Calling Out the High-Tech Hypocrites


The recent brouhaha over Indiana’s religious freedom law revealed two basic things: the utter stupidity of the Republican Party and the rising power of the emerging tech oligarchy. As the Republicans were once again demonstrating their incomprehension of new social dynamics, the tech elite showed a fine hand by leading the opposition to the Indiana law.

This positioning gained the tech industry an embarrassingly laudatory piece in the   New York Times, portraying its support for gay rights as symbolic of a “new social activism” that proves their commitment to progressive ideals.

“So many tech companies have embraced a mission that they say is larger than profits,” Glenn Kelman, chief executive of Redfin, the online real estate firm, told the Times. “Once you wrap yourself up in a moral flag, you have to carry it to the top of other hills.”

Yet beneath the veneer of good intentions, the world being created by the tech oligarchs   both within and outside of Silicon Valley fails in virtually every area dear to traditional liberals. On a host of issues—from the right to privacy to ethnic and feminine empowerment and social justice—the effects of the tech industry are increasingly regressive.

The valley elite may have won its gender discrimination lawsuit against Ellen Pao, but this does not dispel the notion that it runs largely on testosterone. The share of women in the tech industry is barely half of their 47 percent share in the total workforce.  Stanford researcher Vivek Wadhwa describes Silicon Valley as still “a boys’ club that regarded women as less capable than men and subjected them to negative stereotypes and abuse.”

Race is another hot spot for progressives, but outside of Asians, the valley’s record is nothing short of miserable. Some of this reflects the rapid de-industrialization of the industry—the valley has lost 80,000 manufacturing jobs alone since 2000—as companies shift their industrial facilities either to China or to states like Utah and Texas, where they can escape the tax and regulatory regime that they so avidly support back in California.

So good blue-collar jobs go elsewhere, and the valley’s  own  African-Americans and Hispanics (who  make up roughly one-third of the population) now occupy  barely 5 percent of jobs in the top Silicon Valley firms.  They have not done well in the current tech “boom”: Between  2009 and 2011,  earnings dropped  18 percent for blacks and 5 percent for Latinos, according to a 2013 Joint Venture Silicon Valley eport. 

Nor can we expect tech firms to go out of their way to train or develop too many American-born workers, of whatever race, for their jobs. Instead the industry’s elites seek to get their employees through H-1B immigrants, largely from Asia. These workers are likely to be more docile, and more limited in their job options than native born or naturalized citizens. Given that there is a surplus of American IT workers, this brings to mind not global consciousness but instead the importation of the original coolie labor force brought to California to build the railroads.

Similarly, despite claims of a commitment to personal freedom, valley firms like Google are  renowned for their calculated violations of privacy. Support the free movement of labor? Others, notably Apple, are also leaders in seeking to restrain employees  from changing jobs.

And what about the sensible liberal idea that the rich and corporations should pay their “fair share” of taxes?  That’s a progressive ideal paid for by your Main Street businessman or your local dentists, but don’t expect your tech oligarchs to play by the same rules.  True, Bill Gates has voiced public support for higher taxes on the rich but tech companies, including Microsoft, have bargained to evade paying their own taxes. Facebook paid no taxes in 2012, despite profits in excess of $1 billion.  Apple, which even the New York Times described as “a pioneer in tactics to avoid taxes,” has kept much of its cash hoard abroad to keep away from Uncle Sam.

If these actions were taken by oil companies or suburban developers, the mainstream media would be up in arms. Yet by embracing “progressive” values on issues like gay rights, the tech oligarchs are trying to secure a politically correct “get out of jail free” card. Monopolistic behavior, tax avoidance, misogyny, and privacy violations are OK, as long as you mouth the right words about gay rights and climate change—and have the money and  the channels to broadcast your message.

Like other plutocrats, the tech oligarchs seek to buy political protection, usually from the Democrats. In 2012, tech firms gave Democrats roughly twice as much  campaign money to Democrats than to Republicans.

If anything, grassroots techies are even more left-oriented, with 91 percent  of the contributions of Apple employees in the 2012 presidential race going to President Obama.

Yet despite these leanings, the tech oligarchs manage to get a pass from conservatives. Perhaps some have over-imbibed Ayn Rand, becoming prisoners of an ideology that suggests the valley elites reflect a  “meritocratic” ideal driven by profits. That’s an interesting take since so many leading tech firms, from Amazon to Twitter, actually earn little or no profit. They benefit instead from easy access to capital markets, from which they can extract enormous earnings through stock inflation.

Other conservatives also seem to share the views of the most prominent tech libertarian, Paypal co-founder Peter Thiel, who claims that non-conformist business is now “increasingly rare outside of Silicon Valley.” Yet given the “me too” nature of much of what passes for tech today, and the huge advantages to those who can access venture capital,  perhaps American farmers, wildcat oil drillers and even cutting edge restaurateurs take bigger risks, and provide better bigger social rewards to the overall economy.

Commentators on the right and much of the left  seem to have forgotten that the valley is no longer dominated by scraggly outsiders creating amazing innovative products. In most cases now they are essentially extending the power of the Internet—developed by the U.S. military and paid for by American taxpayers—into a host of fields from transportation to renting out rooms. In many cases they are simply redistributing to themselves money that once went to publishing companies, taxi drivers and hotels. That’s capitalism, but not inherently moral, or compassionate.

In reality the valley elite is increasingly nothing more than the latest iteration of   oligopolistic crony capitalism. Firms like Google, Apple and Microsoft hold market shares in their fields upwards of 80 percent. In some cases, they do it without improving their products, as anyone using Microsoft products can certainly attest. Their control of their markets is far greater than those of  the  largest oil, automobile or home-building firms.  Tech firms, particularly in California, have also been primary beneficiaries of crony capitalism, particularly in terms of “green energy” schemes that are far from market-worthy. Despite this, Google and their ilk get subsidies to reap profits while forcing California’s middle and working classes to pay higher bills.

As a country, it is time to understand that the tech oligarchs are not much different from, and no better than, previous business elites. Like oil companies under the Bushes, they relish their ties to the powerful, as evidenced by Google’s weekly confabs with Obama administration officials. No surprise that a host of former top  Obama aides—including former campaign manager David Plouffe (Uber) and White House press secretary Jay Carney (Amazon)—have signed up to work for tech giants.  

None of this is to say that the tech elites need to be broken up like Standard Oil or stigmatized like the tobacco industry. But it’s certainly well past the time for people both left and right to understand that this oligarchy’s rise similarly poses a danger to our society’s future. By their very financial power, plutocratic elites -- whether their names are Rockefeller, Carnegie, Page, Bezos or Zuckerberg --  need  to be closely watched for potential abuses instead of being the subjects of mindless celebration from both ends of the political spectrum.

This piece first appeared at Real Clear Politics.

Joel Kotkin is executive editor of and Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University, and a member of the editorial board of the Orange County Register. He is also executive director of the Houston-based Center for Opportunity Urbanism. His newest book, The New Class Conflict is now available at Amazon and Telos Press. He is also author of The City: A Global History and The Next Hundred Million: America in 2050.  He lives in Los Angeles, CA.

Official White House Photo by Pete Souza.

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"New" is not always good...

Joel, enjoyed reading the article. Spent a small fortune sending my precious daughter to Chapman and if you reflect the general quality of the faculty there, I feel my daughter and I got our money's worth.

I own a small taxi company in Hawaii. I am one of the "evil incumbent businesses" that Uber is attempting to disrupt and replace. I launched my company 2 years ago and currently, we've grown to 38 vehicles and 120 employees (not independent contractors). Some additional relevant facts about my company: a) we pay, as required by federal and state law, health insurance, worker's comp insurance, and temporary disability insurance; b) my employees and I fully comply with all federal and state withholding requirement including FICA and FUTA, c) because driving is an inherently dangerous activity, our drivers readily comply with health exam and background checks mandated by state and local municipality rules, d) needless to say, all our vehicles are fully insured for commercial activities, e) we also fully comply with the meter rates fixed by the city because we understand that we're a part of a larger public transportation system designed to service all - including the poor, the elderly and disabled, f) we're Hawaii's first hybrid electric taxi fleet and Hawaii's first taxi company to add wheelchair accessible, fully ADA compliant vehicles to our fleet - we take great pride in minimizing our impact on the environment and maximizing our service to the disabled community g) one final point, 80% of our employees are classified as minorities and we have a sizable representation from the LGBT community.

Currently, the Hawaii state legislature has a Bill (SB1280) that attempts to require Uber and Lyft drivers to i) obtain commercial insurance covering their commercial activity, ii) register as a business to better ensure, among other things, payment of taxes, iii) obtain physical exam and law enforcement conducted background check, iv) much to my chagrin, the Bill does not prohibit price gouging a.k.a surge pricing. My business operates on thin margin partly because of the huge cost of regulatory compliance. Uber, a $40 Billion company, the darling of the Millennials and Venture Capitalists, charges while sitting on their fat-cat-ass a whopping 20% of gross receipt from its drives whom they affectionately call their "independent small business owners". Uber has threatened that if the Bill passes, their business model will not work. Why? If their small business owners are forced to comply, they may not tolerate 20% off the top. Poor $40 Billion Uber may have to actually settle for 15% - something they absolutely refuse to do.

WHAT'S MY POINT!?!? Not all "old" things are bad, and not all "new" things are good. Remember the "new paradigm" bantered around in the 90s that led to what Alan Greenspan described as "irrational exuberance"? Most "fundamentals" whether applied to the stock market, public safety, child rearing and even industrial psychology of oligarchy, rarely change - that's why its called "fundamental".

It's not just tech

While some of Mr Kotkin's observations seem on point to me, it does seem that tech workers and executives share many of these attitudes with other office working professionals in industries that don't rely heavily on a blue collar workforce. Lawyers, hedge fund managers, Hollywood entertainers and moguls (who do perhaps rely more on less glamorous workforces), and academics are all happy to see policies that drive those industries that might actually hire the working class out of state.

I agree but...

You are correct on your assessment of the tech elite, but you never seem to comment on the Big Energy mafia. You are always using Houston as a model for development with no regard to environmental impacts. We all do not want to work in fraking, and not all techies are insentive to societies needs. Since when is Big Oil, Saudi Arabia, Russia, etc "good guys"???

Who are "We"?

You can educate people, but the minute you start dictating to people how they should think/feel/act you are acting in a fascistic manner. True Freedom allows one to swing their arms right before the point you hit someone else's nose. Progressivism has failed, or is in the process of failing, everywhere it has been tried in the last 130 years. Thinking that you know better than everyone else how to run their lives "for the good of society" demonstrates you're not even happy with your own life. Progressivism is the opposite of Liberty. Further, Progressivism is historically alined with Eugenics and population control... with all manner of Societal Control, where the privileged elite decide what is "good" and "right" for "society". Finally, without exception, every time a so-called monopoly was broken up by the all-knowing beneficent State, the result was always higher prices and less efficient industry.
"You can't even run your own lives, I'll be damned if you run mine"
-Jonathan Edwards, 1971

Elites and fascism

I'm ambivalent about the whole gay marriage thing. If Indiana and Alabama don't want me around (I'm gay) I'm only too happy to vote with my feet and live in a place that appreciates me without giving me grief. Life is just better for me elsewhere.

I will point out the obvious. Fascists (in Germany, in Chile, in Spain... everywhere) always round up homosexuals. Communists don't like us much either. Theocracies, kleptocracies... not big friends of gays. Capitalists tolerate us so long as money can be made in the process, but it's a fickle friendship. We're an easy group to scapegoat when there are bigger more complex problems brewing in society. I'm not militant about these issues. Societies do what they do because it's expedient. But I always have an updated passport and some cash set aside for a quick exist. Just in case I need to vote with my feet again.