Ask HN: Why is Silicon Valley almost broke?

https://news.ycombinator.com/item?id=5535561

by jmilinion • 13 years ago

8 14 13 years ago

news.ycombinator.com

No, not the companies in Silicon Valley but the region itself. I'm reading articles about how CalTrain almost ran out of money, how VTA is underfunded, and articles upon articles about how the region can't build any new public projects anymore.

What's going on over there?

retroafroman• 13 years ago

Large companies[1] and well to do citizens[2] often pay shockingly low tax rates.

[1] http://www.nerdwallet.com/blog/investing/2012/corporate-taxe... [2]http://www.nytimes.com/2011/08/15/opinion/stop-coddling-the-...

ScottWhigham2• 13 years ago

Downvoted for agenda-driven comments that focus only on generalization and speculation.

andyl• 13 years ago

no more public projects? lol someone needs to open their eyes - its non-stop construction around here.

kapitalx• 13 years ago

There are lots of private construction projects going on because of the massive recent boom in real estate in the valley.

caycep• 13 years ago

my understanding is the CA govt has been dysfunctional for a while especially with budgetary matters. I am not an expert in the details but I have heard it's hard to get anything past gridlock in the CA state legislature.

andrewhillman• 13 years ago

It's all of California not just SV. It's a complete economic mess. They need to overhaul the CA government and make severe changes.

ScottWhigham2• 13 years ago

I found myself wondering, "Is OP a US citizen? I doubt it b/c every US citizen knows how foo-bar'ed the CA government is."

Here's a fairly politically-leaning article about how they "lost" almost $1b in tax revenue (projected):

http://www.washingtontimes.com/blog/inside-politics/2012/dec...

“November’s disappointing revenues stand in stark contrast to recent news that California is leading the nation in job growth, has significantly improved its cash liquidity to pay bills, and even long-distressed home values are starting to inch upward,” Mr. Chiang said in a statement. “This serves as a sobering reminder that, while the economy is expanding, it is doing so at a slow and uneven pace that will require the state to exercise care and discipline in how its fiscal affairs are managed in the coming year.”

mathattack2• 13 years ago

For many large projects, it is very hard to separate Silicon Valley the region from the state as a whole. The state is highly dependent on realized capital gains from real estate (hasn't happened in a while) and tech equities (modest, but slower since the Facebook IPO). The cost side has many fixed components, so the state is nearly bankrupt, taking the region with it.

jmilinion3• 13 years ago

Do you think this will this have an effect on the technology companies there in the long run if things keep going the way they are?

mathattack2• 13 years ago

Not really. The rest of the country is in bad shape too, and there is too much personal concentration there. Where would it go? Singapore? Still very expensive there. New York? Also expensive. Austin? Perhaps...

BillSaysThis2• 13 years ago

Note: I've lived in the Valley since 1996.

One thing most people don't factor in is that everything is more expensive here and that to attract workers to skilled but not professional jobs the salaries are higher than elsewhere. My wife is a staffer (not a lawyer or in a position requiring certification) at a well-known law firm and I'd bet her salary is 40-60% higher than if the office were in, say, Portland or Austin.

And real estate, to put supporting buildings like train stations and repair yards, is similarly more expensive.

We do have some real doozies planning projects. For giggles look at the so-called high speed rail project being 'built' to link San Diego to San Francisco, with a price tag that has gone from $30 billion to north of $100 BILLION before a shovel's even gone in the ground. But only if you have an hour or so to roll around on the floor laughing.

On the plus side, Jerry Brown seems to have actually done some practical good since coming back into the governor's office. He's been very pragmatic and considering how much he's had to struggle against legislators, bureaucrats, unions and other entrenched interests, I think Brown has been the most effective governor CA's had since I got here in '96.

jmilinion3• 13 years ago

Silicon Valley is known for having some very smart people solving very complex problems. Do you think there was any way for them to have limited the damage from California over the years?

BillSaysThis2• 13 years ago

Sadly because of gerrymandering and pandering to interest groups, SV hasn't had nearly the influence it might. Also, remember that Cali's issues have been building since the mid-'60s or so and the Valley has only been a significant force for maybe the past decade.

Ask HN: Why is Silicon Valley almost broke?

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