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Wednesday, June 26, 2013

Is there a future for industry in the Bay Area?

I've been deep into the Plan Bay Area controversy, mostly because of the implications for housing, displacement, and the profound transformation of the city that's going to be accelerated by regional planning that doesn't take into account existing vulnerable populations.

But I haven't been paying as much attention to a critical element of the plan: its dismissal of industrial and manufacturing jobs and willingness to write off what is now a significant sector of the regional economy -- and by the way, one that offers middle-class, often unionized, employment.

So I'm glad Zelda Bronstein, former chair of the Berkeley Planning Commission, is on this. Her story in California Progress Report is well-done -- and alarming:

That the region's industrial sector has shrunk and its economy undergone a transformation is undeniable. But to frame this makeover in terms of low-tech vs. high, stagnation vs. innovation, brawn vs. brains, and bad vs. good is a mistake. For one thing, the line between the "old" and "new" economies often zigzags and blurs. For another, there's still a significant amount of industry in the Bay Area. According to MTC/ABAG, in 2010 manufacturing and wholesale enterprise accounted for 460,200 jobs or 14% of the region's employment.

Contrary to "new" economy hype, industrial decline isn't inevitable, and the health of the industrial sector is critical to both broad regional prosperity and environmental amelioration. But for industry to thrive, public officials have to support its essential role in the region's well-being.

Instead, Plan Bay Area puts industry at risk. 
 Again: Smart growth is fine, but not if it ignores the fact that there are already people, and businesses, in the path of large-scale, mostly high-end housing development.

Maybe it's time to talk seriously about a ballot measure to regulate housing development in San Francisco, on the order of the famous 1986 Proposition M. Then maybe other cities will follow.


  1. Does not the newly approved Western SOMA plan, a modification of the Eastern Neighborhoods plan, help protect Services and Light Industrial Area (SALI) uses for at least part of San Francisco?

  2. The ongoing decline in relative comparative advantage between the US and contenders, BRIC who do not necessarily view the USD as the inevitable reserve currency, will mean that imports over time will grow more expensive. At some point expensive imports will make domestic manufacturing production more attractive. When we talk transit oriented development planning over a 30 year horizon, we've got to assume that the US will see a decline in foreign purchasing power per capita in the future as it has over the past 30 years. That means that there should be contingencies in these plans for transit oriented manufacturing zoning so that once it becomes too expensive to import everything, we can return to producing domestically and locally. What currently passes for land use planning in San Francisco is driven by corrupt elected officials enriching their patrons, no rational analysis need interfere with the boosters' grabbiness. Until we stand up to developer intimidation and the resulting corruption and elect community folks to office again, none of this will change due to good arguments.

  3. There may be other factors contributing to the near-bubble valuations of housing prices in some cities in the US. The Federal Reserve has been buying $85 billion of treasuries and mortgage back securities per month for the last several years in order to stimulate the economy back from the near-death experience of 2008. In doing so they may have created other problems which are going to become more obvious as the stimulus is removed.
    There has been an incredible level of cash floating around and rich people have limited options right now in terms of investments. The stock markets are grossly overvalued and starting to collapse as the Fed even hints at a removal of stimulus. Bond prices are starting to go down and yields are rising . The so-called emerging markets of the world may be even more impacted by the removal of stimulus than the US. China is facing a credit crisis and collapse in iron ore prices after a decade of building apartments in cities no one wants to live in.
    the US housing market has actually been a very attractive market recently, only not for subprime buyers but for rich people who don't know what else to do with their money. And San Francisco is a beautiful city but like Manhattan it has become a city for the rich because people are willing to pay a lot of money to live there. There may not be much the local governments can do

  4. "Maybe it's time to talk seriously about a ballot measure to regulate housing development in San Francisco, on the order of the famous 1986 Proposition M. Then maybe other cities will follow."

    It's strange to see one so opposed to high housing prices proposing to increase them. Again, if SF's housing is too expensive, do you suppose decreasing its supply will make it cheaper? How does that happen? It's an astonishing analysis that comes from some parallel economic universe. It's not supported by any urban economic data whatsoever, much less any conceivable political mechanism to make it happen.

    Also, your analogy is mistaken. Prop M modestly decreased the production of office space over time and modestly increased its return over what it would've been without it. More than a few have noted that commercial developers in SF should be grateful for Prop M, as it increased the profitability of their projects.

    It would make as much sense to ask the City to establish restrictions or quotas on new hi-tech firms and their employees. After all, didn't they "cause" our problem? Hint: Seattle has a more robust hi-tech start-up economy than SF. Yet year in, year out, Seattle produces double the amount of new housing of SF's. Any idea of how prices compare between the two?

  5. None of the boosters can make the economic case as to how the housing market will respond to new supply and whether that will help meet policy goals or not. All they can do is to appeal to the scripture of theoclassical economics and argue by the waving of the hands in that direction.

    If a mercenary like Tim Colen were paid by someone else to make the opposite case, he'd do so. Tim Colen is a paid hack and his analysis advances the interests of his funders for his paycheck. Colen lives in a single family home far away from the neighborhoods his developer funders are ripping to shreds. Not only is Tim Colen a mercenary hack but he's a hypocrite as well. Did I mention that this purveyor of Transit Oriented Development snake oil drives to work as often as not?