Musk Takeover Will Kill San Francisco Recovery
Way back in 2017 I wrote an article for the Daily Wire. In it I talked about the San Francisco budget. The bloated budget at that time was $10.1 billion. In the 2020-2021 fiscal cycle, the budget hit a high-water mark at $13.7 billion. While spending has continued relatively unabated, the money coming in to city coffers has come close to running dry. Even as the pandemic has waned, the recovery has been anemic.
As discussed in a previous article, without the federal government intervening and paying San Francisco’s bills, the City would have been deep in the red. The Covid money may have helped balance the books for now, but without a booming recovery to follow, the flow of red ink will come pouring back soon.
San Francisco’s largest industries are tourism and tech. Let’s face it, Covid killed tourism. When you add that to the daily barrage of videos showing the out of control crime on social media, tourists will not be flocking back to the City by the Bay in the near term.
Which leaves us with just tech. The City has hitched its wagon to big tech and all of its riches. As I wrote in the Daily Wire:
“For now, the city is getting away with this gross over-spending because of the tech industry. Tech money has poured in and San Francisco has given tax breaks to companies like Twitter to stay in the Market Street area and drive the revitalization…It will be very interesting to watch who is stuck holding the bag when the bubble bursts and reality comes back to the city finances. The tech bubble has been growing and growing for the past few years. The city has done a dramatic amount of construction and added many more housing units to attract the new techies getting paid very high salaries. “
Well the bubble is about to burst, just not in the way I thought it would. In the piece I laid out my prediction:
“However, as these large companies start to hit money troubles and the now-publicly traded companies need to shed costs, the obvious answer is to get rid of San Francisco real estate, San Francisco regulations, San Francisco taxes, and the extraordinarily high cost of living in the Bay Area. The City appears to not see this eventual reality and instead is spending like a kid in college with his first credit card.”
While that eventual reality is here, it’s not because of shareholders pushing to cut expensive real estate. Instead within the next few weeks, Twitter is set to become a private company owned by Tesla CEO Elon Musk. While it will no longer be publicly traded and beholden to shareholders, do you really think Musk will keep the Headquarters on Market Street?
I see in the very near future, a new Twitter Headquarters popping up somewhere near Austin, Texas. Where business regulations are low and the workers do not have to deal with state income tax.
As stated in the piece, why keep a huge red line item on your balance sheet, San Francisco real estate? Why deal with San Francisco’s insane progressive politics? Why let San Francisco voluminous regulations dig into company profits?
Anyone who owns a business or has had to get permits from the City can attest to the ridiculous red tape. San Francisco government and its business regulators seem to act a lot like Don Fanucci in The Godfather Part II, all just looking to get their beaks wet and get a taste. Why not dump all that?
San Francisco was worried about it’s recovery and people returning to offices before this. Now imagine when there’s no office there to go to. Instead there sits a large “For Lease +\- 1,000,000 sq ft.” Below that sit the newest homeless encampments filled with vagrants sending tweets from their “free” phones about their new digs. As one major tech player leaves, will more also decide they’ve had enough?
The City has built itself on tech, but they can all zoom to work and avoid the progressive nightmare that is downtown. What will the City do when no one comes back?