Why Seattle Is Disconnected Like the Stock Market

Comments

1

Not quite sure what you're saying, Charles, my latest TIAA-CREF quarterly statement says it went up 10% and my 403(b) says it went up $100,000 and I haven't checked the other account.

Oh, wait, you don't mean the stocks that only the top 10 percent have in any appreciable quantity?

2

Another probable factor in Seattle's continued growth despite short-term economic trends is global warming. The Pacific Northwest is likely to be the last remaining temperate region in the continental U.S. (along with perhaps northern New England) within another century or so. Surely this near-inevitability has figured into the plans of at least some of the firms looking to build and/or locate here, even if they don't want to acknowledge it publicly.

3

Good catch @2. As we shift so that California becomes like Mexico and Oregon/Washington becomes like California used to be, this is going to be where you want to be.

There are climate change maps on NY Times and Washington Post that show you where the city you live in 2020 will be in 2040. Start moving to the place you want to be in, get in before all the others move there.

And realize that land is the value, so don't be too picky about the house itself.

4

I had no idea that, as of now, Seattle has more cranes than SF, Chicago, and Vegas combined. As the jobs are leaving for the Eastside—or at least the growth in jobs is shifting toward the Eastside—the luxury multi-unit housing is still arriving.

I don't pretend to understand the economics of this. I do see some truth in Charles's take that Rogoff's third explanation, the Fed's backing up securities, is the most credible. Or rather I see it as the most credible of the three explanations while Charles sees it as the only credible explanation. But here's the thing. None of Rogoff's technical explanations explains why this phenomenon is happening in Seattle in particular.

And this is where I think MarciaX's observation @2 about climate change rings true. Sure, as these recent fires have demonstrated, we're getting hit by climate change, but Seattle also promises to be the least affected of the major cities in the American West.

The interesting thing is that it's possible to take the capitalist expansionism Charles rails against and redirect it in the fight against climate change. Of course, the challenge isn't the economics of it; it's the politics.

5

https://www.youtube.com/watch?v=7xreIIax-W4

6

It is worth repeating: the stock market is not the economy. Likewise, the tech market is not the economy. It is common for the software world to operate on a completely different cycle than the rest of the economy. The dot-com collapse was devastating for software workers. It wasn't just a handful of overpriced companies that collapsed. Big, old companies like IBM had layoffs. Very good software engineers had a hard time finding employment. Yet a few years later, during the Great recession, things weren't that bad for developers. They barely took a hit.

The same is true now. Obviously some companies -- like Expedia -- are getting hammered. But Amazon is clearly doing well, as are other software companies. Under normal circumstances, the money would flow to more people in the region. Not as well as it should (because of income stratification) but much better than it is now. Right now everything is shut down -- the folks who normally eat lunch downtown are staying home. The same is true for bars, clubs, and a huge host of other businesses. This is not a normal economy -- the economy can't recover until the pandemic is over.

From an economic standpoint, there are similarities with the Oil Crisis and stagflation. Normally, if you have too much inflation, the government tightens its belt, and the fed shrinks the money supply. If you have a recession, you do the opposite (run debt, print money). But what if you have both? The inflation in the 1970s was caused by a resource shortage (energy) so the usual tricks wouldn't work. The same is true now. While certain sectors are doing OK, the only way the overall free-market part of the economy can get better is if we handle the pandemic better.

7

What I also find interesting is this idea that Seattle is dying. It seems as if various groups are quick to jump on this idea, even though it seems absurd. You have social conservatives, who think that the left-wing policies in Seattle have caused it to self-destruct into an "anarchist city with jurisdictions permitting violence and destruction of property". But a big part of it is reflected in the ideas from @4. Somehow all the businesses are moving to Bellevue. I can't speak for cressona, but this is a common idea, with little basis in fact. I think the libertarian mindset that is common in the software industry has a big influence. Somehow the very tiny additional amount of taxes that companies in Seattle pay will cause them all to move to Bellevue (or in the case of Expedia and Amazon, back to Bellevue). Oh that, and the $15 minimum wage that was supposed to destroy our local economy.

8

@7: It's not a libertarian mindset, it's a business mind set. The "very tine additional amounts" has an impact in their ledgers and, you can't blame them, steps to circumvent the impact such as moving to Bellevue becomes a practical decision.

Elections have consequences, so do tax hikes.

10

I think when people say "Seattle is dieing" they generally don't mean the economy.
Get ready for a rebirth of that whole "Seattle is dieing" deal, with the end of the Navigation Team the local news outlets have had an increasing coverage of homeless encampment issues and their impacts on local neighborhoods complete with statements from the city explicitly blaming the end of the Nav Team as to why these camps are allowed to linger.

11

You know what else has consequences? 25 years of record setting unregulated, unmanaged growth in a city straining its infrastructure, housing, and government.

You know what they call unregulated growth in biological systems?

Cancer.

12

"As the Polish economist Michal Kalecki explained over 80 years ago, expansion must become more expansion. This means Seattle is expanding because it has expanded. It's building more luxury condos because it has built more luxury condos."

"[O]ver 80 years ago," is another way of saying, "just before the Great Depression emphatically terminated a decade of economic expansion." This is why economists' predictions are usually wrong -- it would actually be better to make economic decisions based upon coin flips than upon economists' predictions. Economists tend to believe the near future will be like the recent past, and a statement like the one quoted above, even though it had been proven completely wrong in the time it was made, reinforces their tendency. To invoke the great Carl Sagan, that statement is equivalent to explaining that the moon has phases and eclipses because it is in the nature of the moon to have phases and eclipses -- a mere rearrangement of words, an 'explanation' which explains nothing.

There are good reasons for Seattle's continued building boom, but Charles' resentful ruminations over his breakfast cocktails is unlikely to explain them.

13

@12.

Three decades ago, billionaire Ted Turner asked Carl Sagan if he was a socialist.

His response:
https://mobile.twitter.com/rafaelshimunov/status/1312934112815190016

14

Jesus. Those were not “predictions,” dipshit. They are observations about what actually happens. What did happen. What does happen. What is happening.

You are blind.

15

What?

16

@15.

Back into your Pokéball.

17

@14: I didn't claim they were predictions, reading comprehension genius. I was merely noting how bad observations lead to bad predictions. The observation from over eighty years ago was wrong, because the world economy of 1935 was very different from the world economy of 1925. Charles' inability to understand his source was dead flat wrong thus leaves him unable to explain how Seattle remains a forest of tower cranes whilst The Stranger teeters on the edge of insolvency.

18

@17. And why was the world economy of 1935 different from the world economy of 1925? Surely nothing an economist could predict.

19

@18: "...over 80 years ago," implies the observation was made in the 1930s, not the 1920s. Anyone comparing economic data from the 1920s and the 1930s who concluded, "expansion must become more expansion" came to a conclusion the data simply did not support -- and that's putting it mildly...

21

@17 my reading in just fine.

You said:
“... it would actually be better to make economic decisions based upon coin flips than upon economists' predictions...”

Buh buh buh...

23

@8 "It's not a libertarian mindset, it's a business mind set."

OK, fine. It is a libertarian mindset applied to business. Not that many people in the business world -- extremely few in the tech business world -- take that mindset.

Quick pop quiz: Where is the center of the tech world? Bermuda? U. A. R? Wyoming, Alaska, Florida?

Nope. These businesses aren't located in low tax countries. They aren't even located in low tax states. They are located in the state with the highest taxes! Silicon Valley is the center for software businesses. Also in the top ten (worldwide -- https://en.wikipedia.org/wiki/List_of_technology_centers) is Silicon Alley, which is located in New York, New York -- the city with the highest income tax rate.

Guess what -- these businesses don't give a fuck. Oh, sure, they will try and squeeze the local jurisdiction for a few bucks, but at the end of the day, they will base their development on where they think they can attract the most workers. Why do you think Expedia went to all that work to move to Seattle? That's because it behooves them to be in the center of activity. They attract people to a beautiful campus (way nicer than anything possible in Bellevue -- maybe Seattle should have been called "nice view"). It also makes it much easier for them to do business with other companies, that of course, are centered in Seattle.

Finally, Seattle is home to the University of Washington. And while Bellevue College is nice, there is no way in fuck it generates the kind of brain power that these companies want, nor does it generate the kind of brain power that may someday display them.

To assume that these companies are guided by low taxes is to take a libertarian view of the world. It is childish; like you read an Ann Rand novel after opening your lemonade stand and had it all figured out at 12. Sorry to break it you, bub, but the world is a lot more complicated than that.

24

@22. Well, you sure showed them!

25

@23 "displace them", not "display them" in that last paragraph.

26

@2 MarciaX & @3 Will in Seattle: Thank you for the fair warning. As a Seattle-born Washington State native, I have long employed the motto: "J'y suis, j'y reste"("I am here, and here I will stay"). Who knew it would be so prophetic?

27

@21: I never claimed the statement Charles quoted was a prediction; it was a bad observation, one which supports the tendency of economists to make their bad predictions. Your comment @14 needlessly confused the two, but that is entirely due to your failure of reading comprehension.

28

Seattle can both have the most cranes and be dying. Crane projects take YEARS to line up before getting to the crane itself; you have proposal, financing, permits, land acquisition, demo and generally six months just of excavation before you get to the crane. There's a LOT of inertia in crane projects.

Seattle's maladies are more like cancer or an infection than a bullet wound, and aren't affecting the whole city equally. Magnolia and Wallingford may be essentially unaffected, while Belltown and Downtown have taken serious body blows. Those areas are "dying", but can be kept on life support for a long time as long as Magnolia stays healthy and keeps paying their taxes.