In August 1945, the US dropped two nuclear bombs on Hiroshima and Nagasaki, killing 150,000 people, mostly civilians. On September 2nd, Japan surrendered and World War II was over.
Nine months later, Donald Trump was born.
We all know that, as the son of a wealthy real estate developer, Trump was “born on third base and thought he hit a triple”. But you can also say that about his entire generation. When Trump’s fellow Baby Boomers began arriving in 1946, the US controlled half of all global industrial output, thanks largely to the destruction in Europe and Asia. This made it easy for folks to glide into middle-class life, particularly if you were white and benefitted from racist immigration laws, racial real estate covenants, redlining, and Jim Crow.
A year later, Hillary Clinton was born.
Donald and Hillary have more in common than just being wealthy New Yorkers. As white Baby Boomers, they are part of the most privileged cohort of humans in history.
Many Boomers came to UC Berkeley for college, where in-state tuition was free to attend the best public university in the world. Housing was abundant and cheap — Berkeley rent averaged $128/month, or $910/month in 2016 dollars, compared to $3,526 today. Students could fight for free speech and free love, thanks to free tuition and (nearly) free rent.
Many grads liked it here and decided to stick around. It was pretty easy to put down roots — the median Berkeley home price in 1970 was $26,300, or $186,960 in today’s dollars, compared to over $1 million now.
The contrast with Millennials is stark. Instead of free college, the next generation got $1.3 trillion in student debt. Instead of abundant housing, the next generation got a massive housing affordability crisis. Some current Cal students, particularly kids of immigrants and students of color, have to forego meals to pay rent.
In last month’s local election, Berkeley started passing the torch to a new, more diverse generation of Millennials, with Jesse Arreguín becoming mayor, and younger voices like Ben Bartlett joining the council. Given that there are now more Millennials than Baby Boomers in the US, Berkeley is again positioned to show the country a new path.
While the torch is being passed politically, Boomers still control the resource that matters most — money. In addition to the $11.6 trillion that the Boomers inherited from the WWII generation, California Boomers who bought homes when they were cheap have seen a second windfall: enormous unearned home equity from property values inflated by a constrained housing supply, combined with dirt cheap property taxes thanks to Proposition 13.
Certainly most liberal Berkeley homeowners oppose Prop. 13, which was a giant subsidy for property owners passed in 1978 by a lobbyist for the LA Apartment Owners Association, and has helped decimate public education in California. That opposition is nice and all, but we who are lucky enough to own a home still put that subsidy into our own pockets every time we pay property taxes.
While not all Baby Boomers have benefitted from these trends, many are sitting on unearned windfalls. A family in the Elmwood who bought in the early 1970s now has over $1 million in “bonus” home equity and over $10,000/year in Prop. 13 subsidies, while Millennials either pay full property taxes, or more typically can’t afford Berkeley at all.
In a city where we are committed to equity, the implication is clear: those who have benefitted the most have a moral obligation to help address our housing crisis, so the next generation can have some of the opportunities they did.
Thanks to Measure U1, Berkeley landlords will pay a share of their windfall profits from the housing crisis into the City’s Housing Trust Fund to create more subsidized housing. Now Berkeley’s homeowners should do the same. U1 is a good start, but not nearly enough given the severity of our housing crisis, and the cuts to affordable housing coming under Trump and the Republican congress.
There are many ways to accomplish this. For example, some countries in Europe tax the “imputed rent” that homeowners earn.
My suggestion: a “Pay It Forward” program where homeowners give back a portion of their Prop. 13 subsidies to the Housing Trust Fund, with low-income homeowners exempted. If state law says it can’t be a formal property tax, we could just send folks an invoice, and assume their progressive Berkeley values will compel them to do the right thing. Some back-of-the-envelope math indicates that well-off, long-time homeowners sharing a quarter of their subsidies could raise over $15 million annually for affordable housing – five times more than Measure U1. We can leverage that with county, state and federal dollars many times over to fuel a massive affordable housing renaissance in Berkeley, and demonstrate a model that could generate billions statewide.
It would be interesting to see if this would get support, particularly from Berkeleyans who are committed to addressing our housing crisis, but are uncomfortable with the strategy of funding affordable housing through market-rate development because of its impact on neighborhood character. With subsidized housing, the subsidy has to come from somewhere, and every option involves trade-offs. Let’s put our money where our values are.
One way or another, we’re all going to need to compromise and make sacrifices if we want a diverse Berkeley that all of our kids can afford to live in. And at a minimum, I’d ask our Berkeley Boomer friends: please stop suing to kill projects that make major investments in the Housing Trust Fund. My older daughter is a 6th grader at Willard, and on the way home from school the other day I mentioned how there are people in Berkeley who sue to stop new housing projects, even after they’ve been approved through an extensive public process. She said, “That sounds like Donald Trump.”
Smart kid with a bright future. Reminds me why I try to defer to the next generation whenever possible.
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