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In the shadow of Liberalism


Has San Francisco’s liberalism really made it into the High-Tech era? Or is “Liberal San Francisco” now an anachronism, a mere image of a former self?

$117,400 is now considered poverty line in San Francisco and in parts of the Bay Area.[1] For many the world over this will sound shocking and may need an explanation as to why. The answer though is simple: housing! The median cost of a house in San Francisco, where house prices have more than doubled in the past 10 years, is $1.6m.[2]

In order to qualify for a mortgage of $1.6 million, you’d need to find $6485 per month (4.5% interest rate), which is nearly 78K per year in annual mortgage payments, on top of the $320,000 you’d also need to find for the 20% deposit. Account also for property taxes, insurance, the inevitable repairs etc. Looking at this you can see why today’s poverty line may even be a ‘liberal’ estimate. And by all estimates its going to get worse, or better, depending on which side of the divide you fall. New IPO’s, the inevitable growth of tech companies, the spiraling value of tech stock all point to continuing increase.

Technical terms such as: Market Value, Equity, Amortization, Housing Sector Index, APR’s versus fixed, may be happily bandied around by real estate professionals, corporate real estate conglomerates and property owners large and small. In the world of the average working professional these terms will hardly figure in their lives anymore.

Young working class and most middle-class professionals have only the rental market to look to for housing. And even if they are lucky enough to find a rental property they will pay such a high market rent as to make saving for a place to buy near impossible. This is after all, the reality of the market. But, it is this ‘Market Reality’ that is now creating ‘Homelessness Reality’ for many families, as children and families forced out of homes due to Market Forces can readily testify.

The touted success of San Francisco’s economic tech boom, however, has created a new shadow class of homeless people. This class is not the traditional class normally associated with as being homeless: the mentally ill, the Vet’s, the tramps, the addicts, the non-functional adults, the kids who have fallen through the cracks. No, this new class of homeless are more than capable of holding down jobs, do have jobs, ex renters / ex home owners. They may be individuals or families we know.

Homelessness after all is about actual living people: individuals, children, families. But how easy to sugar coat the reality of homelessness in the Bay Area, hiding behind abstract terms like ‘Market Reality’ or ‘Market Value’. However, human reality does not exist within mere technical terms, or in real estate jargon, or in stats, or in rationalizations, despite how convenient it may be for those who can say, “I’m all right, Jack.”

How many of us have been tickled pink whenever the current market value of the house we happen to own dramatically increases? An increase in the market valuation of a house maybe good news, but only if we happen to own two of them, given how we all still need a place to live in.

When ‘value’ increases, rents in the area increase also, the hope of owning a home decreases for many and the threat of homelessness increases for others. That’s not our fault we say. (And it isn’t!) After all markets determine our collective realities. It’s the market. The philosophical law of the jungle. And yes, when families are ‘priced out of the market’ they may have to move away. That too is market reality. So, if you’ve grown up in San Francisco, your city, and you and yours now have to move away to say Las Vegas, or wherever else. Tough! That’s just the way it is! It is the way it is.

But, within the ‘way it is,’ let’s not pretend San Francisco represents that bogey word ‘liberalism.’ It can’t anymore. San Francisco may be socially liberal in attitude for sure, a strong supporter of rights for the many, freely held opinions, climate concerns, etc. But harsh reality; the new ‘real estate class’ in San Francisco lives alongside the shadow of a market drunk reality, despite its external championing of liberal values.

The Miriam Webster dictionary partly defines liberalism as “…. a philosophy that considers government as a crucial instrument for amelioration of social inequities….” In our current political world this ideal is hardly going to come to immediate fruition. Suffice it to ask; can we really rely on today’s government to deal with ‘the amelioration of social inequity? And yet the government ideal (for the people, by the people, freedom etc.,) is supposedly the very essence of American identity.

The CEO of Salesforce.com Marc Benioff stated, “Silicon Valley has driven San Francisco into a train wreck of inequality, with homelessness being a severe issue in the city.’’ Benioff was a vocal proponent of Proposition C, a ballot measure aimed at taxing rich companies here, donating nearly $8 million to its cause. Proposition C passed by a large margin and is expected to generate new tax revenue to help tackle homelessness in San Francisco.

It is important to recognize all the genuine efforts to address homelessness that have been made, and are being made by individuals like Benioff, and even by a few well-known high-tech companies.

One example, albeit outside the Bay Area, is Microsoft, which has pledged $500 million to build affordable housing in Seattle.[3] Their efforts help many and are to be applauded. There are also many individuals who generously give in various ways to help the homeless; donate, work with charities/ churches, run food banks, offer mental health services, help people they know who have become homeless, even take them in. And all the above are not just confined to one side of the political divide either.

An example of how entrenched the cult of Market Reality really is, can even be found at the IRS. The IRS enforces the ideal of Market Values onto owners of rental properties effectively discouraging the lowering of ‘fair’ Market Value. If a landlord were so inclined as to rent out a property for less than Market Value, to say a family in need, there would automatically be tax complications for this landlord, affecting their tax status and involving penalties. A claimed ‘rental loss deduction’ in this situation involves penalties. (A leading tax / accountancy firm recently told property owners, “If you want to claim the rental deductions on your investment properties, be sure the rate you charge your tenants is roughly equal to comparable properties in the same area.”) [4]

Recently I visited the home of a friend who happens to be a well-proclaimed liberal. We were discussing current affairs. Someone unknown to me happened to walk by the living room window. “Oh, that’s our tenant.” Hand waves of acknowledgement followed. My friend went on to explain the tenant had just rented out a place at the far end of the house. 300 sq. ft. room, no kitchen, only a hot plate, but separate entrance and garden view. It was $2000 a month. “It does seem a lot but we were assured by the agency it was the going rate.”

Does the subject of homelessness expand beyond political context? Might it even reflect hidden philosophical or even psychological beliefs? Is there a bigger picture we’re missing here?

Now comes the point where writer’s heroically champion the solution to problems they have just laid out. “We now need to do the following ….” Sorry. But as far as solutions go, I can’t see one! Why? I think Market Reality has us all trumped!

Laying forth a list of already familiar solutions: building more affordable housing, more rent control, more individual effort, more local and national government effort, subsidize more (all sincere, worthwhile and need to be done for sure), will hardly make a dent in San Francisco’s housing crisis.

San Francisco’s housing crisis is a crisis of Market Reality. And Market Reality is in the DNA of the American psyche, liberal and otherwise!

Perhaps in days gone by times Market Reality and good old liberalism in San Francisco could fairly co-exist. I wish it still did. But in our high-tech bubble world, the idea they still do, or even still can do, is hardly on the radar.

It seems liberalism itself has been priced out of the market.

John A Baron

[1]

https://www.sfgate.com/expensive-san-francisco/article/low-income-families-sf-bay-area-hud-statistics-13024580.php

https://www.msn.com/en-us/news/video/hud-survey-shows-households-making-dollar117400-still-under-poverty-level/vp-AAzaunR

https://www.sfchronicle.com/expensive-san-francisco/article/low-income-families-sf-bay-area-hud-statistics-13024580.php

[2]

https://www.bloomberg.com/news/articles/2018-04-04/san-francisco-s-median-home-price-hits-a-new-high-1-6-million

[3]

https://www.seattletimes.com/seattle-news/homeless/microsoft-pledges-500-million-to-help-develop-affordable-housing-in-seattle-and-on-eastside/

[4]

https://laporte.com/knowledgecenter/tax-services/tax-consequences-of-charging-below-market-rent

+ CNN article re Benioff & Proposition C - https://www.cnn.com/2018/11/07/tech/prop-c-results/index.html


Tags

markets, high-tech, homeless, liberalism, real estate