Why Silicon Valley is not the second coming of the Gilded Age(medium.com)
medium.com
Why Silicon Valley is not the second coming of the Gilded Age
https://medium.com/the-peer-society/410c644cebe4
147 comments
The fundamental error of this piece is that it assumes that if you vote Democratic, you're by definition not a one-percenter.
What? Much of the article is devoted to making the opposite point: that the SV elite overwhelmingly support the Democrats.
What? Much of the article is devoted to making the opposite point: that the SV elite overwhelmingly support the Democrats.
That was my point -- whether SV's elite support the Democrats or the Republicans is kind of irrelevant to the question. Both parties have been captured by economic elites. These elites have some issues they disagree on, but lots of issues they mostly agree on, and the ones they agree on are the ones that impact the highly wealthy. Where there is consensus, it is the consensus of the elite, for the elite.
In other words -- Jamie Dimon is a Democrat. Robert Rubin is a Democrat. Larry Summers is a Democrat. These are the voices that shape Democratic economic policy, and they are not exactly a group of fiery progressives. They are the evidence of how narrow the difference between the parties is on the issues that the 1% care most about. The issues the parties fight over are by definition issues that guys like these just don't care about. If they cared about them, they would drag the parties kicking and screaming to a consensus just like they have on economic policy.
This is no different than how it was in the first Gilded Age; most of the most notorious political figures from that era were Republicans -- James G. Blaine (http://en.wikipedia.org/wiki/James_G._Blaine) and Roscoe Conkling (http://en.wikipedia.org/wiki/Roscoe_Conkling) come to mind -- but there were plenty of Democrats too, like Boss Tweed (http://en.wikipedia.org/wiki/Boss_Tweed). And all leaders in both parties overwhelmingly hewed to an ideology that business interests were more important than any others.
In other words -- Jamie Dimon is a Democrat. Robert Rubin is a Democrat. Larry Summers is a Democrat. These are the voices that shape Democratic economic policy, and they are not exactly a group of fiery progressives. They are the evidence of how narrow the difference between the parties is on the issues that the 1% care most about. The issues the parties fight over are by definition issues that guys like these just don't care about. If they cared about them, they would drag the parties kicking and screaming to a consensus just like they have on economic policy.
This is no different than how it was in the first Gilded Age; most of the most notorious political figures from that era were Republicans -- James G. Blaine (http://en.wikipedia.org/wiki/James_G._Blaine) and Roscoe Conkling (http://en.wikipedia.org/wiki/Roscoe_Conkling) come to mind -- but there were plenty of Democrats too, like Boss Tweed (http://en.wikipedia.org/wiki/Boss_Tweed). And all leaders in both parties overwhelmingly hewed to an ideology that business interests were more important than any others.
Political affiliation seems like a red herring in a two party system. It wouldn't surprise me if people in SV vote democrat because they don't like certain things associated with the republicans (religion , anti-gay rights, guns , whatever) rather than agreeing wholesale with the democratic party manifesto.
In a straw poll at work some years ago we found that a hypothetic economically liberal, and socially liberal party would handily trounce both Democrats and Republicans. I wouldn't be surprised if the same holds fairly broadly among people in IT.
As the old joke goes, "I can't vote Democratic because I want to be able to spend my money, and I can't vote Republican because of what I want to spend my money on!"
As the old joke goes, "I can't vote Democratic because I want to be able to spend my money, and I can't vote Republican because of what I want to spend my money on!"
By economic liberal do you mean left wing? Economic liberalism usually refers to right wing economic policies.
I meant the usual thing.
Right wing economic policies. Left wing social policies.
So relatively low taxes, less bureaucracy, balance the budget, etc. But also gay marriage, equal rights for a variety of groups, and science based environmental policies.
Right wing economic policies. Left wing social policies.
So relatively low taxes, less bureaucracy, balance the budget, etc. But also gay marriage, equal rights for a variety of groups, and science based environmental policies.
Totally agree that such a party would be great.
Does left wing social policy include e.g. universal welfare, health care and access to education though? Or are you thinking mainly of "liberal" rather than "left wing"?
Part of the problem is that left wing social policies cost money and have to be administered, conflicting with low taxes and less bureaucracy.... :(
Does left wing social policy include e.g. universal welfare, health care and access to education though? Or are you thinking mainly of "liberal" rather than "left wing"?
Part of the problem is that left wing social policies cost money and have to be administered, conflicting with low taxes and less bureaucracy.... :(
You hit the nail on the head. Reality wouldn't let you do all of that without compromises, and we didn't agree where the compromises should be. But that wouldn't stop a politician from promising all of the above. :-)
That said, we did find broad agreement on many things that are completely off the political map in the USA. For example we could reduce the size of our military, liberalize drugs, get rid of the DEA, and reduce prison populations. All of that saves money. We also agreed that none of us actually expect Social Security to still exist when we need it, and so we'd prefer it replaced in the long run by something out of the hands of the politicians. Something along the lines of Australia's Superannuation would make sense. (But it wouldn't be fair to do it like Bush suggested - where it is privatized but with cutoffs that massively reduce what people can expect to get.)
Absolutely none of that is in the public discourse. But it would have been more popular in that office than anything being offered by the political parties.
In other conversations we also agreed that in general it is better to make rules simple and clear with the right incentives, rather than trying to add rules and counter rules that are guaranteed to give perverse incentives and a field day for lobbyists. For example we have laws mandating fuel efficiency standards, with complex exceptions saying that different types of vehicles get different treatment. I can't say anything about the net result other than that I'm sure that it lets politicians say that they solved the problem, while giving established Detroit companies some benefit. (The most obvious candidate for a benefit is that the regulatory mess is a barrier to entry for competitors.) But if you simply tax carbon fuels steeply enough, then incentives will be right. And then if you redistribute those taxes back to people in direct payments, then people can afford the taxes, and are left pushed to choose efficient vehicles for economic reasons.
That said, we did find broad agreement on many things that are completely off the political map in the USA. For example we could reduce the size of our military, liberalize drugs, get rid of the DEA, and reduce prison populations. All of that saves money. We also agreed that none of us actually expect Social Security to still exist when we need it, and so we'd prefer it replaced in the long run by something out of the hands of the politicians. Something along the lines of Australia's Superannuation would make sense. (But it wouldn't be fair to do it like Bush suggested - where it is privatized but with cutoffs that massively reduce what people can expect to get.)
Absolutely none of that is in the public discourse. But it would have been more popular in that office than anything being offered by the political parties.
In other conversations we also agreed that in general it is better to make rules simple and clear with the right incentives, rather than trying to add rules and counter rules that are guaranteed to give perverse incentives and a field day for lobbyists. For example we have laws mandating fuel efficiency standards, with complex exceptions saying that different types of vehicles get different treatment. I can't say anything about the net result other than that I'm sure that it lets politicians say that they solved the problem, while giving established Detroit companies some benefit. (The most obvious candidate for a benefit is that the regulatory mess is a barrier to entry for competitors.) But if you simply tax carbon fuels steeply enough, then incentives will be right. And then if you redistribute those taxes back to people in direct payments, then people can afford the taxes, and are left pushed to choose efficient vehicles for economic reasons.
I don't think that tbilly said that it would be great, just that it would cruise to an easy victory amongst startup types.
That's what used to be called liberal, before that label got re-used.
You just enumerated a significant portion of the de facto Republican agenda. Also, as 2004 demonstrated, voters normally vote for what they like instead of against what they dislike.
Um. One data point does not a "normal" make.
ok fair enough. Here are a few other data points. The same holds true for 1980, 1992, 1996, 2008, and 2012.
1984: http://books.google.com/books?id=phQo8JYcjw8C&pg=PA62...
1988: http://www.time.com/time/magazine/article/0,9171,147885,00.h...
2000: http://archives.cnn.com/2000/ALLPOLITICS/stories/10/18/flash...
2004: http://usatoday30.usatoday.com/news/politicselections/nation...
1984: http://books.google.com/books?id=phQo8JYcjw8C&pg=PA62...
1988: http://www.time.com/time/magazine/article/0,9171,147885,00.h...
2000: http://archives.cnn.com/2000/ALLPOLITICS/stories/10/18/flash...
2004: http://usatoday30.usatoday.com/news/politicselections/nation...
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Not to mention that there's a line of reasoning for 1%ers to support the democratic party's centrist economic policies in the name of self-interest -- richer consumers to buy stuff means more sales for those selling it, better infrastructure is good for business, etc.
Some might disagree with that reasoning but it's really missing the mark to consider rich democrats as some sort of 'self hating rich' or 'culture voters ignoring economic policy'.
Some might disagree with that reasoning but it's really missing the mark to consider rich democrats as some sort of 'self hating rich' or 'culture voters ignoring economic policy'.
Or even that the Democratic party isn't a creature of finance. Since Wall Street has largely captured both parties, a plutocrat can vote on social issues without worrying overmuch about their pocketbook.
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The fundamental error of the New Yorker piece would seem to be as described.
The fundamental thing that this piece fails to discuss is that just because you support the Democrats doesn't mean that you're a stereotypical liberal Democrat.
The fundamental thing that this piece fails to discuss is that just because you support the Democrats doesn't mean that you're a stereotypical liberal Democrat.
> But they're all billionaires, so issues that don't affect billionaires personally... just don't get included in the debate.
I recently came across this fascinating statistical study[1] of U.S. Senators responsiveness to the political positions of their constituents, which found that both Republicans and (to a slightly lesser extent) Democrats were overwhelmingly responsive to the positions of the wealthiest 1/3 of their constituents, and entirely unresponsive to the positions of the lowest 1/3. Well worth a read.
[1] http://www.princeton.edu/~bartels/economic.pdf
I recently came across this fascinating statistical study[1] of U.S. Senators responsiveness to the political positions of their constituents, which found that both Republicans and (to a slightly lesser extent) Democrats were overwhelmingly responsive to the positions of the wealthiest 1/3 of their constituents, and entirely unresponsive to the positions of the lowest 1/3. Well worth a read.
[1] http://www.princeton.edu/~bartels/economic.pdf
Can the lower 1/3 be expected engage on the political front when they are a bit preoccupied with finding the income to pay rent and put food on the table? Perhaps pursuing austerity policies on government programs that increase income to the lower 1/3 helps check the revolution. Case in point, the Republicans -supposedly mortally opposed to taxes - did nothing to prevent the payroll tax increase at the end of 2012 from taking effect. An overwhelmingly regressive tax.
The fundamental error of this piece is that it assumes that if you vote Democratic, you're by definition not an engineer. (not really, but to me it makes as much sense as your statement)
How does being a part of the evil "one percent" make you any less qualified to have or hold a variety of political views? If anything, I've found that having more money makes me more aware of issues like unemployment, health care, etc because many of my friends and family are not as well off, and now I'm in a position where I feel obligated to do something about it.
Overall, I find the whole left/right political divide to be frustratingly counter-productive. Both sides are wrong, and we waste much time and energy arguing about which side is more wrong.
How does being a part of the evil "one percent" make you any less qualified to have or hold a variety of political views? If anything, I've found that having more money makes me more aware of issues like unemployment, health care, etc because many of my friends and family are not as well off, and now I'm in a position where I feel obligated to do something about it.
Overall, I find the whole left/right political divide to be frustratingly counter-productive. Both sides are wrong, and we waste much time and energy arguing about which side is more wrong.
Well feel better - there is no right/left divide in America. By the standards of anywhere else there is only very right / slightly less right.
The greatest trick the Devil ever pulled off was convincing Americans that anyone to the left of Attila the Hun was a Communist...
What I find odd is that the article equates libertarianism with Rand and the Koch brothers, as if no other type exists. There's also a hint of conflating liberalism and libertarianism.
The greatest trick the Devil ever pulled off was convincing Americans that anyone to the left of Attila the Hun was a Communist...
What I find odd is that the article equates libertarianism with Rand and the Koch brothers, as if no other type exists. There's also a hint of conflating liberalism and libertarianism.
Libertarianism is basically a fundamentalist version of liberalism. It's essentially "liberalism has gotten too complicated and the complexity is producing errors; here are the most important bits and they're what Really Matter", which is what fundamentalism is.
It's a fundamentalist version of economic liberalism certainly, but not of political liberalism in the sense of vaguely leftist centrism.
Political liberalism is and always has been nonsense. It's a propaganda label and is as meaningful as having a Libertarian Party with a platform half the libertarians in the country disagree (all of whom contend that those who do agree aren't True libertarians).
> By the standards of anywhere else there is only very right / slightly less right.
Depends. Germansy is rather social democratic, but to a German government subsidised housing (via Fannie Mae and Freddie Mac) and universal minumum wage sound vaguely socialist.
Depends. Germansy is rather social democratic, but to a German government subsidised housing (via Fannie Mae and Freddie Mac) and universal minumum wage sound vaguely socialist.
And describing Obama/Dems as a liberal when hes/they are centre right.
There's a wonderful short story by Orson Scott Card titled God Plays Fair Once Too Often concerning this.
The Democratic Party is trying to gobble up more of the economy to spend through the federal government, the Republican Party is trying to make it eat less. How are they not left and right?
And under George W. Bush the Republican party created the Department of Homeland Security, the purpose of which is arguably to "gobble up more of the economy to spend through the federal government." And engaged in new excesses of deficit spending (since exceeded by Obama, true).
The broader point is that politics is multidimensional. It's not just one axis. The history of tech policy votes in Congress is a good example that's close to HN home.
The broader point is that politics is multidimensional. It's not just one axis. The history of tech policy votes in Congress is a good example that's close to HN home.
You can't map being right and left wing to a scale measured by "desired percentage of GDP to be spent by the government." Consider: Bush or Clinton? Huckabee or Romney? FDR or Hitler? Ukrainian anarchists or Stalin? French monarchists or Jacobins? Southern segregationists or Northern industrialists?
> How does being a part of the evil "one percent" make you any less qualified to have or hold a variety of political views?
I don't think this is what he's saying. It's that one percenters have an inherently greater voice on political issues (if they so choose) and that as a result, the national debate has been warped to focus on the issues and perspectives they consider important.
I don't think this is what he's saying. It's that one percenters have an inherently greater voice on political issues (if they so choose) and that as a result, the national debate has been warped to focus on the issues and perspectives they consider important.
That was my point, yes. I don't object to the 1% having a voice in politics; of course they should! I just object to having a system that defers reflexively to their needs and interests over those of everybody else.
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I've never heard the term "Limousine liberal," but I'm fond of the french expression: La Gauche Caviar. http://en.wikipedia.org/wiki/Gauche_caviar
Or the British term: "Champagne Socialist".
One foundation of the entire argument seems to be that support for the Democratic party makes SV progressive. However, in a global context only the minority left wing of the Democratic party could be called progressive.
Also, a simpler explanation for the large support for the Democrats would be that SV consists of intelligent, highly educated and well-informed people that wouldn't dream of supporting the extremist, anti-intellectual and downright insane collection of circus freaks the Republican party has become.
Just based on the purely anecdotal evidence of online and personal encounters with SV-dwellers, I would consider most of them to be "open minded conservatives".
The other foundation is the way companies in SV are organized and equity dived compared to traditional companies. This could simply be explained as "pragmatic", which is how most companies view it themselves.
It seems to me the author is trying to project his own ideas on SV.
Also, a simpler explanation for the large support for the Democrats would be that SV consists of intelligent, highly educated and well-informed people that wouldn't dream of supporting the extremist, anti-intellectual and downright insane collection of circus freaks the Republican party has become.
Just based on the purely anecdotal evidence of online and personal encounters with SV-dwellers, I would consider most of them to be "open minded conservatives".
The other foundation is the way companies in SV are organized and equity dived compared to traditional companies. This could simply be explained as "pragmatic", which is how most companies view it themselves.
It seems to me the author is trying to project his own ideas on SV.
I think that's correct.
Anecdotally, my personal network in tech seems to side with Democrats for reason like environmental protection, global warming, gay marriage, abortion, and olive branch foreign policy; not because of economic reasons like union support, wealth redistribution, or strengthened regulators.
Anecdotally, my personal network in tech seems to side with Democrats for reason like environmental protection, global warming, gay marriage, abortion, and olive branch foreign policy; not because of economic reasons like union support, wealth redistribution, or strengthened regulators.
Makes you wonder if the Republican party isn't intentionally taking the wedge-issue craziness to 11 only so that they can rebrand next election cycle and yank the mat out from under the Democrats. Given the effectiveness of Romney's rush-to-the-center in the 1st debate against Obama, the thought has to have crossed their minds. The timing (tossing last election to win the next one) makes sense because next election they won't be running against a relatively popular incumbent. They don't have anything to gain by doubling-down on the losing side of every social issue on the list -- their core demographic will vote R regardless -- but a pull-the-mat strategy could net them tons of wealthy individuals from the "socially liberal economically conservative" camp.
I think the bigger issue is that each party caters to their fringe groups and then shifts to the middle when they are in office.
GWB backed one of the biggest expansions of entitlement programs since LBJ (Medicare Part-D).
Obama seems to have no problem ignoring the international community when it comes to using US force globally.
The only thing that separates the two parties (when in office) are the issues that can keep them in office (e.g. the issue of abortion and guns is pretty evenly split in the US)
GWB backed one of the biggest expansions of entitlement programs since LBJ (Medicare Part-D).
Obama seems to have no problem ignoring the international community when it comes to using US force globally.
The only thing that separates the two parties (when in office) are the issues that can keep them in office (e.g. the issue of abortion and guns is pretty evenly split in the US)
I agree to a large extent, but a lot of Democrats do support the healthcare reform which is one of the greatest wealth redistributions of our time. They may not explicitly call it a wealth redistribution, but the idea of making healthcare access available to people that can't currently afford it is a big redistribution.
Like most existing government programs, it's a wealth transfer from the young to the old. The program pays for the old and sick on the back of the comparatively more healthy and less wealthy younger workers.
More supporting evidence that democracies tend to work in favor of the largest voting blocs rather than some abstract "public interest".
More supporting evidence that democracies tend to work in favor of the largest voting blocs rather than some abstract "public interest".
> Like most existing government programs, it's a wealth transfer from the young to the old.
It seems accurate to say that Medicare is as you describe -- we've more or less been socializing the costs of insuring the elderly, privatizing the risks/benefits of insuring the employable, and letting everybody else fend for themselves for a few decades.
But it seems pretty tenuous specifically in the context of the recent PP/ACA legislation. The only arguable point is that by requiring people to join a risk pool, we're forcing them to subsidize the elderly... which we were already doing via a tax-supported medicare program.
> The program pays for the old and sick on the back of the comparatively more healthy and less wealthy younger workers.
Sure, in the same sense that any insurance program is. That is, there is no insurance program of any kind that isn't a "wealth transfer" to those who suffer from the insured-against event from those who don't.
Though when talking about "young" and "old" in the context of a stable policy, this may not be a particularly important point. Most people are going to get a chance to be part of both.
It seems accurate to say that Medicare is as you describe -- we've more or less been socializing the costs of insuring the elderly, privatizing the risks/benefits of insuring the employable, and letting everybody else fend for themselves for a few decades.
But it seems pretty tenuous specifically in the context of the recent PP/ACA legislation. The only arguable point is that by requiring people to join a risk pool, we're forcing them to subsidize the elderly... which we were already doing via a tax-supported medicare program.
> The program pays for the old and sick on the back of the comparatively more healthy and less wealthy younger workers.
Sure, in the same sense that any insurance program is. That is, there is no insurance program of any kind that isn't a "wealth transfer" to those who suffer from the insured-against event from those who don't.
Though when talking about "young" and "old" in the context of a stable policy, this may not be a particularly important point. Most people are going to get a chance to be part of both.
Yea, in real terms the Democratic party are more right wing than the UK Conservative party.
On a policy level that may be true, however I would guess that many members of the conservative party are ideologically more right wing than the average democrat and would prefer to see the party move to the right. They have to maintain a more centrist position to be electable.
Reasonable, honest, thoughtful people vote Republican for good reason. For example, they are more likely to support good governance. Blue states and massive public debts go hand in hand[1].
In my experience, the number one most common quality that distinguishes the rare Bay Area young Republican is a love for sustainable budgets and a belief in the immorality of a government knowingly running an unsustainable deficit. Those monsters.
The idea that the Republican party is a collection of "circus freaks" is a myth largely sustained by the liberal echosphere.
[1] http://blogs.the-american-interest.com/wrm/2012/11/09/blue-s...
In my experience, the number one most common quality that distinguishes the rare Bay Area young Republican is a love for sustainable budgets and a belief in the immorality of a government knowingly running an unsustainable deficit. Those monsters.
The idea that the Republican party is a collection of "circus freaks" is a myth largely sustained by the liberal echosphere.
[1] http://blogs.the-american-interest.com/wrm/2012/11/09/blue-s...
From the link:
"When looking at the list, it’s hard to miss how the costs seem to break down according to the red-blue political divide."
I love arguments that invite you to interpret statistics based on your biases.
No analysis given to the fact that one of the most conservative states (Wyoming) has one of the highest pension liabilities per capita or that one controlled by Democrats (West Virginia) has one of the lowest.
I love arguments that invite you to interpret statistics based on your biases.
No analysis given to the fact that one of the most conservative states (Wyoming) has one of the highest pension liabilities per capita or that one controlled by Democrats (West Virginia) has one of the lowest.
It's very worth noting that most of those "unsustainable deficits" in blue states are caused by making net contributions to the Federal budget, while most of those "good governance" surpluses in red states are caused by receiving net transfers from the Federal budget.
It's hypocritical but easy for a child to complain about the financial irresponsibility of the very parents who subsidize him.
It's hypocritical but easy for a child to complain about the financial irresponsibility of the very parents who subsidize him.
Yes, the Democratic party is not left wing on either a global scale, as you say, or even on a historical scale. The Democrats used to support the Works Progress Administration and the Civilian Conservation Corps to put people to work. Massive government projects like the Tennessee Valley Authority and Rural Electrification Administration were instituted.
More recently the Democrats have been about "ending welfare as we know it" as "the era of big government is over". Words said by a Democratic president, not a Republican. Obama has been the same, and the examples of this are too numerous to mention completely - support of school privatization and charters while attacking teacher's unions, or the more recent nomination of Penny Pritzker as Secretary of Commerce.
This essay has some Orwellian doublespeak sentences which are real howlers - 'The movement towards these more egalitarian corporate structures goes by many names: stakeholder or partner or even conscious capitalism.' Barf! Fantastic, I'll be real glad to be part of a stakeholder corporate structure - YOU own the shares, but I get to be a "stakeholder". Terrific. "Egalitarian corporate structure". There's a contradiction. A corporate structure means one thing - control by the majority shareholders, with the purpose to maximize profit to them. Period. This fact is written into the legal code and court decisions ad nauseum.
If anyone is buying into this idea that today's college educated professional in the US is better off than the college educated professional of the 1950s and 1960s, I suggest you read Barbara Ehrenreich's "Fear of Falling" where she shows a mountain of evidence of why this is not the case.
If these startups are so great for everyone, where are the older people? Where do they go, since they don't seem to be around, other than a small percentage, at anywhere from a small startup to somewhere like Google. Did professionals have to work as many hours as they do nowadays? Oncall all the time, e-mails and phone calls at home? And so on.
The system doesn't even work for us, the educated elite doing the wealth and creating the wealth. It works even less for the rest of the world.
More recently the Democrats have been about "ending welfare as we know it" as "the era of big government is over". Words said by a Democratic president, not a Republican. Obama has been the same, and the examples of this are too numerous to mention completely - support of school privatization and charters while attacking teacher's unions, or the more recent nomination of Penny Pritzker as Secretary of Commerce.
This essay has some Orwellian doublespeak sentences which are real howlers - 'The movement towards these more egalitarian corporate structures goes by many names: stakeholder or partner or even conscious capitalism.' Barf! Fantastic, I'll be real glad to be part of a stakeholder corporate structure - YOU own the shares, but I get to be a "stakeholder". Terrific. "Egalitarian corporate structure". There's a contradiction. A corporate structure means one thing - control by the majority shareholders, with the purpose to maximize profit to them. Period. This fact is written into the legal code and court decisions ad nauseum.
If anyone is buying into this idea that today's college educated professional in the US is better off than the college educated professional of the 1950s and 1960s, I suggest you read Barbara Ehrenreich's "Fear of Falling" where she shows a mountain of evidence of why this is not the case.
If these startups are so great for everyone, where are the older people? Where do they go, since they don't seem to be around, other than a small percentage, at anywhere from a small startup to somewhere like Google. Did professionals have to work as many hours as they do nowadays? Oncall all the time, e-mails and phone calls at home? And so on.
The system doesn't even work for us, the educated elite doing the wealth and creating the wealth. It works even less for the rest of the world.
Wow, the comment with the most insight and clarity in this discussion. I couldn't agree more. We are building a future that we can't properly retire from, making "software" of questionable value (socially, economically, sustainably) while our countries crumble around us and the middle class evaporates.
All the older people are, in fact, at Google. The average age of software engineers there is much higher than you might think.
Since I moved to California and the Bay Area, I have to say I've encountered more smarmyness and arrogance than in Houston Texas. This by itself isn't a negative indicator. However, if you couple it with a tendency for people to judge you by "your cover," then it is. The real attitudes of people, and how they differ from stated ones, are a big part of the downsides of a milieu like the "Gilded Age." Success itself is a part of the problem here. Success attracts attention, both good and bad, making it necessary to bias for false negatives in various interactions. This encourages the "echo chamber" effect.
I wonder if Silicon Valley isn't reaching some sort of gradual saturation. The number of people who pretend to be upbeat and curious versus the number who actually are is disturbing to me.
(EDIT: To be fair, this may well be because I'm on the wrong side of the filtering membrane.)
I wonder if Silicon Valley isn't reaching some sort of gradual saturation. The number of people who pretend to be upbeat and curious versus the number who actually are is disturbing to me.
(EDIT: To be fair, this may well be because I'm on the wrong side of the filtering membrane.)
"Since I moved to California and the Bay Area, I have to say I've encountered more smarmyness and arrogance than in Houston Texas."
I'd describe it more as snobbishness and cliqueyness, but same basic idea. Silicon Valley is great if you're working on something trendy, but it can be surprisingly unfriendly if you're just trying to make cool stuff.
I'd describe it more as snobbishness and cliqueyness, but same basic idea. Silicon Valley is great if you're working on something trendy, but it can be surprisingly unfriendly if you're just trying to make cool stuff.
Thanks for reminding me again why I'm not in The Valley. Seems to me the place has become a very trendy echo chamber, more of a hot fashion and marketing center than a center of innovation or creativity.
FWIW, I've found it to be a hotbed of creativity and innovation, >and< a hotbed of flash-in-the-pan douchbaggery, if that's what you seek that out. The stupidity is easy to avoid.
Yes, exactly. While there are a plenty of hucksters and faux-glamorous hangers-on, there is also an enormous amount of real work being done, both at quiet little startups too busy making something great to bother with publicity, and at large companies, where the engineering talent is sometimes so great that people don’t even notice that it’s there.
Every gold rush attracts hucksters. Each time there's a tech boom, there's a wash of entrepreneurs, etc who have no real track record at anything and often aren't genuinely passionate about technology, just getting rich or famous. It comes and goes.
Tech Cycle:
1. Small groups of dedicated technologists create a large step forward in technology. Generally becoming wealthy.
2. People following money all pile in. Pretenders abound; both founders and investors.
3. It becomes impossible to separate the wheat from the chaff. How do you tell the difference between someone who is legitimately experienced and someone who's skill is putting on appearances?
4. Big crash as the pretenders fail to produce similar results. All the crazy money leaves the technology sector. "Who needs an online pet store anyway?"
5. The only people who are left are small groups of people dedicated to technology regardless of the headlines. (return to step one)
1. Small groups of dedicated technologists create a large step forward in technology. Generally becoming wealthy.
2. People following money all pile in. Pretenders abound; both founders and investors.
3. It becomes impossible to separate the wheat from the chaff. How do you tell the difference between someone who is legitimately experienced and someone who's skill is putting on appearances?
4. Big crash as the pretenders fail to produce similar results. All the crazy money leaves the technology sector. "Who needs an online pet store anyway?"
5. The only people who are left are small groups of people dedicated to technology regardless of the headlines. (return to step one)
> How do you tell the difference between someone who is legitimately experienced and someone who's skill is putting on appearances?
Those who have legitimate experience can detect their peers. Unfortunately, this is highly contextual. You can be a competent Ruby on Rails guy, but still suffer from Dunning-Krueger when trying to evaluate an iOS developer.
You can also go back to first principles. Do people live their lives and engage in conversations in a way that indicates they understand the epistemological stance of scientists? I have a super power in this regard. I exude a field that makes undesirable people prejudge me, to the point where they make factual mistakes.
Those who have legitimate experience can detect their peers. Unfortunately, this is highly contextual. You can be a competent Ruby on Rails guy, but still suffer from Dunning-Krueger when trying to evaluate an iOS developer.
You can also go back to first principles. Do people live their lives and engage in conversations in a way that indicates they understand the epistemological stance of scientists? I have a super power in this regard. I exude a field that makes undesirable people prejudge me, to the point where they make factual mistakes.
This applies to business and marketing too.
A big problem is that innovators lacking business experience are easy prey for self-promoting douchenozzles who pretend to be able to "accelerate" them. In reality they don't know what they're doing, don't have the connections they claim to have, and just want to entangle themselves with something in the off chance it might turn out to be big.
A big problem is that innovators lacking business experience are easy prey for self-promoting douchenozzles who pretend to be able to "accelerate" them. In reality they don't know what they're doing, don't have the connections they claim to have, and just want to entangle themselves with something in the off chance it might turn out to be big.
Obligatory Wikipedia reference: http://en.wikipedia.org/wiki/Hype_cycle
I really loved the insight about how tech companies distribute the wealth created by their growth. When it goes widely you end up with people like Charlie Ayers (Google's chef) who are able to leave and create their own restaurants (more jobs, more creativity). When you keep all the wealth generation to a hand picked set of individuals, it seems you create obligation and cronyism.
And for me, the most amazing part, is that since it looks externally 'easy', success results in a rush of folks who want to do that too.
When people ask my advice about interviewing at a place like Google I tell them, "Don't interview at Google just because you want to work at Google, interview there because there is something you want to accomplish that you can do more easily at Google than anywhere else." Or people asking for advice on creating a startup, where one of the questions is "What should I build?"
Here is a news alert :-) If you don't already feel passionately about building something you don't want to be the person starting the startup. Work at one or two and figure out what it takes to build a company, what works and what doesn't, and be thinking about how your talents might solve a problem in a way that would be useful. Until then, don't quit your day job.
And for me, the most amazing part, is that since it looks externally 'easy', success results in a rush of folks who want to do that too.
When people ask my advice about interviewing at a place like Google I tell them, "Don't interview at Google just because you want to work at Google, interview there because there is something you want to accomplish that you can do more easily at Google than anywhere else." Or people asking for advice on creating a startup, where one of the questions is "What should I build?"
Here is a news alert :-) If you don't already feel passionately about building something you don't want to be the person starting the startup. Work at one or two and figure out what it takes to build a company, what works and what doesn't, and be thinking about how your talents might solve a problem in a way that would be useful. Until then, don't quit your day job.
I find it somewhat funny that the original New Yorker article about the tech industry's insularity is itself hidden behind a paywall; I actually wanted to submit the Packer article itself this morning but didn't bother. Nonetheless, I do think Johnson does a decent job of giving the other side.
But I did send this as a letter to the editor, since it concerns a pet peeve that I constantly see in the media:
George Packer's essay on Silicon Valley's politics makes several references to housing prices, including that "the past two years have seen a twenty-per-cent rise in homelessness, largely because of the soaring cost of housing." But he doesn't mention how supply and demand affect pricing, as Matt Yglesias does in The Rent is Too Damn High or Edward Glaeser does in The Triumph of the City. Both writers have correctly observed that many urban jurisdictions prevent housing from being built to accommodate growing demand; as a result, prices rise. It's not primarily tech companies or their employees who have driven housing prices in Silicon Valley: it's residents themselves, and the courts that have given residents and politicians extraordinary powers to block development—which is why "San Francisco is becoming a city without a middle class."
But I did send this as a letter to the editor, since it concerns a pet peeve that I constantly see in the media:
George Packer's essay on Silicon Valley's politics makes several references to housing prices, including that "the past two years have seen a twenty-per-cent rise in homelessness, largely because of the soaring cost of housing." But he doesn't mention how supply and demand affect pricing, as Matt Yglesias does in The Rent is Too Damn High or Edward Glaeser does in The Triumph of the City. Both writers have correctly observed that many urban jurisdictions prevent housing from being built to accommodate growing demand; as a result, prices rise. It's not primarily tech companies or their employees who have driven housing prices in Silicon Valley: it's residents themselves, and the courts that have given residents and politicians extraordinary powers to block development—which is why "San Francisco is becoming a city without a middle class."
You are right. Why can't more high-rise condo projects get going on the peninsula? Is it b/c of earthquakes? Why not build lots or hi-rise condos along the bart/cal-train corridor?
It's not the earthquake issue. It's that the Peninsula is already fully built out & most existing residents/voters don't want any high density development, they want to keep the existing single-family-home environments.
It's because of zoning.
"I would be surprised if there were any new industry in the history of capitalism that distributed its economic rewards to its employees as widely as Silicon Valley has."
Wall street has been distributing most of it's profits to employees in the form of bonuses for decades. Though unlike SV, it get criticised heavily (a lot unfairly IMHO) for it. Having worked in both, I feel they are full of the same 'type' of people.
Wall street has been distributing most of it's profits to employees in the form of bonuses for decades. Though unlike SV, it get criticised heavily (a lot unfairly IMHO) for it. Having worked in both, I feel they are full of the same 'type' of people.
Yeah, this quote is totally off base. Finance, consulting, law, and accounting all distribute company earnings very widely (often, entirely) to the people who do the actual work.
These companies also tend to have much flatter structures than Silicon Valley tech companies. The greenest associate at a big NYC law or consulting firm probably has just a few levels above him to the managing partner or CEO. The structure is instead broad and flat, with potentially hundreds of partners or managing directors leading their teams with high levels of autonomy.
Pay spreads are also narrower. I don't have numbers for consulting, but many NYC law firms are 5:1 or less top to bottom for partners, and around 30:1 for highest earning partner down to greenest associate (and many of these scales are lock-step, meaning everyone at the same level of seniority is paid the same). Finance is of course broader (thanks to huge bonuses for traders), and my impression is that consulting and accounting are narrower. The pay spread at Yahoo between Marissa Mayer and the most junior programmer is more like 250:1, and even within the ranks of executives the spread is probably more like 50:1.
The deep irony of these professions is that while they are a major part of the capitalist system, they are personally mostly free from that system. It takes very little capital to run a services businesses like these, which means there is no need to bring in shareholders, which means that the money of the business stays with the workers rather than being diverted to investors.
These companies also tend to have much flatter structures than Silicon Valley tech companies. The greenest associate at a big NYC law or consulting firm probably has just a few levels above him to the managing partner or CEO. The structure is instead broad and flat, with potentially hundreds of partners or managing directors leading their teams with high levels of autonomy.
Pay spreads are also narrower. I don't have numbers for consulting, but many NYC law firms are 5:1 or less top to bottom for partners, and around 30:1 for highest earning partner down to greenest associate (and many of these scales are lock-step, meaning everyone at the same level of seniority is paid the same). Finance is of course broader (thanks to huge bonuses for traders), and my impression is that consulting and accounting are narrower. The pay spread at Yahoo between Marissa Mayer and the most junior programmer is more like 250:1, and even within the ranks of executives the spread is probably more like 50:1.
The deep irony of these professions is that while they are a major part of the capitalist system, they are personally mostly free from that system. It takes very little capital to run a services businesses like these, which means there is no need to bring in shareholders, which means that the money of the business stays with the workers rather than being diverted to investors.
Thank you for this.
Lawyers and bankers actually have a sharkish will to negotiate for themselves. They're good at what they do, they're powerful allies and formidable enemies, and they know it. People don't often try to take advantage of them, even when one is senior and the other's a greenhorn. They know better. In 7 years, that junior you tweaked is going to be partner-level somewhere and might end up surprising you how well he does.
Most programmers work for old-style Theory-X companies where you have to be a manager to get a fair shake-- because we, as a group, suck at advocating for ourselves and get taken advantage of in a way that just wouldn't happen to most lawyers or bankers.
The same is true of most of these Silicon Valley "startups". You gotta differentiate between companies that are small because they're elite niche operations (which are some of the best places to work) and companies that are small because they're shitty. Many of these "startups" are the latter.
Lawyers and bankers actually have a sharkish will to negotiate for themselves. They're good at what they do, they're powerful allies and formidable enemies, and they know it. People don't often try to take advantage of them, even when one is senior and the other's a greenhorn. They know better. In 7 years, that junior you tweaked is going to be partner-level somewhere and might end up surprising you how well he does.
Most programmers work for old-style Theory-X companies where you have to be a manager to get a fair shake-- because we, as a group, suck at advocating for ourselves and get taken advantage of in a way that just wouldn't happen to most lawyers or bankers.
The same is true of most of these Silicon Valley "startups". You gotta differentiate between companies that are small because they're elite niche operations (which are some of the best places to work) and companies that are small because they're shitty. Many of these "startups" are the latter.
That's why you start a company. Build a good looking product, that will really never make money, and pimp your team to all larger companies. Maybe one will bite, and will buy your company (basically hiring bonuses).
Having worked with both, they are not quite the same type of people. You might find some similar personality traits (ego, intelligence, and/or arrogance). But there is one major difference: The typical Silicon Valley worker is much more capable of creating a product or service than the average Wall Streeter.
This is anecdotal, but the i-bankers I have worked with and met generally have a limited skillset which boils down to Excel spreadsheet manipulation, 10K reading, and Powerpoint presentations.
The skillset of Silicon Valley employees crosses a wider intellectual range (CS, statistics, math, art+design, EE, other hard sciences). Their knowledge is also deeper in a wider breadth of fields and can put their knowledge to work.
This is anecdotal, but the i-bankers I have worked with and met generally have a limited skillset which boils down to Excel spreadsheet manipulation, 10K reading, and Powerpoint presentations.
The skillset of Silicon Valley employees crosses a wider intellectual range (CS, statistics, math, art+design, EE, other hard sciences). Their knowledge is also deeper in a wider breadth of fields and can put their knowledge to work.
Yea, I did mean personality traits, and moreso sale/trading/asset management than pure i-banking/PE.
However while the typical wall steeter used to be a liberal arts major, it has heavily shifted toward STEM. At most i-banks, something like a third of headcount are tech. Even many of the front office are engineers, though again moreso in trading/asset management. Nowadays a large part of the competitive advantage comes from better software - a classic example of 'software eating the world'.
Anecdotally some of the brightest people I've known were at BGI (now Blackrock), and they all had deep knowledge in finance, math, stats, tech and old school boys club company politics. [my old boss read math cambridge with stephen hawking and created the first and now biggest by AUM electronic portfolio management system for index funds, grinold & kahn literately [1] wrote the book on active portfolio management, etc]
[1] http://www.amazon.com/Active-Portfolio-Management-Quantitati...
However while the typical wall steeter used to be a liberal arts major, it has heavily shifted toward STEM. At most i-banks, something like a third of headcount are tech. Even many of the front office are engineers, though again moreso in trading/asset management. Nowadays a large part of the competitive advantage comes from better software - a classic example of 'software eating the world'.
Anecdotally some of the brightest people I've known were at BGI (now Blackrock), and they all had deep knowledge in finance, math, stats, tech and old school boys club company politics. [my old boss read math cambridge with stephen hawking and created the first and now biggest by AUM electronic portfolio management system for index funds, grinold & kahn literately [1] wrote the book on active portfolio management, etc]
[1] http://www.amazon.com/Active-Portfolio-Management-Quantitati...
A much simpler point the author missed is that wealth doesn't exactly cause the housing shortage so much as not building houses. San Francisco has rent control, and most of the peninsula has severe zoning controls.
It would be extraordinarily profitable to build commercial buildings with dense lofted apartments in many areas of the peninsula, however they are simply prohibited by local governments. That's neither libertarian nor egalitarian.
It would be extraordinarily profitable to build commercial buildings with dense lofted apartments in many areas of the peninsula, however they are simply prohibited by local governments. That's neither libertarian nor egalitarian.
Much of the Bay Area (and California in general) housing policy is best summed up as the ol' Republican "Fuck you, got mine" with a mild environmental gloss, combined with an inability to imagine building anything other than auto-dependent suburbia.
Note that those projects would be profitable only if they were permitted in limited areas only. A broad lifting of regulation would result in sprawl, not density. Look at Houston. Everyone would avoid expensive, dense areas by building out further and further into the land, and in the Bay, there's a ton of undeveloped wooden land that developers would have no problem replacing with tract homes if they were able to do so.
Of course, there is room for urban planning. But it's quite telling that none of these projects are starting even in the "downtown" areas adjacent to caltrain stops, which is exactly where you want growth to happen. If a peninsula city actually wanted to prevent sprawl, they'd build up the urban core rather than force people to commute from more permissive cities in the east bay.
Yeah, but this planning begins at a very local level. The NIMBYs are only concerned about their views being blocked and could not care less about the sprawl occurring 30 miles away.
One of the biggest lies of progressivism is that regulation is in place to protect the poor. Rather, it usually serves vested interests.
One of my first thoughts when he mentioned housing as well.
This article conflates Libertarians with Republicans which I don't think makes sense in Silicon Valley. Yes, nationwide they tend to be in the same group but not in the valley.
Judging from comments on HN the valley does sound quite libertarian but not the kind that register and vote Republican. It seems more intellectual and based in logic while Republicans are more about dogma and scoring political points.
Judging from comments on HN the valley does sound quite libertarian but not the kind that register and vote Republican. It seems more intellectual and based in logic while Republicans are more about dogma and scoring political points.
I would say there are few dominant strands of political views in Silicon Valley:
* "Liberaltarian" (http://www.cato.org/publications/commentary/liberaltarians). Generally libertarian views (support for free markets, drug de-criminalization, gay rights, right to bear arms, open borders, etc...) but where views on social issues (namely basic civil liberties, gay rights, drug de-criminalization, open borders) trump (by far) the economic issues.
Most of these folks also don't subscribe to Randian/Nietzschean "virtue of selfishness" so given a candidate whose economic policies might benefit them but who opposes gay rights and immigration, they'll vote for his opponents even if they happen to be straight and native-born.
* Conventional style liberalism, but with heavier focus on civil liberties and technology. Zoe Logfren is probably great example of candidate that appeals heavily to this group.
* Bloomberg-style centrism: some degree of social liberalism (particularly in regards to gay rights, abortion), moderate-to-center-right economic views (mainly dictated by self-interest), but strong opposition to personal liberty-issues that are perceived to have social costs (e.g., drug de-criminalization, right to bear arms).
This is generally common with older folks, likely the ones that supported Reagan and Nixon earlier. Generally these are also the view of many California republicans (e.g., Meg Whitman) but also a significant chunk of Democrats. Given national republican party has now deviated from significantly from this view (with big factions now being religious right, Tea Party, and some libertarian-leaning folks), again there's a tendency to vote democratic on national level.
* Actual libertarians tends to be somewhat more common than in the rest of the country, but again there's a tendency for people to come to libertarian views from a more academic point of view (study of economics, philosophy, etc...) as opposed to from reading Atlas Shrugged.
So yes, if you define libertarian as Objectivist (a view that goes far beyond libertarianism -- the idea that poor deserve to be poor and do not deserve even voluntary charity, as opposed to the idea that economic planning hurts the poor more than it helps), then there's only few libertarians in Silicon Valley. If you use a more open-minded definition (opposition to economic planning and support for personal liberties) the picture changes a bit.
* "Liberaltarian" (http://www.cato.org/publications/commentary/liberaltarians). Generally libertarian views (support for free markets, drug de-criminalization, gay rights, right to bear arms, open borders, etc...) but where views on social issues (namely basic civil liberties, gay rights, drug de-criminalization, open borders) trump (by far) the economic issues.
Most of these folks also don't subscribe to Randian/Nietzschean "virtue of selfishness" so given a candidate whose economic policies might benefit them but who opposes gay rights and immigration, they'll vote for his opponents even if they happen to be straight and native-born.
* Conventional style liberalism, but with heavier focus on civil liberties and technology. Zoe Logfren is probably great example of candidate that appeals heavily to this group.
* Bloomberg-style centrism: some degree of social liberalism (particularly in regards to gay rights, abortion), moderate-to-center-right economic views (mainly dictated by self-interest), but strong opposition to personal liberty-issues that are perceived to have social costs (e.g., drug de-criminalization, right to bear arms).
This is generally common with older folks, likely the ones that supported Reagan and Nixon earlier. Generally these are also the view of many California republicans (e.g., Meg Whitman) but also a significant chunk of Democrats. Given national republican party has now deviated from significantly from this view (with big factions now being religious right, Tea Party, and some libertarian-leaning folks), again there's a tendency to vote democratic on national level.
* Actual libertarians tends to be somewhat more common than in the rest of the country, but again there's a tendency for people to come to libertarian views from a more academic point of view (study of economics, philosophy, etc...) as opposed to from reading Atlas Shrugged.
So yes, if you define libertarian as Objectivist (a view that goes far beyond libertarianism -- the idea that poor deserve to be poor and do not deserve even voluntary charity, as opposed to the idea that economic planning hurts the poor more than it helps), then there's only few libertarians in Silicon Valley. If you use a more open-minded definition (opposition to economic planning and support for personal liberties) the picture changes a bit.
Good analysis. It's also interesting to plot those categories against professions. In my experience, engineers and programmers tend to be the most libertarian (for a reasonable non-Objectivist definition of libertarian). It's the marketing and legal and HR and sales and other departments that tend to be more liberal, and by that I mean less concerned with economic liberties. VCs tend to be libertarian as well.
You are spot-on.
I think he did a good job at making the distinction. Not sure if you got the jist of it, but he clearly states that despite the heavy libertarian leaning culture, SV overwhelmingly voted for Democrats the last few elections, indicating they were not on board with the Republican platform.
My take on it is that SV is 'liberaltarian', in that they prefer small, efficient, decentralized organizational structures, but that they also recognize the need for social welfare as a stabilizing force. Additionally, I would guess most of them are turned off by the conservatism side of the Republican party (pro-religion, pro-drug controls, etc), and as such tend to vote for democrats based on the 'lesser of two evils' decision making process. This pretty much describes my views, and I would imagine a lot of others in SV.
My take on it is that SV is 'liberaltarian', in that they prefer small, efficient, decentralized organizational structures, but that they also recognize the need for social welfare as a stabilizing force. Additionally, I would guess most of them are turned off by the conservatism side of the Republican party (pro-religion, pro-drug controls, etc), and as such tend to vote for democrats based on the 'lesser of two evils' decision making process. This pretty much describes my views, and I would imagine a lot of others in SV.
My take on it is that SV is 'liberaltarian', in that they prefer small, efficient, decentralized organizational structures, but that they also recognize the need for social welfare as a stabilizing force.
That's how I see it as well.
The fact is, that there is a strong demand for social insurance/welfare services (e.g. health insurance, unemployment stipends, retirement pensions, etc), and the supply of those services can either come mostly from the government (as it tends to in Western Europe) or mostly from employers (as it tends to in the US).
"Liberaltarians," I think, believe that we're better off letting the government provide the social insurance services to everyone, so that citizens' access to them is no longer dependent on employment, which will increase liquidity in the labor market and take some of the risk out of entrepreneurship. Then employers also won't have to be burdened with providing and administrating these expensive "benefits." Win-win.
Meanwhile, people that live in sparsely-populated rural areas believe that they have less demand for social services, and that their tax dollars are paying for the social services that are only consumed by low-income city-dwellers. I've read studies that show this is false, and most rural counties consume more tax dollars than they contribute, mostly due to farm subsidies. Regardless, that seems to be the main economic concern of rural Republican voters.
That's how I see it as well.
The fact is, that there is a strong demand for social insurance/welfare services (e.g. health insurance, unemployment stipends, retirement pensions, etc), and the supply of those services can either come mostly from the government (as it tends to in Western Europe) or mostly from employers (as it tends to in the US).
"Liberaltarians," I think, believe that we're better off letting the government provide the social insurance services to everyone, so that citizens' access to them is no longer dependent on employment, which will increase liquidity in the labor market and take some of the risk out of entrepreneurship. Then employers also won't have to be burdened with providing and administrating these expensive "benefits." Win-win.
Meanwhile, people that live in sparsely-populated rural areas believe that they have less demand for social services, and that their tax dollars are paying for the social services that are only consumed by low-income city-dwellers. I've read studies that show this is false, and most rural counties consume more tax dollars than they contribute, mostly due to farm subsidies. Regardless, that seems to be the main economic concern of rural Republican voters.
> "Liberaltarians," I think, believe that we're better off letting the government provide the social insurance services to everyone, so that citizens' access to them is no longer dependent on employment, which will increase liquidity in the labor market and take some of the risk out of entrepreneurship.
Also, employer-funded health insurance is a drag on US companies that must compete with foreign companies that can rely on government health insurance/services.
Also, employer-funded health insurance is a drag on US companies that must compete with foreign companies that can rely on government health insurance/services.
And it depresses salaries. Companies could afford to pay more in salaries if they didn't have to pay for health insurance. This could potentially make up for the higher taxes we might have to pay for a national single-payer health plan.
Of course, we might not have to pay higher taxes at all if we didn't have all these private health insurance companies skimming the pot.
Of course, we might not have to pay higher taxes at all if we didn't have all these private health insurance companies skimming the pot.
Also remember that there was a very pro-George W. Bush sentiment in Silicon Valley in 2000, but eight years of the pro-war, pro-deficit spending Bush administration was enough to turn things around in 2008.
From 2008:
http://news.cnet.com/8301-13578_3-10079225-38.html Calling venture capitalist Tim Draper an ardent Republican is something of an understatement. In 1999, he was enough of a fan of then-candidate George W. Bush that he chaired three fundraisers over a year before the actual election. Salon once dubbed him "George W.'s point man in Silicon Valley." The Draper, Fisher Jurvetson managing partner is a longtime proponent of limited government, free markets, and libertarian concepts like school vouchers, making him a natural fit for a political party whose platform lauds "lower taxes, reasonable regulation, and smaller, smarter government." This year, though, something odd happened. Draper gave $2,300--the legal maximum--to Barack Obama and zero to John McCain. Draper also did something that would have been unthinkable in the days when Bush was touting laissez-faire principles: he disclosed publicly that he will vote for a Democrat. [...]
From 2008:
http://news.cnet.com/8301-13578_3-10079225-38.html Calling venture capitalist Tim Draper an ardent Republican is something of an understatement. In 1999, he was enough of a fan of then-candidate George W. Bush that he chaired three fundraisers over a year before the actual election. Salon once dubbed him "George W.'s point man in Silicon Valley." The Draper, Fisher Jurvetson managing partner is a longtime proponent of limited government, free markets, and libertarian concepts like school vouchers, making him a natural fit for a political party whose platform lauds "lower taxes, reasonable regulation, and smaller, smarter government." This year, though, something odd happened. Draper gave $2,300--the legal maximum--to Barack Obama and zero to John McCain. Draper also did something that would have been unthinkable in the days when Bush was touting laissez-faire principles: he disclosed publicly that he will vote for a Democrat. [...]
but he clearly states that despite the heavy libertarian leaning culture, SV overwhelmingly voted for Democrats the last few elections, indicating they were not on board with the Republican platform.
The author seems to use this fact to negate the idea that many in SV lean libertarian:
If libertarianism is so rampant in Silicon Valley, why are they voting for higher taxes and funding a big government liberal by such overwhelming numbers?
The premise that voting for the Democratic Party is the opposite of a "Gilded Age" is confusing to me though - it seems too reductive to assume that every person who voted for a Democrat is an ardent redistributionist who wants to see the welfare state expanded. I agree with your take on the politics of the region though.
Also, I wish that the title "Learning from Los Gatos" was explained in any way - what is the "Los Gatos" in reference to?
The author seems to use this fact to negate the idea that many in SV lean libertarian:
If libertarianism is so rampant in Silicon Valley, why are they voting for higher taxes and funding a big government liberal by such overwhelming numbers?
The premise that voting for the Democratic Party is the opposite of a "Gilded Age" is confusing to me though - it seems too reductive to assume that every person who voted for a Democrat is an ardent redistributionist who wants to see the welfare state expanded. I agree with your take on the politics of the region though.
Also, I wish that the title "Learning from Los Gatos" was explained in any way - what is the "Los Gatos" in reference to?
> what is the "Los Gatos" in reference to?
Presumably the town of Los Gatos (a relatively wealthy suburb of San Jose). Why Los Gatos in particular? I have no idea.
Presumably the town of Los Gatos (a relatively wealthy suburb of San Jose). Why Los Gatos in particular? I have no idea.
Little "l" libertarianism has always had a tense relationship with the Republican party. Certain parts of the libertarian philosophy are certainly incorporated within the conservative philosophy espoused by many Republicans, but the GOP has always been a large tent party (like the Democrats) which includes numerous groups that believe many different things that often disagree with each other.
But attempting to have a nuanced discussion of politics in this country is as pointless as it is impossible.
But attempting to have a nuanced discussion of politics in this country is as pointless as it is impossible.
> Little "l" libertarianism has always had a tense relationship with the Republican party
It gets even more complicated when you look inside the party. On one hand you have the "Tea Party" Representatives and Senators elected in the last couple of election cycles. Most of them swing towards little "l" libertarianism (at least fiscally if not socially). Recently, the Republican leadership in the House "fired" most of them from their committee assignments because they won't hold "the party line". The current Republican leadership talks a small government game, but isn't very interested in it. It is rhetoric and not action.
If the scale tips into the "Tea Party" favor (lot of interesting primary action), then I can see actual libertarianism (more fiscal than social) having a home, otherwise I expect the 2016 Presidential primary and convention to be epically nasty. The 2012 convention was a screw the local folks type of affair, but I get the feeling the local folks are gearing for 2016.
> But attempting to have a nuanced discussion of politics in this country is as pointless as it is impossible.
My only comfort in this area is that at least some of things that were said by candidates about other candidates in the election of 1800 cannot be said now.
On the other hand, punditry (by both sides) is just as profitable as it ever was as a spectator sport.
note: For those interested in a deeper look at such things. Look at the build up to the 2014 South Dakota Senatorial race. The amount of non-local manipulation reminds me more of national party bosses than a normal primary season. It might be a bit of an indicator of what is to come for both parties.
It gets even more complicated when you look inside the party. On one hand you have the "Tea Party" Representatives and Senators elected in the last couple of election cycles. Most of them swing towards little "l" libertarianism (at least fiscally if not socially). Recently, the Republican leadership in the House "fired" most of them from their committee assignments because they won't hold "the party line". The current Republican leadership talks a small government game, but isn't very interested in it. It is rhetoric and not action.
If the scale tips into the "Tea Party" favor (lot of interesting primary action), then I can see actual libertarianism (more fiscal than social) having a home, otherwise I expect the 2016 Presidential primary and convention to be epically nasty. The 2012 convention was a screw the local folks type of affair, but I get the feeling the local folks are gearing for 2016.
> But attempting to have a nuanced discussion of politics in this country is as pointless as it is impossible.
My only comfort in this area is that at least some of things that were said by candidates about other candidates in the election of 1800 cannot be said now.
On the other hand, punditry (by both sides) is just as profitable as it ever was as a spectator sport.
note: For those interested in a deeper look at such things. Look at the build up to the 2014 South Dakota Senatorial race. The amount of non-local manipulation reminds me more of national party bosses than a normal primary season. It might be a bit of an indicator of what is to come for both parties.
Conflating libertarians with Republicans doesn't make sense anywhere. The simplified definition I give people who ask me what a libertarian is is "someone who is economically conservative but socially liberal." The conventional "Republican = conservative, Democrat = liberal" model of American politics casts a vector quantitiy as a scalar.
>> "someone who is economically conservative but socially liberal."
I don't feel like that defines a libertarian at all.
When I hear the word, I think of someone who believes they (and everyone) should have the right to do whatever they like - so long as it does not infringe on anyone else's freedoms or rights.
I don't feel like that defines a libertarian at all.
When I hear the word, I think of someone who believes they (and everyone) should have the right to do whatever they like - so long as it does not infringe on anyone else's freedoms or rights.
> When I hear the word, I think of someone who believes they (and everyone) should have the right to do whatever they like - so long as it does not infringe on anyone else's freedoms or rights.
I've always hated this definition, because it's so empty. The whole debate of politics is what happens when the freedoms and rights of different people come into conflict. Different groups define these freedoms and rights differently, and think different responses are appropriate when there is conflict.
The difference between a libertarian and say a conservative is not that one believes people should be free to do what they want and the other does not. It's that one defines "freedom" narrowly and the other defines it more broadly.
Take something like prostitution. A libertarian would say you have the freedom to sell your body or to buy sex for money. A conservative might believe that people should have the freedom to create cohesive communities based on traditional values, and having your kids see prostitutes on the side of the road undermines that. Similarly, the two react differently when coercion in prostitution brings the prostitutes' rights in conflict with her pimp's. A libertarian might say that we have other laws to deal with abuse and coercion and that banning prostitution is unnecessary. A conservative might note that such abuse is endemic to prostitution and that banning prostitution could prevent the burgeoning of an extremely abusive and coercive business. A liberal might swoop in and say we should legalize prostitution, but regulate it to prevent the downsides.
Or consider something like workers rights. A libertarian would say that people get paid what they deserve when everyone can freely bargain. A liberal might point out that employers have vastly superior bargaining positions. Interestingly, what liberals say about employees and bargaining is not dissimilar to what conservatives say about prostitutes: when you look at the circumstances most prostitutes find themselves in, how "voluntary" are their actions really? Libertarians perceive "voluntary action" to be extremely well defined: basically, if you did it, it must have been the product of your totally free exercise of will. Both liberals and conservatives take more nuanced views (though in different contexts).
I've always hated this definition, because it's so empty. The whole debate of politics is what happens when the freedoms and rights of different people come into conflict. Different groups define these freedoms and rights differently, and think different responses are appropriate when there is conflict.
The difference between a libertarian and say a conservative is not that one believes people should be free to do what they want and the other does not. It's that one defines "freedom" narrowly and the other defines it more broadly.
Take something like prostitution. A libertarian would say you have the freedom to sell your body or to buy sex for money. A conservative might believe that people should have the freedom to create cohesive communities based on traditional values, and having your kids see prostitutes on the side of the road undermines that. Similarly, the two react differently when coercion in prostitution brings the prostitutes' rights in conflict with her pimp's. A libertarian might say that we have other laws to deal with abuse and coercion and that banning prostitution is unnecessary. A conservative might note that such abuse is endemic to prostitution and that banning prostitution could prevent the burgeoning of an extremely abusive and coercive business. A liberal might swoop in and say we should legalize prostitution, but regulate it to prevent the downsides.
Or consider something like workers rights. A libertarian would say that people get paid what they deserve when everyone can freely bargain. A liberal might point out that employers have vastly superior bargaining positions. Interestingly, what liberals say about employees and bargaining is not dissimilar to what conservatives say about prostitutes: when you look at the circumstances most prostitutes find themselves in, how "voluntary" are their actions really? Libertarians perceive "voluntary action" to be extremely well defined: basically, if you did it, it must have been the product of your totally free exercise of will. Both liberals and conservatives take more nuanced views (though in different contexts).
I've always hated this definition, because it's so empty. The whole debate of politics is what happens when the freedoms and rights of different people come into conflict.
Well yes. Libertarianism is davka the project of destroying politics by rendering all available decisions a matter of either private fiat by a property-owner or property-ownership disputes through the court system. The whole idea is that the elected government should have nearly zero power to actually gather or direct collective, social effort.
Well yes. Libertarianism is davka the project of destroying politics by rendering all available decisions a matter of either private fiat by a property-owner or property-ownership disputes through the court system. The whole idea is that the elected government should have nearly zero power to actually gather or direct collective, social effort.
Grouping those under ~30 or so into distinct political camps is both hopeless and erroneous, especially given how many of just people in general today don't identify with either major political party.
Judging from comments on HN the valley does sound quite libertarian but not the kind that register and vote Republican. It seems more intellectual and based in logic while Republicans are more about dogma and scoring political points.
I think deciding half the nation eschews logic and intellect in favor of dogma and 'political points' is an extremely unfortunate move. People are not the pastiches you see on TV and HuffPo.
(I vote Democrat.)
I think deciding half the nation eschews logic and intellect in favor of dogma and 'political points' is an extremely unfortunate move. People are not the pastiches you see on TV and HuffPo.
(I vote Democrat.)
More like half of that half. There's polls on how many people still think Saddam had WMDs or think Obama was born in Kenya or whatever. That's still enough to swing primaries and give us the current Congress.
I think a good number of small-l libertarians would consider voting Republican if they were a reasonable alternative and if Obama was actually the socialist he's made out to be. But the fact is, they're not and he isn't. Half of the political system is in fact impervious to reason.
I think a good number of small-l libertarians would consider voting Republican if they were a reasonable alternative and if Obama was actually the socialist he's made out to be. But the fact is, they're not and he isn't. Half of the political system is in fact impervious to reason.
"But the fact is, they're not and he isn't."
Exactly. And a lot of libertarians (like me) are to busy making stuff to vote. Plus, we don't want that 'lessor of two evils' guilt hanging over our heads.
Exactly. And a lot of libertarians (like me) are to busy making stuff to vote. Plus, we don't want that 'lessor of two evils' guilt hanging over our heads.
I think the Valley's insane wealth is a temporary thing, indicative of a comparatively new industry.
Detroit once had the highest average income in the United States. Cars are still as popular as ever, but the auto industry eventually shifted and diversified and broadened and left Detroit mostly behind.
Detroit once had the highest average income in the United States. Cars are still as popular as ever, but the auto industry eventually shifted and diversified and broadened and left Detroit mostly behind.
Author states that Silicon Valley corporate structures are more egalitarian when measured against traditional firms. Author attributes this to a more progressive, 'stakeholder' culture in SV.
Question: human capital is disproportionately more important to building value in the tech sector than it is in the broader economy (think mines, manufacturing etc). Isn't it more likely that a more equitable equity split is a pre-requisite for success in SV as opposed to being a consequence of it?
Question: human capital is disproportionately more important to building value in the tech sector than it is in the broader economy (think mines, manufacturing etc). Isn't it more likely that a more equitable equity split is a pre-requisite for success in SV as opposed to being a consequence of it?
This a good point. Investment banks also generally have a very high percentage of employee ownership (50%+) because so much of their value is their employee base.
50%? That's way better than any SV firm
It's not quite apples to apples. Bankers get paid way more (so they sell off less of their stock) and they are also often paid in RSUs or other forms of stock comp that can't be sold for several years. Tech workers are generally paid with stock that vests each year, and if they're smart they'll sell that down immediately (as they still generally have lots of future stock they're still exposed on, from a portfolio perspective.)
sell that down? What does that mean?
I believe the stakeholder culture is because tech companies often have the potential for rapid growth. For example, a barbershop's capital is mostly human, but there isn't a big chance it will IPO. This means the best barbers don't have much incentive to choose their barbershop based on equity in the compensation package.
"There is a growing body of research that shows that companies that limit their high-low wage ratios and distribute generous option plans consistently outperform more traditional, inegalitarian firms."
I'd love to know more about this growing body of research.
A basic Google search yields the ten most profitable firms: Gazprom, Exxon Mobil, Industrial & Commercial Bank of China, Royal Dutch Shell, Chevron, China Construction Bank, Apple, BP, BHP Billiton and Microsoft[1].
I don't get the sense that oil companies and big banks are egalitarian in their approach to employee equity. What am I missing?
[1] http://money.cnn.com/magazines/fortune/global500/2012/perfor...
I'd love to know more about this growing body of research.
A basic Google search yields the ten most profitable firms: Gazprom, Exxon Mobil, Industrial & Commercial Bank of China, Royal Dutch Shell, Chevron, China Construction Bank, Apple, BP, BHP Billiton and Microsoft[1].
I don't get the sense that oil companies and big banks are egalitarian in their approach to employee equity. What am I missing?
[1] http://money.cnn.com/magazines/fortune/global500/2012/perfor...
Those are profits in absolute terms. I suspect the author is arguing that relative to the size of the company, wage ratios are important. I would argue he is mistaking consequence for cause. Companies with egalitarian wage ratios can afford (read 'need') equitable wage ratios precisely because of the nature of their business (think software firms with barriers to entry, high margins that are dense with human capital vs a company) vs (a chemicals company, that produces a fungible good and can only compete on price - business is characterized by low margins and a greater proportion of unskilled labor - ie more wage equality would put you out of business)
Both oil companies and big banks compensate their skilled employees very well. It's not hard to make six-figures straight out of an MS as a petroleum engineer or geologist; you can do $200K/year with 5-10 years experience. And banks, of course, are legendary for their comp structures: you could be doing $80K salary + $160K bonus straight out of college and making half a mil or more 5-10 years out.
It's the roughnecks, construction crews, and bank tellers that don't make big money. Of course, those tend to be the numerical majority of employees because they're relatively cheap.
It's the same thing at Google - engineers can get paid $250K/year, but book scanners get paid $10/hour.
It's the roughnecks, construction crews, and bank tellers that don't make big money. Of course, those tend to be the numerical majority of employees because they're relatively cheap.
It's the same thing at Google - engineers can get paid $250K/year, but book scanners get paid $10/hour.
Even roughnecks make a fair amount of money in the oil industry. In canada a skilled tradesperson, like a ticketed welder, can easily clear 250k a year. The hours are long, and the work is hard, but it tends to be peicemeal in basis, so you arnt stuck doing it all year long. Also adding to this, as their work is typically all over the map, both living and traveling expenses are typically covered via something like a $100 a day living stipend.
> For starters, almost all of them recognize that their industry itself arose out of government funding (see ARPANET), and some of the most celebrated achievements of the digital culture (open source software, Wikipedia) involve commons-based collaboration with no conventional definition of private property whatsoever. It’s precisely because we lack a new vocabulary to describe this worldview that we end up lumping the tech sector together in the libertarian camp.
I'm pretty sure that's just a form of socialism.
> There’s a real estate crisis in Silicon Valley because the companies in the region are much more generous in the way they share the wealth, not less.
Don't forget the fact that no town/city wants to build (or make it easier for developers to build) high density housing despite that it is desperately needed to keep up with housing demand.
I'm pretty sure that's just a form of socialism.
> There’s a real estate crisis in Silicon Valley because the companies in the region are much more generous in the way they share the wealth, not less.
Don't forget the fact that no town/city wants to build (or make it easier for developers to build) high density housing despite that it is desperately needed to keep up with housing demand.
I'm pretty sure that's just a form of socialism.
Quiet you, we're trying to Talk Like Very Serious People ;-)!
Quiet you, we're trying to Talk Like Very Serious People ;-)!
There needs to be a corollary to Betteridge's law of headlines: if a headline reads "Why <foo> is not happening", that means it most definitely is happening (or has already happened).
"It gets at both our desire to be competitive in the global marketplace, but also to be more fair and equitable in the way we share our wealth. True libertarians would be repulsed at the thought."
I don't think this guy really understands libertarianism. Libertarian principles don't say anything about how private actors choose to distribute ownership. Most libertarians are only "repulsed" if government forces private actors to distribute ownership in a particular way. If spreading out equity more evenly among employees makes a particular firm more competitive, then awesome, that's how the market works.
I don't think this guy really understands libertarianism. Libertarian principles don't say anything about how private actors choose to distribute ownership. Most libertarians are only "repulsed" if government forces private actors to distribute ownership in a particular way. If spreading out equity more evenly among employees makes a particular firm more competitive, then awesome, that's how the market works.
"The whole premise of stakeholder capitalism offers a powerful and distinct message, because it gets at both our desire to be competitive in the global marketplace, but also to be more fair and equitable in the way we share our wealth. True libertarians would be repulsed at the thought..."
This sounds to me like a fundamental misunderstanding of the dynamics of a startup vs big company.
In a startup, every employee has an important bearing on the success or failure of the company. Getting the right people on the team is priority number one for a budding startup, and to get the best people you have to promise them a piece of the spoils.
In a typical big company, only a handful of people have enough authority to steer the ship. For everyone else, their roles usually aren't mission-critical, or they're relatively easy to replace. You therefore don't need to pay them as well.
This isn't about "being fair and equitable" or "sharing our wealth" for its own sake, this is still just about economics. More people are getting stock at tech companies because those people's skills and contributions are more directly linked to the success of those companies. It just doesn't make sense to be giving stock to pilots, pharmacists, and factory workers - if they're amazing at their jobs, it has at most a marginal affect on the company as a whole, and if they quit, the show will go on.
Don't get me wrong, I'm completely in support of giving junior people meaningful equity, for a number of reasons. But it still needs to make sense. There are good reasons why we don't see it in other industries.
This sounds to me like a fundamental misunderstanding of the dynamics of a startup vs big company.
In a startup, every employee has an important bearing on the success or failure of the company. Getting the right people on the team is priority number one for a budding startup, and to get the best people you have to promise them a piece of the spoils.
In a typical big company, only a handful of people have enough authority to steer the ship. For everyone else, their roles usually aren't mission-critical, or they're relatively easy to replace. You therefore don't need to pay them as well.
This isn't about "being fair and equitable" or "sharing our wealth" for its own sake, this is still just about economics. More people are getting stock at tech companies because those people's skills and contributions are more directly linked to the success of those companies. It just doesn't make sense to be giving stock to pilots, pharmacists, and factory workers - if they're amazing at their jobs, it has at most a marginal affect on the company as a whole, and if they quit, the show will go on.
Don't get me wrong, I'm completely in support of giving junior people meaningful equity, for a number of reasons. But it still needs to make sense. There are good reasons why we don't see it in other industries.
TLDR: You might think Silicon Valley is a rich white boys club. But we're a progressive rich white boys club. Our values are highly superior to J. P. Morgan's (or just about anybody's really) so there is actually nothing to be critical of.
What's so great about being progressive? Aren't progressives the people who want to re-distribute other people's money? And what on earth is so dreadful about the gilded age? The greatest increase in the standards of living in the history of the US happened in the gilded age. By this idiot newyorker writer's logic, we are supposed to dread and avoid the entrepreneurs that dropped the prices of kerosene, steel and other commodities, facilitated rapid industrialization and improved the living standards of everyone. Why are the billionaires of today (sergei, larry, Zuck etc) any different in nature than the billionaires of those times? Except for the crony capitalists that got in bed with the government, what is wrong with great success and wealth?
The "10Ks of millionaires" figure is striking, but the Bay area is ~8M people and ~2.5M households, so thats ~1-4% of households are millionaires. People using liquidity cash to buy houses isn't nearly a strong an effect regionwide as high salaries and building restrictions.
Lots of cities have a 1-4% millionaire density. By The Economist's definitions, Frankfurt is over 7%. NYC has 400,000 millionaires (5%).
http://www.economist.com/blogs/graphicdetail/2013/05/daily-c...
http://www.economist.com/blogs/graphicdetail/2013/05/daily-c...
> True libertarians would be repulsed at the thought, but the success of Silicon Valley even suggests that governments could do much more to encourage these kinds of internal compensation structures, in the name of better business and social cohesion. (Not to mention old-fashioned fairness.)
Wait, what part did the government play in how tech-companies compensate their employees fairly? Or does he mean the government should be applying to same structure by force on companies in other industries (to share equity with employees)?
Does the author not understand the difference between startup culture vs big business?
Wait, what part did the government play in how tech-companies compensate their employees fairly? Or does he mean the government should be applying to same structure by force on companies in other industries (to share equity with employees)?
Does the author not understand the difference between startup culture vs big business?
The author appears to intend that latter meaning, where SV companies have more egalitarian ownership structures on their own, but that now that we've seen the results, the government should encourage those structures more broadly in the economy.
Actually, the government plays a small part already in how high-tech companies share equity with employees, through preferential tax treatment for Incentive Stock Options. You could imagine many such nudges that could be employed to expand capital ownership short of distributing equity to employees "by force".
Remember in general that the limited-liability corporation as an institutional type is itself a creation of government - the notion of a business as a separate entity with distributed owners such that the business can go bankrupt without allowing creditors to go after the non-business assets of the stockholders is an artificial and relatively modern invention with a large and complicated legal structure buttressing it. C Corporations, LLCs, LLPs, PCs and the like are all creations of government and the way they operate in practice is non-trivially shaped by the ways those laws are structured. Is it so outlandish to imagine an alternative form with a deliberately egalitarian bias (an "E Corp"?). It only takes one state experimenting to make it a reality!
Actually, the government plays a small part already in how high-tech companies share equity with employees, through preferential tax treatment for Incentive Stock Options. You could imagine many such nudges that could be employed to expand capital ownership short of distributing equity to employees "by force".
Remember in general that the limited-liability corporation as an institutional type is itself a creation of government - the notion of a business as a separate entity with distributed owners such that the business can go bankrupt without allowing creditors to go after the non-business assets of the stockholders is an artificial and relatively modern invention with a large and complicated legal structure buttressing it. C Corporations, LLCs, LLPs, PCs and the like are all creations of government and the way they operate in practice is non-trivially shaped by the ways those laws are structured. Is it so outlandish to imagine an alternative form with a deliberately egalitarian bias (an "E Corp"?). It only takes one state experimenting to make it a reality!
Corporations can still distribute revenue and equity as they please. It's a legal structure for taxation and liability.
The state forcing corporations to distribute their earnings or equity a certain way is a massively more intrusive structure.
If that was done, it would likely be single handily the greatest manipulation of markets and private assets ever done by a government in modern history.
If an egalitarian equity structure legitimately benefits the companies, they will adopt that structure. If they don't then their competitors would do it as a competitive advantage. Unless it really doesn't benefit the companies and therefore requires the state to involuntary make them do it?
The state forcing corporations to distribute their earnings or equity a certain way is a massively more intrusive structure.
If that was done, it would likely be single handily the greatest manipulation of markets and private assets ever done by a government in modern history.
If an egalitarian equity structure legitimately benefits the companies, they will adopt that structure. If they don't then their competitors would do it as a competitive advantage. Unless it really doesn't benefit the companies and therefore requires the state to involuntary make them do it?
If an egalitarian equity structure legitimately benefits the companies, they will adopt that structure.
Interestingly wrong. The problem here is the definition of "benefits the company". The interest of the company is defined as the interest of its shareholders, with the interest of different shareholders counting in proportion to their ownership stake.
The equity structure is itself the terminal teleological value of the company, and consumer markets make zero evaluation of that structure except in very specialized sub-cases (like when I deliberately purchase King Arthur Flour for being a worker cooperative, for instance). This is one of those "companies do not evolve" things; state action is the only thing that will ever change company structures away from what the incumbent shareholders want, and even a fresh-founded start-up has incumbent owners in the form of its founders and seed investors.
Interestingly wrong. The problem here is the definition of "benefits the company". The interest of the company is defined as the interest of its shareholders, with the interest of different shareholders counting in proportion to their ownership stake.
The equity structure is itself the terminal teleological value of the company, and consumer markets make zero evaluation of that structure except in very specialized sub-cases (like when I deliberately purchase King Arthur Flour for being a worker cooperative, for instance). This is one of those "companies do not evolve" things; state action is the only thing that will ever change company structures away from what the incumbent shareholders want, and even a fresh-founded start-up has incumbent owners in the form of its founders and seed investors.
Given how little the votes of the average shareholder actually mean today versus the singular, large bloc-votes of the large shareholders, I see no reason not to move the economy towards a form of worker cooperatives that issue non-voting stock, or in which stockholders vote for some portion of the Board of Directors and employees for the other one. The main actual issue will be splitting up dividends between proper Mondragon-style Employee Capital Accounts and stock-investors.
* The defining difference between Silicon Valley companies and almost every other industry in the U.S. is the virtually universal practice among tech companies of distributing meaningful equity (usually in the form of stock options) to ordinary employees. *
While me may already be better than the rest of the country in this regard, we can definitely do a lot better than we do today. I'd be preaching to the choir so I'll refrain from elaborating on the equity compensation of single digit employees, but there must be a way to share the success more equally than we do today.
While me may already be better than the rest of the country in this regard, we can definitely do a lot better than we do today. I'd be preaching to the choir so I'll refrain from elaborating on the equity compensation of single digit employees, but there must be a way to share the success more equally than we do today.
"Randian libertarianism". Bullshit. Rand was NOT a libertarian.
http://www.aynrand.org/site/PageServer?pagename=ar_libertari...
http://www.aynrand.org/site/PageServer?pagename=ar_libertari...
Sort of a unexpected result, isn't it? The more 'egalitarian' companies distribute (massive) amounts of wealth into a (relatively) large number of people, gentrifying the entire Valley, and threatening to push the old inhabitants out. Is this egalitarianism? In making the middle managers (or whoever these people are) into millionaires, the divide between billionaires and the layman isn't actually improved: now the gap is even wider.
There is also some curious use of evidence: Obama won Santa Clara by 42% implies "the most dynamic sector .. is now decisively in the camp of the Democrats", but it was only 30 years ago that Reagan won the same county by >10%. The data seems to imply that the county could swing back next election, but the author doesn't seem to appreciate that idea. Why does the author have a hunch that while they temporarily voted Republican, they're truly Democrats at heart?
There is also some curious use of evidence: Obama won Santa Clara by 42% implies "the most dynamic sector .. is now decisively in the camp of the Democrats", but it was only 30 years ago that Reagan won the same county by >10%. The data seems to imply that the county could swing back next election, but the author doesn't seem to appreciate that idea. Why does the author have a hunch that while they temporarily voted Republican, they're truly Democrats at heart?
> There is also some curious use of evidence: Obama won Santa Clara by 42% implies "the most dynamic sector .. is now decisively in the camp of the Democrats", but it was only 30 years ago that Reagan won the same county by >10%.
Keep in mind that Reagan won the nationwide popular vote by 18%, so winning by 10% in his home state doesn't indicate a strong Republican following there. It just indicates a very one-sided race.
Keep in mind that Reagan won the nationwide popular vote by 18%, so winning by 10% in his home state doesn't indicate a strong Republican following there. It just indicates a very one-sided race.
Does it strike anyone else as odd that everyone in the Silicon Valley software industry has nearly unanimous views on social policy? I've never been to Silicon Valley, but I have spent my entire life and career among engineers, and I have observed diverse views on such issues as gay marriage, climate change, abortion, etc.
There's selection bias: some engineers may choose to move to the SF bay area in part because of the perceived views on social policy. One example of this is SF's Castro district especially a few decades ago.
Speaking as someone who lives on the SF peninsula, I think it's fair to say there's near-uniformity of views on gay marriage (though drive an hour east and that will flip). Climate change, on the other hand, is an area where reasonable people even in this area are more likely to disagree.
Speaking as someone who lives on the SF peninsula, I think it's fair to say there's near-uniformity of views on gay marriage (though drive an hour east and that will flip). Climate change, on the other hand, is an area where reasonable people even in this area are more likely to disagree.
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Here's an interesting thing: If the spread of equity and the wealth that has led to has resulted in the rising cost of real estate, then, that same spread has resulted in a greater visibility of the wealth disparity in the US as a whole.
I know one thing, Silicon Valley is hurting for more H-1B visas to fill vacant jobs. Perhaps one reason SV overwhelmingly votes Democratic is that the Democrats are in general more pro immigration.
The author starts with a false premise about what libertarianism is. How can I follow any logic that starts off wrong?
Off-topic: Why do outbound links on Medium.com have a scary-looking Redirect Notice?
The defining difference between Silicon Valley companies and almost every other industry in the U.S. is the virtually universal practice among tech companies of distributing meaningful equity (usually in the form of stock options) to ordinary employees.
That's disingenuous. 0.02% of something that a CEO thinks (based on nothing but his own ego) is worth $10 billion is not meaningful equity.
The proper way to model this is that equity compensation tends to be about 1/3 of what the person is giving up in salary, career advancement, etc. If you're paying $30,000 to work there, you'll typically get $10,000 per year in equity, or $40,000 over 4 years. That'll be 0.4% if the current valuation is $10 million.
Now, let's say a clueless schmuck puts his whole life savings (or, more accurately, what he'll be getting in lieu of savings over the next 4 years) in some extremely volatile (100-500%) penny stock, because that's actually what's happening (with that penny stock being in one's employer, i.e. controlled by someone who can fire you for "performance" Pincus-style). Some of those people are going to end up modestly wealthy (no employee gets rich) and most are going to be hosed.
To say that employee equity in typical startups (there is "meaningful" is a huge stretch. You'd have the same results asking people to pump their savings into penny stocks. A few would get very rich (from modest starting points) and most would wipe out.
That's disingenuous. 0.02% of something that a CEO thinks (based on nothing but his own ego) is worth $10 billion is not meaningful equity.
The proper way to model this is that equity compensation tends to be about 1/3 of what the person is giving up in salary, career advancement, etc. If you're paying $30,000 to work there, you'll typically get $10,000 per year in equity, or $40,000 over 4 years. That'll be 0.4% if the current valuation is $10 million.
Now, let's say a clueless schmuck puts his whole life savings (or, more accurately, what he'll be getting in lieu of savings over the next 4 years) in some extremely volatile (100-500%) penny stock, because that's actually what's happening (with that penny stock being in one's employer, i.e. controlled by someone who can fire you for "performance" Pincus-style). Some of those people are going to end up modestly wealthy (no employee gets rich) and most are going to be hosed.
To say that employee equity in typical startups (there is "meaningful" is a huge stretch. You'd have the same results asking people to pump their savings into penny stocks. A few would get very rich (from modest starting points) and most would wipe out.
And this is why I'd rather just get large cash bonuses than equity options or grants, if I'm going to work for someone in industry. Give me cash, and I can dump it into my Vanguard index funds for a pretty good expected value.
But this is just wrong. There are lots of one-percenters who vote Democratic. They just mostly feel more strongly about cultural-liberalism issues than they do about economic ones. But when it comes to economic issues, these folks still tend to lean rightward; they overestimate the degree of social mobility the economy makes possible today, they support "ownership society" initiatives like 401(K)s and health vouchers over social insurance programs, and so forth. These folks aren't found just in tech, they're also quite common in the entertainment industry and other "new economy"/"information economy" sectors. (The derogatory term for them used to be "limousine liberals"; rich people who were totally down with helping the poor, as long as doing so didn't cut into their personal bottom line.)
So you have billionaires on both sides. American politics, in fact, has mostly become a battle between billionaires. On one side you have billionaires who care about social liberalism, on the other you have billionaires who care about economic liberalism. But they're all billionaires, so issues that don't affect billionaires personally (like the minimum wage, or how to pay for retirement, or the unemployment rate, or affordable housing) just don't get included in the debate. As far as the political system is concerned, they're non-issues. They don't exist.
There used to be institutions that brought these issues into the discussion anyway, like political parties and labor unions. But those have mostly atrophied over the last 50 years, so we have a system where whether the capital gains tax rate is low enough (a question that billionaires of all stripes care deeply about) is continuously and loudly debated, while whether the minimum wage is high enough is hardly ever discussed.