Economics
Resolving San Francisco’s Class Warfare
San Francisco’s class warfare exists because of an intense level of wealth inequality in the city. Here’s one innovative solution that could tackle the problem from the ground up.
March 1, 2014
Martin Adams
Author, Economist

For more information about how land reform can create meaningful work, restore our ecology, and bring more wealth into our local communities, I invite you to read my book Land: A New Paradigm for a Thriving World.

​Martin Luther King, Jr. once said: “True compassion is more than flinging a coin to a beggar; it understands that an edifice which produces beggars needs restructuring.” Compassion opens our eyes to the suffering of others and allows us to feel their suffering as our own. It also helps us realize that the economic system we are currently living in is deeply responsible for the poverty we have amidst ourselves today—the kind of poverty that is especially present in big cities such as San Francisco, California.

A recent article in The Guardian highlighted the tensions present in San Francisco, where long-time residents fear gentrification by high-tech employees, who have driven up rents even more in a city that’s already plagued by high rents. While zoning restrictions are only partially to blame for the housing supply shortages in San Francisco, the tensions that are present in San Francisco are caused by something much deeper.

San Francisco’s class warfare is an expression of an intense level of wealth inequality that’s present in the city. So why is it that there is so much wealth inequality in San Francisco? In general, in our current economic system, wealth inequality can be directly correlated to population density (see chart below). It means that wherever you have a lot of people crammed together over a small area, you have greater wealth inequality. Why is that?

When you have a lot of people living closely together, land becomes more valuable. The problem is that property owners—and the banks that finance property ownership—are allowed to privatize that land value.
Population: “Annual Estimates of the Population for the United States, Regions, States, and Puerto Rico: April 1, 2010 to July 1, 2011,” U.S. Census Bureau, 2011. Area: “Land and Water Area of States and Other Entities: 2008,” U.S. Census Bureau, 2012. Gini coefficient: “Household Income for States: 2009 and 2010,” U.S. Census Bureau, 2011. Source: http://www.unitism.com

When you have a lot of people living closely together, land becomes more valuable, since there’s only so much of it over any given area. In the case of San Francisco, land is exceptionally valuable, since there’s a lot of wealth crammed into a relatively small area. The problem is that (in our current economic system) property owners—and the banks that finance property ownership—are allowed to privatize that land value. So when you have a lot of people living closely together, land values skyrocket; this value, however, then only flows into the hands of the few that own that land.

When financial institutions and property owners profit from land, they profit from the contributions of others.

As a matter of fact, San Francisco is not poor at all! Look how valuable its real estate is! Hundreds upon hundreds of millions of dollars live in the City—located right underneath the skyscrapers and the old Victorian mansions. Yet, that value is not shared: property owners claim those land values for themselves, even though human beings alone don’t make land valuable—land values are community-generated. Therefore, when financial institutions and property owners profit from land, they profit from the contributions of others.

In order to ultimately resolve San Francisco’s class warfare, the value of San Francisco land has to be shared with all San Franciscans. And for those who think I propose some strange concept that’s never been tried—let me remind you that land values are already partially being shared in far-flung places like Hong Kong and Taiwan, both of which have relatively strong economies (although Hong Kong has great wealth inequality for other reasons—some of which I’ve shared in my book Land: A New Paradigm for a Thriving World).

Imagine if all residents of San Francisco had an equal stake in San Francisco land! Gone would be the tensions, the class warfare, the attacks on Google buses.

Imagine if all residents of San Francisco had an equal stake in San Francisco land! Gone would be the tensions, the class warfare, the attacks on Google buses. Residents would welcome tech-employees, for they would make their land even more valuable—how exciting would that be! San Francisco could become an even greater hub of creativity, sustainability, and cutting-edge innovation as its community wealth would be shared with all the people that live in San Francisco. The possibilities for personal and social transformation in such an environment are nearly endless.

For more specific information on how to share the value of land, check out step #7 in my other article, “Undoing Gentrification in San Francisco”.

Going back to Martin Luther King, Jr: compassion understands that an edifice which produces beggars needs restructuring. Our present economic system produces beggars—no doubt about it. It therefore not only needs restructuring—it needs restructuring from the ground up.

For more information about how land reform can create meaningful work, restore our ecology, and bring more wealth into our local communities, I invite you to read my book Land: A New Paradigm for a Thriving World.

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Author, Economist

MARTIN ADAMS is a systems thinker and author. As a child, it pained him to see most people struggling while a few were living in opulence. This inspired in him a lifelong quest to co-create a fair and sustainable world in collaboration with others. As a graduate of a business school with ties to Wall Street, he opted not to pursue a career on Wall Street and chose instead to dedicate his life to community enrichment. Through his social enterprise work, he saw firsthand the extent to which the current economic system causes human and ecological strife. Consequently, Martin devoted himself to the development of a new economic paradigm that might allow humanity to thrive in harmony with nature. His book Land: A New Paradigm for a Thriving World is the fruit of his years of research into a part of this economic model; its message stands to educate policymakers and changemakers worldwide. Martin is technical director at Progress.org.