Posts tagged ‘san francisco’

What Happens When You Abandon Prices As A Supply-Demand Matching Tool? California Tries Totalitarianism

Mostly, we use prices to match supply and demand. When supplies of some item are short, rising prices provide incentives for conservation and substitution, as well as the creation of creative new sources of supply.

When we abandon prices, often out of some sort of political opportunism, chaos usually results.

California, for example, has never had the political will to allow water prices to rise when water is short. They cite all kinds of awful things that would happen to people if water prices were higher, but then proceed instead with all sorts of authoritarian rationing initiatives that strike me as far worse than any downsides of higher prices.

In this particular drought, California has taken a page from Nazi Germany block watches to try to ration water

So, faced with apparent indifference to stern warnings from state leaders and media alarms, cities across California have encouraged residents to tattle on their neighbors for wasting water — and the residents have responded in droves. Sacramento, for instance, has received more than 6,000 reports of water waste this year, up twentyfold from last year...

Some drought-conscious Californians have turned not only to tattling, but also to an age-old strategy to persuade friends and neighbors to cut back: shaming. On Twitter, radio shows and elsewhere, Californians are indulging in such sports as shower-shaming (trying to embarrass a neighbor or relative who takes a leisurely wash), car-wash-shaming and lawn-shaming.

“Is washing the sidewalk with water a good idea in a drought @sfgov?” Sahand Mirzahossein, a 32-year-old management consultant, posted on Twitter, along with a picture of a San Francisco city employee cleaning the sidewalk with a hose. (He said he hoped a city official would respond to his post, but he never heard back.)

Drought-shaming may sound like a petty, vindictive strategy, and officials at water agencies all denied wanting to shame anyone, preferring to call it “education” or “competition.” But there are signs that pitting residents against one another can pay dividends.

All this to get, in the best case, a 10% savings. How much would water prices have to rise to cut demand 10% and avoid all this creepy Orwellian crap?

One of the features of Nazi and communist block watch systems was that certain people would instrumentalize the system to use it to pay back old grudges. The same thing is apparently happening in California

In Santa Cruz, dozens of complaints have come from just a few residents, who seem to be trying to use the city’s tight water restrictions to indulge old grudges.

“You get people who hate their neighbors and chronically report them in hopes they’ll be thrown in prison for wasting water,” said Eileen Cross, Santa Cruz’s water conservation manager. People claim water-waste innocence, she said, and ask: “Was that my neighbor? She’s been after me ever since I got that dog.”

Ms. Franzi said that in her Sacramento neighborhood, people were now looking askance at one another, wondering who reported them for wasting water.

“There’s a lot of suspiciousness,” Ms. Franzi said. “It’s a little uncomfortable at this point.” She pointed out that she and her husband have proudly replaced their green lawn with drought-resistant plants, and even cut back showers to once every few days.

Update:  Seriously, for those that are unclear -- this is the alternative to capitalism.  This is the Progressive alternative to markets.  Sure, bad things happen in a free society with free markets, but how can anyone believe that this is a better alternative?

Bundy Ranch the Wrong Hill for Libertarians to be Dying On

Here is something I find deeply ironic:  On the exact same day that Conservatives were flocking to the desert to protest Cliven Bundy's eviction from BLM land, San Francisco progressives were gathering in the streets to protest tenant evictions by a Google executive.   To my eye, both protests were exactly the same, but my guess is that neither group would agree with the other's protest.  I think both protests are misguided.

In the case of Cliven Bundy, I agree with John Hinderaker, right up to his big "But...."

First, it must be admitted that legally, Bundy doesn’t have a leg to stand on. The Bureau of Land Management has been charging him grazing fees since the early 1990s, which he has refused to pay. Further, BLM has issued orders limiting the area on which Bundy’s cows can graze and the number that can graze, and Bundy has ignored those directives. As a result, BLM has sued Bundy twice in federal court, and won both cases. In the second, more recent action, Bundy’s defense is that the federal government doesn’t own the land in question and therefore has no authority to regulate grazing. That simply isn’t right; the land, like most of Nevada, is federally owned. Bundy is representing himself, of necessity: no lawyer could make that argument.

It is the rest of the post after this paragraph with which I disagree.  He goes on to explain why he is sympathetic to Bundy, which if I may summarize is basically because a) the Feds own too much land and b) they manage this land in a haphazard and politically corrupt manner and c) the Feds let him use this land 100 years ago but now have changed their mind about how they want to use the land.

Fine.  But Bundy is still wrong.  He is trying to exercise property rights over land that is not his.   The owner gave him free use for years and then changed its policy and raised his rent, and eventually tried to evict him.  Conservatives and libertarians don't accept the argument that long-time tenancy on private land gives one quasi-ownership rights (though states like California and cities like New York seem to be pushing law in this direction), so they should not accept it in this case.   You can't defend property rights by trashing property rights.   Had this been a case of the government using its fiat power to override a past written contractual obligation, I would have been sympathetic perhaps, but it is not.

I would love to see a concerted effort to push for government to divest itself of much of its western land.  Ten years ago I would have said I would love to see an effort to manage it better, but I feel like that is impossible in this corporate state of ours.  So the best solution is just to divest.  But I cannot see where the Bundy Ranch is a particularly good case.  Seriously, I would love to see more oil and gas exploration permitted on Federal land, but you won't see me out patting Exxon on the back if they suddenly start drilling on Federal land without permission or without paying the proper royalties. At least the protesters in San Francisco likely don't believe in property rights at all.  Conservatives, what is your excuse?

I suppose we can argue about whether the time for civil disobedience has come, but even if this is the case, we have to be able to find a better example than the Bundy Ranch to plant our flag.

I Am Guessing San Francisco Doesn't Provide Any Liability Protection For Employers In Exchange For This

San Francisco has put deep restrictions employers' ability to check the criminal records of people they hire.  Yesterday the Senate blocked the nomination of Debo Adegbile to run the Civil Rights division of the Justice Department.  Senators were concerned about his actions as defense attorney for a man convicted of murdering a Philadelphia police officer.  Honestly, I have no problem with defense attorneys going to extremes to defend their clients.  I was more concerned with his historic support for ideas like this one in San Francisco:

Private sector employers in the City of San Francisco will have to comply with new “ban the box” legislation restricting questions about applicants’ criminal records on applications for employment and during job interviews.

The Fair Chance Ordinance, No. 17-14, prohibits employers with at least 20 employees from inquiring about a job applicant’s criminal history on an employment application, including “checking the box” to indicate criminal convictions or other criminal justice system involvement. It also prohibits covered employers from asking about criminal history during an initial interview. The law applies not only to regular employees, but also those performing contracted or contingent work, or working through a temporary agency. The Ordinance becomes operative on August 13, 2014.

After the initial interview, the Ordinance prohibits the employer from asking the applicant about the following:

  • arrests that did not result in conviction, unless charges remain pending;
  • completion of a diversion program;
  • sealed or juvenile offenses;
  • offense s that are more than seven years old from the date of sentencing; and
  • offenses that are not misdemeanors or felonies, such as infractions.

The employer must provide the applicant with a written notice before making any inquiry into the applicant’s criminal history and display a poster in the workplace developed by the City’s Office of Labor Standards Enforcement (OLSE).

The Ordinance also restricts an employer’s ability to consider criminal history disclosed by an applicant. The information may be used in the selection process only if it has “a direct and specific negative bearing on that person’s ability to perform the duties or responsibilities necessarily related to the employment position.”

This is just stupid.  First, I cannot tell you how many government forms (e.g. corporate registrations) require me to report my criminal background -- this is outright hypocrisy, holding private employers to  a different standard than public agencies.  If they really are consistent, truly believing that criminal background checks are discriminatory because they have disparate impact, then they should be pushing to remove them for things like gun ownership.  Anyone really believe they will do this?

The bigger issue for businesses is that we don't make these checks because we are jerks, we make them for real financial reasons.  Specifically, we are worried about the health and safety of our employees and customers.  And for those that think that business owners are all evil and wouldn't care about such things, then we certainly care about getting sued for the actions of our employees.  As a business owner I have been made, particularly in California, responsible for any dumbass thing my employees do.  I will get sued if these employees do something wrong.  And worse, can you just see the trial -- plaintiff's attorney is going to be in front of the jury and say things like "this employee has a long criminal record and defendant did not even check, he did not even care about my client's safety."

Entirely Predictable Unintended Consequences -- San Francisco Rental Market

There should be a word for "entirely predictable unintended consequences".  The Germans have come up with some good words for complex ideas, like schadenfreude, so maybe we can outsource the task to them.

Anyway, I just finished a book called Season of the Witch, about San Francisco in the 1960's and 1970's.   Churchill once said that “The Balkans produce more history than they can consume” and I am reminded of this quote when reading about San Francisco in these two decades.  Written by a Progressive sympathetic to San Francisco's bleeding leftist edge (the author cannot mention Ronald Reagan without also expressing his disdain), it is never-the-less pretty hard-hitting when things go off the rails (e.g. the enablement of Jim Jones by the entire leftist power structure).

Much of the narrative is about the great influx of lost youth and seekers of alternative lifestyles into the city; the attendant social, crime, and drug issues this created; and a quest for tolerance and social peace.   As such, it is not a book about political or economic policy per se, it's more about the people involved.  But we do get glimpses of the policies that key players like Harvey Milk, Dianne Feinstein, and Willie Brown were advocating.

What struck me most were the policies these folks on the Progressive Left had on housing.  They had three simultaneous policy goals:

  1. Limit San Francisco from building upward (taller).  San Francisco is a bit like Manhattan in that the really desirable part where everyone wants to live is pretty small.  There was (and I suppose still is) a desire by landowners to build taller buildings, to house more people on the same bit of  valuable land.  Progressives (along with many others across the political spectrum) were fighting to have the city prevent this increased density as a threat to San Francisco's "character".
  2. Reduce population density in existing buildings.  Progressive reformers were seeking to get rid of crazy-crowded rooming houses like those in Chinatown
  3. Control and cap rents.  This was the "next thing" that Harvey Milk, for example, was working on just before he was shot -- bringing rent controls to San Francisco.

My first thought was to wonder how a person could hold these three goals in mind without recognizing the inevitable consequences, but I guess it's that cognitive dissonance that keeps socialism alive.   But it should not be hard to figure out what the outcome should be of combining: a) some of the most desirable real estate in the country with b) an effective cap on density and thus capacity and c) caps on rents.  Rental housing is going to be shifted to privately owned units (coops and condos) and prices of those are going to skyrocket.  You are going to end up with real estate only the rich can afford to purchases and a shortage of rental properties at any price.  Those people with grandfathered controlled rents will be stuck there, without any mobility.

So I was reading this the other day.  It turns out there is a severe shortage of affordable rental properties in San Francisco, and lately there have been a record number of conversions of rental properties to private ownership.

With the area economy rebounding, San Francisco is in the midst of a housing crisis as many residents are evicted from their apartments. With rents strictly regulated, an increasing number of San Francisco owners are getting out of the rental business and cashing out their properties to turn them into co-ops. Steven Greenhut argues that rent control actually forces prices upward, especially over the long term, by diminishing the supply of available rental housing.

Update:  One recurring theme through the book is that progressive elements in SF saw their government and particularly their police force as "bullies".  They used this term a lot -- and they were right.  So it is interesting today to see all these progressives and how they act with power.  Turns out, they are all bullies too, just on different issues.

By the way, the Dirty Harry movies are way more interesting after reading this book.  Season of the Witch is what all this looked like to a progressive.  The Dirty Harry movies are what the same events looked like from a different perspective.

Understanding "Mix": Is Flattening in Income Growth Due in Part to Geographic Cost of Living Differences and Migration Within the US?

For 20 years, before I liberated myself from corporate America, I spent a hell of a lot of time doing business and market analysis (e.g. why are profits declining in Division X).  I was pretty good at it.  If I had to boil down everything I learned in those years to one lesson, it would be this:  Pay attention to changes in the mix.

What do I mean by "changes in the mix"?  Here is an example.  A company has two products.  One has a 20% margin, and the other has a 30% margin, and both margins have been improving over time because of a series of cost reduction investments.  But overall, company margins are falling.  The likely reason:  the mix is shifting.  The company is selling a higher proportion of the lower margin product.

Here is a real world example:  When I was at AlliedSignal (now Honeywell) aviation, they had exactly this problem.  They were operating in a razor and blades business -- ie they practically gave the new parts away to Boeing and Airbus to put on their planes, because they made all their money selling aftermarket replacements at a premium (at the time, government rules made it almost impossible to buy anything but the original manufacturer's part, so they could charge almost anything for a replacement, especially given that an airline likely had a $50 million plane sitting dormant until the part was replaced).  I routinely would tell managers in the company that essentially our business made money from unreliability -- the less reliable our parts, the more money we made.  Because newer technology, competition, and pressure form airlines was forcing us to greatly improve our reliability (at the same time we were giving stuff to Boeing at ever greater losses), all our newer products on newer planes were less profitable than the old stuff.  As planes aged and dropped out of the fleet, our product mix was getting less and less profitable.

This same effect can be seen in many economic and political issues.  Take for example an argument my mother-in-law and I had years and years ago.  She said that Texas (where I was living at the time) had crap schools that were much worse that those in Massachusetts, her argument for the blue political model.  She observed that average educational outcomes were much better in MA than TX (which was and still is true).  I observed on the other hand that this was in part a result of mix.  Texas had better outcomes than MA when one looked at Hispanics alone, and better outcomes for non-Hispanics alone, but got killed on the mix given that Hispanics typically have lower educational outcomes than non-Hispanics everywhere in the US, and Texas had far more Hispanics than MA.

All of this is a long introduction to some thinking I have been doing on all the "Average is Over" discussion talking about the flattening of growth in median wages.  I begin with this chart:

click to enlarge

 

There is a lot of interstate migration going on.  And much of it seems to be out of what I think of as higher cost states like CA, IL, and NY and into lower cost states like AZ, TX, FL, and NC.  One of the facts of life about the CPI and other inflation adjustments of income numbers is that the US essentially maintains one average CPI.  Further, median income numbers and poverty numbers tend to assume one single average cost of living number.  But everyone understands that the income required to maintain lifestyle X on the east side of Manhattan is very different than the income required to maintain lifestyle X in Dallas or Knoxville or Jackson, MS.

Could it be that even with a flat average median wage, that demographic shifts to lower cost-of-living states actually result in individuals being better off and living better?

For some items one buys, of course, there is no improvement by moving.  For example, my guess is that an iPhone with a monthly service plan costs about the same anywhere you go in the US.  But if you take something like housing, the differences can be enormous.

Let's compare San Francisco and Houston.  At first glance, San Francisco seems far wealthier.  The median income in San Francisco is $78,840 while the median income in Houston in $55,910.  Moving from a median wage job in San Francisco to a media wage job in Houston seems to represent a huge step down.  If you and a bunch of your friends made this move, the US median income number would drop.  It would look like people were worse off.

But something else happens when you take this nominal pay cut to move to Houston.  You also can suddenly afford a much nicer, larger house, even at the lower nominal pay.  In San Francisco, your admittedly higher nominal pay would only afford you the ability to buy only 14% of the homes on the market.  And the median home, which you could not afford, has only about 1000 square feet of space.  In Houston, on the other hand, your lower nominal pay would allow you to buy 56% of the homes.  And that median home, which you can now afford, will have on average 1858 square feet of space.

So while the national median income numbers dropped when you moved to Houston, you actually can afford a much nicer home with perhaps twice as much space.  Thus, it strikes me that there are important things happening in the mix that are not being taken into account when we say that the "average is over".

Of course, while this effect is certainly real, I have no idea how much it affects the overall numbers, ie is it a small effect or a large effect.  Fortunately my son is studying economics in college.  If he ever goes to grad school, I will add this to my list of research suggestions for him.

Postscript:  This exact same discussion could apply to US poverty statistics.  We have one poverty line income number whether you live in Manhattan or Tuscaloosa.  I have always wondered how much poverty statistics would change if you created some kind of purchasing power parity test rather than a fixed income test.

Liberal Douchebag vs. Liberal Douchebag: Google Employees Invade San Francisco

This is an article a reader described as being from the "screw them all" category, and I am inclined to agree.  There are many funny bits in the piece, but I particularly liked the San Francisco lefties arguing that these new Google millionaires should act more like the Rockefellers and the Vanderbilts.  LOL for sure.

Incredibly, no one asks the obvious question -- why is home supply in San Francisco treated as zero sum, such that a Google millionaire moving in by necessity kicks some  poor people out.  The reason is that no place in the country does more than San Francisco and the Bay Area to make it impossible to build new housing.  San Francisco has some unique geographic constraints but you don't hear people complaining about this in Houston (which is in fact a much larger city).  In fact, I am trying to imagine Houston complaining about too many rich people moving in.  I just can't seem to focus that image in my head.

Actually, the article does very briefly consider the supply side of the equation, but of course no one mentions government development and zoning restrictions -- its the fault of capitalist speculators!  My reader highlights this paragraph:

Though he doesn’t much care for the start-up douchebags, Redmond blames not individual tech workers for the current crisis, but property speculators and the lawmakers who have let them take advantage of their precious commodity: space. “If we had a major earthquake in San Francisco, the water mains all broke, and some guy showed up with a water truck and started selling water for $10 a gallon, people would be pissed,” he says. “That guy would be ridden out of town; he’d be attacked with sticks and pitchforks. But that’s what the real estate people are doing right now – and they’re getting away with it.”

Memo to speculators:  If I have lost all access to water and am dying of thirst, you are welcome to come to my house and sell water to me for $100 a gallon.  I promise no pitchforks at my house.

PS-  One thing I did not know is that tech companies seem to be running large private bus systems

The Google buses, which often stop in spaces supposedly reserved for public transport, are a particular point of contention. This growing fleet of unmarked luxury coaches carries some 14,000 people on their 35-mile trip from the city to Silicon Valley and back. Since the search giant introduced the buses a decade ago, Facebook, Apple, eBay and almost 40 other companies have followed suit. Each new route quickly becomes a corridor of hip clothing stores and restaurants.

This is an interesting exercise in privatization.  For riders, it certainly would be nice to have routes custom designed to match your needs (ie exactly from your origin to your destination without changing trains or busses), something that is often an issue with public transport networks.  Als0- and this is going to sound awful but it is from many public surveys and not my own point of view - these private bus networks get around the social mixing issue that turns a lot of middle class riders off on bus systems.

This is obviously expensive but I understand why some companies do it.  As someone wrote a while back, no one in their right mind would put Silicon Valley in California today if it were not already there.  It is absurdly expensive to do business in CA and it is expensive to live there as an employee.  However, tech companies have found that  a certain good called "access to San Francisco" is quite valuable to the types of young smart employees they want to hire and can overcome these negatives.  So the bus system is a way for companies to better provide this good.  The irony of the article is that as so many tech companies are selling this good (ie access to San Francisco) they may be changing the character of San Francisco in a way that makes the good less valuable over time.

How Can People Say This Stuff With A Straight Face?

Joane Hayes-White has no shame:

San Francisco's fire chief has explicitly banned firefighters from using helmet-mounted video cameras, after images from a battalion chief's Asiana Airlines crash recording became public and led to questions about first responders' actions leading up to a fire rig running over a survivor.

Chief Joanne Hayes-White said she issued the order after discovering that Battalion Chief Mark Johnson's helmet camera filmed the aftermath of the July 6 crash at San Francisco International Airport. Still images from the footage were published in The Chronicle.

Filming the scene may have violated both firefighters' and victims' privacy, Hayes-White said, trumping whatever benefit came from knowing what the footage shows.

"There comes a time that privacy of the individual is paramount, of greater importance than having a video," Hayes-White said.

Any 5-year-old can figure out here that this has nothing to do with victim privacy -- this is all about shielding her organization from accountability from future screw-ups.  Somehow we have ended up in a completely backwards world where surveillance is aimed at private citizens doing private things but is banned for public officials doing public things.  Ms. Hayes-White is obviously just a puppet for the firefighters union, and she be treated with contempt.

California Regulatory Burden

I often tell folks that while the taxes in California are irritating, what has really killed my interest in expanding in California is the regulatory burden.  It took 3 years to get through Ventura County planning department to get permission to put a modular ticket booth in a corner of an existing parking lot -- only to be denied.  I have faced potential prosecution because we demolished an unsafe deck without state permission.  I now have to fire people who try to work through lunch or else face employees suing  me (successfully!) later for their voluntarily working through lunch.

I think that is why I enjoyed this blog, SLO Leaks, so much.  It is a 3-1/2 year story of an obviously wealthy gentleman trying to get the local planning board and later the California Coastal Commission to allow him to build a house on his residential-zoned land.  I sat up for hours last night reading through it.  42 months and $3 million later, he still is not even close to having his approvals.  It is interesting to see his respectful-of-authority tone shifting over time, until at the end he is writing about how he has shifted his company's new office and expansion from California to Texas.

Here are a few nuggets.   Here is what he is up against:

Once a year the Public Works Dept gives a report on what has happened in the previous year in the Avila Beach area. One part of their report is on how many building permits were issued. In order to get a building permit you first have to get a minor use permit through the Planning Dept, so this is a good gauge of how much work the Planning Dept does. So for the period from July 1, 2010 to June 30, 2011, in the Avila area, which has Ryan Hostetter as a full time planner, the entire list of building permit issued is here:

One single family residential permit was issued during the entire year.

That’s it. No commercial buildings, no office building, no barns, just one single family house permit. And it wasn’t my permit, that’s for sure – because I am now going through the potentially years long Coastal Commission permit appeal process before I can even apply for a building permit.

And this:

So after waiting nearly a year, Daniel Robinson, who is a low level bureaucrat with the California Coastal Commission, and who had never even been to the house site, and who had never even met me or my wife, has told me that he doesn’t like my front yard, he thinks the retaining walls are too big, he thinks my house is too big, and that he doesn’t like the overall design of my house. Daniel thinks that my house should look more like a farm house, and also that people walking around in the city of Pismo Beach will be offended by the mere sight of my house (so called “visual impact”). And if my house design doesn’t please him then he will recommend to the full Coastal Commission that they deny my permits. Since I will only get 3 minutes to defend my house in front of the Coastal Commission I would then probably lose that permit appeal vote and I will be unable to build my house at all, and I will lose about $3 million, and will have wasted years of my life.

The California Coastal Commission is perhaps the most capricious and authoritarian government entity in the country, for example:

But then there was the minor issue of a permit for Daly City, a suburb of San Francisco, to rebuild a rock retaining wall that had been damaged during the last winter storms. It was such a minor issue that Daley City didn’t even send a representative to the CCC meeting. What could possibly go wrong?

The rock retaining wall was to protect a dirt and gravel road that follows along the coastline. On the other side of the dirt road is an abandoned landfill that Daley City capped over in the 1970′s. And I watched the Coastal Commission, apparently on a whim, decide to overrule their staff and instead of issuing a permit they decided to require Daily City to dig up the entire landfill and relocate it inland somewhere. Where it got relocated to the Coastal Commission didn’t care – since that isn’t their problem. And the estimate to do this landfill relocation is $125,000,000.00!

$125,000,000.00 works out to $1250.00 for every man, woman, and child in Daly City. And the Coastal Commission decided that this must happen with about 10 minutes of discussion amongst themselves and without a single fact to cloud their minds! It was both unbelievable and terrifying.

From all the facts, it looks to me like he is never going to get approved.  But you can get quick approval from the  CCC -- if you are rich and have political juice

Like me, [Steve Blank] is in the high tech industry. Like me, he has started several high tech companies....

After Steve sold his last startup company he applied for a permit to build a house in the California Coastal Zone in 2000. And, just like me, Steve’s land use permit was appealed to the California Coastal Commission. The reason for the appeal was “sensitive habitat” issues. (I don’t have any sensitive habitat issues because my proposed house is in the middle of a field of non-native weeds.)

Unlike me, Steve’s appeal to the Coastal Commission went pretty smoothly. He had his hearing in only 8 months – start to finish. It has taken me a year and a half, after waiting a year and a half for SLO County to issue the permit in the first place. And there were no onerous “Special Conditions” imposed on Steve by either San Mateo County or the Coastal Commission.

Here is the list of “Special Conditions” that the Coastal staff wants to impose on me.

Superficially Steve’s house and my house are similar. I have a main house and a barn on 37 acres, Steve has a main house, two barns, and a farm labor house. But Steve’s house is 15,780 sq. ft., with a swimming pool, and a 2,500 sq. ft. barn, and another 3,040 sq. ft. barn 31 ft. high, and a 1240 sq. ft. farm labor house all on 261 acres. So Steve’s house is around 3 times larger than my proposed house (and much taller). Steve also got to have a fence and there was no requirement for public access. And Steve was able to build his house to look anyway he wanted. No “rural agricultural theme” architecture for Steve, that’s for sure. Steve can also plant in his yard pretty much any damn thing he wants.

Steve is pretty proud of his house. A picture of his house is the banner to his web page, which ishere. You can see the front gate of his house here. And this is an overhead view.

Steve Blank is one of the current California Coastal Commissioners.

You Can't Use Voluntary Action to Try to Stop Government Coersion

Or so says California's Gavin Newsom, in a great Reuters quote found by Zero Hedge:

California Lieutenant Governor Gavin Newsom says he wants the U.S. Department of Justice to investigate "threats" against local communities considering using eminent domain to seize and restructure poorly performing mortgages to benefit cash-strapped homeowners.

Newsom sent a letter on Monday to U.S. Attorney General Eric Holder asking federal prosecutors to investigate any attempts by Wall Street investors and government agencies to "boycott" California communities that are considering such moves.

"I am most disturbed by threats leveled by the mortgage industry and some in the federal government who have coercively urged local governments to reject consideration" of eminent domain," he wrote in a letter, a copy of which was provided to Reuters.

Newsom, a Democrat who was previously mayor of San Francisco, warned the influential Securities Industry and Financial Markets Association in July to "cease making threats to the local officials of San Bernardino County" over the proposed plan to seize underwater mortgages from private investors.

Some towns in San Bernardino County, which is located east of Los Angeles, have set up a joint authority that is looking into the idea of using eminent domain to forcibly purchase distressed mortgages. Rather than evict homeowners through foreclosure, the public-private entity would offer residents new mortgages with reduced debts.

Newsom said in the letter on Monday that while he is not endorsing the use of eminent domain at this time, he wants communities in California to be able to "explore every option" for solving their mortgage burdens "without fear of illegal reprisal by the mortgage industry or federal government agencies."

This quote is so rich with irony that it is just delicious.   Certainly ceasing to do business in a community that threatens to steal all your property strikes me as a perfectly reasonable, sane response.   Calling such a response an actionable threat requiring Federal investigation just demonstrates how little respect California officials, in particular, have for private activity and individual rights.

The third paragraph might be worth an essay all by itself, classifying a voluntary private boycott as illegally coercive while treating use of eminent domain, intended for things like road building, to seize private mortgages as so sensible that it should be sheltered from any public criticism.

WOW. Our Countries Leaders Sure Have Come A Long Way

From ABC News via Q&O

At a million-dollar San Francisco fundraiser today, President Obama warned his recession-battered supporters that if he loses the 2012 election it could herald a new, painful era of self-reliance in America.

“The one thing that we absolutely know for sure is that if we don’t work even harder than we did in 2008, then we’re going to have a government that tells the American people, ‘you are on your own,’” Obama told a crowd of 200 donors over lunch at the W Hotel.

At least he is making the choice clear.

Why Would Anyone Start a Business in San Francisco?

Via Protein Wisdom:

A legislative proposal in San Francisco seeks to make ex-cons and felons a protected class, along with existing categories of residents like African-Americans, people with disabilities and pregnant women. If passed by city supervisors, landlords and employers would be prohibited from asking applicants about their criminal past. [...]According to The City’s Human Rights Commission, San Francisco has the highest recidivism rate of any big city in California, almost 80 percent. With an influx of new prisoners set to be released because of the state’s budget crisis, supporters argue felons need legal protections before they’re disqualified simply because of their record, which could be decades old and for crimes that have nothing to do with the job they’re hoping to get.

Do you really want to open your customer contact business in a location where you cannot background check employees, or are not legally allowed to fire them if you find some horrible criminal history?  Can you imagine the lawsuits flying?  And don't tell me that the company would be safe in a courtroom arguing that it was illegal to check.  I could easily see a California jury holding a company liable for not background checking an employee for an incident even when it was illegal to do so.

 

19th Century FU

Here are a couple of mansions in San Francisco, on of which was built by Charles Crocker of the "big 4" (including Sanford, Huntington, and Hopkins) who built the western half of the transcontinental railroad  (don't be fooled -- the railroad itself, forced years ahead of its time by government policy, was a financial mess.  The big 4 made their real money in the construction company that built the railroad, and in real estate and ancillary businesses at the railroad's terminus).

Note the thing that looks like a four-story high wall in the back corner of the near mansion. What is that?  Its a four-story high wall.  Crocker was ticked off the last building owner on the block did not sell to him.  So he built a "spite wall" on his property on three sides of the building to block its views.  Abusive, I suppose, and used by some to talk about what the rich could get away with in that era.  But consider that in the current era, Crocker would just go to the government and get it to condemn the building and hand the property to him, in the Kelo logic that he would pay more taxes on the property.   Rich people have more power today to abuse their relationship with government for the simple fact that the government has a lot more power to be commanded.

As I tell people all the time, if you want to limit the special powers the rich wield by influencing politics, the only solution is to limit the power of the government.

From this cool 360 panorama of San Francisco

Environmentalists Praising Use of Coal

From environmental blog the Thin Green Line:

McDonald's has been a frequent target on this blog, and many others related to health and environmental issues. But mark it on your calendar: This post is in praise of Micky D's, for installing EV charging stations at a new West Virginia location.

Yes, it's just about the strangest place you could pick, given that the Huntington, WV, location is not on a throughway connecting EV early-adopter towns like New York, D.C., or San Francisco. The location clearly has more to do with its proximity to partner American Electric Power's Columbus, Ohio, headquarters "” but we'll give kudos where kudos are due. With 58 million people eating at McDonald's everyday, the burger chain isn't a bad spot to enable electric vehicle drivers to charge up.

99% of West Virginia's electricity comes from coal, so its interesting to see environmentalists championing the switch from gasoline to coal.  Notwithstanding the fact that the fossil fuel use of electric vehicles is being grossly under-estimated, charging up your EV in WV is a great way to take positive steps to increase your CO2 footprint.

Trading Cribs

Brian Caplan compares his life with that of the richest of the Gilded Age:

I just returned from the Biltmore, America's largest home.  Built by George Vanderbilt between 1889 and 1895, the Biltmore is a symbol of how good the rich had it during the Gilded Age.  I'm sure that most of the other visitors would answer "very good indeed."

But how many would actually want to trade places with George?  Despite his massive library, organ, and so on, I submit that any modern with a laptop and an internet connection has a vastly better book and music collection than he did.  For all his riches, he didn't have air conditioning; he had to suffer through the North Carolina summers just like the poorest of us.  Vanderbilt did travel the world, but without the airplane, he had to do so at a snail's pace.

Perhaps most shockingly, he suffered "sudden death from complications following an appendectomy" at the age of 51.  (Here's the original NYT obituary).  Whatever your precise story about the cause of rising lifespans, it's safe to say that George's Bane wouldn't be fatal today.

I made this observation several years ago, though, though I went west coast railroad entrepreneur rather than east coast.  I showed pictures of a San Francisco mansion and a middle class home of a friend of mine in Seattle.

One house has hot and cold running water, central air conditioning, electricity and flush toilets.  The other does not.  One owner has a a computer, a high speed connection to the Internet, a DVD player with a movie collection, and several television sets.  The other has none of these things.  One owner has a refrigerator, a vacuum cleaner, a toaster oven, an iPod, an alarm clock that plays music in the morning, a coffee maker, and a decent car.  The other has none of these.  One owner has ice cubes for his lemonade, while the other has to drink his warm in the summer time.  One owner can pick up the telephone and do business with anyone in the world, while the other had to travel by train and ship for days (or weeks) to conduct business in real time.

I think most of you have guessed by now that the homeowner with all the wonderful products of wealth, from cars to stereo systems, lives on the right (the former home of a friend of mine in the Seattle area).  The home on the left was owned by Mark Hopkins, railroad millionaire and one of the most powerful men of his age in California.  Hopkins had a mansion with zillions of rooms and servants to cook and clean for him, but he never saw a movie, never listened to music except when it was live, never crossed the country in less than a week.  And while he could afford numerous servants around the house, Hopkins (like his business associates) tended to work 6 and 7 day weeks of 70 hours or more, in part due to the total lack of business productivity tools (telephone, computer, air travel, etc.) we take for granted.  Hopkins likely never read after dark by any light other than a flame.

If Mark Hopkins or any of his family contracted cancer, TB, polio, heart disease, or even appendicitis, they would probably die.  All the rage today is to moan about people's access to health care, but Hopkins had less access to health care than the poorest resident of East St. Louis.  Hopkins died at 64, an old man in an era where the average life span was in the early forties.  He saw at least one of his children die young, as most others of his age did.  In fact, Stanford University owes its founding to the early death (at 15) of the son of Leland Stanford, Hopkin's business partner and neighbor.  The richest men of his age had more than a ten times greater chance of seeing at least one of their kids die young than the poorest person in the US does today.

Hopkin's mansion pictured above was eventually consumed in the fires of 1906, in large part because San Francisco's infrastructure and emergency services were more backwards than those of many third world nations today.

Here is a man, Mark Hopkins, who was one of the richest and most envied men of his day.  He owned a mansion that would dwarf many hotels I have stayed in.  He had servants at his beck and call.  And I would not even consider trading lives or houses with him.  What we sometimes forget is that we are all infinitely more wealthy than even the richest of the "robber barons" of the 19th century.  We have longer lives, more leisure time, and more stuff to do in that time.   Not only is the sum of wealth not static, but it is expanding so fast that we can't even measure it.  Charts like those here measure the explosion of income, but still fall short in measuring things like leisure, life expectancy, and the explosion of possibilities we are all able to comprehend and grasp.

You Libertarians are So Paranoid. Government Would Never Use its Power to {Fill in the Blank}

From San Francisco, of course.  Via Maggies Farm's great daily link roundup

If the commission approves the ordinance at its meeting tonight, San Francisco could soon have what is believed to be the country's first ban on the sale of all pets except fish.That includes dogs, cats, hamsters, mice, rats, chinchillas, guinea pigs, birds, snakes, lizards and nearly every other critter, or, as the commission calls them, companion animals.

"People buy small animals all the time as an impulse buy, don't know what they're getting into, and the animals end up at the shelter and often are euthanized," said commission Chairwoman Sally Stephens. "That's what we'd like to stop."

This is the same city that is replacing Cokes with Soy Milk in its vending machines.  Oddly, when you read the pet article, it turns out their main concern is with hamsters, that get euthanized a huge rates as people who initially think they are cute wake up one day and realize they are just irritating rodents.  One wonders then why they ban on all animals just to get at one kind.  And why are fish OK but dogs are not?

I think I blogged this the other day but I want to repeat the un-ironic comment made by a city official on the soda ban in vending machines:

"It's entirely appropriate and not at all intrusive for city government to take steps to discourage the sale of sugary sodas on city property."

One wonder if any limitation on individual choice (save perhaps on abortion) would be considered inappropriate or intrusive by these folks.

How Can You Argue with Logic Like This?

From the Thin Green Line:

So much for criticism that California's environmental leadership "” notably AB 32 "” kills jobs: The state has the most green-collar jobs of any in the nation, and San Francisco leads the Golden State with 42,000 positions. For a city with a population of 809,000, that's pretty impressive.

I think of my father-in-law when I read something like this.  He was a lifelong environmentalist as well as a PHD physicist and a researcher at MIT's Lincoln Labs.  While we often disagreed on various issues, he always tried to bring both science and the scientific method to environmental issues.  I wonder what he would think about this bozo.

Not that this quote really deserves further attention, but here are a couple of random thoughts:

  • While AB32 has been law for a number of years, the CARB has made only limited progress actually setting up the enabling regulations and carbon trading schemes.  In effect, AB32 is largely un-implemented at this point, making its lack of effect on job growth fairly unsurprising
  • Wow, what a surprise -- the state with the largest number of workers has the largest number of workers in a particular employment category.  My guess is they have the most car mechanics in the country too, and the most SUV owners.  So what?
  • The whole definition of a "Green collar job" is total BS.  Basically it means you work in a job that has been deemed to be in a politically correct energy related field.  But why are solar executives green jobs but hydro plant workers not?
  • The implication in the post is that this is some kind of public policy victory, but of course there is no evidence at all of why these jobs exist or are located in California
  • Even if these jobs are the result of some kind of California public policy initiative, how much did they cost?  How many jobs were lost when the government shifted resources around by fiat?  In Spain, its been calculated that more than 2 jobs were lost for every green job created.

There used to be a joke in Texas during the 80's oil bust -- "How do you make a million dollars in oil?  Start with $10 million."  The same likely applies here -- "How do you create 42,000 green jobs?  Start with 100,000."

Chinese Factories

TJIC writes:

Chinese factory conditions may not be the exact cup of tea for a San Francisco graphic designer or a Connecticut non-profit ecologist grant writer "¦ but they're, by definition, better than all the other alternatives available to the Chinese workers (or the factories would find it impossible to staff up).

I wrote previously:

One morning, a rice farmer in southeast Asia might faces a choice.  He can continue a life of brutal, back-breaking labor from dawn to dusk for what is essentially subsistence earnings.  He can continue to see a large number of his children die young from malnutrition and disease.  He can continue a lifestyle so static, so devoid of opportunity for advancement, that it is nearly identical to the life led by his ancestors in the same spot a thousand years ago.

Or, he can go to the local Nike factory, work long hours (but certainly no longer than he worked in the field) for low pay (but certainly more than he was making subsistence farming) and take a shot at changing his life.  And you know what, many men (and women) in his position choose the Nike factory.

Update: In an interesting question of incentives, Foxconn, the manufacturer much in the news for a rash of suicides at its plant in China, apparently pays about 10-years salary to the families of workers who kill themselves.  They have ended the practice, worried that they are incentivizing some of the suicides.

Black Swan

It is not often that the NY Times will question the long-term consequences of any Democratic program ostensibly aimed at mitigating a short-term need.  So I don't want to fail to highlight this:

The Obama administration's $75 billion program to protect homeowners from foreclosure has been widely pronounced a disappointment, and some economists and real estate experts now contend it has done more harm than good.

Since President Obama announced the program in February, it has lowered mortgage payments on a trial basis for hundreds of thousands of people but has largely failed to provide permanent relief. Critics increasingly argue that the program, Making Home Affordable, has raised false hopes among people who simply cannot afford their homes.As a result, desperate homeowners have sent payments to banks in often-futile efforts to keep their homes, which some see as wasting dollars they could have saved in preparation for moving to cheaper rental residences. Some borrowers have seen their credit tarnished while falsely assuming that loan modifications involved no negative reports to credit agencies.

Some experts argue the program has impeded economic recovery by delaying a wrenching yet cleansing process through which borrowers give up unaffordable homes and banks fully reckon with their disastrous bets on real estate, enabling money to flow more freely through the financial system.

"The choice we appear to be making is trying to modify our way out of this, which has the effect of lengthening the crisis," said Kevin Katari, managing member of Watershed Asset Management, a San Francisco-based hedge fund. "We have simply slowed the foreclosure pipeline, with people staying in houses they are ultimately not going to be able to afford anyway."

In Case You Were Not Depressed Enough...

I wrote the other day about restrictions in the Federal stimulus bill that substantially reduced the ability of state governments to cut spending in response to lower tax revenues.  It turns out there are a myriad of other limitations, including court cases and past consent decrees, that make it nearly impossible for states to do much if anything about their budget shortfalls (except raise taxes, of course).  Just about everyone except for taxpayers have a set of lawyers in courts full time preventing budget changes that affect their special interests.

If you thought elected officials in your state were running the budget show, you might be in for a surprise.  Likely as not the federal courts are more powerful budget authorities than the state's legislature or executive.  A few consent decrees can easily cripple any attempt to pass a balanced budget requirement in a state legislature, and overturn the act itself in federal court if it does happen to pass.  Tennessee, for instance, was shacked by three consent decrees, all of which were administered by federal judges.  Before even writing budget legislation, the governor of Tennessee had to persuade two federal judges, who were the de facto managers of the state's health care system, that any changes were a good idea.

The most damaging consent decrees to state budgets tend to be related to staffing levels.  A number of state agencies settled all manner of employment and discrimination claims by entering consent decrees freezing staff levels.  Often state employee unions were among the most active consent decree wielders.  These decrees tend to lock up not only staff levels, but salaries (through "constructive termination" clauses that equate even modest pay cuts with termination and thereby trigger staffing minimum clauses) and pension benefits as well.

Explain to me again how these government officials who signed these incredibly short-sighted consent decrees just to get through their own term in office are more long-term focused than private actors?  Would any of you short-term-focused capitalists sign an open-ended agreement to never cut staff or salaries or benefits for employees no matter what the future fortunes of your company were?

The only way through this is going to be a massive string of state and local government bankruptcies.

Update: Sort of related, I got this in my email today from a reader

The City of San Francisco pays for two Police Departments and two Fire Departments, less about 5%.
Both have one active-duty department and one retired-duty department.
When a cop or firefighter retires in San Francisco, he receives a 90% pension.

Then, every year THEREAFTER, the retiree receives 50% of every raise negotiated by the active duty Memorandum of Understanding.

He seems to have it right, he links to this site, which does indeed show that the COLA on retiree pay includes 50% of all raises given to active duty employees.  I wonder how early they are vested?

Update #2: Via Nick Gillespie, update #1 is not that unusual:

Retirement incomes for the most experienced government employees top out at 88 percent of their active-duty pay. Unlike most private-sector workers, whose retirement is driven by the strength of the stock market and their 401-k plans, the pensions for government employees are guaranteed.

In addition to higher average retirement incomes, government retirees in Ohio also enjoy government-sponsored health care, can retire as young as 48 for police and firefighters, and have the opportunity to 'retire' and collect a full pension while going back to work, often at full pay for doing the same job. Such 'double-dippers' were paid more than $741 million by the State Teachers Retirement System last year and $240 million by the Public Employees Retirement System, records show.

In Toledo, even the mayor is a double-dipper.

Since starting his current term in January 2006, Toledo Mayor Carty Finkbeiner has drawn his annual salary of $136,000 in addition to a state pension for more than two decades in elected and unelected positions. He is leaving office on Monday.

And because he is already receiving a Public Employees Retirement System pension, Toledo taxpayers have paid $75,221 into an annuity as an additional retirement fund for Finkbeiner.

San Francisco: Progressive Paradise or Bankrupt Banana Republic?

Great article in the SF Weekly on San Francisco:  The Worst Run Big City in the US.  The article is lengthy and packed full of government fail.  Just one example:

You can't get San Francisco running efficiently, because that would require large numbers of unionized city workers to willingly admit their redundancy and wastefulness. Inefficiency pays their salaries. "It's been going on for decades," Peskin says.

This problem comes up almost every time the city negotiates labor contracts, which is part of the reason San Francisco is constantly on the brink of fiscal ruin. Politically powerful unions "” the progressives are beholden to the service unions; moderates cater to police, firefighters, and building trades; and Republicans ... what's a Republican? "” negotiate contracts the city knows it can't afford. Politicians approve them, despite needing to balance the budget every year, because the budget impact of proposed contracts is examined by the Board of Supervisors only for the following year, no matter how long contracts run. According to former city controller Ed Harrington, it has become common practice not to schedule any raises for the first year of a contract, but to provide extensive raises in later years.

The result is a contract that looks affordable one year out, then blows up in the city's face. City employees receive up to 90 percent of their already generous salaries in pensions and many also receive lifetime health care "” meaning that as they retire, labor costs soar.

Sounds like the health care bill in Congress, no?  The bit near the beginning on the problem in the parks department - overstaffing, no one showing up for work, lost money, poor controls, no process - particularly resonate with me.  My business is the privatization of public parks.  I can't tell you how many public parks agencies I know to be providing terrible service (service levels that I would be ashamed of) with grossly inflated budgets tell me face-to-face that they can't privatize because that would jeopardize the quality of the parks.  Well, that and the fact that the public employees unions would not allow it.

I always laugh when folks tell me that government intervention is needed because private industry is too short term oriented.  But no one is more short term oriented than politicians looking to the next election or closing this year's budget hole.  In particular, capital maintenance is always ignored until infrastructure is literally falling apart.   We see it in parks, transit systems, roads, schools, etc.  It is the same phenomenon that causes third world state-run oil companies to have their production fall off - instead of reinvesting their profits into upgrades and maintenace of their fields and infrastructure (as those short-term focused American oil companies do) they transfer the money into social giveaways that cement their political power.  Here is a great example from San Francisco:

In 2002, the San Francisco Chronicle revealed that the city had, for decades, been siphoning nearly $700 million from its Hetch Hetchy water system into the San Francisco General Fund instead of maintaining the aging aqueduct. Several mayors and boards of supervisors used that money to fund pet causes, and the Public Utilities Commission didn't say no. Unfortunately, spending maintenance money elsewhere doesn't diminish the need for maintenance. By 2002, the water system was in such desperate condition that voters were asked to pass a $3.6 billion bond measure to make overdue fixes. Obligingly, they did "” who doesn't like water? Since then, the projected costs have swelled by $1 billion. So far.

My favorite line:

"San Francisco is Disneyland for adults, or a place people go until they grow up."

Update on Government Salaries

Over 700 employees of San Francisco's BART transit agency make over $100,000 just in cash wages.  This does not include lucrative benefits that probably add $30,000 or more to total compensation for most employees.  (SF Chron, via Thin Green Line)

Legalize Immigrants From Mexico; Ban Immigrants From California

Until a few years ago, I did business up and down the Pacific Coast.  If I had to rank the business climates of these states, from worst to best, I would informally come up with something like:

  1. (worst) Certain California counties (e.g. Ventura, San Francisco, Santa Barbara)
  2. Oregon
  3. Western Washington
  4. Rest of California
  5. Eastern Washington

So I was interested to see that Oregon may finally be getting the bad press it deserves as a difficult place to do business, though, interestingly enough, this particular article blames it on the Californians:

Some might call this California disease. This refers to a chronic inability to make hard decisions as well as a general disregard for business and economic activity....

With all the influx of Californians, it's not surprising that Oregon shows some signs of California disease. It recently increased its tax rates so that Oregon's highest-income taxpayers face marginal tax rates that match Hawaii's for the highest in the nation. Oregon's land-use planning had been extremely centralized for some time. Indeed, Oregon's land-use planning may be the most centralized in the United States. This makes it harder for communities to control their own destinies, whether they want to grow or not.

Interestingly, I actually wrote about similar effect in the context of immigration into the US.  While I am a supporter of open immigration, my greatest fear is that in the name of individual liberty, we would let in millions of new people who would someday vote against individual liberties.  It seems that may be a more substantial problem with Californian than Mexican immigration.

The good news for the rest of us is that Oregon may preferentially be attracting the slackers

Our analysis of California migrants has shown a gradual reduction in their earnings over what they were earning in the Golden State. There also are less quantifiable impacts. Portland, a city attractive to many unemployed and underemployed younger Californians, could well be becoming the "slacker" capital of the world.

Fortunately, Arizona is so politically un-correct with slacker/socialist/statist/greenie types that we don't get a lot coming here.

More Indentured Servitude in San Francisco

Via the Thin Green Line:

Throwing orange peels, coffee grounds and grease-stained pizza boxes in the trash will be against the law in San Francisco, and could even lead to a fine.

The Board of Supervisors voted 9-2 Tuesday to approve Mayor Gavin Newsom's proposal for the most comprehensive mandatory composting and recycling law in the country. It's an aggressive push to cut greenhouse gas emissions and have the city sending nothing to landfills or incinerators by 2020.

"San Francisco has the best recycling and composting programs in the nation," Newsom said, praising the board's vote on a plan that some residents had decried as heavy-handed and impractical. "We can build on our success."

The ordinance is expected to take effect this fall.

The legislation calls for every residence and business in the city to have three separate color-coded bins for waste: blue for recycling, green for compost and black for trash.

Failing to properly sort your refuse could result in a fine after several warnings, but Newsom and other officials say fines will only be levied in the most egregious cases.

I think if I lived there I would save some really rank crap buried in the back yard, maybe a few animal carcasses, to throw in the trash when the inspector came by to dumpster dive.

But the whole concept confuses me.  There is this assumption that everything environmentalists always wanted us to do, like recycling, is automatically and without need for critical thought going to reduce CO2 emissions.  But will it?

Doesn't composting increase greenhouse gas emissions vs. land filling? I have always wondered about this with Christmas tree recycling programs. If the program was really about reducing greenhouse gasses, why are we chipping the trees and spreading the chips around so they can decompose faster?  Decomposition is basically just slow combustion, producing CO2 and some methane.  Shouldn't we instead be shrink-wrapping the trees and burying them deep in the name of carbon sequestration?

By the way, advocates will say that recycling saves money.  Well, it is not clear that it even saves the state any money but it certainly does not save you and I any.  In fact, the only way people can even fool themselves into believing there is any economic benefit is to assume that the value of your and my time is $0.  We are indentured servants, working for the state as trash sorters for no compensation.

Postscript: Assume there are 110 million households in the US, and each household has to spend 5 minutes a week sorting trash.  And assume that the value of folk's time is $20 per hour (and I can guarantee you the marginal value of my free time is a LOT higher).  This is $9.5 billion of stolen labor each year.

You Must Subsidize My Unrealistic Choices

I found this a fairly typical example of the thinking by the modern victim class.

Stimulus dollars for new fare boxes strikes me as very close to the extreme in Keynes's insight that stimulus from the gov't can be needed and serve well, when he said something like that a "stimulus" could be burying bottles of dollars under a field and people digging them up - his point being that ANY stimulus would help. 50+ yrs later, surely the thought that "yeah, but, a smarter-placed stimulus would have more effect." Stimulate the company (and its employees) that make fare boxes, or allow SF residents to not be yet further pressed for money? I think the latter is smarter, and am stunned that the former seems to be going to happen.

I beg you to write and publish something on this. Raising fares at Muni also has a ripple effect on local business -- I won't ride the bus on the wkend out into the neighborhoods and maybe use my little splurge money to buy something there. In addition to that, for MTA, I will be overall paying less to them (while feeling a lot more confined, riding a lot less). The fare increase will get less money from me, while imposing more hardship on me, and I will be putting less money into local business.

Thank you for noticing and writing of we "the working poor." We're increasing in number. I'm well-educated and under-employed, and right now just trying to get by each month. I am desperately trying to avoid having to move out of SF.

So here is the situation:

  • He is well-educated, presumably with portable skills, but insists on staying in San Francisco where he cannot find full employment.  My sense is he has not tried to find a job anywhere else in the country
  • He considers himself to be poor, but refuses to entertain the idea of living in the most expensive city in the country (save possibly Manhattan)
  • He wants the rest of us via stimulus money to to subsidize his rail transport to help him better live in a city that has no work for his skills and which is too expensive for him to afford

I am OK with helping out folks who have tried everything they can to make ends meet and still need help to survive.  But should I really be thrilled to rush to the aid of someone who refuses to take even the first and most obvious step to address their poverty?

I have moved 9 times in my life trying to make things work for me and my family. I loved Boulder CO the best, and would love to live there, but there is no work for me that fits my skills. I guess I could have stayed and lived their in a financial situation that is less than I desire, but if I did so, it would be hard for me to imagine that I would lash out at the rest of the world for not subsidizing my choice.

Postscript: These guys are on drugs thinking light rail is the answer for the working poor.  As I wrote in the comments:

...light rail is simply not transit for the working poor. It is transit for yuppies that happens to be used by some working poor.  They are built for white collar workers commuting to town who are too high and mighty to be caught dead in a "grubby" bus.  But since light rail is orders of magnitude more expensive than buses, two things happen in every city that ever builds light rail.

1) Light rail fares skyrocket to cover their immense operating deficits and capital costs, giving the lie to politicians that sold these systems as helping working poor.

2) Bus service, the form of transit that serves most of the working poor even today in the Bay Area, is cut back to help pay for rail.

Light rail is the worst enemy of providing transit services to the working poor ever devised in this country.

Only The Taggart Building Will Be Spared

One of the images I remember form reading Atlas Shrugged was of darkened skyscrapers, as the government forced the closure of the upper stories of buildings to save energy.  Only building owners with political pull were excepted.  It seems San Francisco is following a similar plan:

Turn the lights out -- or pay.

That's the message of legislation being revived by Board of Supervisors President David Chiu, who will introduce a measure Tuesday mandating that skyscrapers turn off all nonemergency lights at night as a way to save energy. The introduction comes just days before Earth Hour Saturday, in which people are urged to turn off their lights for an hour at 8 p.m.

The legislation is essentially a new run at a law introduced a year ago by former board president Aaron Peskin that ultimately withered after strong opposition by the Building Owners and Managers Association of San Francisco. (We couldn't reach them by press time Monday). Peskin's proposal mandated building owners turn the lights out, or face administrative fines, but it was criticized as difficult to enforce. Chiu actually pushed Peskin to introduce that legislation, he said.

I would have assumed that if electricity consumption were really so high and so useless, that building owners would have had sufficient reason on their own to turn lights off.  After all, isn't it already turn the lights out or pay?  Unless of course electricity is free in SF.

One problem poorly understood by academics and government officials is that many folks outside of government actually work longer than a 9-4 work day.  As it happens, I am in my office tonight, likely until midnight, catching up on some things I could not with the phone ringing off the hook all day.  The only time I have ever occupied prime downtown real estate in an office tower was when I consulted with McKinsey & Co., and I can say for sure that there was seldom if ever a night when there weren't people in the office working well past midnight  (unfortunately, I was often one of them, which explains why my consulting career outlasted the birth of my first kid by only as long as it took me to find a new job).

Postscript: There is an incentive mis-match at work here in most leases.  Few commercial leases include individual metering for utilities, since most buildings are not set up for it  (it would actually be moderately hard, since office space is often reconfigured over time, shifting from one suite to another).  As a result, there is a kind of tragedy of the commons where renters pay their share of average use for all occupants, diluting the effect of their own usage on their own bills.  I am not sure how fining building owners when their tenants work late is going to help, though.

At the end of the day, this is all micro-managed bullsh*t.  If you want less electricity usage, raise rates, and let individuals figure out how to get the savings.  Just because a particular use (eg night lights in skyscrapers) is the most visible to policy makers does not make it the marginal use or the low hanging fruit for energy savings.