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Stand up for America’s people. Not its “principles”: An open letter to Silicon Valley

“We believe in a world that should be getting closer because of the digital age, not more separated.” — Aaron Levie, Lead Magician (and CEO) at Box

Then donate to a labor union.

Donate to veterans and unions. Regardless of current fashion preferences, the time to donate to civil liberties associations are years far gone.

“Low-cost foreign nationals are more important to my bottom-line than the very hard-working, blue-collar American families that traditionally supported the rights and dignities of those immigrants in the first place.”

Silicon Valley tech leaders are virtue signalling themselves into oblivion. Because at the end of the day, all they care about is money and fame.

Frankly, the notion that the Digital Age is some great equalizer is riddled with economic naivety. First, it ignores all mention of the time horizon over which new capital ought to be deployed. In fact, it can be established that when the equilibrium rate of innovation and the rate of growth of the economy are proportional to a given industry’s market size, that the optimal tax on capital is clearly non-zero (Aghion et al., 2012). Second, it assumes that markets equilibriate without consequences. The medium-run, in effect, doesn’t matter because any innovation-led unemployment is short-lived and inconsequential. (Stiglitz, 2014) might disagree. History strongly disagrees. Ah, but models are just benchmarks you say. Unfortunately, many people actually did and still do believe that free market fundamentalism as policy is the right way forward, even in the face of industries which thrive on massive increasing returns to scale (see The Californian Ideology).

Ultimately, what happens in-between is just as important as what happens in the end. Restrictions to immigration and free-trade are not entirely antithetical to the best principles of most Western liberal Democracies when these decisions are made (even wrongly) in the best interest of preserving their respective Republics. Frankly, most of Silicon Valley, California, and elsewhere everywhere-digital are deeply misinformed about the nature of power law-degree distributions (and the network effects which drive increasing returns) toward high-tech revenue and the impact that has on globalization, employment, and social inclusion in general. This is where the whole story begins.

As the CEO of any burgeoning new tech company, I’m sure you’re aware of the incredible advances pouring out from the new non-equilibrium economics and social sciences that has since emerged in the past few decades, primarily from the Santa Fe Institute, from NESCI, MIT Media Lab, and elsewhere. In fact, private firms themselves have come to comprise much of the corpus of knowledge with respect to social physics applications of machine learning (see Uber’s work on estimating instantaneous demand curves; a never-before achieved feat). Whether or not you know the whole story, I’m sure you’re at least aware of the many ways these news laws will make you rich. Anyway, here is at least a start of a more comprehensive understanding:

Unfortunately, even with the availability of all this new knowledge, I continue to be amazed by the efforts that the tech community will go to simply ignore the social welfare consequences of efficiency. What was the last economics paper for which you’ve actually spent more than a few hours to sit down and really read? A SparkNotes summary of one 1776 publication of Adam Smith’s most widespread treatise does not count. Travis Kalanick had the audacity — no — idiocy to proclaim that “…I’m a trustbuster…I’m pro-efficiency. I want the most economic activity at the lowest price possible. It’s good for everybody, it’s not red or blue.” A trust-buster that forms his own trust? Sure, a mitochondrion is fit genetically, but it takes all its orders from the Nucleus.

Obviously, the social returns to the formation of novel networks as in Uber and Lyft are clearly a good, but certainly not immediate, and without a view to the interim, unrest becomes a predictable consequence of technological unemployment. So why aren’t tech companies working to at least supplement the industries and hard-working family people they so brazenly displace, especially when their leaders now form the Presidential advisory? Why aren’t they at least paying more taxes? This is not something that can merely be pontificated away with some appeal to long-term GDP-idealism, i.e. “Go back to school!”; “You should have studied code instead of car mechanics!”; “In the long run, human progress matters more than you!” Hah. While tech leaders everywhere are lining up to donate to the ACLU today and yesterday, donations to labor unions languish. This is inherently wrong.

When I was applying to startup accelerators and tech incubators, all I ever heard from angels and VCs was how one’s organization should be poised to leverage scale as efficiently and mercilessly as possible. At first I thought this made sense. Leave business to risk leaders and governance to policymakers. It’s not in the entrepreneur’s mission to explicitly make positive social change without at first generating a solid return for investors. My traditional economics training told me that impersonal market forces are supposed to somehow balance the gross economic returns of competition with the deep societal need for human welfare. The mission of any would-be monopoly, however, is exactly the opposite. Regardless, after some time I couldn’t avoid the inundation. Buzz words like: scaling, first-mover, winner-take-all, power law, built-in virality, and network effects. Everywhere! Less fortunately for the losers, a singular drive toward scale is wrought with consequences.

Let’s be real. Economics and technology comprise the whole story. Culture, politics, polarization, dissent. These all come downstream from the latter. Nobody is racist or evil by default. And while neither are those who do end up committing racist or evil acts exculpable from their crimes, those who started the fire ultimately have more power to stop it. So where does the responsibility to affect positive change really lie? On Main St., or on Market St.? Stiglitz may as well have said:

As [suburban] incomes fell, [domestic white- and blue-collar workers] had less and less money to buy goods produced by [algorithms, machines, and cheap foreign labor]. [Law firms, accounting firms, hedge funds, car manufacturers, mining outlets, and warehouses] had to lay off workers, which further diminished demand for [technological produce], driving down [the returns to middle-class labor] even more. Before long, this vicious circle affected the entire national economy. — The original quote is available here

Instead of admonishing the less fortunate, the less educated, from a seat of privilege and luxury, can’t you agree that more effort should be made to appeal to the struggling lower and middle classes of not just America’s Rust and Bible Belts, but of all the peoples of all struggling Western liberal Democracies? This is a civilizational issue. Should the rights and basic dignity of actual members of their respective Republics be relegated to the dustbins of their own Democracies in the face of external pressure from elite Globalists who do not understand the damage they are doing to their own people, I would think that the people should take their fate into their own hands. Choose to ignore these warnings at your peril. This is not about racism. This is about the rights of the members of one’s own Republics to decide their own fate, and yes, that includes a temporary travel ban against nationals who happen to belong to, by definition, asecular religious autocracies (Norris, 2011) if they believe that matters.

And while I do not support discrimination against those who in earnest seek to wholeheartedly adopt Western values when they emigrate, as even a very amateur Systems theorist I can understand that this is much bigger than the arbitrary emergence of some less-educated, or otherwise cavalier Ochlocracy whose sole purpose is to do evil for no reason other than to do evil itself. Foolish. If you had any skin in this game you’d send a credible signal that you’re committed to fixing the very problem you are at least partially responsible for starting. This is certainly a trying time for the world. So, please consider allocating at least 1–2% of your company’s net earnings to one of these lovely non-profits and encourage your colleagues to do the same, or stop your incessant promulgations because they carry absolutely no weight.

References

Aghion, Phillipe; Akeigit, Ufut, and Fernández-Villaverde, Jesús. Optimal Capital versus Labor Taxation with Innovation-Led Growth.

Norris, Pippa. (2011). Muslim support for secular democracy.

Stiglitz, Joseph. (2014). Unemployment and Innovation.

This originally appeared on Medium, and has been reprinted with permission. You can follow Martin Erlíc on Medium and Twitter, among other places. 

Photo: Web Summit/Creative Commons