The fundamental error of this piece is that it assumes that if you vote Democratic, you're by definition not a one-percenter.
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.
> 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.
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.
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.
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.
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.
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.
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.)
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)
"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.
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.
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.
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."
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?
"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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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?
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.
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?
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.
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)
> 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.
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.
"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.
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.
> 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?
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!
* 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.
[+] [-] smacktoward|13 years ago|reply
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.
[+] [-] pg|13 years ago|reply
What? Much of the article is devoted to making the opposite point: that the SV elite overwhelmingly support the Democrats.
[+] [-] bjhoops1|13 years ago|reply
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
[+] [-] paul|13 years ago|reply
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.
[+] [-] unknown|13 years ago|reply
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[+] [-] cmbaus|13 years ago|reply
[+] [-] onemorepassword|13 years ago|reply
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.
[+] [-] nostromo|13 years ago|reply
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.
[+] [-] dmmalam|13 years ago|reply
[+] [-] jacoblyles|13 years ago|reply
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...
[+] [-] CleanedStar|13 years ago|reply
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.
[+] [-] stcredzero|13 years ago|reply
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.)
[+] [-] johngalt|13 years ago|reply
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)
[+] [-] Alex3917|13 years ago|reply
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.
[+] [-] tomkarlo|13 years ago|reply
[+] [-] ChuckMcM|13 years ago|reply
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.
[+] [-] jseliger|13 years ago|reply
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."
[+] [-] bubbleRefuge|13 years ago|reply
[+] [-] HeliasVlastimir|13 years ago|reply
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[+] [-] dmmalam|13 years ago|reply
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.
[+] [-] rayiner|13 years ago|reply
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.
[+] [-] loganfrederick|13 years ago|reply
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.
[+] [-] YokoZar|13 years ago|reply
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.
[+] [-] d4vlx|13 years ago|reply
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.
[+] [-] strlen|13 years ago|reply
* "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.
[+] [-] pyoung|13 years ago|reply
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.
[+] [-] hvs|13 years ago|reply
But attempting to have a nuanced discussion of politics in this country is as pointless as it is impossible.
[+] [-] john_b|13 years ago|reply
[+] [-] api|13 years ago|reply
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.
[+] [-] mcarvin|13 years ago|reply
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?
[+] [-] tomkarlo|13 years ago|reply
[+] [-] CyrusL|13 years ago|reply
[+] [-] milang|13 years ago|reply
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...
[+] [-] nostrademons|13 years ago|reply
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.
[+] [-] mcarvin|13 years ago|reply
[+] [-] joshAg|13 years ago|reply
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.
[+] [-] eli_gottlieb|13 years ago|reply
Quiet you, we're trying to Talk Like Very Serious People ;-)!
[+] [-] grbalaffa|13 years ago|reply
[+] [-] zhemao|13 years ago|reply
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.
[+] [-] lhh|13 years ago|reply
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.
[+] [-] jvm|13 years ago|reply
[+] [-] cdugg|13 years ago|reply
[+] [-] pchristensen|13 years ago|reply
[+] [-] uvdiv|13 years ago|reply
http://www.economist.com/blogs/graphicdetail/2013/05/daily-c...
[+] [-] dmix|13 years ago|reply
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?
[+] [-] Lambent_Cactus|13 years ago|reply
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!
[+] [-] hkmurakami|13 years ago|reply
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.