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Free Minds & Free Markets

How Seattle's Economic Illiteracy Kills Jobs

Fortunately, Amazon is fighting back.

Seattle is worried about the well-being of the poor and mentally ill people living there, so it's going to drive businesses out of town.

OK, that's not how the politicians describe their plan, but that's probably how it will work out.

Members of Seattle's city council want all big Seattle businesses to pay a tax of $500 per employee.

In response, Amazon stopped building a new complex. Construction workers joined Amazon in protesting the new tax.

On the other side are city council members like Kshama Sawant. She and members of her political party, Socialist Alternative, demonstrated in support of the tax. They chanted, "Housing is a human right!"

Seattle does have large encampments of street people. Some are mentally ill. Some are young people looking to get stoned and live free. Some are homeless simply because they cannot afford apartments. There are many reasons for that, but one is that Amazon and other companies have brought so many new jobs to Seattle that the demand for housing exceeds the supply.

Normally, when that happens, the free market quickly solves the problem. Builders view the rising prices as a wonderful thing. They quickly build new housing to sell to the new customers. But in Seattle, and many towns in America, politicians make that very hard.

Seattle's building code is 745 pages long.

If you want to build apartments, you better hire lawyers and "fixers" to keep you on the right side of the rules.

Seattle's rules insist that "Welded splices shall be of ASTM A706 steel" and "foam plastic signs shall not be greater than 1/2 inch" thick.

On the majority of Seattle's land, building any high-rise is illegal; zoning rules say only single-family houses may be built.

Want to run a cheap flophouse with single rooms? Seattle's rules make that just about impossible.

Finally, if a landlord decides to take a building off the market, he must pay each of his tenants $3,000 in relocation costs.

No wonder there's a housing shortage.

Seattle's big-government restrictions created a housing problem. So now they propose to solve it with more heavy-handed government.

Seattle promises its new per-employee tax will only hit "big" companies, those grossing more than $20 million per year (about 3 percent of Seattle's businesses).

Don't the politicians realize that many growing companies will simply stop expanding when they get close to $20 million in income, just as companies, looking to escape Obamacare, avoid employing more than 49 workers?

Some pay lawyers to split the company into pieces. Some expand in another state. Don't politicians see that raising taxes has nasty side effects? I guess not.

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  • BestUsedCarSales||

    On the majority of Seattle's land, building any high-rise is illegal; zoning rules say only single-family houses may be built.

    According to the radio. The amount is closer to 90%>

  • tuhad||

    I just got paid $6784 working off my laptop this month. And if you think that¿s cool, my divorced friend has twin toddlers and made over $9k her first month. It feels so good making so much money when other people have to work for so much less.
    This is what I do...>>>> www.profit70.com

  • Leo Kovalensky II||

    Socialism would work if it weren't for those nasty kulaks at Amazon. Wreckers!

  • Jerryskids||

    To be fair, it's not Seattle that's economically illiterate, it's Seattle's political class. Check out most any big city and you'll find the same thing is true there as well. When you forget your place as a servant of the people and begin seeing yourself as their master, you see things backward, like seeing business and industry as a burden on government and government dependency as a good thing.

  • MoreFreedom||

    I think at least half of Seattle's political class is economically literate. They know that if the government spends $400 million for the homeless, that money will really be given to businesses they run, so they can profit from that government spending. After paying their high 6 figure salaries, they'll spend what's left on the homeless. In the meantime, the politicians get campaign cash that are essentially kickbacks from that spending. Most know what they're doing.

    But I'll agree, there's some who actually think taking peoples' money via force is a good thing, who are economically and morally illiterate.

  • Enjoy Every Sandwich||

    Seattle promises its new per-employee tax will only hit "big" companies

    That bullshit story is similar to the one that was peddled when the federal income tax was imposed. "Only the rich will pay!" Yeah...how did that work out?

  • Leo Kovalensky II||

    It's true. They've just defined everyone above the poverty line as "rich"

    Done and done.

  • Illocust||

    Well big is relative. If all the current big companies move out, then the folks left are big by comparison to a lemonade stand.

  • damikesc||

    I'll note "big" is subjective.

    If Amazon leaves, a different company will be the big company in Seattle. No matter how much smaller they are than Amazon was...they will be the "big" company.

    I do wonder what the voters for Socialist Alternative expect to happen with this tax.

  • Cynical Asshole||

    I do wonder what the voters for Socialist Alternative expect to happen with this tax.

    A Utopian paradise. Kind of like Venezuela, or Cuba.

  • Earth Skeptic||

    The women in Seattle are gonna have to work a bit harder on sex appeal then.

  • $park¥ leftist poser||

    I was watching a Boston news station last night and they were doing a story about Amazon's new HQ location. The story ended up being a warning to whatever city ends up with the new site because the reporter actually blamed Amazon for the homeless problem in Seattle.

  • Leo Kovalensky II||

    Not only did they cause the problem, but they discriminate against the homeless because they offer "home" delivery.

    /sarc

  • vek||

    I don't think Amazon caused the homeless problem, that was mostly more homeless moving here for the nice freebies... But Amazon has caused lots of other problems. People working in many respectable professions can't even afford to buy a studio condo in this city anymore. It's ridiculous.

    I've lived here for 13 years, and this city IS NOT a better place to live now than it was then. I guess maybe if you're a certain type of vacuous yuppie it is, but even most other professionals I know that have lived here for a long time agree. This includes most of the Amazon employees I know! It's just been too much too fast. On the plus side I will get some good LOLZ when the bubble bursts :)

  • Illocust||

    That sounds like a supply problem. Which might have to do with that 750 page building code.

  • vek||

    Yes, in the strictest sense it is most definitely a supply problem. The building code and zoning laws 100% make the problem worse.

    That said there have been lots that have been upzoned for YEARS that still haven't been developed. So it's not like they've literally filled up every single high density spot and it's still not enough. It's just been growth that's been a little too fast. It happens. Real estate booms happened in the 1800s when there was no zoning too. It would have been a lot LESS bad if there weren't stupid zoning laws and building codes... But things probably would have still got pretty bad.

    Also all the new buildings kind of suck in and of themselves. It's totally a whiny nimby thing to say, but most of the neighborhoods were considered a lot nicer to actually live in and go around before they crammed in 10 times more people.

    There's not a lot to be done about it of course, other than making people stop moving here, but sometimes there is such a thing as a "sweet spot." A lot of neighborhoods in Seattle were almost just the right amount of density and flavor to them in the past... And now they're a little too crowded and filled with ugly buildings. Again, there's nothing to be done about it... You can't stop the world from changing... But it still sucks.

  • MatthewSlyfield||

    "People working in many respectable professions can't even afford to buy a studio condo in this city anymore. It's ridiculous."

    This is the result of Seattle zoning rules, it is absolutely not a problem that Amazon has caused.

  • Rhywun||

    A lot of that code is demanded by NIMBY's. The single-family home is the American Dream, and it's mandated practically everywhere because nobody wants the poors to move in next door and lower their property values.

  • vek||

    See my post above. Real estate booms have happened in the past when there were no zoning laws too. Dumb laws make them worse, but they are ultimately just caused by demand out stripping supply, which can happen in an unfettered market too for a period of time.

  • damikesc||

    I don't think Amazon caused the homeless problem, that was mostly more homeless moving here for the nice freebies... But Amazon has caused lots of other problems. People working in many respectable professions can't even afford to buy a studio condo in this city anymore. It's ridiculous.

    But is that Amazon's fault? Seems a lot of blame --- if not, well, ALL of it --- falls on Seattle zoning laws that make it nigh impossible to handle the volume.

  • vek||

    See above post.

  • Cynical Asshole||

    Amazon has caused lots of other problems. People working in many respectable professions can't even afford to buy a studio condo in this city anymore. It's ridiculous.

    Sigh...

    Seattle's building code is 745 pages long.

    If you want to build apartments, you better hire lawyers and "fixers" to keep you on the right side of the rules.

    Seattle's rules insist that "Welded splices shall be of ASTM A706 steel" and "foam plastic signs shall not be greater than 1/2 inch" thick.

    On the majority of Seattle's land, building any high-rise is illegal; zoning rules say only single-family houses may be built.

    Want to run a cheap flophouse with single rooms? Seattle's rules make that just about impossible.

    Finally, if a landlord decides to take a building off the market, he must pay each of his tenants $3,000 in relocation costs.

    How is any of that Amazon's fault? Other than providing jobs which attracts more people and increases demand, which causes prices to increase (especially when the city government makes it damn near impossible to increase supply fast enough). Although if Seattle's city government keeps doing what they're doing that "problem" will be solved soon enough.

  • Microaggressor||

    They're going to solve the property value problem Detroit-style.

  • vek||

    See my posts above. Stupid laws make the problems far worse. Obviously. However booms happen in markets. In Seattle real estate that is largely because of Amazon, and the ripple effects from Amazon drawing in a ton of other tech firms in such a short period of time.

    A lot of the other "problems" are also just quality of life things. Seattle, to me, was a near perfect sized city when I moved here. It could have even been a touch smaller and probably been awesome! Now it's passed that threshold where it has a lot of "big city" problems that it did not previously have, and other problems (like traffic) have become exponentially worse.

    As I mention above there's not a lot to be done about it. It happened, it's just the way the cookie crumbled. But it still kind of sucks. Just because you believe something should be allowed to happen, like unfettered growth because I'm a libertarian, doesn't mean you always have to like the outcome. Sometimes shit sucks, even if it should be allowed to happen. Dig my meaning?

  • MichaeI Hihn||

    "I don't think Amazon caused the homeless problem, that was mostly more homeless moving here for the nice freebies..."

    "People working in many respectable professions can't even afford to buy a studio condo in this city anymore."

    These two issues - housing so expensive that even respectable professionals can't afford a studio, and high homeless populations - may be related.

  • Paradigm||

    Expensive housing on the left coast is typically caused by rent control, which drives shortages...without fail...just like price controls in Venezuela. It's as predictable as the sun rising in the east.

  • vek||

    Thankfully we don't have rent control yet! They keep trying to pass it every so often, but somehow it hasn't made it through yet. I will probably be long gone from here before it happens, but I bet it WILL happen sooner or later. That'd do a nice job of fucking things up even worse!

  • TrickyVic (old school)||

    ""People working in many respectable professions can't even afford to buy a studio condo in this city anymore. It's ridiculous.""

    Like every other liberal city.

  • vek||

    Pretty much. As stated above zoning stuff certainly adds to problems a TON. But some places do have naturally arising issues too. The growth here was SUPER fast, and largely unexpected. We are geographically limited as far as suburban sprawl too. If we had buildable land where the sound is we would be having no housing issues because that much more land added into the commutable distance availability alone could have largely absorbed the level of stupid we've seen around here.

    Obviously bad laws need to be called out... But they aren't always responsible for 100% of a given problem. In Seattle maybe they're responsible for 50% of the housing spike, maybe it's 25%, or maybe it's 75%. It's hard to know other than that they sure as hell didn't help.

  • Trainer||

    It's called a boom. Leave it alone and eventually it will all settle down and even out, if you're lucky. If not, it will be followed by a bust. But then it will all settle down and even out again as long as you leave things alone. Or you could have another boom. Whatever. As long as you don't meddle, it will all work out.

    Sincerely,
    The City of Houston

  • Earth Skeptic||

    Well, Amazon, and all those other FASCIST companies, requires that people, like, work or something before they get money. The only FAIR thing is for Amazon to just pay everyone, and, um, free weed, too. Oh, and all the money at Amazon belongs to the city, cuz they need to make houses, maybe those cool little tiny houses.

  • Rhywun||

    If the "argument" goes anything like it does a couple states to the south, it means that Amazon employs a lot of highly-paid "techies" who price everyone else out of the market.

  • vek||

    Well that's largely the truth of it. In the long term once things have shaken out it will probably be a good thing in most respects. However short term booms and busts are not preferable in many ways compared to more steady and predictable growth. What's happened here and in SF has been pretty insane boom level events, so it's created a lot of chaos in a very short period of time. It is what it is.

    One of the things that makes me smile though is knowing that the underlying fundamentals show SF, here, and some of the other trendy cities are WAAAAAAY outside of where they can sustainable stay in terms of pricing. So there will be a pretty hard correction coming at some point. The fact that it will mostly hit really douchey progressives makes me feel warm and fuzzy inside :)

  • vek||

    I think these tech firms are morons for over concentrating their workforces in such a small number of outrageously expensive cities, where they themselves drove the cost of living dramatically higher, to the point they have had to dramatically increase their own employees wages to offset the increased cost of living...

    If they'd just opened more offices in a few other major cities they could have saved probably 10s of billions in expenses, their employees would have a higher real standard of living, AND they wouldn't have screwed up SF, Seattle, etc nearly as bad, if at all! It would have probably ended up being a net benefit for basically every party involved to have opened just a few more major offices in other already major cities. But I guess Zuckerberg thinks that since HE can't imagine living anywhere else, none of his employees possibly could either... Not realizing that his 125K a year employees are basically being forced to live like college students still in SF, and would have been perfectly happy to make 95K a year in Atlanta, or Dallas, or Cleaveland etc since that's where many of them are originally from anyway...

  • Rhywun||

    Somebody honest should determine what the ratio of Seattle's homeless who are actually looking for a home to those who aren't. I suspect that in addition to having a housing shortage, Seattle also has a problem with attracting a lot of people who either have no intention of finding a home or are unable to hold down a job.

  • damikesc||

    Seattle is San Francisco.

  • Microaggressor||

    Free shit is their only proposed solution.
    Socialists don't understand incentives.
    They're just going to make the problem worse, and keep blaming capitalists so they can shove through more counterproductive policy.
    Seattle's days are numbered.

  • tlapp||

    Socialist just take the capital to spend on current consumption leaving the future poorer. Eating the seed corn.

  • vek||

    I've talked to quite a few bums over the years, and a very high percentage of them either have zero intention of trying to get a job and a place, or are waaay to screwed up to ever pull it off. Most of them came here just to be homeless here. There are of course people from the lowest rungs of society that have lived here for years that really were pushed out of their places by the insane rents, but that's probably a small minority of them. The people like that mostly have the good sense to move outside the city and nail down a mediocre job there so they're not homeless!

  • Cynical Asshole||

    Seattle is worried about the well-being of the poor and mentally ill people living there

    That's the horseshit they peddled to sell this turd to their usefulless idiots, but what they're really worried about is that some companies make "too much money." How much money is too much? Did they turn a profit? Then that's "too much."

  • Trainer||

    I had an ex-employee post in her facebook, "Profits are the unpaid wages of the workers." Except that I worked and got the profits when she got fired for asking for a weekend off to celebrate her 24th birthday in Austin and then didn't come back for 2 weeks and was upset that she wasn't on the schedule.

  • Earth Skeptic||

    "It's not only government bureaucrats who are to blame. The consulting firm McKinsey weighed in with an analysis of Seattle-area homelessness and concluded the city needed to spend $400 million a year to solve the homelessness problem."

    Nice move, McKinsey. I assume that the homeless solution contains several line items for perpetual consulting. Otherwise, with that $400 million, the city could write checks for $100k to each of the 4000 homeless, and be done in one year. Oops, unless another 4000 showed up the following year to get on the gravy train.

  • TrickyVic (old school)||

    ""The consulting firm McKinsey weighed in with an analysis of Seattle-area homelessness and concluded the city needed to spend $400 million a year to solve the homelessness problem."""

    Throwing money at it hasn't fixed NYC homeless problem.

  • Incredulous||

    Accusing Amazon of "extortion" and "acting like the mob" while stealing their money is beyond ridiculous.

  • tlapp||

    Amazon is already looking for a new HQ. Once it is up and running Seattle will likely see their location shrink along with not only the $275 but the entire tax receipts from those relocated jobs.
    Liberals do believe taxing influences behavior when they want to tax gasoline, liquor, cigarettes, etc but somehow think it doesn't apply to jobs.

  • vek||

    I see my post above really got a lot of peoples panties in a twist!

    You DO realize one can dislike something, and still believe it should be allowed to happen right? Like, I'm not a big fan of fat chicks. I especially don't like seeing them in 2 piece bikinis. That doesn't mean I think it should be made illegal though!

    The fact is that Seattle was a lot nicer city to live in for almost EVERYONE 15-20 years ago, or even more. I can literally count on one hand the number of people I have met who have lived in Seattle for any length of time that have said they prefer it now to saaay 10-20 years ago. I have had literally hundreds of conversations with people who think it is way worse, because it's a topic that comes up a lot around here.

    A lot of people who have only lived here for 5-7 years think it's got a TON worse just since they've been here, because it has. That was when it really picked up steam again after the recession. This is far and away the majority opinion.

    If you were a low wage worker it was a lot easier to make it here, and everything was way cheaper. If you were a high earner and made $150K a year you lived like a king! Now you can afford to live like... A mechanic in Des Moines? Or a mailman in Dayton maybe? You can't buy a modest single family house in a decent neighborhood making ONLY $150K a year now.

    So PARDON ME for realizing that this is in fact NOT a super awesome situation for most people. It's not unreasonable to gripe a bit.

  • vek||

    Then there's the traffic, the crime, no parking, the general density increasing beyond being nice in a lot of areas, the tons of long standing venues, businesses and buildings being torn down and replaced with uglier, cheaper looking ones... I could go on. In other words almost everybody agrees it is not better.

    I get that things need to be torn down to throw in more apartment buildings. That a gorgeous old brick building gets torn down and replaced with an ugly one that doesn't mesh with the neighborhood isn't the end of the world... But it's still something a lot of people miss, because most people liked the old brick building better. Would tearing down the Coliseum in Rome be worth it to cram in more apartments? Nothing here is quite that cool, but it's a lesser degree of the same thing.

    That said I wouldn't want to ban Seattle from having an irrationally ridiculous boom. It's not my place, or anybody elses. But it doesn't mean I have to pretend that it's actually been improved from my perspective, especially since almost 100% of people share my opinion. I don't understand why some of you have the opinion that nothing "undesirable" can ever come from "progress." Stuff has pros and cons, and it's okay to bitch about the cons as long as you don't try to pass laws to prevent the change like an asshole.

  • Duelles||

    If Seattle had politicians life would be good. Seattle has socialists. Life is not so good.

  • Technomad||

    A lot of the homeless are victims of deinstitutionalization. Back in the old days, they were the sort of people who were sent to asylums. In the asylums, with people to make sure they took their goddamn meds, they seemed all right...and well-meaning people pushed to get the mean old asylums closed down. Out on the street, surprise surprise, they couldn't cope and often ended up homeless.

    Another factor is the demise of SRO hotels in many places. Those weren't great places to live, but they were cheap, downtown and convenient for poor people who were in work but didn't have the salary or salary history for a real apartment. Even the YMCA no longer offers cheap accomodations.

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