
cities that reward generation of wealth and financial success over a sense of
shared humanity and community have a hard time preserving social capital,” Sam
Altman, the president of YCombinator, told the economist Tyler Cowen in a
recent interview. “Where I grew up, no one would walk past a person collapsed
on the side of the street on their way to work and not do something about it. I
hope I never get used to the fact that that happens in San Francisco.”
True revolution would involve curbing the authority of
the San Francisco Planning Commission. If Democrats in the city or in
Sacramento actually cared about the poor or the environment (density is green),
they would enact a land-value tax and establish a redistributive policy to
align the interests of the city, current residents, and future citizens. Strong
government housing policy could spur growth and redistribute the city’s wealth
fairly. But most of all, the freedom to build and experiment is the engine of
Silicon Valley dynamism. Allow the experiments of the few to become the
prosperity and fulfillment of the many, and the city could thrive once again.
This is unlikely to happen anytime soon, of course. But
If the dream is lost, the skills and funding remain . . . for now. I’m advising
all the startups I meet with to consider staying in other cities. And anyone
else who comes here should be aware that most bathrooms require a code to
enter.
No comments:
Post a Comment