San Francisco, California

Finance

8/20/2023

I had the privilege of getting a taste of the golden age of innovation in Silicon Valley through a year-long residency in the San Francisco Bay Area. That's when the Internet and browser development really took off.

I lived in beautiful and "crazy" Berkeley on the eastern side of the San Francisco Bay Area and took the then-modern BART (Bay Area Rapid Transit) train to Palo Alto to a "technical writing" office where I worked part-time without salary. We wrote and assembled operating manuals, in close alignment with the development departments of companies that offered hardware and software solutions.

From Concord Airfield, I piloted single-engine Piper planes, often taking 2-3 guests to show them the prominent sights from a higher perspective. This included flying above the Bay Bridge to the Golden Gate Bridge and sometimes further to Half Moon Bay, Livermore, and Palo Alto Airfields.

We also drove often to Calistoga in the Napa Valley wine county and enjoyed the hot springs and mud baths.

The time proved to be a period of deep freedom for me and by studying IT and the programing language C++ I was also very intellectually stimulating.

San Francisco was a thriving city at that time, and actually, I could relate to it from my first visit in the eighties right after completing my Abitur, when I traveled the US during a 4 month period.

With no other city have I built such an emotional and intimate relationship. I have always been fascinated by the diversity, the openness, the liberal touch, and the breathtaking location between the Pacific Ocean and the Bay Area.

I am saddened by urban development since the Corona pandemic erupted in 2020. Problems arose even before that due to high rents caused by the preferred residence of employees of Twitter, Salesforce, Yelp, and Uber in San Francisco, driving the prices in the real estate market. Apple, Facebook offered WiFi-equipped free bus rides to Silicon Valley to the south.

"Tech companies were among the most enthusiastic in embracing remote work during the pandemic,... allowing employees to avoid San Francisco's high rents". Big tech laid off employees out of financial caution. "Thirty percent of commercial real estate is now empty". (1)

"A well-known office complex in the heart of the financial district still cost $300 million in 2019. Now experts estimate only with purchase bids of about $60 million." (2)

"People in the tech industry can often work from anywhere from the home office. The urge to return to overpriced San Francisco is low."

In hindsight, it was a mistake by the city politicians after the financial crisis to bet on one industry, namely Big Tech. The jobs are office-based, and other traditional industries had left the city already before that, offering no balance in the event of a downturn in one business segment. (1)

This resulted in a dependency that contributed significantly to today's decay of San Francisco. The socioeconomic situation was very fragile and a single crisis in finance or health could easily trigger a cascade of problems that were not controllable anymore.

The strong deterioration in 2020-2023 manifested itself in growth in homelessness and poverty on the streets of the city. Shoplifting is very common, and tourists feel unsafe because violence and cardboard shelters are spreading to previously unaffected tourist and business areas.

The documentary on the German TV channel ZDF highlighted in interviews on the streets that also the middle class is affected as even a decent income won't prevent homelessness and relative poverty in this expensive city. (3)

Fentanyl has become a substitute for heroin, causing tremendous health problems due to overdoses. A dose lasting barely 30 minutes costs $8 and painful withdrawals lead to daytime shoplifting.

What are the possible solutions? From my point of view, it can only be solved when CEOs of big tech, city politicians, real estate businesses, police, authorities, and health institutions work together to develop a future plan for the city. Individual, narrow-minded approaches are doomed to fail, because of the structural connectivity of finance, work, tourism, drug addiction, homelessness, and real estate.

I sincerely hope that one day I will be able to pay another visit to San Francisco, in a new light and with a modern, urban character that satisfies all social classes with their own needs and goals.

References:

1.) "So long, San Francisco", Financial Times, 20-21 May 2023

2.) "San Francisco – die leerste Innenstadt Amerikas“, Handelsblatt, 14 June 2023

3.) "Amerika ungeschminkt" Dokumentarfilm, Markus Lanz und Silke Gondolf, ZDF, 2021

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