Friday, June 21, 2019

The Brave New World of the Tech Oligarchs

Meet your new masters, the tech oligarchs. We all have an interest in seeing what they have in store for us and for our nation. So, Joel Kotkin gazes into his crystal ball to see the the future that the tech oligarchs are preparing for us. (via Maggie’s Farm) It isn't a pretty picture.

As the saying goes, time will tell whether he is right or wrong. But surely,his vision is alarming.

Kotkin begins by pointing out that the giants of high tech are monopolies. They have beaten down the competition and have taken control of the cyber terrain.

For an industry once known for competition, the level of concentration is remarkable. Google controls nearly 90 percent of search advertising, Facebook almost 80 percent of mobile social traffic, and Amazon about 75 percent of US e-book sales, and, perhaps most importantly, nearly 40 percent of the world’s “cloud business.” Together, Google and Apple control more than 95 percent of operating software for mobile devices, while Microsoft still accounts for more than 80 percent of the software that runs personal computers around the world.

The new tech age is not like the old industrial age. Whereas the industrial age required middle and working class people, the tech titans only need a few brilliant technicians and engineers. Not only did the industrial age require the middle and working classes. It provided them with opportunity and the chance to earn a living.

Such is not the case with high tech and their oligarchs:

Unlike the former masters of the industrial age, they have little use for the labor of  middle- and working-class people—they need only their data. Virtually all their human resource emphasis relies on cultivating and retaining a relative handful of tech-savvy operators. “Software,” Bill Gates told Forbes in 2005, “is an IQ business. Microsoft must win the IQ war, or we won’t have a future.”

This will produce a concentration of wealth in the hands of fewer and fewer people.

This reflects their perception of how society will evolve. Ferenstein notes that most oligarchs believe “an increasingly greater share of economic wealth will be generated by a smaller slice of very talented or original people. Everyone else will increasingly subsist on some combination of part-time entrepreneurial ‘gig work’ and government aid.” Such part-time work has been growing rapidly, accounting for roughly 20 percent of the workforce in the US and Europe, and is expected to grow substantially, adds McKinsey.

In order to keep the restless working class in line, the tech oligarchs will create a giant welfare state, one that feeds and sustains more and more people, one that even builds new housing for the homeless-- as Google recently announced that it is doing. It will not offer opportunities to work, but will care for them, like helpless children. Thus they are comfortably home within today's Democratic Party:

Instead, they favor providing what Marx once described as a “proletarian alms bag” to subsidize worker housing, and provide welfare benefits to their ever expanding cadre of “gig” economy serfs. The former head of Uber, Travis Kalanick, was a strong supporter of Obamacare, and many top tech executives—including Mark Zuckerberg, Y combinator founder Sam Altman, and Elon Musk—favor a guaranteed annual wage to help, in part, allay fears about the “disruption” on a potentially exposed workforce.

Kotkin calls it “oligarchal socialism.” Others see it as a new form of communist government. Workers will have little opportunity to enter the oligarchy, but will be provided with bread and circuses:

Their social vision amounts to what could be called oligarchal socialism, or what the Corbynite Left calls “fully automated luxury communism.” Like the original bolshevist model, technology and science, as suggested by billionaire tech investor Naval Ravikant, would occasion “the breakdown of family structure and religion” while creating the hegemony of a left-wing identity-centered individualism.

Life in a world dominated by these oligarchs would depart from the model of democratic and competitive capitalism that emerged over the last half-century. Rather than hope to achieve upward mobility and the chance to own property, the new generation will be relegated largely to the status of rental serfs. For the next generation, this promises a future not of upward mobility and owned houses, but of rented apartments and social stagnation. Here in California, Facebook is leading the drive to vastly expand this kind of housing, where the serfs and technocoolies can lose themselves in what Google calls “immersive computing.”  The poor, most of whom simply want opportunity, will be relegated to permanent dependent status.

We see this vision in action in today’s California. As everyone knows by now, the Golden State has been divided between the hyperrich and the very poor. The middle class is being hollowed out. Homeless encampments are popping up in the vicinity of the greatest concentration of wealth on the planet. The rest are leaving the state.

California, and particularly the Bay Area, already reflects this neo-feudal reality. Adjusted for costs, my adopted home state suffers the overall highest poverty rate in the country, according to the US  Census Bureau. Fully one in three welfare recipients in the nation live in California, which is home to barely 12 percent of the country’s population, while a 2017 United Way study showed that close to one in three of the state’s families are barely able to pay their bills. Today, eight million Californians live in poverty, including two million children. Roughly one in five California children lives in deep poverty and nearly half subsist barely above that.

Kotkin also sees that the new tech world order produces inequality:

For all its protestations of progressive faith, the Golden State now suffers one of the highest GINI rates—the ratio between the wealthiest and the poorest—among the states. Inequality is growing faster than in almost any state—it now surpasses that of Mexico, and is closer to that of Central American banana republics like Guatemala and Honduras than it is to developed countries like Canada and Norway. There’s even the return of medieval diseases such as Typhustied to the growing homeless encampments. We could soon even see the return of Bubonic plague, although the mainstream media seems to be ready to blame this, like most ills, on climate change as opposed to failed social policy.

The oligarchs are totally committed to erasing income inequality. But they are largely responsible for producing it. And, dare we mention, minorities especially are being left behind in the new tech paradise:

As recently as the 1980s, the San Jose area boasted one of the country’s most egalitarian economies. But in the current boom, cost-adjusted wages for middle class workers, Latinos, and African Americans in Silicon Valley actually dropped. Many minorities labor in the service sector in jobs such as security guard, for around $25,000 annually, working for contractors. There’s ever-greater segregation of minority and low income families, workers forced into mobile home parks or sleeping in their cars, as well as some of the nation’s largest homeless encampments. According to the Brookings Institution, in the last decade, increasingly tech-dominated San Francisco has suffered the most rapid growth in inequality while the middle class family heads towards extinction.

As everyone should know by now, this is not going to continue. There is a limit to how much you can pay people off with free stuff-- it is not coincidental that great tech firms provide tons of free information-- and with convenience. Savvy politicians are surely going to crack down on these firms, for monopolistic practices:

But public skepticism, notably in California, towards the tech lords is growing; many on both sides of the political divide see them much like modern versions of the gilded age mogul, successfully playing the political system to avoid regulation, anti-trust action, and taxes.

The oligarchs will certainly fight back. And they have a weapon that would have made William Randolph Hearst drool with envy: they own the marketplace of ideas. They have near total control over the way information is disseminated. And thus, they have an unprecedented influence over the way you think. Clearly, they are not promoting the free exchange of ideas. They are forcing people to think as they think. We call it political correctness because it resembles leftist ideology. But, we must emphasize, theories that are supposed to point us toward an ideal state are really designed to empower the tech elites:

Far more than the old industrial giants, they enjoy unprecedented sway through their manipulation of the information pipelines, as is widely evidenced in de-platforming of largely conservative voices on outlets such as Facebook, YouTube, and Twitter. Nearly two-thirds of readers now get their news through Facebook and Google and their dominance among younger generations is, if anything, more overwhelming.

Marginalizing and buy off large segments of the population cannot go on forever. The tech oligarchs, with their cool tee shirts and politically correct opinions, are, Kotkin explains, a clear and present danger, but not just to democracy. They are a clear and present danger to the social order.

But these well-placed defenders may not be enough to fend off regulatory assaults, particularly as more people recognize how the world being created by the tech elites offers little promise for the middle class, democracy, or free thought. Rather than the saviors many once saw, the oligarchs now represent a clear and present danger to the most basic foundations of our democracy. Resisting them represents the great imperative of our era.


trigger warning said...

There is another difference ignored but worth noting. When Standard Oil monopolized the petroleum industry, every additional barrel of crude extracted and refined cost the company money, and those costs scaled up (modulated by economies of scale, of course) as the consumer base and demand scaled up. When Microsoft tweaks Windows, or Facebook tweaks their customer-facing software, the existence of automated downloads and cloud computing means that the marginal cost of one more customer, or a million, is, in effect, near-zero. The ISPs carry the load. Nice business to be in.

Village Talkies said...
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