Would Bernie’s supporters let him take on Silicon Valley?

If Bernie Sanders became president and was then tough on the growing power of the Internet industry, would the progressives currently singing his praises still support him?  With this post, I am neither endorsing nor indicting the candidacy of Senator Sanders himself, but as his campaign is built on a theme of holding Wall Street and corporations accountable, I have to wonder if his supporters have contemplated the idea that, as president, if he were to wield Teddy Roosevelt’s sledgehammer, this means Silicon Valley and its capitalists, too.

After all, Google alone is among the largest corporate tax dodgers in the country; it now consistently ranks as in the top ten biggest lobbyists; it is among the federally subsidized; it has wriggled out of anti-trust investigations and paid its way out of criminal indictments for its executives; part of the businesses strategy is based on invading your privacy; the company is racing toward a trillion-dollar valuation without being profitable while its top execs live among an elite fraction of the one percent; it doesn’t employ very many people; and the company built a considerable portion of its market share by exploiting other people’s labor without permission.  Google isn’t the only Internet company to resemble these remarks—they’re just the biggest and most pervasive.

But we’ve seen what happens when the government tries to tell the Internet industry what to do, haven’t we? The industry rallies the masses by scaring the hell out of everyone with messages about free speech and a broken Internet and the end of democracy itself. And you’re right in the middle of a Candy Crush game, dammit! (On a side note, watching this particular campaign season, the idea that the “Information Age” has been a boon to democracy is a very tough sell.  If it really is possible to break the Internet, somebody show me how.)  Okay, back to the point …

I’m not at all surprised that Sanders’s message is popular with a lot of 18-29-year-old progressive voters.  Like the humane antithesis of Trump’s cultish message of intolerance, the Sanders campaign is certainly about being fed up—fed up with the fact that the system is rigged—and this frustration cannot be denied.  But how holistically this political base is willing to look at the rigging is another matter. When Sanders says “Wall Street”, how does that translate among his supporters?  Does it consider the networked economy of the 21st century?

Given the extent to which the sanctity of the Internet is hugely important to this same demographic, is anyone paying attention (including Bernie?) to the fact that the industry which has accelerated wealth consolidation, which has produced paper billionaires out of the most speculative—and often predatory—investments, and which evangelizes an ethos of operating above the rule of law is led by Google, Amazon, Facebook, Apple, Uber, Spotify, etc.  Like it or not, many of the same people who say they want a guy like Sanders to take the fight to Wall Street are trapped in a dichotomy in which simply sharing that message on social media is telling Wall Street to keep doing exactly what it’s doing. Or consider another example …

With an infusion this January of $2 billion in private equity from China, Uber is now valued at over $60 billion, making it bigger on paper than Dow Chemical, General Motors, or Time Warner.  Although there are many drivers currently operating, the company technically employs almost nobody, and it has recently invested some of its VC money in the future of driverless cars.  In fact, in recent announcements, Uber founder Travis Kalanick has stated that if they can eliminate the driver altogether, the price of using services like Uber will become cheaper than owning a car. In theory, he may be right; but that statement alone implies a dramatic, multi-decade transformation to our economy and our infrastructure. This may include ground-transportation services consolidated down to just one or two dominant companies by the same mechanisms that enabled Amazon to become the category killer in product fulfillment. But what exactly do we think that sixty-billion-dollar speculation is about, a ride-hailing service? Yeah. So, when Bernie says he wants to tax Wall Street and pay for infrastructure, how does the current capitalist bet on Uber’s future change that conversation?  We’ll “tax” Wall Street to pay for a public subsidy of a ground-transportation paradigm that is still owned by the 1%?

What the tech-utopian promise and the Sanders campaign have in common is that they both reflect frustration with the status quo, and both will frame issues in the language of democratization; but where the agendas differ is considerable and seems to highlight the two opposing streams in which the millennial generation in particular is standing.  Sanders voters want to make college free and healthcare more affordable while the Internet industry wants to make doctors and professors, to a certain extent, obsolete.  Sanders voters want to level the playing field while the Internet industry wants to own the field, the ball, the bat, and the photos you took while you were playing.  Sanders voters want to make America less corporate, the Internet industry is the ultimate corporatization (see networking) of everything.  Sanders voters talk about American jobs while the tech-utopian’s rhetoric has confused the mantra of “disruption” with Schumpeter’s creative destruction.  Sanders voters cannot possibly say they want any president to go after Wall Street today and not include the hugely speculative bets on the technological future this same constituency says it wants in the palm of its hand.

It’s not that we cannot or should not have the best future technology can provide, but if a Bernie Sanders (or even Hillary Clinton) were to take this economic agenda to the doorstep of Silicon Valley, and that industry responds with its standard barrage of messages that the Internet and our rights are “under attack”, will this segment of the electorate keep faith with its stated mission, or will they get fooled again?

© 2016, David Newhoff. All rights reserved.

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  • Sadly I think this will be a steeply uphill battle if even possible. This is because, unlike Wall Street, Google gives you something, i.e. “I get free music from Google, the only people hurt are those evil rich record execs!” For many of Sander’s voters Bernie is giving them a similar promise i.e. “Bernie will give me free healthcare and take money from those bad rich guys to do it!” Let me be clear that I am not criticizing socialized medicine here (I completely support socializing medicine like, you know, the rest of the civilized world), I am criticizing the simplicity with which some conceive it. This is why support for such plans, falter when the realities of how it will function come out. It’s what happened to the ACA (aka “Obamacare”). (“Wait! I have to pay something?! That’s not how it was supposed to work!”).

    Sanders’ supporters won’t rally against Silicon Valley, because Bernie is the same thing as Silicon Valley to them.

  • I think if there was a perception that Silicon Valley (the big players – Google, Apple, etc.) was as destructive to the health and well being of the American economy as the big players on Wall St. are…the mob would turn in a second and rip their heads off.

    Sanders campaign has attracted an unusual coalition of people, and in my mind at least, the extraordinary thing about those people is that they are just plain fed up with the deck being so stacked. By the way, Trump is attracting his own kind of coalition of similar people.

    For Hillary, Cruz, and Rubio, their campaigns are linked to the old party infrastructure…and while Hillary might pull out a nomination (the Democratic machine is more effective than the Republican – Cruz and Rubio are done), at the end of the day I think there are many Sanders supporters who will vote for Trump instead of Hillary…purely on the basis of tearing the whole thing down with someone outside the “system”. Or else they won’t bother to vote at all.

    I’m sensing a disturbance in the Force, Luke….

    • ” I think there are many Sanders supporters who will vote for Trump instead of Hillary…purely on the basis of tearing the whole thing down with someone outside the “system”. Or else they won’t bother to vote at all.”

      And if they do that, they’re damn fools. The whole, “tear the system down and then utopia will rise” trope is incredibly selfish and destructive, because it ignores the high cost in both human lives and infrastructure.

  • The beginning of the end..

  • For my part, the answer is a resounding yes. I would love for someone to tear apart Tech Bubble 2.0 and labor exploiters like Uber, just as much as Wall Street proper.

    Perhaps there are some Bernie supporters who disagree, but I think it’s easy to treat demographics as a false monolith. The biggest fans of Bernie are the folks this economy is NOT serving, the ones rejected from the opportunities we’ve been heavily educated for (and heavily charged for that privilege). While I’ve not studied it closely, I think you’ll find a lot more support for Hillary in the tech sector, and a lot more support for Bernie in the unemployed.

    And most of the folks I know–even who use Uber–feel pretty ambivalent and uneasy about its practices. An alternative would probably be welcome. Of course, my experiences are not necessarily representative, and anecdotes aren’t data. But I wouldn’t sell the Bernie fans short on this front.

    • David Newhoff

      Thanks for your comment and for sharing your own observations. I don’t presume to know the answer to the question either, but do think it’s a question worth asking. And as I say, I really cite Bernie insofar as he represents a certain agenda and set of stated goals. I suspect there are plenty of people who feel as you do, but I also find it interesting that none of the candidates are really talking about the 21st century economy–about the effect of technology on job loss, for instance, despite the fact that economists are talking plenty about these issues.

  • I think there’s a huge difference though between reforming Wall Street and reforming Silicon Valley. The only reason the two sectors are often compared (i.e. Silicon Valley is the new “Wall Street”) is because they are sectors that appears to play fast and loose with government regulations, and attract people due to the potential for wealth.

    The difference is that one represents what in reality is actually the most regulated industry out there–monetary markets–and yet it’s still not regulated enough in many respects. It may seem in the tech policy world that Silicon Valley is a big deal, but in reality, the amount of influence the tech industry has on your average citizen, whether its a flyover state, blue collar worker applying for a loan, a single mother in Ohio trying to refinance her mortgage, a recent college graduate struggling with student loans, or a couple buying their first house, absolutely pales in comparison to the influence that the banking and investment industry has on your average citizen. Ask that single mother trying to refinance her mortgage what she thinks about Uber. Then ask her what she thinks about the fact that she can’t refinance because the value of her mortgage plummeted after crediting agencies falsely inflated the values of packaged investments to essentially get kickbacks from investment banks selling those investments.

    One industry’s incompetence/fraud led to the worst financial crisis since the Great Depression. The other is an industry where people actually WANT the bubble to burst (see this great article http://www.nytimes.com/2016/03/09/technology/in-san-francisco-and-rooting-for-a-tech-slowdown.html?_r=0)

    Additionally, money markets don’t CREATE anything, other than wealth. So the issue is where the wealth is being concentrated. When you have executives of Goldman Sachs padding their bonuses off taxpayer bailout money, which was only necessitated due to Goldman Sach’s own unlawful actions, while many people in this country cannot make a living wage, it’s going to spark a lot of anger, even from people who don’t care about such issues as net neutrality and copyright reform (i.e. most people). Uber may be hyper-inflated in value, but at least it offers people jobs (you can say they employ almost nobody, but that independent contractor driving me around can set his own schedule and make some extra cash driving around for a couple hours), or other value, e.g. Google and search optimization. And if Uber and other tech companies are indeed way over-inflated in value, don’t you think the scrutiny should be as much on the finance industry providing the funding?

    So yea, not saying Silicon Valley isn’t in need of reform. Just saying, I see why Bernie’s focus is on Wall Street. One is a much more pressing for a much larger constituency.

    • Thanks, Jon. I wouldn’t necessarily separate Silicon Valley and Wall Street at all, and so I don’t advocate shifting attention away from one to focus on the other. My larger point is that Silicon Valley in many ways represents the worst excesses of Wall Street on amphetamines, and I wonder how many people consider that a lot of the “free” toys they love in the digital age are feeding a very aggressive investor agenda that is surely consolidating wealth and power.

      • Sure, but do you think the larger issue is related to the start-ups themselves that are being funded, or the venture capitalists that fund them? And if the latter, what kinds of regulations would you want in place?

        Keep in mind part of why these companies are so inflated in value is because of the perceived strength of their IP.

        By the way, this was an interesting recent article both poking fun at Silicon Valley, but also highlighting the problems with loose investors: http://arstechnica.com/the-multiverse/2016/03/cast-of-hbos-silicon-valley-discuss-the-real-tech-region-at-swsw/

      • Sorry, Jon, for the late response. I think the larger issue is a business culture that was cultivated long before the CEOs of most of these start ups were born. I don’t think government deregulated markets unilaterally; I think people wanted them to be deregulated because it was consistent with the kind of business ethics fostered in the 1980s that drove so many of my contemporaries to B-School. I think companies like Uber are just extensions of the culture that gave us Mike Milken and Enron and later the mortgage securities fiasco. I don’t think we can hope to entirely regulate away that kind of culture; the culture has to change first and then the policy follows. Either we demand responsible, sustainable capitalist models, or we don’t. For the last 50 years or so, that’s not what we’ve wanted. There are indications that the millennial generation does want this–HR departments revealing that candidates care about the ethics of the companies they join, etc. — but how much of this is purely aesthetic is a question. Is there a regulatory answer to companies like Uber? Maybe. But first, there should be a market answer, in which consumers decide whether or not they want to feed that kind of business.

      • The problem is that legislators abandoned regulation of the internet. For things like freedom of speech that is laudable, for other stuff not so. The result has been that if any part of a thing can be delivered digitally then there is little regulation. This is attractive to VC and results in the same abuses that occurred within the banking and financial system. Clever people exploit loopholes in order to maximize profits at the expense of the wider community. I’m reminded of an interview with the spokesperson for the banking industry in about 2008. She said these are clever people and any regulation you put in place they’ll find a way around. In that sense wall street and silicon valley are the same thing. Silicon valley and banks tends to inhabit the cracks between jurisdictions. The only difference being that we have some 300 years of experience with dealing with one form of these critters and just 15 years with the other.

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