But why should it be? Why is creating low cost housing in the bay area better than spending that money in, say, Sacramento? What are the individual, societal and area benefits of doing it on the bay area vs anywhere else in the state of California?
I am being contrarian to be sure, Full disclosure: Australian with no dog in this fight.
So I ask because Tyler Cowan (https://medium.com/conversations-with-tyler/patrick-collison...) made the point that the Bay Area makes a lot of great global goods, and loosening housing regulation is effectively a tax on the current, extremely productive people that live in the Bay Area.
Given that these people pay taxes in California, why not find somewhere else to house less well to-do people? Somewhere less expensive, less productive and less likely to be problematic for the residents, would seem ideal.
$1,000,000 in SF buys sweet FA, but that would 3 median priced houses in Sacramento, and it is less than 100 miles away.
So I just wonder what the correct level is to do these things at: country, State, City, Suburb or street? I just think there are only so many dollars, why is the argument about where they are spent, rather than how effectively?
Because the cost is in satisfying local rent-seeking, rather fundamental physical restrictions. If the cheapest housing unit costs three times as much in SF because of earthquake-proofing, HVAC, and density, then sure, build in Sacramento instead. However, roughly speaking, the price differential is because people in SF voted to have houses that cost three times as much (because they own houses and get to make those decisions consequence-free).
It's not my claim, it is Tyler Cowan's claim. In case you are unsure who he is, pretty much everyone who is anyone holds Tyler as a hero, Malcolm Gladwell for one.
So not ridiculous, not held by a random internet nobody, but thanks for your input ;)
From the transcript, and yes, this is a long quote, but I really love Tyler, and what he says always is considered and interesting, and the full quote is deserved:
COLLISON: Restrictive urban construction and land use regulations.
COWEN: They’re terrible. We should allow much more building. Much more of this country should be like Houston and parts of Texas. But that said, I’ve become a slight contrarian on this lately. I wonder if the Bay Area isn’t the one place in the world where building restrictions might make some sense because most of you want the restrictions. Even if not you in the room, you out there in this area. So removing the restrictions would be a tax. It would be great for the people who moved in.
But if you’re all producing these amazing global public goods, and the federal government is going to raise taxes on you anyway, I promise this. I don’t care who wins the next five elections, your taxes are going up. State, city, local, whatever. And then we put this new tax on you and you all are the Atlases out there. I don’t know if loosening building here would tax your productivity or increase it. But I’d at least consider the notion. This is the one place in the world where we shouldn’t loosen building restrictions.
COLLISON: Can you apply that argument in reverse? Do you think Silicon Valley would be better off if it had half the population?
COWEN: I don’t live here. I don’t know how bad the traffic is, and I suspect the people who are the most productive have workarounds. They can afford to live where they want, for instance.
COLLISON: I think a lot of us spend a lot of time in traffic.
COWEN: But it seems to me, it’s a pretty finely honed structure. It’s evolved the way it has and to cut it in half or shrink it, it’s probably a big mistake.
COLLISON: Just to make sure I understand, you’re saying the tax would be the other people around us? Our personal experiences of the area would somehow be diminished?
COWEN: The general culture would change; it would be less intense. It would be like taking Florentine Renaissance and injecting into it 50,000 people from Naples. Nothing against Naples. I love Naples, in fact, more than Florence. But I suspect that would have been a mistake back then. So I worry, if you have too many people move into this uniquely weird, diverse monoculture, you could wreck it. Just a cautionary note, I’m agnostic, but I’ve started having this worry lately.
Cowen's really illustrating how the upper-middle-class elite will fight savagely for their interests, regardless of what it means for their principles. Affordable housing is good _except for us_, high taxes are good _except for us_, immigration is good _except for us_, diversity is good _except for us_.
I particularly can't get over his outright xenophobia at the end: "Keep the dirty foreigners out, but I still hate Trump!" He can't have it both ways; either live with immigration and learn how to make it work well (which is probably the better idea), or allow everyone else to be raging xenophobes just like he is.
You easily can do it both. I love immigrants and different cultures, but I have no desire to turn the United States into Bangladesh. How long before you can't drive to Yosemite or you have to wait years for a permit or some other stupid shit?
Glad I was lucky enough to be born here, too bad if you weren't. I do not want the population in this country to continue to rise. It certainly doesn't need any help. Move to Canada or Russia instead.
That's a little uncharitable. NIMBYism is bad, sure, but it might enable building massive tech companies that provide massive consumer surpluses. How much you value "area supports the next Google" versus "area has 500k additional residents at reasonable housing costs", along with how much these trade off against each other, is an open question.
"Culture that creates wealth needs to change because one CEO resigned".
Because the finance industry is now perfect after the 2009 meltdown, so we can all look elsewhere, and the massive task of creating billions from nothing more than an idea and a culture of supplying capital to ideas that are not currently profitable is incredibly easy to do and replicate, and can be done by anyone anywhere /s (if that is needed).
> there is no evidence that it is profitable nor (far more worryingly) that it knows how it can make itself profitable.
I'm sorry what? I keep reading these sorts of sentiments, but they sound, and I know this is insulting, they sound like people who don't understand business in even the 101 sense.
As long as the margin per sale is greater than the cost of that sale, it is possible for a business to be profitable one day. Given Uber charge a percent per ride, they definitely have a workable margin (which not all startups do BTW, e.g. many of the food startups like Bento https://gimletmedia.com/episode/kitchen-confidential-season-...).
The question, for a growing business with money in the bank, is are we growing revenue FASTER than we are growing costs. As long as you are, then inevitably, the two lines will intersect at some point. http://4.bp.blogspot.com/-Yv7OoVt_q0I/UHcx99N5I5I/AAAAAAAAAZ... is the sort of graph Uber needs.
So the questions right now for Uber are: at what scale (aka total revenue) does Uber BECOME profitable with its current cost structure? How soon can Uber reach that date? And is Uber's runway long enough to get there?
I have no idea of any of these numbers, but http://uk.businessinsider.com/uber-leaked-finances-accounts-... has some "leaked" numbers. Seems in Q3 2016 they spent $2.5B and made $1.7B, so they would need to either grow by about 50% with zero cost growth, or cut about 32% of the costs to be profitable. Is that doable? How the F would I know? But I doubt that $2.5B includes many must have costs, like servers, developers and offices, and includes a F-ton of advertising and other incentives all of which are easy-ish to cut.
If that is the case, Uber are 15 months from profitable.
That's the insane maths of startups: Revenue growth % > Costs Growth % = success.
And what about costs? If I were a betting man, I'd wager most of Uber's costs are things they could cut - advertising, non-essential staff, Given their revenue seems to growing rather well, I see no reason why there isn't a time horizon where Uber is inevitably profitable. Whether Uber has enough runway, and whether they can raise more cash, I have no idea.
Lastly, I find the idea that is floating about that Uber are subsidizing fares a really odd one. I think Uber are subsidizing things. Uber subsidize. development. Uber are also subsidizing the legal battle in certain markets, by paying for cases that will inevitably help competitors. Heck, Uber is even be subsidizing some drivers in some markets (my NYC driver told me they have some finance scheme in place to help new drivers purchase/lease cars). But subsidizing fares? They take a 20% cut, that is no subsidy!
Whether 20% is enough of a cut, and visa versa whether the fees are high enough that a 20% cut is enough raw revenue I don't know. Ditto I don't know whether Uber's runway is long enough, or if they can extend it with more funding. What I do know is all this writing Uber off doesn't seem to track with what seems to me a very sensible "build a moat by being the biggest while growing revenue faster than costs" strategy.
So a business that requires bulk advertising to recruit both drivers and riders (in the U.K. Driver recruitment is one of the most common radio adverts on commercial stations) could survive without advertising..
Given that I saw my first tv advert for uber last weekend (focused on rider recruitment) I suspect that instead of cutting advertising costs uber will have no choice but to continually increase them over the years
> The question, for a growing business with money in the bank, is are we growing revenue FASTER than we are growing costs. As long as you are, then inevitably, the two lines will intersect at some point.
You're implying an infinite market. The shared fever dream of all startup entrepreneurs.
The math works out nicely if you look at it this way, but the problem with uber is that it is people intensive. Their core asset are their drivers and not their technology. To maintain that driver supply they are paying out their drivers quite handsomely. Just to add I am currently in the largest south east asian market and there are 3 major competitors here fighting for the 250M+ population.
If you cut out those subsidies, you cut out the advertising, those numbers would go into a downward spiral. Drivers would go to the competition who keep subsidizing, there would be less cars as a result, less cars means a less useful service and users would eventually leave, which would mean THE END.
I personally think the core to this issue with Uber and all other ride hailing businesses is that the behavior they are promoting is far from what people deem as normal. A few years back , letting some random person into your car and taking them somewhere was the beginnings of many horror movies either for the driver who would be the victim or visa-versa (it would just depend on the title of the horror movie). In this day and age i still think its not normal to let a random person in your car, but with enough money to do it people will allow for this behavior. I mean if you were not getting paid enough would you let someone into your car randomly and take them where they wanted to go.
With this in mind uber must shell out the cash to allow drivers to want to loan out their cars for others to get in and also give up their time driving around waiting for a passenger to hail them and since they are not the only service like this in each country the cost gets exponentially hire when they compete for price hence why the crazy fund raising required by all businesses of this type in each specific region.
Very different to online marketplaces where the assets are the merchants within the marketplace who sell. In this scenario merchants sell, its what they have always done and is normal behaviour to them so having a channel to sell their goods to a wider audience is always going to be a better option and merchants hence dont need $$$ to keep them within the market place. Once you get them on board you dont have to deal with them potentially leaving, they can sell on your platform or any other platform it just comes down to driving traffic.
Even though with ride hailing you can be part of many different ride hailing services at once, if you are driving for one you are not driving for the other at that moment so their is solid competition for drivers time there and drivers will go with who pays the most which then comes in the for of subsidies. You let those subsidies go you loose your drivers, you loose your users and you loose the market share, then you loose.
Assets of ride hailing services are humans, humans change and get restless and always looking for something better, maintaining that asset happy without lots of cash (specially when there is other competitors doing the exact same thing) with more or less the same technology is going to require lots of cash.
Im curious to see where all this will end, for now im enjoying my crazily subsidized rides that has helped me save so much money in transportation, so im not complaining , but where this business will go eventually and where the regional players that compete with uber on a regional level are all going to end up is going to be dam interesting to see ... im excited :)
Coverage of political machinations is pointless, but information on political outcomes is invaluable - there is a massive difference. Chomsky has said the only paper that tells the truth is the Financial Times, in part because you don't make money with lies, whereas most news is designed to push an agenda and obfuscate anything real.
Understanding political outcomes is very different to listening to political debate/punditry/noise, and learning, for example, that certain subsidies are ending is not the same as reading political arguments on the environment, and they shouldn't be confused.
Knowing that Trump is president means one can predict certain things - the Paris accord ending - but not others, for example budgets are far less fungible than people think, and a lot of the budget of any nation is kinda locked in, so a lot of the noise on funding cuts and changes is unlikely to come to fruition. If you read a lot online/watch a lot, how do you know which of the multitude of BS will come to fruition?
I reckon if more news focussed on "this is the debate, these are the likely outcomes, these industries would be affected in these ways", then reading more would be invaluable. OTOH, Covfefe coverage? I'll Pass.
Why restrict it to the nation then? Why not city currencies? There are lots of countries - like India and China - where the gap in income between regions is larger than between countries.
It's a weird concept money, and I wonder what the right level is. I doubt it is optimised at the country level, but then a "better" notion like demographic similarity may be impractical, even if better, e.g. one currency for Northern Italy and one for Southern may be difficult to sell even if preferable, and ditto a unified Basque/southern French currency, or an eastern seaboard Yuan and a country China currency.
As a Londoner I suspect we'd all benefit from having different monetary policy in London and the rest of the UK. The argument I've heard is that fiscal and monetary policy have to be applied together, so it makes sense to have currency controlled at the same level as taxation.
> makes me want to gulag the rich and seize the means of production.
I feel the opposite way. This sort of thing rarely happens in the west, but quite openly happens in other places, and that fact makes me want to help fix the inequities in OTHER countries that cause this, not tear down my own country.
Specifically (and proselytizing to a degree) it makes me more determined to give a significant portion of my income to https://www.givedirectly.org/basic-income so that at least some of the poorest people on the planet can be empowered to make their own choices.
Depends where you define Asia as. Saudi Arabia plays in the Asian conference in FIFA, but so does Australia. Australian and Saudi values differ ever so slightly :)
This idea is definitely more acceptable than it is in the west in all the world. Africa. Asia. Middle East. Maybe not South America, but even there it would be more acceptable than it is in say Norway.
As for the absolute level of acceptability in each area or country, that is hard to work out, especially in Asia where saving face means something can be unacceptable in theory, but practiced quasi-openly, as in the example of the article, where Lola was an open secret in the guys family.
But why should it be? Why is creating low cost housing in the bay area better than spending that money in, say, Sacramento? What are the individual, societal and area benefits of doing it on the bay area vs anywhere else in the state of California?
I am being contrarian to be sure, Full disclosure: Australian with no dog in this fight.
So I ask because Tyler Cowan (https://medium.com/conversations-with-tyler/patrick-collison...) made the point that the Bay Area makes a lot of great global goods, and loosening housing regulation is effectively a tax on the current, extremely productive people that live in the Bay Area.
Given that these people pay taxes in California, why not find somewhere else to house less well to-do people? Somewhere less expensive, less productive and less likely to be problematic for the residents, would seem ideal.
$1,000,000 in SF buys sweet FA, but that would 3 median priced houses in Sacramento, and it is less than 100 miles away.
So I just wonder what the correct level is to do these things at: country, State, City, Suburb or street? I just think there are only so many dollars, why is the argument about where they are spent, rather than how effectively?