Antiochus
Member
It's somewhat amusing that with all the attention paid to Wall Street and traditional corporate CEOs, not much outrage has been paid to those absconding in Silicon Valley.
A most cogent summation and analysis. Nothing particularly new but it weaves all the well known evidence together in a compelling package. What is particularly notable is that the Silicon Valley Bubble could arguably be responsible for not only the Income Inequality issue of the past two decades, but also the Housing Bubble of the 00's as well.
http://www.newgeography.com/content...fwdus-and-silicon-valley-s-shady-1-percenters
A most cogent summation and analysis. Nothing particularly new but it weaves all the well known evidence together in a compelling package. What is particularly notable is that the Silicon Valley Bubble could arguably be responsible for not only the Income Inequality issue of the past two decades, but also the Housing Bubble of the 00's as well.
http://www.newgeography.com/content...fwdus-and-silicon-valley-s-shady-1-percenters
When Steve Jobs died in October 2011, crowds of mourners gathered outside of Apple stores, leaving impromptu memorials to the fallen businessman. Many in Occupy Wall Street, then in full bloom, stopped to mourn the .001 percenter worth $7 billion, who didnt believe in charity and whose company had more cash in hand than the U.S. Treasury while doing everything in its power to avoid paying taxes.
A new, and potentially dominant, ruling class is rising. Todays tech moguls dont employ many Americans, they dont pay very much in taxes or tend to share much of their wealth, and they live in a separate world that few of us could ever hope to enter. But while spending millions bending the political process to pad their bottom lines, theyve remained far more popular than past plutocrats, with 72 percent of Americans expressing positive feelings for the industry, compared to 30 percent for banking and 20 percent for oil and gas.
Perversely, the small number of jobsmostly clustered in Silicon Valleycreated by tech companies has helped its moguls avoid public scrutiny. Google employs 50,000, Facebook 4,600, and Twitter less than 1,000 domestic workers. In contrast, GM employs 200,000, Ford 164,000, and Exxon over 100,000. Put another way, Google, with a market cap of $215 billion, is about five times larger than GM yet has just one fourth as many workers.
This is an equation that defines inequality: more and more wealth concentrated in fewer hands and benefiting fewer workers.
While Facebook and Twitter have little role in the material economy, Apple, which continues to collect the bulk of its profit from physical goodscomputers, iPads, iPhones and so onhas outsourced nearly all of its manufacturing to foreign companies like Foxconn that employ workers, often in appalling conditions, in China and elsewhere. About 700,000 people work on Apples physical products for subcontractors, according to the New York Times, but almost none of them are in the U.S. The jobs arent coming back, Jobs bluntly told President Obama at a 2011 dinner in Silicon Valley.
Not so much anti-union as post-union, the tech elite has avoided issues with labor by having so few laborers who could be organized. Andrew Carnegie and Henry Ford exploited workers in Pittsburgh and Detroit, and had to deal with the political consequences; the risks are much less if the exploited are in Chengdu and Guangzhou.
"There doesn't seem to be a role" for unions in this new economy, explained Internet entrepreneur and venture capitalist Marc Andreessen, because people are "marketing themselves and their skills. He didnt mention what people without skills in demand at tech companies might do.
But Americans with those skills shouldnt rest easy, either. These same companies are always looking to cut down their domestic labor costs. Mark Zuckerberg, in particular, is pouring money into a new advocacy group, Fwd.us, with a board consisting of big-name Valley luminaries, to push comprehensive immigration reform (read: letting Facebook bring in a cheaper labor force). In a remarkably cynical move, Fwd.us has separate left- and right-leaning subgroups to prod politicians across the political spectrum to sign on to the bill that would pad the companys bottom line.
Ostensibly, the increase in visas for high-skilled computer workers is a needed response to the critical shortage of such workers herea notion that has been repeatedly dismissed, including in a recent report from the Obama-aligned Economic Policy Institute, which found that the country is producing 50 percent more IT professionals each year than are being employed in the field. The real appeal of the H1B visas for guest workerswho already take between a third and half of all new IT jobs in the Statesis that they are usually paid less than their pricy American counterparts, and are less likely to jump ship since they need to remain employed to stay in the country. Facebooks lobbyists, reports the Washington Post, have pressed lawmakers to remove a requirement from the bill that companies make a good faith effort to hire Americans first.
Even as market caps rise, the number of Americans collecting any cut of that new wealth has scarcely moved. Since 2008, while IPOs have generated hundreds of billions of dollars of paper worth, Silicon Valley added just 30,000 new techrelated jobsleaving the region with 40,000 fewer jobs than in 2001, when decades of rapid job growth came to an end.
The good jobs that are being created are also heavily clustered in one region, the west side of the San Francisco peninsulaa distinct and geographically constrained zone of privilege. The area boasts both formidable technical talent and, more important still, roughly one third of the nations venture funds along with the worlds most sophisticated network of tech-savvy investment banks, publicists, and attorneys.
But little of the Valleys wealth reaches surrounding communities. Just across the bridge to the East Bay are high crime rates and an economy thats lost about 60,000 jobs since 2001 with few signs of recovery. Inland, in the central Valley, double-digit unemployment is the norm and local governments are cutting police and other core services and even trying to declare bankruptcy.
We live in a bubble, and I dont mean a tech bubble or a valuation bubble. I mean a bubble as in our own little world, Googles Schmidt boasted to the San Francisco Chroniclein 2011. And what a world it is. Companies cant hire people fast enough. Young people can work hard and make a fortune. Homes hold their value. Occupy Wall Street isnt really something that comes up in a daily discussion, because their issues are not our daily reality.
Inside the bubble zone, centered around the bucolic university town of Palo Alto, employees at firms like Facebook and Google enjoy gourmet meals, child-care services, even complimentary house-cleaning. With all these largely male, well-paid geeks around, theres even a burgeoning sex industry, with rates upwards of $500 an hour.
Those at top of the tech elite live very well, occupying some of the most expensive and attractive real estate in the country. They travel in style: Google maintains a fleet of private jets at San Jose airport, making enough of a racket to become a nuisance to their working-class neighbors. They have even proposed an $85 million flight center, called Blue City Holdings, to manage airplanes belonging to Googles founders, Larry Page and Sergey Brin, and its executive chairman, Eric Schmidt. Like the Russian oligarchs, currently making a run on Tuscanys castles and resorts, the Valley elite have embraced conspicuous consumption, albeit dressed up in California casual. In San Francisco, San Mateo, and Santa Clara counties combined, luxury vehicles accounted for nearly 21 percent of new car registrations from April 2011 to March 2012, more than twice the national average. Home prices in places like Palo Alto and the fashionable precincts of San Francisco go for well over a millionand routinely trigger all-cash bidding wars.
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Despite this vast wealth, and their newfound interest in lobbying Washington, the tech firms are notorious for paying as little as possible to the taxman. Facebook paid no taxes last year, while making a profit of over $1 billion. Apple, a pioneer in tactics to avoid taxes,has kept much of its cash hoard abroad, out of reach of Uncle Sam. Microsoft has staved off nearly $7 billion in tax payments since 2009 by using loopholes to shift profits offshore, according to a recent Senate panel report.
And now, these 1 percenterswho invested heavily in Obamaare looking to help shape the public good in Washington and, as with Fwd.us, what theyre selling as good for us all is what aligns with their interests.
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Expect more of this kind of hubris from the new oligarchs. Some cities, ranging from Seattle, where Amazon is leading the charge, to Las Vegas and even Detroit now are counting on tech giants to expand or restore their damaged central cores.
But if those oligarchs do come, they will have little interest in retaining or expanding blue-collar jobs in construction or manufacturing, which they see as passé; the housing they build and even the public amenities they invest in will be for their own employees and other members of the creative class. The best the masses can hope for are jobs cutting hair, mowing grass, and painting the toenails of the oligarchs and their favored minions. You wont see much emphasis, either, on basic skills training and community colleges, which are critical to auto manufacturers, oil refiners, and other older businesses and can provide opportunity for upward mobility for middle- and working-class youth.
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Perhaps an even bigger danger stems from the ability of the sovereigns of cyberspace to collect and market our most intimate details. Moving beyond the construction of platforms for communication, the oligarchs trade on the value of the personal information of the individuals using their technology, with little regard for social expectations about privacy, or even laws meant to protect it. Google has already been caught bypassing Apples privacy controls on phones and computers, and handing the data over to advertisers. The Huffington Post has constructed a long list of the firms privacy violations. Apple is being hauled in front of the courts for its own alleged violations while Consumer Reports recently detailed Facebooks pervasive privacy breachesculling information from users as detailed as health conditions, details an insurer could use against you, when one is going out of town (convenient for burglars), as well as information pertaining to everything from sexual orientation to religious affiliation to ethnic identity.
As Googles Eric Schmidt put it: "We know where you are. We know where you've been. We can more or less know what you're thinking about."
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Green is an easy sell in the Valley. If California electricity is too unreliable or expensive, firms will just shift their power-consuming server farms to places with cheap electricity, such as the Pacific Northwest or the Great Plains. Middle-class employees who, in part due to green smart growth policies, can no longer afford to live remotely close to Palo Alto or in San Francisco, can be shifted either abroad or to more affordable locales such as Salt Lake City, Phoenix, or Austin, Texas. Meanwhile, with supply restricted, the prices on houses owned by the oligarchs and their favored employees continue to rise into the stratosphere.
What we have then is something at once familiar and new: the rise of a new ruling class, arrogant and self-assured, with a growing interest in shaping how we are governed and how we live. Former oligarchs controlled railway freight, energy prices, agricultural markets, and other vital resources to the detriment of other sectors of the economy, individuals, and families. Only grassroots opposition stopped, or at least limited, their depredations.
But todays new autocrats seek not only market control but the right to sell access to our most private details, and employ that technology to elect candidates who will do their bidding. Their claque in the media may allow them to market their ascendency as progressive and even liberating, but the new world being ushered into existence by the new oligarchs promises to be neither of those things.
