The Tech Dilemma-- To Stay or to Leave San Francisco

Add the Charles Schwab company to the list of the firms that are leaving San Francisco. Yesterday, Schwab announced that it was moving its headquarters to the Dallas,TX area. 

Those who remain in the region are undergoing a type of mourning process. At first, they were saying, good riddance, we don’t need you anyway. Now, they have moved on to shaming-- those who left town are cowards who have abandoned ship.

Mike Solana has written a thoughtful article about the ongoing discussion on Substack. (via Maggie’s Farm).

He remarks that local political leaders have produced the debacle that the city and the state are now suffering. No argument there. And he questions whether the tech oligarchs owe their success to Silicon Valley, or whether these same people made the Valley into a tech hub. Who owes what to whom? Do the tech companies owe it to San Francisco and California to stay around, even while being abused and harassed by government officials.

As it is simply too embarrassing for politicians to admit the state needs the technology industry after more than a decade of antagonizing the men and women who built it, and as it is political suicide for incumbent politicians in a one-party state to admit that every one of the problems we’re facing has been created by our elected leaders, a moral argument for tech’s responsibility to California, and specifically the Bay Area, has recently been produced. It goes something like this: young ambitious people moved to the state, and struck gold. But rather than “give back” to the land, they’re leaving with resources they “took” from the region. Like the milkshake guy from There Will Be Blood, sucking oil from the earth. Like the evil army people from Avatar, and their unquenchable thirst for unobtanium. It’s the Substack Billionaire Boy’s Club at it again, but this time with shovels and axes and the exploitative fantasy of eating up all the “low-income” 29 million dollar mansions in Miami Beach.

Have these firms given to the community or have they taken from it? As you know, the government officials who have been antagonizing the tech industry are now hard at work figuring out how to tax them, even if they leave the state. In New York anyone who lives outside of the state for six months and a day is exempt from state income taxes. In the new proposals in California, spending sixty days in the state subjects you to income and wealth taxes.

Tax the rich, why not? These brain dead legislators do not know how to do anything else:

But I take extreme issue with the notion that industry leaders have taken something from the “community,” defined here as the “talent,” the “incubators,” and the “mentors.” This is precisely the opposite of reality. The men and women leaving are the talent, they have started the incubators, they have built the companies, they have funded the startup ecosystem, and they have mentored countless young people. This is the “network.” They are the network. Technology workers do not “extract” value from the region, they are what makes the region valuable.

It’s the talent that has built the tech industry. By now, the talent is fed up with being harassed by government officials. It has been finding more welcoming climes in Texas and Florida and perhaps even Nevada.

Solana asks one pertinent question: what have the state and city governments done with the enhanced tax revenues the received from the high tech firms? In truth, they have wasted the money. The city of San Francisco is rife with homelessness, crime and drug abuse. And housing is unaffordable-- largely because the local government has done everything in its power to inhibit the construction of new housing.

With our government’s incredible, historic abundance of wealth, the Board of Supervisors has presided over: a dramatic increase in homelessness, drug abuse, crime — now including home invasion — and a crippling cost of living that can be directly ascribed to the local landed gentry’s obsession with blocking new construction. This latter piece is important, as it appears to be the only thing our Board cares about. This is because significantly increasing the local housing supply would decrease the value of the multi-million dollar homes almost every single one of our Supervisors owns, and we could never have that.

And, the local government is now working to institute socialist government control over technology firms. You might find it ironic, or at least pathetic, that the high tech oligarchs who are contributing to Democratic political campaigns, both with their fortunes and with their in-kind censorship of the opposition, would find it shocking that the city government has gone full socialist-- that means taking control over new tech firms:

They also instituted the “San Francisco Office of Emerging Technology,” which in theory prohibits almost every future company and technology from existing in the city without prior approval from the local government. Laws aren’t enforced in San Francisco, so the OET hasn’t really come up. But a company in this city can now be attacked by the Board at any moment, for almost any reason. This is the nature of ambiguous laws in one-party states. In a country where nothing is technically legal, punishment can be meted out for almost any whim or unjust personal reason that can be imagined by small-minded people with political power.

As seems to be happening in New York City and State, the mania about increasing taxes is directly aimed at the wealthy, at the 1% that pay nearly half of the state taxes. Not paying their fair share-- so say the politicians. Increasingly, the rich are choosing not to pay anything at all.

Since income taxes are structured progressively, the state has backed itself into a position of extreme uncertainty, as the top one percent of earners pay half the state’s taxes — while politicians argue the state’s wealthiest men and women, who already pay more in taxes than the wealthiest men and women of any other state and most free countries in the world, are not paying their “fair share.” As if rudimentary economic threats were not enough, politicians have made cultural platforms of their anti-technology, anti-industry attitudes, and have done everything in their power to drive our top one percent of earners out of the state. In this, our politicians are succeeding.

But then, Solana explains that the tech tycoons have not even bothered to fight. Aside from those who have moved out of the state, the rest have been supine and submissive. Perhaps they have gotten in touch with their feminine sides.

Then again, most of the tech oligarchs have some serious ideological commitments, and their beliefs trend toward the left. This makes them obtuse at levels that one rarely sees about the very wealthy-- they are voting against their own self-interest.

As I have suggested, they must think that by skewing elections leftward they are buying protection from the mob. Alas, such seems not to have placated the ravenous appetites of the mob:

There’s the sense the technology industry “lost” some kind of fight. But with such tremendous wealth and creativity, how was this possible?

It’s pretty simple, really. We never actually fought.

There is a tremendous irony in the notion that tech workers have ruined the region, for which we are now constantly being blamed while at the same time being told that leaving is tantamount to violence. The truth is, had tech workers actually assumed a significant measure of political influence, and led in local politics, San Francisco would today be one of the greatest cities in the world. But not only was such political influence not achieved, it was never attempted. Throughout the most recent technology boom of the last fifteen years, there has been almost no meaningful engagement in local politics from the industry.

Then again, the grandees of the tech world have larger problems to deal with. They are saving the world by enlisting to fight the war on the weather.

So, what’s a techie to do? Solana recommends more civic engagement. And yet, local San Francisco politics, of the socialist variety, is exactly what the tech tycoons have been promoting on a national level.

Fight or flight? There is no right answer here. I’m still figuring it out myself. The only thing I know for sure is “extraction” didn’t do this, and if what the technology industry has given the Bay Area constitutes “exploitation,” then for the love of God, Mark Zuckerberg, exploit me next.

In any case, regardless of the city we land in, we have to get involved. There’s no ignoring the rest of the world anymore. Grab your shovels, folks, we’ve got work to do.

Extract or die.