The technological revolution once promised a new era of expanded democracy and enhanced opportunity. Instead, we face today a reality that blends the worst aspects of George Orwell’s Big Brother and Aldous Huxley’s Brave New World controllers.
Incredibly, the Democratic establishment still looks to Gavin Newsom as their answer to Joe Biden. Yet frothy accounts of the California Governor’s record are about as accurate as a Google AI treatment of American history: totally fraudulent.
In what has been a bleak year for Silicon Valley, the sudden surge in the value of tech company Nvidia, driven by its mastery of chips used for artificial intelligence, may seem like a ray of hope. Yet if this success may reward the firm’s owners and employees, as well as the tech-oriented financial speculators, the blessings may not rebound so well to the industry’s workforce overall, or to the broader interests of the West.
In recent decades, progressive politics has been underwritten by the ascendant economic titans of capital, technology, and communication. Big Tech and financial firms have long financed Democratic causes, led by those such as George Soros and the now-disgraced crypto-master Sam Bankman-Fried, who was released last month on a $250 million bail deal.
On: Leighton Smith Podcast
By: Host, Leighton Smith
Joel Kotkin, described according to The New York Times, is America’s uber-geographer. Kotkin is an internationally recognised authority on global, economic, political and social trends.
We talk to him about what is now brewing in Silicon Valley, proposed in Toronto and implemented in China, that could be the role model for our future urban civilization.
After an introduction, Joel’s interview starts at about 7:57
By: News
On: Mind Matters
In a column yesterday at Spiked, urban studies specialist Joel Kotkin, author of The Coming of Neo-Feudalism: A Warning to the Global Middle Class (2020), provided depressing evidence that the power of Big Tech is beginning to genuinely resemble the power medieval lords had over their serfs. It’s not just an office joke any more.
When Google went public in 2004, it epitomised technological and entrepreneurial genius. Two engineers had developed a remarkably powerful, easy-to-use search engine, opening the doors to vast amounts of knowledge.
The founders proclaimed their motto as ‘Don’t be evil’, which was typical of Silicon Valley’s decades-old techno-optimism. Stewart Brand, writing in Rolling Stone in 1972, claimed that once access to information became universal, it would turn us all into ‘computer bums, all more empowered as individuals and as cooperators’. It would be a new era, Brand continued, of enhanced ‘spontaneous creation and of human interaction’. The ‘early digital idealists’, noted computer scientist and writer Jaron Lanier in 2014, envisioned a ‘sharing’ web that functioned ‘free from the constraints of the commercial order’.
This idyll is no more. Google and the other Big Tech firms are no longer grassroots creators. They’re now oligarchs and monopolists, exerting undue influence on the market and on politics.
The California economy may seem healthy on the surface, with home prices soaring, Silicon Valley booming and the state government posting big multi-year state budget surpluses thanks to a massive surge in capital gains tax revenues and income tax revenues from tech stocks.
But that good news masks a dangerous period ahead.
In fact, California’s heavy dependency on tax payments from the rich and on the continued strength of the tech economy makes the state highly vulnerable in the event of a significant slowdown — or, worse yet, a full-bore global recession. According to Jim Doti of the A. Gary Anderson Center for Economic Forecasting at Chapman University, the probability of a recession starting late this year or next is very high.
Property prices are already beginning to drop in parts of the Los Angeles area. Similarly the IPO market, a major source of capital gains, is retrenching. Financial setbacks for the wealthy are problematic for the state because the top 1% of income-earning Californians pay 46.2% of all personal income taxes.
We’ve been here before. After the last recession ended in 2009, it took the state five years to get revenue from income taxes back up to pre-downturn levels. During those five years the state received about $50 billion less in revenue than if the recession had not occurred, and government was forced to cut programs by about $45 billion to compensate, according to the California Franchise Tax board.
Today, the state is even more reliant on tax revenues from its wealthy elites: Capital gains collections have increased roughly fivefold since 2010. Income taxes, mostly from the very wealthy, which barely constituted one-third of state revenues in 1980, now make up two-thirds.
A new recession, or even simply a slowdown, would place California in a very difficult position, particularly given that it continues to engage in what CalMatters columnist Dan Walters calls “an expansionist binge” of ever greater social spending and housing subsidies. Despite strong annual budgets, California suffers the highest debt of any state — $507 billion. It is projected that the cost of servicing the state’s debt in 2022 and 2023 will be approximately $8 billion annually and could grow even higher as interest rates rise.
Read the rest of this piece at Los Angeles Times.
Joel Kotkin is the author of The Coming of Neo-Feudalism: A Warning to the Global Middle Class. He is the Roger Hobbs Presidential Fellow in Urban Futures at Chapman University and Executive Director for Urban Reform Institute. Learn more at joelkotkin.com and follow him on Twitter @joelkotkin.
Marshall Toplansky is a Clinical Assistant Professor of Management Science at the Argyros School of Business and Economics at Chapman University.
Homepage photo: D. Ramey Logan, used under CC 4.0 License
The record meltdown of Meta stock earlier this month suggests turbulence in the tech world and a difficult period ahead for the company formerly known as Facebook. But even as Meta’s stock has fallen, the record profits being posted by fellow oligarchical tech firms Google, Microsoft, Apple, and Amazon indicates that Silicon Valley’s hegemony is far from over. Read more
Enthusiasts of “the new economy” long cherished the notion that it would be different from the unenlightened, sluggish, and piggish older one. Yet our economy seems increasingly to resemble not some hippy capitalist utopia, but the deeply concentrated economy of pre-war Japan.
At the time, Japan had developed an economic model around a handful of large corporate conglomerates called zaibatsu. Organized as a “financial clique,” with a bank at the center, these firms extended their interests into virtually all economic activity. They included Mitsui, Mitsubishi, Sumitomo, and Yasuda. Mitsubishi led the way in shipbuilding, steel, and of course aircraft, being the creator of the famous Zero fighter.
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