If San Jose can’t afford its basic public services, what city can?
One would think that the richest city in America would have better roads. And more police officers. And more adequate housing for the poor.
.. Prop. 13 has meant that as real-estate values in California have skyrocketed, longtime homeowners have continued to pay extremely low property taxes.
.. San Jose is battling a number of social problems as it deals with those fiscal challenges. Its poverty rate is 12.9 percent, and there are still hundreds of homeless people, even though the city shut down the homeless people’s encampment known as “The Jungle” in late 2014. As more people are unable to keep up with rising costs in the region, many end up on the city’s streets.
.. It can be disconcerting to see the poverty amid so much prosperity, especially because poverty in San Jose looks different than it might elsewhere. There are no hulking public apartment complexes here, nor are there homeless people begging for money on the subway, because there isn’t a subway (though there is a downtown light-rail system). Instead, people here stay in their cars and drive from work to home, making it possible to completely avoid seeing poverty at all.
Why China’s super-rich send their children abroad.
About a third of China’s wealth belongs to just one per cent of the population. While China’s poor still inhabit a developing-world economy, a recent report found that the country now has more dollar billionaires than the U.S. does. “What is happening in China constitutes one of the most rapid emergences of wealth stratification in human history,” Jeffrey Winters, a politics professor at Northwestern University, told me. Winters, the author of the book “Oligarchy,” pointed out that China is one of a small number of countries—Russia is the other notable example—where extreme wealth stratification was eliminated in a Communist revolution and then later reëmerged. As in Russia, the sudden formation of a new oligarchy in China means that there are many super-rich people who are unfamiliar with the ways in which more entrenched aristocracies quietly protect their wealth. “No matter the culture or age, old money knows from long experience that it is far safer to be secluded and less seen,” Winters said. But new money, as Thorstein Veblen theorized, asserts itself through conspicuous consumption.
.. A study by the Bank of China and the Hurun Report found that sixty per cent of the country’s rich people were either in the process of moving abroad or considering doing so.
.. But, for affluent Chinese, the most basic reason to move abroad is that fortunes in China are precarious. The concerns go deeper than anxiety about the country’s slowing growth and turbulent stock market; it is very difficult to progress above a certain level in business without cultivating, and sometimes buying, the support of government officials, who are often ousted in anti-corruption sweeps instigated by rivals.
.. “there’s always a fear that, if the officials to whom they’re tied are brought down in an anti-corruption campaign, it could bring trouble for them, too, and lead to the seizure of their assets. There’s also a concern that business rivals who may be better connected to people in the government could use their ties to the party-state to bring down their competitors.”
.. I asked him if the people he works with could be considered China’s one per cent. “I wouldn’t say that they are the one per cent,” Oei replied. “More like between the one and two per cent.” His clients tend to have prospered in regional manufacturing cities, whereas the very wealthiest people are from Beijing, Shanghai, and Shenzhen. “The tippy top of the pyramid have political backing or connections,” he said. “They don’t need to export the wealth.”
.. The home buyer, typically the husband, lives and works in Asia, where cash can be made fast, while establishing his family members in Canada in order to move the money to a place of social and political stability. Yan has coined the term “hedge city” for places like Vancouver: they are a hedge against volatility at home.
.. He has recommended raising the tax on vacant investment properties and called for “far better tracking” of international investment and absentee owners. But it seems unlikely that such measures will be implemented. As prices have risen, ordinary Canadians have found that their homes represent more and more of their net worth. Many people in the federal government, including the Prime Minister, Justin Trudeau, have advocated caution when it comes to steps that would depress property values. Besides, rich international buyers mean higher tax revenues. “The state is addicted to the revenue,” Eby told me.
.. Westerners are all about being straightforward and direct. But, when you negotiate a deal in China, it’s all about what’s unsaid, simultaneously hiding and hinting at what you really want.
.. It’s like this: when I am driving here and need to make a turn, I turn on my signal light and do it. It’s the most normal thing in the world. When I first drove in Asia, I flashed my signal and immediately people, instead of slowing down, all sped up to cut me off. It was so maddening, and then, after a little while, I became like everyone else. I never signal when I turn in Asia. I just do it. You don’t have a choice.”
Don’t Break Up the Banks. They’re Not Our Real Problem.
It never dawned on either lenders or regulators that housing prices kept going up mainly because underwriting standards were getting looser.
.. It’s no longer accurate to say that the large banks pose a systemic danger to the American economy. Some argue that they should be broken up solely because they are too politically powerful. Perhaps so, although that power hasn’t managed to prevent regulators from dismantling bank leverage and risk. Furthermore, no advocate of a breakup has come forward with a plan on how to do it. Large banks are global, complex, integrated institutions. Breaking them apart would be incredibly difficult, long and disruptive, and the banks might have to freeze loan growth during the process, slowing our economy even further.
.. The central economic problem of our time is income inequality, especially the lack of personal income growth for most Americans, which was one of the underlying causes of the financial crisis. In lieu of rising incomes, credit was allowed to be democratized. Living standards were maintained only because increased credit supplemented deteriorating incomes. That helps explain, post-crisis, why United States growth is slow: Without easy credit, consumers cannot increase spending, because their incomes have fallen since 2007.
If we want a stronger economy, improving the distribution and growth of personal income should be our focus. Breaking up the big banks will not help, and might even hurt.
Bernie Sanders and the New Populism
If you step back a bit, though, all of the players look more like pieces in a board game, whose rules and layout are predetermined. As Karl Marx famously remarked, in “The Eighteenth Brumaire of Louis Napoleon,” “Men make their own history, but they do not make it as they please; they do not make it under self-selected circumstances, but under circumstances existing already, given and transmitted from the past.”
Going into the 2016 Presidential election, our economic inheritance is forty years of income stagnation and rising inequality, which culminated, in 2007 and 2008, in a global financial crisis and a government rescue of bankers and other financial interests. Yes, this bailout has been followed by half a decade of modest G.D.P. growth and strong job growth, but the narrative of inequity, unfairness, and frustrated expectations remains fixed in the public consciousness.
As the Financial Times commentator Martin Wolf pointed out on Wednesday, Latin American-style income distribution leads to Latin American-style politics—populism of the left and the right.
.. In a January poll of likely voters in the Iowa Democratic primary, forty-three per cent of respondents described themselves as “socialist.” And it isn’t just Iowa. A 2011 study by the Pew Research Center found that forty-nine per cent of millennials—defined as Americans between the ages of eighteen and twenty-nine—view socialism favorably, compared to forty-three per cent who view it unfavorably.
.. To my mind, the most striking thing about the Iowa poll wasn’t that virtually half of likely Democratic voters embraced the designation “socialist.” It was that eighty-eight per cent agreed that the word “optimist” described them.
.. In voting for Syriza and Podemos, the Greeks and Spanish weren’t indicating that they wanted to nationalize the means of production or bring back the Comintern. They were rejecting austerity policies imposed by a political system that seemed beholden to bureaucrats in Brussels and bankers in Frankfurt, and they were calling for a return to the Enlightenment ideals of popular sovereignty and popular participation.
.. For all his crankiness, Sanders is tapping into this optimism and providing an outlet for it.
.. If you look at the rise of populism in other countries, you will find that urging people to be realistic is a common reaction from establishment politicians and their supporters. It is a risky response, though. Trotted out too often, or too vehemently, it can make those who rely on it sound suspiciously like one of the “mothers and fathers” that Bob Dylan addressed back in 1964 ..