Richard Florida wrote this op-ed in today’s New York Times on the “significant economic division between conservative ‘red states’ and liberal ‘blue states.'” Maybe he’ll do something similar for Canada or even B.C. (as has for Toronto) since he’s director of the Martin Prosperity Institute at the Rotman School of Management, University of Toronto.
But until then, here’s an experiment: Let’s just substitute “Metro Vancouver” and “RBC” (Rest of B.C.) for blue and red in the American context and see if that fits, particularly in the context of the Transportation Referendum.
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(Metro Vancouver), whose economy turns on finance, trade and knowledge, (is) generally richer than (RBC). But (RBC has) done a better job over all of offering a higher standard of living relative to housing costs. … economies based on energy extraction, agriculture and suburban sprawl may have lower wages, higher poverty rates and lower levels of education on average … but their residents also benefit from much lower costs of living. For a middle-class person , the dream of a big house with a backyard and a couple of cars is much more achievable in (RBC) than in (Metro Vancouver). …
For (Metro) urbanites who toil in low-paying retail, food preparation and service jobs, for the journeyman tradespeople who once formed the heart of the middle class, for teachers, civil servants, students and young families, the dream of homeownership — or even an affordable rental apartment — is increasingly out of reach. Adding insult to injury, rapid gentrification in these larger knowledge hubs brings the constant threat of displacement of creative workers ….
Inequality has grown fastest over the past three decades in (Metro Vancouver) … (But Metro) economies are also extremely expensive to operate. Their innovative edge turns on a high-cost infrastructure of research universities and knowledge institutions — a portion of which demand public subsidy. Their size and density require expensive subway and transit systems to move people around. …
And yet for all that, they are pioneering the new economic order that will determine our future — one that turns on innovation and knowledge rather than the raw production of goods.
Despite their longstanding divisions, red and blue economies depend crucially on one another. … in our increasingly competitive global economy, long-term prosperity turns on knowledge, education and innovation. The idea that (RBC) can enjoy the benefits provided by (Metro Vancouver) without helping to pay for them is … irresponsible and destructive of our … future as it is hypocritical. …
As long as the highly gerrymandered (RBC) can keep on delivering the economic goods to their voters, concerted … action on transportation, infrastructure, sustainability, education … will remain out of reach. These are investments that the future prosperity … requires.
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Interesting article. What it does not mention is that we had excessive immigration to Vancouver area, primarily from Asia but also from Alberta or other parts of the world without corresponding payment of additional taxes, specifically for healthcare, education usually funded through income taxes, PST and property taxes. Property taxes are far too low in Vancouver and as such it is rational behavior for a rich immigrant, without a real job here, to buy the biggest house possible as there is no taxes on a gain and low property taxes. They rather sacrifice on consumption, except a car while drawing free healthcare and free or heavily subsidized schooling for their (often non-English speaking) kids.
Our tax system needs changing to reflect this new reality !
==> Rich immigrants pay far too little in taxes here in MetroVan !
Our income taxes are too high, and many rich immigrant do not work here, do not pay enough income taxes here or create income abroad, not taxed in Canada. As such we need to lower income taxes and increase property taxes, and especially land transfer taxes by 1% per $1M to 15% like in the UK. A rich immigrant buying 4 houses in Point Grey, W-Van, Richmond or UEL, then tearing them down and building 4 new ones pays next to no taxes. if the land transfer taxes were say 10% for a $10M home, now routinely done in these 4 areas, Vancouver and BC would actually monetize this economic activity so we had enough cash for public transit, homelessness, education or healthcare.
Of course our vote buying left-leaning mayors like Gregor Robertson rather poopoo businesses by taxing them 4-5 times the amount a residential condo would pay, plus all sorts of other obstacles to create real high paying jobs in Vancouver. No wonder Surrey or Richmond creates more jobs and we see a steady stream of cars driving into downtown from Richmond at 5 pm rather than the other way around
I do not see why a PST increase in RBC would help here. The core issue in Metrovan is that property taxes, and land transfer taxes, especially for non-residents, but also for the affluent immigrants are far FAR too low compared to the US, Alberta, Asia or UK !
[Disclaimer: I am an immigrant too, and I welcome immigration, but not the excessive immigration of late with little integration & very poor language skills and almost no taxation paid, and offloading of costs such as schooling, housing, roads, public transit or healthcare onto locals !!]
A bit of a stretch to say the cost of living is higher when people can easy get by without the cost of owning and operating automobiles.
In fact, that is one of the main reasons why housing is more expensive in the city. People have more money to spend on housing when they don’t spend as much on driving and they are very willing to spend more so they are not forced to drive.
In the States it is becoming common to measure affordability by the cost of transportation and housing. When people spend 45% or less on transportation and housing that is considered affordable. We really need to do the same here or the city will always look less affordable than it really is.
Richard Florida loses credibility by the month. Here is a critiques by a friend:
Laurence Aurbach
Jan 4 (1 day ago)
to PRO-URB
That is a very confused and muddled essay. It can’t seem to make a coherent step from one paragraph to the next. It’s a series of unconnected factoids that individually are not new — and not well supported either. Who knows what point Florida is trying to make when it finally stumbles to a finish.
Most of the argument about a better standard of living in red states is based on housing affordability. Florida says, “For a middle-class person , the American dream of a big house with a backyard and a couple of cars is much more achievable in low-tax Arizona than in deep-blue Massachusetts.”
Thanks to the outstanding work on affordability by Scott Bernstein and CNT, it is fairly easy to compare different regions.
In Phoenix the average household spends 53 percent of income on housing and transportation. In Boston the average household spends 47 percent of income on housing and transportation. Advantage Boston.
How about the working class? (Defined as a worker earning 50 percent of the region’s median income.) In Phoenix a worker spends 71 percent of income on housing and transportation. In Boston a worker spends 63 percent of income on housing and transportation. Advantage Boston.
How about housing types? In Phoenix 22 percent of housing is apartments. In Boston 34 percent is apartments. Not identical, but close. For the big-house buyers, advantage Phoenix.
How about smaller cities? In Springfield MA the average household spends 52 percent of income on housing and transportation. In Tucson AZ the average household spends 56 percent of income. In Springfield MA a worker spends 71 percent of income on housing and transportation. In Tucson AZ a worker spends 75 percent of income.
In short, the basis of Florida’s argument is weak when transportation costs are included.
What about food cost that are usually higher in cities too due to the fact that the rent the supermarket has to pay is far higher in the city than in the burbs, the wages are higher and shipment costs to get food on the store is higher too ?
Also, a car is used not only to get to work. Transportation cost are also for life style ie weekend trips or visiting friends or the movies. A necessity in North-America except in downs of a few select cities ( such as New York, Boston, Toronto and Vancouver). For the other 95% of population not having a car is inconvenient.