Young Tech Tycoons Pushing Left Coast Ahead Of East In Democratic Power Structure

There are two deep-blue regions that are critical to the Obama administration: the Northeast and the coastal region between San Jose and Seattle that truly deserves the moniker of the Left Coast. They dominate the Democratic donor list, and provide the administration with most of its appointees and much of its ideological moorings.

Yet this common ground conceals a shift in the balance of power between these two blue strongholds. The power of the high-tech heavy Left Coast is waxing while the old Boston-to-Washington corridor is waning. Jeff Bezos’ purchase of The Washington Post simply confirms this movement of the political tectonic plates.

The Rise of the Tech Oligarchs

Wall Street was the star of the 1980s, but today, it’s the tech industry that offers “the same heady mix of mystery, power and money,” as Om Malik puts it. The Left Coast’s ascendency is based largely on its increased domination of this critical sector. Thirty years ago, East Coast giants such as ITT and Eastman Kodak ranked among the largest tech firms, with little representation from the Left Coast. Today the region accounts for seven of the top 10 tech companies.

The Left Coast is also home to four of the world’s top seven software companies. The software for most of the world’s computers comes from either Microsoft in Seattle or Google and Apple in the Bay Area. Search is almost completely dominated by Google, social media by Facebook. Bezos’ Amazon overwhelms its e-tailing competitors.

This has generated an enormous shift in the geography of American wealth. In 1990 most of the richest Americans lived in the Northeast or were part of the old energy/agriculture economy in the middle of the country. Today five of the nation’s 15 wealthiest people reside in the Bay Area or the Puget Sound; only two, Michael Bloomberg and George Soros, come from Wall Street. More importantly, the Left Coast oligarchs tend to be much younger than their East Coast counterparts; six of the world’s 29 billionaires under 40 hail from the Left Coast, three from Wall Street.

Seizing the Means of Communications

The best historical analogy can be found at the turn of the 20th century as entrepreneurs from America’s industrial expansion — John D. Rockefeller, Andrew Carnegie, E.H. Harriman and JP Morgan — moved to influence government and politics, first by buying political influence and later through foundations. Many of the great newspaper tycoons of the time, for example William Randolph Hearst, heir of a great Colorado mining fortune, also used their money in influence mass opinion, a pattern repeated, ironically in 1933, when Wall Street financier Eugene Meyer bought the moribund Washington Post, greatly enhancing his family’s influence for decades.

But these newbies come with an extra media advantage: they dominate virtually all the emerging transmission systems for information. Google, Apple and Facebook all are emerging as major disseminators of entertainment as well. This shift promises to inflict collateral damage on both Hollywood and the Manhattan-centered advertising industry. The recent shotgun merger of Omnicom and Plublicis reflects the weakened position of traditional ad firms at a time that Google alone has more ad revenues than the entire print publishing industry combined.

Reshaping the Political Landscape

Once largely divorced or distant from politics, the Left Coasters such as Amazon, Apple, Facebook and Google have all greatly expanded their lobbying operations. Many tech firms, notably Facebook and Apple, pay minimal taxes, meaning they have a strong stake in defending their current privileges . They also have reason to work to make it difficult to protect the privacy of netizens since so much of their profit depends on selling personal information to corporations.

This fluency with data has also made the Left Coasters critical contributors of campaign expertise for President Obama and other Democrats. Now they are starting to fund the next generation of pliable favorites, most recently Newark Mayor and senatorial aspirant Corey Booker.

The rise of the Left Coast oligarchs will likely accelerate the extinction of the traditional working-class Democratic Party. Bezos and other Left Coasters tend to be progressive on social issues, but vehemently opposed to unions, here and abroad.

Bezos and other online retailers will need to defend themselves against attacks on the job-destroying aspects of their shops; since 2003 there has been a loss of roughly 800,000 retail jobs while the electronic side of the industry has generated less than 180,000.

Mark Zuckerberg and others leading the charge for immigration reform also have an interest in assuring a steady supply of lower cost, lower hassle “techno-coolies” for their software shops.

This may not endear the oligarchs to a large part of American middle class who would prefer those jobs go to themselves, or their children. Left Coasters also embrace green policies that entail high energy prices, arguably more acceptable in the mild, if a bit, wet climate of the Left Coast but economically disadvantageous to far less temperate middle America.

Conservatives, for their part, hope that the Left Coast moguls prove more libertarian than statist. But they may miss the fundamental law of oligarchy: when a company dominates a sector, they usually seek to use the government to consolidate their position. Google and other tech firms, for example, have been more than happy to feed off the crony capitalist trough — for example in backing renewable energy schemes — when opportunity strikes.

What’s the Future?

Demography is working against the East Coast, now the oldest part of the country, with the smallest population under 20. The region’s aging population will likely blunt innovation there. In contrast, despite high housing prices, the Left Coast’s population grew 10% in the last decade compared to 6% for the Northeast; Census projections to 2023 suggest the Northeast will continue to lag as well over the next ten years.

As urban analyst Aaron Renn has noted, Seattle, Portland and San Francisco also boast a very politically incorrect advantage. Despite their worship at the altar of diversity, these cities have smaller populations of African-Americans and Latinos, who tend to be more economically disadvantaged. The Northeast is three times as black as the Left Coast. In contrast, the Left Coast’s largely upwardly mobile Asians account for 15% of the local population, three times their proportion on the East Coast.

The Left Coast also enjoys by far the highest concentration of people engaged in STEM jobs — roughly 50% higher the national average. Since 2005 STEM employment has expanded by double-digit percentages in Seattle, San Jose and San Francisco, compared to much more modest gains in New York and Boston. In some fields like e-tailing, the Left Coast, not surprisingly, dominates, with Seattle and San Jose leading the way.

Given the current economic trajectory, more traditional East Coast dominated-industries — from brick and mortar retail to publishing and media — can be expected to crumble before the onslaught of the Bay Area and Seattle. The old cities of the East may hold their social prestige and legacy well into the current century, but the blue balance of power seems destined to keep tilting toward the Left Coast.