Destroy Your Country’s Economic Mobility With This One Neat Trick

I live in the Bay Area. It is extremely expensive. (Source not cited.)

Oppressively high housing costs have led to all kinds of 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 South Bay. The fact that teachers — a group that society actually pretends to care about — can't live anywhere near the communities in which they teach.

These are but some of the problems we tolerate so that millionaires in Menlo Park can enjoy subsidized mansions.

Increasingly, I worry about another problem — one that we'll feel across generations and lead to a much less egalitarian America: What do the Bay Area's dysfunctional housing policies mean for long-run economic mobility?


First, some context on what that question means:

A handful of "superstar cities" (e.g., SF, DC) now dominate our national economy. While there has always been something magical about dropping smart people and good companies in the same place and pressing "Play," our globalized, financialized economy is hitting "Fast Forward" on that trend. (To grind this analogy into dust, you can also imagine our economy deleting Midwestern manufacturing towns from the TiVo.)

In a well-functioning society, moving to a superstar city would be one of the surest ways to change your economic fortunes. After all, you can develop elite programming skills, but if you're living in West Virginia, it’ll be hard to capitalize on them.*

Insane housing costs flip the calculus. If you're the child of a coal miner or whatever, it's hard to 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.


But you know who doesn't need to worry about that calculus? People with family wealth, or whose families happen to be living in a superstar city already. For them, it's all upside.**

Since the supply of homes is constrained by fentanyl-strength NIMBY-ism,*** housing has become a ferocious zero-sum competition. There are only so few spots to go around. But what if your family can help you "get into" the Bay Area housing market (i.e., subsidize rent, gift you a down payment, or let you live at home)? Suddenly, you're earning a double reward: Not only do you have access to the unique opportunities afforded by living in a superstar city, but your would-be competition can't even interview! You'll be able to pass down your geographic privilege to your children, while our would-be movers from coal country languish.^


Of course, at this point, I know what you're thinking: Pfft, life is hard. Why don't you call the wambulance, bro?

And you know? Yes. Good point. Life is hard, and I should call the wambulance. But I care so much about this topic because 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). While I grew up in the "bad" part of town (it was fine), San Mateo as a whole boasted pretty good income diversity, at least back then.

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 thought to ask: "What do I want to do with my life?" I also learned 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 wanted to work in Data Science, I was even luckier. I could enroll in a Data Science bootcamp and move in with my parents, escaping the high rents that would have made such a risk impractical — 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, however, 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 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 care that we've made life so hard for regular people?

Of course, the answer to all of these questions is a big fat "NO." And the sinister thing is that the "NO" is silent! We've built it into the structure of society — into our zoning — so that we don't have to own up to the consequences.

But make no mistake: There are consequences. Economists have estimated that our superstar cities' housing policies are reducing national GDP by 9% per year. That's thousands of teachers who want to teach but can't afford to. Thousands of immigrants who could have started companies en route to a better future.^^ Countless kids whose lives would have gone differently if only we hadn't made it so damned hard for them. And although these costs are hidden, there's no escaping the feeling that something has gone horribly, horribly awry.


Speaking the subtext aloud, finally: I don't think my story would have been possible had I been born today, and I can't articulate all the ways that depress me.


TL;DR:

  • 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 and pass down that privilege to their children; 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 ever since WWII made things briefly, uncomfortably equal^^^ 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


*Yes, 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.

**Strictly speaking, the situation isn't "all upside," especially for people from the Bay Area. My wife works in government. From what we've gathered, many people doing the traditionally middle-class jobs that hold society together — teachers, policemen, nurses, etc. — are from the Bay Area, i.e., they had the "luxury" of living at home. But that's not a particularly glamorous life (as evidenced by the fact that most millennials want to leave the Bay Area as soon as humanly possible). The real beneficiaries are, of course, those with economic — and not merely geographic — privilege.

***I 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 a few minutes, you'll see why I phrased it that way.

^Here, you can begin to see how economic privilege really compounds. At many elite colleges, there are more students from the Top 1% than the Bottom 50%. With the best job opportunities clustered in hyper-expensive superstar cities, which of these two groups do you think will be better positioned to reap the returns of their elite educations, even holding constant the usual advantages like connections?

^^ Don't even get me started on the bananas ass immigration policies of the current White House

^^^Well... for white people. Black Americans were largely cut out of the government-backed creation of the modern middle class, which you can read about in many good books, including this one and this one.