The value of appreciated stocks (or other assets) still represents purchasing power, either through piecemeal sales as needed to match spending, or via asset-backed loans ("buy, borrow, die") to avoid sales entirely. This increased purchasing power drives up demand for (and therefore prices of) goods and services generally in the region.

I have the same issue as OP.

Piecemeal sales aren't affected by the total amount though? If I'm a billionaire vs a 100 Billionaire, I'm still taking out the same amounts to live and buy yachts.

Also, as far as I can tell, it's not these 9 Billionaires hoovering up housing in the valley either. They all utmost have 2-3 properties, most of the rest of the market remains unaffected by this inequality.

In this local context, Citizens United is irrelevant too, most of the state MP's and local council members are not funded by the Billionaires and do not need to kowtow to their policy preferences.

So how exactly is inequality driving the cost of living?

EDIT: I do wish someone would actually answer this question. Everytime I bring this up I get yelling (or downvotes) in response. I agree Citizens United has really change how Billionaires are able to affect federal elections, but in these corner cases like "Silicon Valley", how does inequality affect the cost of living? This is a sincere question.

Agreed, the cost of housing is the primary driver of every other increased cost in the Bay Area except for the cost of gas.

High rent means high wages, which means high costs for business, which means high prices for consumers...

States like Texas keep housing low, which means lower wages for workers and lower prices for consumers, but I don't want us to artificially impoverish people in order to achieve the goal of "affordability."

Instead we have to lower rent without lowering income as much. This would cause an explosion in average spending power and therefore a much stronger middle class.

Great right? Yes it would be, except for the landlords, real estate investors, and middle aged homeowners who will do anything and hurt almost anyone to keep the value of their properties artificially inflated to preposterous levels. Unfortunately, those are the people in charge in most cities.

Here is one explanation.

https://youtube.com/watch?v=BTlUyS-T-_4

is there a tl;dw? Based on a quick skim of the transcript it seems to be "pandemic stimulus/quantatative easing went to rich people and they bought houses with it", which seems to demonstrate a massive misunderstanding of how quantitative easing works, and ignores how housing prices crept up pre-pandemic, before any money printing happened.

It's not a great video. It's basically outrage bait for people who don't understand economics, by someone who also doesn't understand economics but uses words that sound like an economist uses them.

It’s basically Piketty’s thesis. His argument isn’t about QE directly, but wealth inequality.

Rich people have much more money than they need to live and therefore must spend their money on assets and other such things to avoid depreciation. They don’t just buy a massive house to live in, they buy properties, which drives up house prices and rent. They also finance mortgages, which enable poorer people to afford more expensive properties by putting themselves in more debt to the rich.

Extreme wealth of a few therefore has a direct impact on the price of essentials for those with less money.

QE isn’t directly responsible for house prices increasing, but the pandemic measures effectively transferred a vast amount of wealth to companies, shareholders and banks, rapidly making inequality worse.

He claims that the most equal time in British history - with the most affordable housing - was post-war 20thC, pre ‘80s neoliberalism and prices of assets have been creeping up since.

They have a disproportionate amount of influence on public policy. That leads to diverse systemic problems in society, so yes, this impacts low income workers and the overall cost of living in a city, state and country.

> Is this just a result of a strong market since most of their “wealth” is in stocks

No. This isn’t the result of The Market happening more to nine households than everybody else. That isn’t a thing that happens

Here is the source and I’m still not sure

https://www.sjsu.edu/hri/docs/SVPI%202025%20Annual%20Report%...

Yikes. I get they're trying to push an anti-inequality agenda, but some of the statistics are only tenuously related to inequality. For instance:

>0 Number of student wellness centers in the San José Unified School District that opened in 2024, despite the growing mental health crisis in youth

>0 Number of Narcan kits stocked at San José Unified School District schools, making SJUSD the only major Bay Area school district that does not stock Narcan or train staff to administer Narcan in case of a fentanyl overdose.

What's the implication supposed to be? That if it weren't for AI tech bros, there would be student wellness centers and narcan kits?

The implication is that if there were less wealth inequality, those with less current wealth would have more things, yes.

Things that are currently underfunded could, with the availability of more funds, be less underfunded.

Obviously it's not just the nine billionaires that are "the problem", but inequality in general.

>The implication is that if there were less wealth inequality, those with less wealth would have more things, yes.

Is it really a funding issue? The same quote mentions that other bay area school districts were somehow able to afford narcan kits.

it's that those 9 billionaires are a very small, tractable problem

That’s backwards from my approach to economics

A high gini coefficient isn’t because of someone accumulating more wealth than everyone else, its because of low velocity of money movements in the economy

Fixing the speed of money movements solves the other problems and results in more people having wealth, or access to services. Note that its not completely arbitrary money movements, its into goods and services and investments. This has to be more attractive than passively holding money and assets, which is what most risk-averse people’s entire plan is.

It's obviously focused more on the agenda. They start out by saying they are inspired by the Katrina pain index--and I do have some food and shelter attributes.

However, it seems like a lot of what they worry about is the victimhood from being envious.

A lot of the compensation is in stocks, sure, but a lot of compensation is also, well, in compensation. HN users have been posting -- for years -- about salaries and cash (or cash equivalent) bonuses for starting level software engineering positions at some companies exceeding $250K annually. The salary inflation in Silicon Valley's tech fields has far outpaced both general inflation and wage increases of non-tech workers in the area, so even if you're seeing San Jose Panda Express locations paying $20/hr, it's just not closing or even maintaining the gap. (And we're setting aside how many of those sorts of positions aren't actually full-time.)

For full disclosure, when I was working in Silicon Valley as a tech writer a few years ago, I was making over $200K in salary and bonuses, no stock options. Now I'm working remotely in Florida, contracting with a "managed services" company who's placed me with a much bigger tech company (one you've definitely heard of) which uses this structure to keep salaries down, and I'm making $35/hr -- and the company only pays for benefits in the most technical sense, e.g., I can buy health insurance with pre-tax money but they don't contribute any of it, there's a 401(k) but it effectively has no corporate matching, I get 10 days of PTO a year, etc.).

Asset value is driven by confiscated labor. Every stock someone who doesn't work owns is stock the person who actually created its value could own, but instead it was confiscated. That confiscation is enforced at gunpoint by the world's most powerful and violent regime that will make an example out of anyone who tries to adjust the order to be a little more fair.

> but how is stock-based wealth taking away from lower income workers?

Workers could have some/more of that stock. Nearly all workers own precisely zero share of the companies they work for, despite what this tech-oriented crowd might imagine. So when a company does well and the ownership's wealth surges, the worker bees only benefit down the line if they're able to successfully lobby for a raise. Though that doesn't always work, since the factors that drive up stock values often involve things like laying off expensive workers, cutting benefits and freezing pay. Huzzah.

So it's not exactly "taking away" anything, it's more that the entire system is stacked to ensure the workers don't have anything to take away to begin with.

The ultra rich have, effectively, left the economy. They forgo taxable income and get what amounts to interest free loans, backed on their non-income benefits, from other rich folk, then spend that to accumulate "real" assets like property.

The result is that their imaginary, untaxed, "unrealized" money is effectively realized at an opportunity cost of normal people still participating in the schmuck economy.

It's more complicated than that, of course, and it's not exactly "free money" - the house of cards could crumble - but that's the skinny of how it works.

This is why there's so much talk of taxing unrealized gains (as one example). They're trying to remove the game and force the wealthy back into the normal economy.

Stocks have changed from the prior concept of stocks. Stock buybacks used to be illegal stock manipulation. Lifestyles didn't used to be financed via loans using stock as collateral. Companies used to be managed for the long term and dividends not this quarter's impact on stock value.

The rich initiated the changes but keep going 'what who me? They're just stocks' like it's 1940 when the public calls them out for it.