What Would Henry George Say?
Still Relevant, Still Poignant
By Erin Griffith and Conor Dougherty
August 31, 2023
By Dr. Ibrahima Dramé
In a recent post titled, “How the Dream of Building a California City From Scratch Got Started”, Erin Griffith and Conor Dougherty from the NYT reported on an ambitious project by a group of Silicon Valley tech tycoons to build a new city in Solano County, California.
This is not the first experiment of its kind in the US, however. Proponents of the project bill it as an incarnation of their vision “to create walkable communities, good-paying jobs, affordable housing and open space” in the area.
While the idea of a new city seems enticing, given the severe housing shortage in California, the economics of the project are not sound and this raises questions as to its viability and ability to deliver on the promise of affordable living.
The costs are huge and for the investors to make any money, the price of everything in the area will increase dramatically, negating any benefits from better paying jobs. As Henry George would say, if they are successful and attract tens of thousands of new residents to the area, the price of land will skyrocket, as will the price of the fancy new homes they will be building in the area. The investors would pocket a huge windfall, but affordability would suffer. A college grad who makes 100k vs 50k will still not be able to buy a million dollar home. This is exactly why so many very well-paid young professionals are moving out of cities like San Francisco. So, instead of alleviating an existing problem, the new city may end up just replicating it.
It’s the people who create the value in any town, city or community and if the people are not benefiting from the growth of a metropolis, then it becomes a purely financial transaction and as soon as the money flow gets turned off, the project dies.
The other problem is that a project of this scale would require billions, tens of billions more likely, on infrastructure to make it happen That may only work financially if the state and federal government get involved which is an entirely new kettle of fish that tech companies have proven they do not navigate well. And, with Governor Newsom possibly eyeing the White House, it is highly unlikely he would want to give a blank check to tech billionaires for monkey bars in a new playground.
Proponents of this project didn’t learn from Google in Toronto, Jeff Burns in Nevada, Bill Gates in Arizona or Amazon in New York City and if they don’t change course and strategy, they may soon end up in the same place.
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