The Golden Gated Communities

by Kevin D. Williamson
Will progressive governance turn Northern California into Detroit?

Detroit isn’t a monster — it’s just ahead of the curve. Or it is a monster, in the classical sense of that word: a warning of things to come. We should all be paying attention, but those Americans who should be paying the closest attention are those who are unfortunately least inclined to do so: the happy inhabitants of the gilded communities of Northern California.

I have written a great deal about Detroit as the inevitable endgame of progressive politics and economics, and those who are disinclined to be persuaded by such analysis as I have to offer respond as with one voice: “San Francisco!” The case bears some examination.

Though its charms are wasted on me, San Francisco obviously is enormously appealing to a great many people, as is the Bay Area in its entirety. There are some rough spots, to be sure, but the great swath of territory that runs from San Francisco to San Jose before taking a U-turn up to Berkeley contains a great deal to recommend itself: untold high-tech wealth, a stimulating intellectual climate, world-class educational and cultural institutions, beautiful waterfront properties, and municipal infrastructure that is much better than the American average. As one of my progressive correspondents put it, the high price of San Francisco real estate should communicate to a market-oriented critic such as myself that the city is doing something right. And there is something to that, but there is an important limitation to that analysis. California is a great place to live if you are rich.

And California is not very rich.

The median income for a three-member household is only $67,401 in California. That is not a terrible figure, but it is a bit less than the considerably less glamorous Commonwealth of Pennsylvania ($68,848), only about 30 venti frappuccinos per year ahead of Nebraska ($67,235). That figure is considerably lower than in, say, Wyoming, where the median three-member household takes in nearly 10 percent more each year, and it is far, far behind Alaska, where the median three-member household could buy a new Ford every year and still have as much left over as its California counterparts.

Of course, California has some very poor spots, and your typical Silicon Valley grandee does not spend very much time so much as downwind of one of them. But there is trouble in the happy valley, too. San Jose boasts one of the nation’s highest median household incomes at $81,000 a year — pretty heavy money for a midpoint. But the median price of a single-family house in San Jose is $775,000, or just over nine and a half times the median income. By way of comparison, in Austin, San Jose’s high-tech Texas cousin, the ratio is only 4 to 1 — even as the Texas capital sees record housing prices. In San Francisco, the ratio is 10.2 to 1; in Houston, it’s only 4.3 to 1.

That means that the median family in San Jose could never responsibly purchase the median house in San Jose: Saving ten years’ pre-tax wages and betting it all on a single investment — in California real estate, no less — would be enormously risky. No responsible mortgage lender (if there is such a thing) would approve that loan.

Similar ratios have held up for a long time in New York City, which is arguably a special case. But even if it isn’t, there is an important difference: Expanding the calculation into the greater metropolitan region, New York City still does not look great, but it looks a lot better. Compare the San Jose metro with the Austin metro, and the comparison looks even worse for California than it does on a city-to-city basis. When housing prices are nine or ten times family incomes, there are basically two ways that distance can be crossed — and, high as incomes are in Northern California, do not bet on seeing them multiplied in short order.

But what happens between now and then?

Places like San Francisco and San Jose have become the economic and cultural equivalent of the Southern California phenomenon most loathed by good progressives everywhere: the gated community. The cities of Silicon Valley are not organized around golf courses, tennis courts, and clubhouses on the traditional gated-community model, but that is merely a difference in taste and recreational interest. The barriers between them and the water-starved California inland — or the poor sections of Oakland — are not physical, but they are nonetheless ruthlessly patrolled, a fact not lost on Silicon Valley’s less-well-off, who recently have taken to breaking the windows of the hated “Google buses,” the private coaches that spare California’s tech royalty the indignity of a ride on the BART. The vandals’ manifesto reads: “You are not innocent victims. You live your comfortable lives surrounded by poverty, homelessness and death, seemingly oblivious to everything around you, lost in the big bucks and success.”

San Francisco, the world capital of progressive piety, has a population that is barely 6 percent black, but its population of persons arrested for drug felonies is 60 percent black. More than 40 percent of those arrested for homicide are black. In this bastion of well-heeled progressive governance, about half of the black households make less than $25,000 a year. And this isn’t in Laramie, Wyo., where you can rent a three-bedroom home for less than $800 a month. This is less than 25 grand a year in one of the most expensive places in the country.

In 1950, nobody thought Detroit — by many measures then the world’s most prosperous city — would end up a half-abandoned, bankrupt, violent basket case. Nobody thought that U.S. automakers would be so inept as to fail to keep up with Japanese and European competitors, that their unions would be so corrupt and rapacious, or that the city of Detroit would slide into Third World standards of municipal governance. But bear this in mind: The automakers had large, expensive factories in Detroit. Their capital was physical. Sure, Google and Apple have real estate and physical infrastructure in California, but high-tech firms are much less tied to the land than were their industrial-age competitors. California’s cities are falling to bankruptcy and fiscal crisis like water dripping in a sink. Meanwhile, the local radicals, driven by envy and ideology, have taken to accosting Silicon Valley engineers at their homes. The companies are responding with increased reliance upon private security forces. But there are other possible responses, such as relocating to where they are more welcome.

Is San Francisco the progressives’ best counterexample to the devastation in Detroit? Ask again in 20 years.

— Kevin D. Williamson is a roving correspondent for National Review.

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