The original goal of this blog was to explore all aspects of making a larger house “green” or sustainable. I have spent more time lately debunking the mountain of lies promoted by Elon Musk in both solar and EV aspects of Tesla’s operations. Rather than convert those researches into posts, I’ll just copy those threads here for future readers.
International Energy Agency reluctantly admits wind and solar are a complete flop. They have been hijacked by extreme "greens". Next they will fudge numbers like NASA-GISS. Unreliables will "rust in place".https://t.co/WU4bnWbt1F
— Patrick Moore (@EcoSenseNow) November 23, 2018
More on solar and Tesla topics:
There have been a few solar roof tile installs and changes in the story from Tesla since the Aug 2018 post, so it’s time for an update.
Nothing changes the original post’s conclusion that the flashy Oct 2016 PR announcement of the tiles on the set of Desperate Housewives was a sham, announcing a nonexistent product designed to induce Tesla shareholders to vote to allow Tesla to take over Solar City, a publicly traded solar company nearing bankruptcy that Elon Musk and his family part-owned. This was fraud on the other shareholders of Tesla, and enabled Musk and his family to avoid $billions in losses and a blow to his image that might well have made it harder for Tesla and SpaceX to raise investor money.
The Desperate Housewives demo was years before any profitable installations could possibly have occurred (if ever.) The fine line between overoptimistic hype and fraud was definitely crossed, saving Musk and family billions in losses.
Tesla statements in quarterly letters to shareholders show the usual Tesla backing away from aggressive (fraudulent if done with foreknowledge) introduction promises. Keep in mind that Tesla took $1,000 deposits from thousands of homeowners for these tiles in 2016 and 2017 before quietly instructing sales reps to downplay the tiles.
When stories in major media questioned the solar roof tiles (for example, “Tesla made a big deal out of its Solar Roof in 2016, but two years later it has barely shipped any” at CNBC), Tesla rushed to produce stories designed to counter them.
This slickly-produced official Tesla video purports to show solar roof tile mass production in the Buffalo Gigafactory 2.
I don’t doubt that Tesla could continue to burn cash by installing hundreds of solar roofs to keep the hype alive for another year, but the “look inside the Buffalo Gigafactory” video shows they are being hand-produced at great cost.
This Twitter thread discusses the first two customer installs, and this thread covers the third — all three major Tesla fans and promoters, all in California. So unless you consider the possibility all three are fake, the tiles have been made to work on roofs. Longevity of the tiles as a roof is probably excellent, similar to ceramic tile, but the long-term functioning of the solar power system might be more of a problem, with complex interconnects and electronics permanently installed under hot roof tiles. Offering a warranty similar to the best conventional solar panels (25 years) might add to the losses to be expected from the product in mass use.
The installs are said to take two weeks or more, using a crew of four or more — which adds up to at least 300 hours at something like $20/hr, or $6,000 for roofing labor alone, while a normal tile roof might take half that. Tesla uses its own work crews and has said nothing about allowing any other roofing or solar company to buy and install the product.
Tesla *could* spend hundreds of millions getting up to speed and driving costs down, but a continuous flow of new investors are required to fund it. The company has cut back on capex as it tries to make it through a cash flow crisis, and the solar tile project is another promise Elon Musk made but is hoping we all forget.
Solar roof tiles are inherently more complicated than panels, the interconnects will be expensive and failure-prone, and the house designs are constrained to particular roof angles and orientations to efficiently capture the sun. The tiles are inherently less efficient than single-purpose panels and their cost can only be justified for aesthetics on traditionally-styled buildings.
But once the solar roof tile hype had served its purpose of getting approval to bail out Solar City, it took on a life of its own and had to be maintained as part of the Visionary Elon plan. Comic-book Tesla hype raised stock price and ability to spend more investor money.
The solar roof tiles are still featured on Tesla’s web site, and after a laughably simplistic savings calculation there is still an option to send Tesla a $1,000 deposit. I had assumed they weren’t still taking deposits, but Twitter user Justin (@Trumpery45) corrected me.
Tesla claimed Gigafactory 2 near Buffalo, NY, would be mass-producing the tiles and was involved in NY Governor Andrew Cuomo’s scandal-plagued development agency (the “Buffalo Billion” case) to bring more jobs and grow the economy of upstate NY. $750 million of subsidies from NY helped build and equip Gigafactory 2, but Tesla has lagged years on its commitments to employment levels and could be penalized $40 million a year if it fails to meet the goals. Current employment is about a quarter of the commitment and the effort is widely viewed as an embarrassing white elephant:
Although Tesla’s main patron, New York Governor Andrew Cuomo, a Democrat, easily won reelection, his opponents have pointed to the Gigafactory 2 deal as a sign of his coziness with moneyed interests. Raymond Walter, a Republican in the New York State Assembly who lost his own reelection bid, says he’s concerned the state has too many “eggs in the Tesla basket, which doesn’t seem like a very strong basket at this point.” When Walter toured the factory in March, he recalls, “it was mostly empty. I would say 10 percent to 15 percent of the floor was being utilized for production. It was not an impressive use of $750 million in taxpayer funds.”
…The company had spent years trying to develop a high-efficiency solar panel, called “Project Whitney,” with the aim of churning out 10,000 units per day in Buffalo by mid-2016, but it struggled to manufacture dozens per day in trial tests. In a 2016 incident, previously unreported, a panel installed on a pilot roof malfunctioned and started burning; crew members had to stamp it out with their feet to keep the panel from catching fire, according to two sources familiar with what happened. SolarCity eventually scrapped Project Whitney, though Tesla says it had nothing to do with the incident.
For months in 2017, the factory was mostly idle while teams in Fremont figured out what they wanted to build. Part of the challenge was that the $274 million in equipment the state had purchased for SolarCity was designed for a completely different product—conventional solar panels—and needed to be retooled for Tesla’s Solar Roof. Layouts and production processes for Buffalo changed constantly. “We didn’t even know if any of these tools were going to be viable,” says a former factory engineer. Tesla says the factory is now using the majority of the equipment originally purchased in 2014.
…Which means they only wasted/scrapped half (c. $137 million!) of the $274 million the state paid for equipment. Certainly a wise use of NY State tax dollars.
The Buffalo News has an update:
Tesla once again is backing away from its timetable to ramp up production of its new solar roof in Buffalo.
The electric vehicle maker, which has promised to bring 1,460 jobs to its South Park Avenue solar plant, said Wednesday that it now expects to ramp up production of the solar roof – expected to be Tesla’s main product in Buffalo – during 2019.
Just three months ago, Tesla predicted that solar roof production would increase significantly during the first half of this year, after failing to meet its previous timetable to ramp up solar roof production by the end of 2018.
In its fourth-quarter earnings announcement Wednesday, Tesla gave little indication that the solar roof – designed to look like conventional roofing shingles but with solar cells inside – is close to being ready for rapid deployment.
The company said it is installing solar roofs “at a slow pace” so the company can learn from design changes it made in the product, as well as gaining a better understanding of how to install the roof in bad weather.
The latest news story quotes anonymous Tesla employees and makes it clear the video above was a Potemkin demonstration for a product that’s not going anywhere:
Both Witherell and Dennis Scott, another worker laid off in January, said the lack of discipline was unfamiliar to them based off of other workplaces.
For example, both said that employees would watch movies on their cell phones while on the clock.
“We’re paid for 12 hours to work, not watch movies,” Scott said.
Witherell added: “During my employment there, nothing improved during the entire employment as far as production.”
“Some weeks we produced enough solar modules for zero homes and probably the best I saw was maybe four homes in a week, so that is alarmingly scary to obviously be a part of a company who doesn’t have any sense of urgency to tackle these issues and get them working correctly,” Witherell said.
Scott said his experiences there have him questioning the massive state investment that Gov. Cuomo made on behalf of taxpayers.
“That $750 million could have been spread out a lot better to a lot of other companies to stay here in Buffalo than sinking it into one big company,” Scott said.
Tesla can’t produce and install these tiles at any marketable price for years, if ever, but collected millions of dollars of deposits for them. If Tesla files for Ch. 11 bankruptcy, as it probably should at this point, those consumers — like all the others who made good-faith deposits for fantasy products from Tesla — will be at the end of a long line of unsecured creditors and will likely never be repaid.
In very hot climates like Palm Springs, where I live, the air circulation under conventional solar panels is necessary to keep the panels cool enough to stay efficient on hot, sunny days. But in cooler climates with good sun — for example, inland areas of the Pacific Northwest — an integral panel that blends into the roof can work well. Roofing producer GAF has a new product that is worth looking into.
But for most buildings where rooftop solar makes sense, it is far cheaper and more practical to install conventional panels on racks on a low-cost new roof. Even at Tesla’s announced-but-not-really-available prices for its solar roof tiles, you get more power production and a more maintainable system for half the cost by sticking to conventional roofing and panels.
More on solar and Tesla topics:
The previous post got thousands of views and Twitter comments, inspiring me to write a thread on the related topic of solar-Powerwall-Tesla car as an ideal of independence for green consumers. It’s compressed and minus the usual citations, but it explains why the dream Elon Musk is selling isn’t anywhere close to realization. The thread:
1) Experts also know $TSLA fantasy setup of solar/Powerwall/Tesla car doesn’t work without grid connection to net metering utility. The battery capacity is too low, it can’t supply surge startup for AC units and the like, and grid power down means no power for anything.
2) Special circuits supplying only a subset of the house’s critical appliances have to be installed to allow use while grid is down. Big AC units can’t be included. Cost for the gridless setup in the extra $10,000s as a retrofit.
3) Year-long net metering, required to make solar ROI reasonable in most locales, is a huge subsidy to wealthy rooftop solar owners and is rapidly disappearing as it impacts rates for poor people.
4) Electric utility rates are set by law to guarantee profit to the utility, so a subsidy to solar users raises the rates for everyone else. CA already generates so much solar electricity around noon in spring that the state has to pay other states to take some of it.
5) Rooftop solar can only be a small portion of generation without distorting management of the other forms of generation, turning them into peak-nighttime plants only and raising costs further.
6) Big battery storage installations can help a lot in special cases (islands, “over-solared” states like Germany) but cost far too much to compete with conventional or existing nuclear plants for base power needs.
7) Tesla’s fantasy world is at least decades away. Utility-scale solar farms are cheaper and more easily maintained. The public sentiment supporting home rooftop solar will melt away when people understand they are paying twice as much so others can escape paying for the grid.
8) Tesla’s only real success was the Model S, which caught the imagination of wealthy Silicon Valley types who wanted to show their virtue and have the shiny thing few people had. But that market is small and fickle.
9) As governments around the world discover they have subsidized and required alternative energy too much (every pol seemed to love raising the percentage required), those subsidies are being rolled back or removed. Deadly for Tesla car and solar sales. /end
Tesla and its impresario Elon Musk are in the news this week. One aspect of his hype machine, the ballyhooed solar roof tiles, looked suspect to most of us who follow solar developments when it was introduced. Like many of his supposedly visionary ideas, there was nothing new about it and others who have worked on it gave up because it was not yet practical or cost-effective. But when Elon is selling blue sky dreams to attract more investors, his PR machine can flood the media universe with hundreds of articles uncritically rewriting Tesla’s press releases before even one skeptic is interviewed.
The solar roof tile scam is one of many schemes Musk has employed to keep his hype machine going. The increasing frequency of new business ventures he’s promoted over the past few years are a sign of desperation; his narrative must keep expanding to bring in more cash to keep the Tesla dream alive. Everything from new models (long-haul semi trucks, a pickup truck…) to solar roof tiles and batteries to stabilize the grid. Each one of these ideas has merit, but the shotgun promotions came as the company lost $billions and is years behind schedule in getting Model 3’s out to customers who placed $1000 deposits on the promise of a $35K base model. There is no longer any prospect of a $35K base model, and no money to fund new GigaFactories hyped for China and Europe.
Today we’ll focus on the solar roof tiles and the NY GigaFactory to produce them.
The context of the fraud is Tesla’s takeover of his cousins’ failing business, Solar City, which was nearing bankruptcy when Elon swooped in to offer Tesla stock for it. The motivation was to avoid a failure in his family of businesses which might have damaged his reputation and hurt his much bigger bubble company, Tesla. Musk owns about 20% of Tesla shares and has borrowed against about half of that, so declines in TSLA stock price directly threaten his net worth; it is likely he used the proceeds of these loans to fund his other companies, notably SpaceX, the Boring Company (small-bore tunneling), and the Hyperloop efforts. A margin call that might result if his stock value declines enough to no longer cover the loan amounts would trigger large forced sales and a complete collapse of the stock price and his empire.
In order to induce the stockholders of Tesla to approve the purchase of Solar City, Musk emphasized its importance to Tesla’s long-term strategic plans of promoting solar as part of a mix including utility-scale batteries for load balancing and solar to replace fossil fuels and nuclear. This vision is premature since even in most favored areas for solar, solar plus battery for daily load balancing is impractically costly compared to gas-fired plants and a mixed strategy, and even that doesn’t address the yearly load balancing required.
The solar roof tile product was promoted to make buying Solar City seem a reasonable use of Tesla’s cash and equity. The fraudulent nature of the unveiling, presented as a product ready for customer deposits and installs, has been reported on but ignored amid the raft of glowing stories from credulous media. For example, this Fast Company story from 6-19-2017, “Inside “Steel Pulse,” The Project That Became Elon Musk’s Solar Roof”:
Tesla’s sleek new product helped clinch the company’s merger with SolarCity. We investigate its mysterious origin.
In late August 2016, Elon Musk went to check out the first iteration of his new “solar roof” product on a customer’s home. Musk has famously high product standards, but he needed this one in particular to be a stunner. The Tesla CEO was in the middle of pushing through a controversial, multi-billion-dollar acquisition of SolarCity, the company his cousins Lyndon and Peter Rive cofounded. This new offering would be key to selling Tesla and SolarCity shareholders on the merger. In fact, just weeks earlier, on an August 9 SolarCity earnings call, Musk hinted that a “beautiful” roof product would soon be unveiled, telling analysts that it would create a “huge market” for the combined companies. “What if we can offer you a roof that looks way better than a normal roof? That lasts far longer than a normal roof?” he teased. “Different ballgame.”
Yet internally at SolarCity, the solar roof product was far from what he would consider market-ready, let alone beautiful, according to nearly a dozen sources familiar with the project. In recent months, SolarCity had focused on developing a standing-seam metal roof with solar integration, code-named “Steel Pulse.” Whereas traditional solar panels are usually mounted on top of existing shingles, the basic goal of Steel Pulse was to make the roof itself solar powered, so it looked like a normal roof, yet generated electricity through embedded solar cells. Some employees felt Steel Pulse was unattractive, but the project’s leaders, including then-CTO Peter Rive, seemed keen on its aesthetics, and pushed ahead. The company found customers who were open to having the latest prototype installed on their Bay Area home, and when it was ready, Peter invited his cousin to see the metal solar roof in the wild.
Musk hated the implementation. According to two sources, after he arrived, he told Peter and other team members that they were wasting his time with this “piece of shit.” He demanded more “stunning” concepts and soon directed the team to pivot their focus toward a different style of solar roof—and fast. After all, Tesla and SolarCity shareholders would be voting soon on whether or not to approve the merger. Musk needed this new product to live up to the expectations he had set on the earnings call weeks ago.
…considering the timeline of Steel Pulse’s development with the SolarCity acquisition, some insiders have wondered if Musk sold shareholders on a product that didn’t exist. “It’s all about the narrative for Elon,” says a source close to Musk. “Solar Roof was as ‘real’ as anything he’s ever shown [off to the public]. Was it a finished product? By no means.”
The demo Musk introduced last October at a splashy presentation was a glass-tile solar roof, much different from the metal prototype he’d seen before. How did he pull off this transformation in just weeks? More to the point, who executed the idea and when? Leaders at Tesla and SolarCity, including Lyndon and Peter Rive, gave a variety of different answers on the timeline of its origin and development. At first, the companies said Solar Roof was a Tesla product, and then, later, a SolarCity product. Public statements are similarly contradictory. Some involved with the product’s development suggest that the mixed messages are a result of the combined companies’ wish not to appear as if they rushed out the glass-tile prototype in order to be able announce a high-profile product before the shareholder vote on the acquisition, which some critics viewed as Tesla bailing out SolarCity.
[Musk rejects a standing-seam metal solar roof developed by Solar City and demands a replacement that looks like conventional roofing tiles]
…Somehow, over the next few months, teams at SolarCity, Tesla, and 3M (which makes solar films that can be used for solar glass tiles) managed to put together a glass-tile solar roof demo, which Musk unveiled on October 28 at an event at Universal Studios’ back lot in Los Angeles, on an old residential set used in Desperate Housewives. Shortly before sunset, Musk appeared onstage in front of a crowd of several hundred to make his big reveal. “The houses you see around you are all solar houses. Did you notice?” he said, gesturing toward the homes with a grin. They appeared to have regular shingled rooftops, but Musk said they’d actually been retrofitted with a new product called the Solar Roof, a potentially transformative system that’s nearly indistinguishable from a traditional rooftop—and one, he promised, that lasts longer and costs less, all while generating electricity. “Why would you buy anything else?” he said. The crowd cheered.
Some people aware of Steel Pulse’s development at SolarCity were shocked by what Musk revealed. “Where the hell did that come from?” says one source, describing a common sentiment among certain teams at the time. Considering how different it looked from the standing-seam metal roof prototype, many sources concluded the demo was simply not real–it was merely vaporware. (As one jokes, “There’s a reason that they announced the idea on a fake block in a fake neighborhood with fake houses!”) A well-connected source explains, “Basically, from August to October, it was more about getting the thing to look right, and then from October until now, it’s really about getting the thing to work. This is just how Tesla does things. Their first car demo [for the Model S] was held together by magnets.”
…the company does acknowledge that the demos Musk unveiled at Universal Studios were not functional. …No matter how the Solar Roof came to be, it seems to have worked: Three weeks after Musk’s presentation, 85% of shareholders approved the Tesla-SolarCity merger.
The slick promotional material featured “photos” of a modern house with glossy solar roof tiles and a Tesla car in the garage — in a vision of a completely solar-powered yet stylish way of life for those wealthy and virtuous enough to choose it.
The photo above has now been traced back to its source, a slightly-modified model of a modern house licensed and augmented with the Tesla features. There was no such house, and it seems unlikely any will be built anytime soon. The rendering is based on a Mascord software model modified and re-rendered; I assume Tesla licensed the model from Mascord, but I recognized the photo from its common use in Portland to market new homes. In other words, it was slapped together on short notice to market what didn’t exist.
[The Mascord “Norcutt” house plan is pretty — see the source here.]
User “Justin” on Twitter found an ad for replan/rerender on some service like Fiverr, and commented: “Wow they bought the CAD file flipped, added some height to the entrance, and re-rendered it.”
So we now know Tesla’s solar roof tiles aren’t going to be going out to people who placed deposits on them this year, if ever, with a total of 12 installs (apparently 11 to Tesla execs.) The one install in public view took a large crew two weeks and the customer was charged about twice the cost of a standard solar setup. Tesla lost much more than that. The NY Gigafactory for producing them is mostly idle, and owes the state $100s of millions in penalties if it doesn’t employ 1500 people by deadline. The 8-7-2018 Reuters story, “Inside Tesla’s troubled New York solar factory”:
…Repeated hold-ups since the Buffalo, New York plant opened last year have forced Tesla’s partner in the joint venture, Panasonic, to seek other buyers for the components it had built to sell to Tesla, according to a Panasonic employee, a former Panasonic employee and a former Tesla employee. The issues have also rattled the faith of state officials in Tesla’s ability to deliver on investment and employment promises it made in exchange for $750 million in state subsidies.
The production challenges add to doubts over Tesla’s cash-strapped solar operations as it focuses on boosting production of its better-known electric vehicles, which have also seen repeated production delays. Tesla acquired the solar business in 2016 in a controversial $2.6 billion purchase of SolarCity – a sales and installation company founded by two of Musk’s cousins – but the business has been shrinking ever since.
…In a call with Tesla investors last week, Musk said “hundreds” of homes already had solar roofs, but the company clarified the estimate in its statement to Reuters, saying it included systems that had been partially installed or were “being scheduled for install.”
In California, the nation’s leading solar market, there were twelve Tesla roof systems connected to the grid as of May 31, all in Northern California, according to records from the state’s three investor-owned utilities. The cost per watt for those systems was listed at nearly $6, according to the records. That’s about double the national average for solar systems. [Ed. note: and the cost to Tesla of that install, which required a large crew working for two weeks, is likely many times what the customer was officially charged — see below.]
Tesla began accepting $1,000 deposits from customers for the Solar Roofs in May 2017, seven months after it unveiled a prototype.
Tesla confirmed in a statement to Reuters that it has been seeking to improve on its production process for the solar roof at the New York plant. “We are steadily ramping up Solar Roof production in Buffalo and are also continuing to iterate on the product design and production process,” the company said in the statement. “We plan to ramp production more toward the end of 2018.”
…Some New York state lawmakers worry Tesla may fail to hold up its end of the bargain. The state provided $350 million to build the factory, along with $274.7 million for equipment and $125.3 million “for additional specified scope costs,” according to a Tesla filing with the Securities and Exchange Commission.
The subsidy package requires Tesla to employ 1,460 people in Buffalo, including 500 at the plant, within two years of the facility’s completion, and to spend $5 billion in the state over a decade.
Empire State Development, the state’s economic development arm, is overseeing the agreement. The agency believes Tesla is currently meeting its obligations, said spokeswoman Pamm Lent, adding that the company would face penalties of $41.2 million a year if it falters.
Republican New York state Assemblyman Ray Walter, who represents a district near the factory, said it concerned him that only a small portion of the plant appeared functional when he toured it in March. “After investing $750 million of taxpayer money, we want it to work out,” he said. “It just does not look like it’s heading down that path.”
Tesla said in its statement that the facility now employs about 600 people and is on track to meet all of its commitments. None of the Tesla sources could provide a production figure for the solar roof, saying only that output was low and frequently interrupted. They said only the textured black version of the solar roof had been produced so far, one of four varieties Tesla is marketing.
EQUIPMENT IN BOXES
Panasonic recently produced about 1,900 conventional 325-watt solar panels per day at the plant, meant to be sold under the Tesla brand, and about 2,000 5.5-watt photovoltaic cells per day that were intended for the solar roof, according to two Panasonic sources, one who recently left the company.
That would put annualized production at about a quarter of Tesla’s target for the plant, which is 1 gigawatt per year by 2019. And Tesla isn’t buying most of the cells being produced, according to the Panasonic employee. … For now, wooden crates filled with unused equipment are sitting around the factory, according to the Panasonic employee and three other employees with knowledge of the plant operations. Some of that equipment has become obsolete over the past couple of years as technology has changed, two of the workers said.
One of the few customers that has taken delivery of the Solar Roof is Tri Huynh, 39, who works in business development in Silicon Valley. Huynh said he paid about $100,000 for the system, which included three Tesla Powerwall home batteries to store the power produced. It took two weeks and a dozen workers to install, compared to a day for most traditional panel systems. “It’s fantastic. I love it,” he said, adding he was saving hundreds of dollars a month in power costs. “I’m a tech guy, so I kind of wanted the latest technology.”
Warren Jason, a retired technology entrepreneur who is building an 11,000-square-foot house in the Hollywood Hills, is not so pleased. He put down $1,000 to reserve a roof in early 2017 but it has not yet arrived, and he has been unable to get details to give to his architect and engineers. “We’ve been begging Tesla for information,” he said. “It’s been extremely frustrating.”
The solar roof tiles were a fraud, part of a scheme to defraud the market and Tesla shareholders by inducing them to commit resources to a dying company run by Elon’s family and friends. Musk is in big trouble now as the SEC examines his more recent Twitter claim of an offer to take the company private at $420 a share, but that has also focused attention on the smaller-scale frauds he has used to keep a narrative of constant innovation and disruptive products growing. As people who know the market areas for each of his supposed innovations compare notes, they are just starting to realize they all knew he was a fraud in the area they understood, but so long as he was apparently successful at promoting the dream no one had a reason to look more deeply at all the claimed new products. But now they do.
In coming days and weeks, the truth of his claims will come out. And it may signal the top of the most recent tech bubble which has tech giants’ stock prices inflated beyond reason. Most of these are real growth businesses that can actually make a profit without needing massive new cash infusions, but their stocks have been inflated by the prevailing atmosphere of easy credit and a steadily rising market. Being reminded to check sources and listen to contrary voices by a high-profile failure like Tesla’s can change sentiment for the whole market.
Further reading: The Story of Solar City’s Takeover.
Mike Shellenberger is a maverick environmentalist and activist who ran for the Democratic nomination for governor of California. He stirred up some good conversation by his willingness to address the myths coastal Californians cling to to avoid recognizing their votes have gradually strangled the rest of the state and led to a crisis of high cost and low availability of housing for younger and poorer people.
This is the story about a real-world “Elysium” — a state which has the highest levels of poverty & inequality in the country but whose residents have convinced themselves that they are behaving ethically, protecting the environment, and fighting racism. California seems to be a progressive paradise, but it is number one in poverty and inequality in America. How can this be? And how does California maintain its reputation as a progressive leader…
Everyone believes California is our most progressive state. And why not? It imposes the highest tax on the richest one percent. It is aggressively implementing Obamacare. And it is standing up to President Donald Trump on everything from immigration to the environment. And yet the Golden State is also number one in poverty & inequality. How can this be? Around the world, progressive nations like Sweden and France, which redistribute wealth through high taxes and generous social welfare policies, boast of less inequality than other nations.
What gives? And how does California maintain its reputation as a progressive leader given the reality on the ground? To answer those questions, let’s take a closer look at what might be considered a present-day Elysium. In the 2013 science fiction film “Elysium,” the rich have fled to a luxury satellite orbiting Earth while the poor toil in dangerous conditions below. Life in California today differs in degree, not in kind, from that dystopian vision.
Homeless encampments with hundreds of people have cropped up in the last two years. Occasionally, they are ravaged by hepatitis A, which in 2017 killed 20 people. In Silicon Valley, 132 people died — up from 85. In San Diego, 117 people died, up from 56. Last year, San Diego city workers nearly killed a homeless person after accidentally throwing her and the tent she was sleeping in into the back of garbage truck. She escaped just seconds before being crushed by the trash compactor.
Meanwhile, inside comfortable homes perched atop Berkeley and Beverly Hills, affluent progressives condemn the cruelty of the Trump administration toward the poor. It’s true that workers in California earn 11 percent more than their counterparts nationally. But that amount is not enough to make up for mortgage payments and rents that are 44 percent and 37 percent higher (respectively) than the national average. Where 56 percent of Californians could afford a middle-class home in 2012, in the third quarter of 2017, just 28 percent could.
This matters. Homeownership has been the traditional route for the working class to join the middle-class, notes Chapman University demographer Joel Kotkin, who has been ringing the alarm about the crisis for years. One fact says it all: homeowners have a net worth that is whopping 36 to 45 times higher than that of renters.
California’s elected officials make serious-sounding pronouncements about the problem but back them up with only symbolic actions. Last September, Gov. Jerry Brown signed housing legislation that will raise $250 million per year to subsidize housing. But that’s just enough to subsidize 1,824 units annually at a time when 100,000 to 200,000 new units are needed.
Is the problem too few progressive policies — or too many?
A political machine based on an alliance between the ultra-rich and the powerless must be fueled by hypocrisy. By feigning great concern for the poor and homeless while quietly strangling new housing and industrial development via downzoning and environmental lawfare, the neo-feudal lords of California have preserved their comfortable life in the wealthy coastal cities and gated communities while driving out the middle class. The black population of San Francisco has fallen from 13.4% in the 1970 census to less than 6% in 2010. Wealthy communities make the construction of modest homes and apartments for poor people illegal but rely on service workers who pack rented homes two to a bedroom or commute long distances from poor towns.
Starting in the 1970s, housing prices began to rise dramatically as new housing was restricted by anti-growth policies, couched in terms of preserving the environment but really designed to pull up the drawbridge to preserve a privileged lifestyle for those who had already bought houses. Because motivations had to be disguised as environmental concerns to appear less selfish, communities contrived to keep water supplies limited and opposed new roads and transit. The propaganda took hold and is now so entrenched that “all right-thinking people” accept that no new supplies of fresh water should be built, new highways only allow more sprawl, and even local roads should have European “traffic calming” design applied, removing traffic lanes and parking. Meanwhile, the state government is wasting billions on a boondoggle high-speed rail project, aka “train to nowhere.” The fantasy of renewable energy and mass transit for everyone is coming into conflict with the development of driverless car services, which may strand those expensive transit investments in the next few decades. The political machine continues to promote higher energy costs for suburban and interior populations and has demonstrated it cannot build new infrastructure at a reasonable cost or on time, but its control over the state is unchallenged.
A few green shoots of rebellion, like Shellenberger’s candidacy, are no threat so far — he received a bare 0.5% of the primary vote. Yet discontent is rising, and nearly half the Bay Area residents polled recently said they’d like to move away. For the well-off in booming industries, the wonderful coastal climate and groomed upper-class population of wealthier enclaves continue to make life sweet. Street crime, poverty, and homelessness are creeping into even some of the most favored areas, though, and the election of Donald Trump as president shattered the technocratic fantasy of rule by the “best people” like themselves.
Some good reading on how this fantasy of environmental and social justice grew to enable the wealthiest to keep control of the state and most local governments while actively harming lower and middle classes:
Good book by MIT Prof. B.J. Frieden, who saw the syndrome’s beginnings in 1979 after only a few years of antigrowth “I’ve Got Mine, Jack” policies in the richest suburbs, notably Marin County:
Abstract: A powerful, ideologically driven crusade to keep the average citizen from homeownership and the good life in the suburbs is exposed as a warning signal to environmentalists, whose concerns may backfire, and to homebuilders and the general public in other parts of the country where projects for urban growth may soon run up against the protectionist’s blockade. Frieden asserts that the connections between housing and serious environmental issues such as pollution, use of toxic substances, nuclear-testing hazards, and the conservation of natural resources are few and minor. The attack on home-building does not follow from the central concerns of the Sierra Club and other environmental groups, he feels, but stretches the environmental agenda to phony issues designed to keep the average citizen from using the land, while preserving the social and fiscal advantages of the influential few. He documents environmental controversies that have already discouraged large, planned-unit developments with community open space, driven up the cost of housing, and promoted a return to the 1950s-style building practices of expensive freestanding single-family homes, each on its own lot in small, exclusive developments at the urban fringe.
A more recent treatment, “The Rise of the Homevoters: How the Growth Machine Was Subverted by OPEC and Earth Day,” by William A. Fischel, 2017:
In the 1970s, unprecedented peacetime inflation, touched off by the oil cartel OPEC, combined with long-standing federal tax privileges to transform owner-occupied homes into growth stocks in the eyes of their owners. The inability to insure their homes’ newfound value converted homeowners into “homevoters,” whose local political behavior focused on preventing development that might hinder the rise in their home values. Homevoters seized on the nascent national environmental movement, epitomized by Earth Day, and modified its agenda to serve local demands. The coalition of homeowners and environmentalists thereby eroded the power of the pro-development coalition called the “growth machine,” which had formerly moderated zoning. As this chapter shows, these changes in the meaning of homeownership and in the political behavior of homeowners explain why local zoning has become so restrictive.
In hindsight, a state government with foresight might have headed off this slow-motion disaster by preventing local governments from acting against the larger interests of the state and the future citizens who might have chosen to live there had a good supply of housing been available. Curbing the use of environmental lawsuits and zoning to stop or delay new housing and continuing investment in infrastructure projects like highways and water supplies would have led to a larger population in more desirable coastal areas with lower housing prices and rents, and a healthier growth economy not deprived of middle-class labor. The only people not better off under that scenario are the already-wealthy whose spacious estates in Atherton and Beverly Hills are in effect subsidized at the expense of lesser citizens.
A watered-down bill to address the problem recently died in the legislature. It would have lifted some height and density limits statewide in areas served by transit. Without a groundswell of voter support, nothing will be done.
Rubin Report interview of Mike Shellenberg:
If you’ve been shopping for houses or apartments online in recent years, you may have run into 3D virtual walkthroughs — these are software models of interior spaces you can “walk” through by clicking on a computer screen, or by wearing VR glasses (still not widely available.) After initially clumsy and low-res beginnings, these have now become quite useful, allowing you to see finishes, traffic flow, and even appliance labels far more than is possible in the 30-40 photos now standard for high-end house listings. This makes it more practical for overseas and remote buyers to consider buying a house without ever having seen it in person.
The VR model is created using a specialized camera setup. The photographer places the camera tripod at eye level in representative spots throughout the space, and software stitches the resulting high-res 360-degree photos together into a virtual model of the interior.
A big gallery of diverse Matterport-recorded spaces is here.
[Originally published June 5, 2016, at JebKinnison.com.]
When I went to work at BBN Labs (a DARPA research shop, like a B-grade Xerox PARC or Bell Labs) in 1984 as a freshly-minted MIT graduate, my office was small and barren, with a desk, a VT-100 terminal, and a classic Mac. But it was still the age of the private office, and I’m thankful I never had to deal with the cubicle, or worse, the bullpen of today — I would never have been able to program with the noise and distractions.
The engineer next door had a leather couch and an oriental rug in his office, and art and geeky knick-knacks on shelves all around. Sometime during the first week, the headhunter / HR contractor who had recruited me stopped by. “Don’t get too comfortable. I mean, don’t spend a lot of time decorating.”
I didn’t know quite what he was getting at — interpreting it as philosophical advice, or perhaps practical because he had just seen the overdecorated office next door. Everything changes and ends, so best be prepared to move on as soon as you think you’ve arrived at your destination? Always have your bug-out bag packed and ready? But later I realized he meant he knew the Labs were splitting, with the part I was working for to be spun off to commercialize the BBN Butterfly multiprocessor. And in a few months we were in a new building next door, so decorating my office would have been a waste of time.
And so it is with houses. Last year we bought a large ten-year-old house for retirement. But this has me thinking of what the headhunter told me — and why I’ve spent so much time moving and fixing up places, hoping this time it would be Just Right….
By the time I started work at BBN I had been a landlord for five years, looking after a turn-of-the-century mansion that had been split up into four units during the Depression. It was my first venture into real estate investment — a grand three-story house on College Avenue between Tufts University and Davis Square, Somerville. I knew the Red Line subway extension would be coming to Davis Square, and at $70K the building was a good bet. I imagined doing all sorts of renovation, but while we lived in the ground floor apartment and I did do a lot of small upgrades for energy conservation and the like, I was too young and distracted to do anything major like finish the enormous attic into another glorious apartment as I had intended. And knowing what I know now, I realize I would have been stymied by the NIMBYs nearby anyway….
We had friends gutting and renovating houses in (crime-ridden, cheap) San Francisco (which is no longer cheap.) One time we were staying at their house while they had stripped their own bathroom down to the studs — which meant using a fully-exposed toilet. “Pretend there’s still a wall there.” The things we did when we were young and hungry…
I was getting into microcomputers and compilers and AI, which is how I ended up at BBN doing multiprocessor LISP for the SCI (Strategic Computing Initiative), which was supposed to be a government-funded response to the Japanese AI scare. Neither country cracked the problem, then both pulled the funding plug when no practical results happened — lots of money and effort went down the drain. This drying up of interest and collapse in AI research starting around 1986 is now called The AI Winter… which also crashed my next employer, Symbolics, when the beancounters decided to direct all researchers to buy Sun machines with Lisp compilers instead.
So because I had an absorbing job, I lost interest in the house projects, and it seemed like a good idea to free myself to move around by selling it. We got $350K for it; since we had borrowed all but $14K downpayment, that meant a profit of over $250K on a $15K investment, by the wonders of leverage and good luck. And the rents had largely paid for our own house expenses along the way, as rent controls ended, interest rates dropped, the subway opened, and investment started to flow back into the neighborhood, which today is highly desirable — Zillow thinks the building is worth $1.8 million now, 25x what we paid in 1978. Those conditions are unlikely to ever be repeated.
I entered a PhD program in computer science at Northeastern studying things like denotational semantics with Mitch Wand. A year of that was enough, and I moved to Vancouver to get away from the various unpleasantnesses of that era — escaping to a tiny apartment in a highrise tower in the West End.
I bought a big piece of land on Bowen Island and spent the next five years subdividing it, attacked by the Islands Trust and the antidevelopment faction on the island — which as it turned out, is retirement home to many Canadian bureaucrats. You really haven’t lived until people at a public meeting gang up to attack you as “an American developer.” The photo is of the first house being built in my subdivision, not by me — I never built my own house there, since I realized I wasn’t wanted.
I fought them to a draw and got out alive, though just barely. I ended up in California, where I picked up a new partner and bought an Eichler in Sunnyvale (photo above). That was my first real success at renovation — we updated the kitchen and baths, much of it “just enough” updating — for example, the 1969 bathrooms just needed new drop-in sinks and faucets to seem fresh, so I could do a lot of the work myself. We paid the dangerously-high sum of $600K for the house in 2000 and sold it for $1.2 million in 2007. Now Zillow claims it’s worth $1.7, showing how inflated values are in Silicon Valley….
We eventually ended up in the city of San Francisco itself, renting the top floor unit of a new building on upper Market Street. The developer built the largest building he could legally, and what he thought would sell — two condos in a five-story building, with the garage and entries in the middle floor.
The builder/developer made a few mistakes. First mistake: badly judging the market, which collapsed as he was finishing the project in 2008. Second mistake: the steel-framed center of the building didn’t settle, but the back end did, leaving our living room with an inch-high bulge running across the floor. Third mistake: the slate-tiled roof deck, planned hot tub and the garden box, which he never finished installing (but did fill with dirt.) The roof deck leaked. And leaked. And leaked — he rebuilt parts of it several times, while areas inside the house were soaked and had to be replaced. While it would be grand to sit in one’s rooftop hot tub watching the city lights and sipping Chardonnay, the reality never quite justified the trouble.
Meanwhile, the green marble countertops in the kitchen were probably chosen as a selling point — luxury! Green! Marble! But were horrible, since the slightest hint of acid — a lime, champagne, anything — etched the marble in ugly gray spots and rings. Despite our precautions, parts of it looked terrible in less than a year, and the owner had to bring in a refinisher to redo it and seal it again.
One last view from the Market Street place. The effect of the views eventually wore off, and we were left with the high rent, the leaks, the cold wind and fog that made the roof deck less than pleasant most of the time, and the steep walk up and down the hill to the gym.
Finally, we bought a big place in far south canyon Palm Springs. It came decorated in a sort of post-modern Beetlejuice style, not quite our taste but well-done. At over 6,000 sq. ft. it was a lot more house than we needed, but we were thinking one of our parents (or both?) might end up living with us, and of course we wanted room for guests. Neither of those really happened, so half the house was generally closed off.
The place had three dishwashers, three refrigerators, four water heaters, and six AC units. I replaced most of the ceiling lights with LED units, and since the AC bills were in the hundreds (and could easily have been in the thousands!), I looked into two-stage evaporative cooling.
Here you see one of the evaporative coolers being craned to the roof, where it was installed near the existing HVAC unit to share ducting. The concept of evaporative cooling takes advantage of the cooling effect of evaporation; the desert air is usually very dry, and under the right conditions evaporation can drive a surface down to near freezing temperature (the dew point is the theoretical limit, and that is often very cold — as I write it is 94 degrees outside, but the dew point is 37 degrees F.)
Normal evaporative coolers just run outside air over wet materials to cool and add moisture before sending it into the house. A two-stage cooler uses that effect to cool water, then expels the first stage air outside. The cold water is then sent to the next stage to chill outside air which is further cooled by running it over moist materials, but since the air is already cooled it gets a bit cooler and does not pick up so much moisture. The result is cool, clean, slightly moist air, perfect for a home in the desert. Running both units, we were able to cool the parts of the house we used most down to comfortable levels using less than 20% of the power used for AC, since all that was needed was a few showers a day worth of water and two big fans.
Unfortunately this super-advanced cooler was made by a pioneering company, and I soon had arrows in my back. No one knew how to install it, so I had to design the ducts myself. The computer control program would occasionally glitch, requiring a system reboot — cut the power and restart. When it was running, the air was much nicer than what you get from AC, but you had to understand how to open doors and windows just so to balance the system — air was being blown in cool and had to escape, so choice of open windows to distribute the coolth was an art.
It was no great strain for me to run it, but when our plans changed again and I was left alone in the house, it made no sense to keep the house for several more years. We put it up for sale. No one understood the coolers, since unlike solar panels virtually no one has ever seen one — the cheaper one-stage coolers, known as “swamp coolers” locally, have a reputation for being high-maintenance and the choice of people too poor to afford real AC. So that was no help at all in marketing the house, and I doubt the new owner ever used the instructions I left for him.
While waiting for that to sell, I put a deposit down on a unit to be built at The Morrison, a trendy modern development of detached houses on tiny lots, each with a small pool. One of the few developments that kept selling through the recession, and now a model for many copycat developments in Palm Springs. Above is a view of the construction site from our partly-furnished new house.
So again we had to move and set up a new place — change all the lighting to LED, buy new furniture, decorate. It always seems to be me that has the time and opportunity, so I do it. And years pass, and other things I could be focusing on don’t get done….
“Don’t get too comfortable. Don’t spend a lot of effort decorating,” as my HR guy told me long ago. Unless that’s what you want to do — specialization allows most of us to concentrate on what we’re best at, while farming out other tasks to people who specialize in those. When taxes are very high, there’s a big cost to hiring someone else to do something — you paid taxes on your income, and the people you hire pay taxes on what you pay them, and so on — which is why most of us try to do a lot of the work ourselves to save money. If I pay someone $1,000 to paint, I have to earn $1500-2000 more to make up for that expense. So I do the painting. And I get distracted, and do a worse job.
You can waste a lot of your life buying and selling houses, decorating and moving. I admire people who can stay in one spot for fifty years, happy with what they have — that’s not really me. We’ve moved one more time, and this time is the last! [He said, knowing it’s not true.]