I live in the Bay Area. The Bay Area is extremely expensive. (Source not cited.)
Oppressively high housing costs have led to all kinds of fun social pathologies. San Francisco’s homelessness crisis is only the most well-documented. There is also the rise of the Stockton supercommuter. The swelling (and increasingly discriminated against) RV populations in the Peninsula and South Bay. The fact that public school teachers — a group of people that society actually pretends to care about — can’t live in (or even near!) the communities in which they teach.
These are but some of the problems we tolerate so that Menlo Park millionaires can enjoy subsidized mansions.
Increasingly, I worry about another problem — one that we’ll feel across generations. Namely, what do the Bay Area’s dysfunctional housing policies mean for long-run social mobility?
First, some context on what that question even means:
Our national economy is now dominated by a handful of “superstar cities” (e.g., San Francisco) that are hyperproductive. While there has always been something magical about dropping smart people and good companies in the same region and pressing “Play,” our globalized, financialized economy has pressed “Fast Forward” on that trend. (To grind this analogy into dust, you can also imagine our globalized, financialized economy deleting former Midwestern manufacturing centers from the TiVo.)
The point being: Moving to a superstar city is one of the surest ways to materially change your (and your family’s) economic fortunes. After all, you can develop elite programming skills, but if you’re living in West Virginia, it’s going to be hard to capitalize on them.1
Insane housing costs flip that calculus on its head. If you’re the child of a coal miner or whatever (you can insert your favorite Andrew Yang-ian cliche), and you’re looking at your economic prospects, you no longer see the Bay Area as a place of boundless opportunity. Instead, you’re comparing your not-so-great options at home to your not-so-tempting options in a superstar city.
“After all,” you might ask yourself, “what’s my long-term plan in a place like that? Is it worth giving up being near my friends and family to live in a shoebox in San Francisco?” (No, my Yang-ian friend, the answer is no.)
But you know who doesn’t have to worry about that calculus? People with family wealth, or whose families happen to be living in that particular geographic region already.
For them, it’s all upside2. Since the supply of homes is constrained by fentanyl-strength NIMBY-ism3, housing has become a ferocious zero-sum competition. There are only so few spots to go around.
But their families can help them “get into” the Bay Area housing market (which is to say: subsidize rent or gift them a down payment, two things that happen way more than you think). This intergenerational investment pays dividends because they can now earn the outsized returns that come from living in a superstar city. Assuming these superstar city agglomeration effects continue, these lucky Baydestrians will be able to pass down their geographic privilege to their children. Meanwhile, our would-be movers from coal country (and their would-be geographically- and economically-privileged progeny) are shut out.
(Here, you can begin to glimpse how economic privilege compounds: At many elite universities, there are more students from the Top 1% than the Bottom 50%. Against the backdrop of ridiculous housing costs, which of these two groups do you think will be better positioned to reap the returns on their elite educations, even holding constant the usual advantages like connections, etc.?)
At this point, I know what you’re thinking: “Pffft, so much complaining. Life is hard. Why don’t you call the waaaambulance, bro?”
And, yes, right, good point. But the reason I care so much about this topic is that I am one of the geographically privileged. Through impossibly dumb luck, I was born to parents who decided to immigrate from Cairo to San Mateo (a town roughly halfway between San Francisco and San Jose). I grew up in Shoreview, which at the time was considered the “bad” part of San Mateo (which I find funny because today it has a median home price above $1 million). But San Mateo — at least then, before this technological boom hollowed out the Bay Area’s middle class — boasted pretty good income diversity.
This diversity, in turn, benefited me in ways that are probably impossible to articulate.
Although my parents worked at convenience stores and restaurants, I had friends whose parents worked at Sun Microsystems and Genentech. I could use them as a resource when I finally thought to ask the question: “What do I want to do with my life?” I could also learn the upper-middle-class manners (y’all are weird as fuck tbh) that let me navigate the world of finance when I stupidly decided that’s the field I wanted to work in.
More importantly: When I realized that I hated finance and that I wanted to work in Data Science, I was even luckier. I could enroll in a Data Science bootcamp and move back in with my parents, escaping the high rents that would have made such a risk untenable — or at least really, really, really difficult — for someone like me.
Because I could afford to take the risk, I was able to materially change my fortunes, to say nothing about the fortunes of my future family.
If my parents were immigrating today, they might have had to live in Vallejo instead of San Mateo. I wouldn’t have had access to the same educational options. I wouldn’t have met adults who worked at Sun Microsystems. I don’t know if I could have afforded the risk I took in leaving a good job for a sketchy educational venture called a “bootcamp.”
To put it in soulless economic terms, there is a much higher chance that my human capital would have gone… undeveloped.
And, look, I don’t mean to remove all individual agency from the equation: Even in this, our dystopian future, some people will make it. There are always people who will make it, no matter how flawed society’s generative models are. People are resilient, lucky, even remarkable sometimes.
But this isn’t about individual agency. It’s about how we design our society, and what that design says about us — our values.
Do we make it easy for people to realize their potential? Are we as welcoming as the Bay Area’s progressive rhetoric implies? Do we even care that we’ve made life so hard for regular people?
The answer to all of these questions, of course, is a big fat “NO.” And the really sinister thing is that the “NO” is silent! It’s been built into the structure of society, but the consequences are mostly invisible.
I mean, sure, economists have estimated that the insane housing policies in our superstar cities are reducing national GDP by 9% per year. But we can’t see that unrealized GDP, nor can we see the intergenerational impact. We can’t see all the potential being squandered. We can’t see the teacher who gives up teaching because he doesn’t want to live in an RV. We can’t see the unfounded company that an immigrant would have started4. We can’t see all the kids whose lives would have gone differently if only we hadn’t made it so damned hard for them.
We just get the vague sense that something has gone horribly, horribly awry.
Speaking the subtext aloud, finally: I don’t think my story would have been possible if I were born today, and I can’t articulate all the ways in which that depresses me.
- A handful of superstar cities are becoming America’s primary engines of economic growth
- These superstar cities are becoming increasingly inaccessible to the average person due to insane housing policies
- People with economic privilege can reap the outsized rewards of these superstar cities; regular people are shut out
- This pattern will aid in the creation/ossification of the two-tiered society that America has been trying desperately hard to implement since WWII made things briefly, uncomfortably equal5 for a little while
- This outcome is, to put it lightly, a disaster: Although the notion of “equality of opportunity” has always been a farce, the fact that we’ve allowed it to become this big of a farce is shameful
1Yes, yes, there’s remote work. And I think a full-throated embrace of remote work will need to be part of the solution here. (It certainly won’t be the aforementioned Menlo Park millionaires voluntarily changing their community’s zoning laws.) That said, I don’t think remote work is a perfect solution for reasons I’m happy to get into.
2Okay, so this is a slight exaggeration. If you’re living at home with your Bay Area-based parents and you’re not en route to genuine financial independence, you’d hardly describe this situation as “all upside.” (There’s a reason young people are leaving places like San Francisco in ever larger numbers.)
3I know this phrasing is in poor taste, but sometimes, things are so screwed up that the only way to rail against them without going insane is to use language that’s equally screwed up. If you think about it for two minutes, you’ll see why I said it that way.
4Don’t even get me started on the bananas ass immigration policies of the current White House.