Maybe not, but I think it's perfectly fair to have an article that looks into it. Too bad this article fell way short.
I would point out:
* Software companies, specifically, are more likely to be freeloaders than non-software companies. Tax avoidance schemes such as the Double Irish + Dutch Sandwich allow companies that make revenues primarily from intellectual property laws to skirt US and California taxation[1], and are therefore freeloading on the local governments by taking advantage of the talent from public schools (UC Berkeley), the local government infrastructure (roads, bridges, highways and freeways; a standardized electrical grid with a [somewhat] regulated utility company; financial regulations that keep [some] public faith in the banks and the US Dollar fiat currency; police system to keep the peace; fire systems to prevent runaway fires and catch arsonists; an intellectual property system that protects patents, copyrights, and trademarks [if you see the system as "protecting" these things]; a judicial system that allows persons and companies some say in how the law is applied to them and some opportunities to use litigation to enforce contracts; and national defense to prevent national instability and potential loss of private property or lives).
* For whatever reasons, tech companies want to be located within miles of each other, all challenging each other for talent and office space in a small geographic area, and all of the secondary effects of those things.
* Software allows companies to scale up without expensive upfront capital investments and allow fewer employees to generate more revenue than traditional types of brick-and-mortar businesses (although maybe not scale the way financial products scale). This provides for concentration of wealth in the hands of fewer people.
I would argue that the article and a handful of other SV articles miss some key issues related to costs for housing and other living expenses in California:
* Prop 13 limits the rate at which property taxes can rise up to market values. I observe 3 side-effects of Prop 13: (1) Properties have less turnover since Prop 13 in 1978 because property taxes reset to market rates if the property changes hands (except for a few exceptions) (2) Property taxes are kept low, thereby starving local governments of tax money needed for typical local government services (3) Property values are inflated because it's now more valuable to own a property since you aren't being taxed at the full rate
* Land is simply not in a large supply. Water surrounds the peninsula and is VERY expensive to build on (anything that alters the SF Bay ecosystem is expensive to develop). Much of the undeveloped land is owned and managed by the Open Space Preserve which is not develop-able. Many tracts of land owned by the farmers / orchard owners of pre-tech Santa Clara County have left their land to the county and state with the express wishes that the land be kept undeveloped.[2]
* What little land is able to be developed, dense development is prevented by "Not in My Back Yard" organizations ("NIMBY"s).[3] NIMBYs typically prevent high-rise construction (like SF waterfront).[4][5] This is the same with the BART transit system, which had tentative plans to run down the peninsula to San Jose, but was prevented by NIMBYism in the affluent peninsula neighborhoods.
* Good-intentioned but bad-implementation policies such as SF "rent control" and San Jose's newly proposed "low-income rental fee"[6]. Short of increasing supply or lowering demand, these are stop-gap policies that have some serious blowback effects.
> “We are trying to get tech billionaires involved in what we’re doing. They donate millions to good causes, but almost nothing to the local community they are helping destroy."
Other related issues about how the rich/wealthy spend their charitable donations compared to the less rich/wealthy:
* I immediately thought of this article from Robert Reich, "When Charity Begins at Home (Particularly the Homes of the Wealthy)"[7] which basically says that the very wealthy overwhelmingly give to large university endowments and operas as their non-profit donations rather than community organizations that address homelessness or other poverty issues.
* Of course there are "non-profit" PAC contributions which effectively route "donations" to political campaigns to re-shape politics (such as the Waltons pushing anti-Union politics, the Waltons and the Kochs pushing anti-science and environment-negative policies ... none of which help local communities [but are also not directly related to the tech industry in the SF Bay Area]).
* You could argue that even when tech Billionaires donate to a charity, it could get squandered like Zuckerberg's $100 Million "donation" to New Jersey's Newark public school system, which some have argued didn't make any difference/change.[8]
* Tech companies are able to scale up better than traditional brick-and-mortars, so the wealth generated by tech companies is more concentrated in fewer hands. Stats show that the very wealthy donate a much smaller percentage of their income/wealth to charitable causes[9]. This means that local charities need to compete harder for fewer dollars and it's already less likely to go to a local organization than to a university endowment or some other more selfish charitable donation (an opera or a local environmental cause that serves to benefit the donator as much as anyone else).
I would point out:
* Software companies, specifically, are more likely to be freeloaders than non-software companies. Tax avoidance schemes such as the Double Irish + Dutch Sandwich allow companies that make revenues primarily from intellectual property laws to skirt US and California taxation[1], and are therefore freeloading on the local governments by taking advantage of the talent from public schools (UC Berkeley), the local government infrastructure (roads, bridges, highways and freeways; a standardized electrical grid with a [somewhat] regulated utility company; financial regulations that keep [some] public faith in the banks and the US Dollar fiat currency; police system to keep the peace; fire systems to prevent runaway fires and catch arsonists; an intellectual property system that protects patents, copyrights, and trademarks [if you see the system as "protecting" these things]; a judicial system that allows persons and companies some say in how the law is applied to them and some opportunities to use litigation to enforce contracts; and national defense to prevent national instability and potential loss of private property or lives).
* For whatever reasons, tech companies want to be located within miles of each other, all challenging each other for talent and office space in a small geographic area, and all of the secondary effects of those things.
* Software allows companies to scale up without expensive upfront capital investments and allow fewer employees to generate more revenue than traditional types of brick-and-mortar businesses (although maybe not scale the way financial products scale). This provides for concentration of wealth in the hands of fewer people.
I would argue that the article and a handful of other SV articles miss some key issues related to costs for housing and other living expenses in California:
* Prop 13 limits the rate at which property taxes can rise up to market values. I observe 3 side-effects of Prop 13: (1) Properties have less turnover since Prop 13 in 1978 because property taxes reset to market rates if the property changes hands (except for a few exceptions) (2) Property taxes are kept low, thereby starving local governments of tax money needed for typical local government services (3) Property values are inflated because it's now more valuable to own a property since you aren't being taxed at the full rate
* Land is simply not in a large supply. Water surrounds the peninsula and is VERY expensive to build on (anything that alters the SF Bay ecosystem is expensive to develop). Much of the undeveloped land is owned and managed by the Open Space Preserve which is not develop-able. Many tracts of land owned by the farmers / orchard owners of pre-tech Santa Clara County have left their land to the county and state with the express wishes that the land be kept undeveloped.[2]
* What little land is able to be developed, dense development is prevented by "Not in My Back Yard" organizations ("NIMBY"s).[3] NIMBYs typically prevent high-rise construction (like SF waterfront).[4][5] This is the same with the BART transit system, which had tentative plans to run down the peninsula to San Jose, but was prevented by NIMBYism in the affluent peninsula neighborhoods.
* Good-intentioned but bad-implementation policies such as SF "rent control" and San Jose's newly proposed "low-income rental fee"[6]. Short of increasing supply or lowering demand, these are stop-gap policies that have some serious blowback effects.
> “We are trying to get tech billionaires involved in what we’re doing. They donate millions to good causes, but almost nothing to the local community they are helping destroy." Other related issues about how the rich/wealthy spend their charitable donations compared to the less rich/wealthy:
* I immediately thought of this article from Robert Reich, "When Charity Begins at Home (Particularly the Homes of the Wealthy)"[7] which basically says that the very wealthy overwhelmingly give to large university endowments and operas as their non-profit donations rather than community organizations that address homelessness or other poverty issues.
* Of course there are "non-profit" PAC contributions which effectively route "donations" to political campaigns to re-shape politics (such as the Waltons pushing anti-Union politics, the Waltons and the Kochs pushing anti-science and environment-negative policies ... none of which help local communities [but are also not directly related to the tech industry in the SF Bay Area]).
* You could argue that even when tech Billionaires donate to a charity, it could get squandered like Zuckerberg's $100 Million "donation" to New Jersey's Newark public school system, which some have argued didn't make any difference/change.[8]
* Tech companies are able to scale up better than traditional brick-and-mortars, so the wealth generated by tech companies is more concentrated in fewer hands. Stats show that the very wealthy donate a much smaller percentage of their income/wealth to charitable causes[9]. This means that local charities need to compete harder for fewer dollars and it's already less likely to go to a local organization than to a university endowment or some other more selfish charitable donation (an opera or a local environmental cause that serves to benefit the donator as much as anyone else).
[1] http://en.wikipedia.org/wiki/Double_Irish_arrangement [2] http://www.mercurynews.com/obituaries/ci_25043508/silicon-va... [3] http://en.wikipedia.org/wiki/NIMBY [4] http://techcrunch.com/2014/04/14/sf-housing/ [5] http://techcrunch.com/2014/11/02/so-you-want-to-fix-the-hous... [6] http://www.bizjournals.com/sanjose/news/2014/10/06/san-jose-... [7] http://robertreich.org/post/69833627613 [8] http://www.newyorker.com/magazine/2014/05/19/schooled [9] http://www.theatlantic.com/magazine/archive/2013/04/why-the-...