The Silicon Valley economy has caused massive disruption of traditional business and business models. In the years ahead, a vast new range of technological innovations — from self-driving cars to robots — may make past disruptions seem tame. In this coming world, driven by innovation and powered by individual brilliance, what role will “normal” employees and small-business owners have?
To answer these and other questions, I polled dozens of start-up founders and conducted interviews with a handful of notable billionaires and household names. I asked how they thought the future of innovation would affect ordinary people. The answers I received made clear that Silicon Valley’s elites envision a world in which 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.
“What I discovered through my survey was that Silicon Valley represents an entirely new political category: not quite liberal and not quite libertarian.”
The way the Valley elite see it, everyone can try to be an entrepreneur; some small percentage will achieve wild success and create enough wealth so that others can live comfortably. Many tech leaders appear optimistic that this type of economy will provide the vast majority of people with unprecedented prosperity and leisure, though no one quite knows when.
Inequality is something of a taboo subject in the Valley. Rarely do technologists talk about how they feel about the subject in public. Many take a pessimistic view of most of the workforce. And they fear what will happen when they build robots that can perform most jobs much better than the average human. All respondents said that a meritocracy inherently leads to an unequal world.
I asked what percentage of wealth would be held by the richest people in a perfect meritocracy. Roughly eight of 12 respondents said that 50 percent or more of all income would go to the top 10 percent. This worldview is exceedingly common in Silicon Valley. Tech executives often praise so-called 10xer engineers — an elite class of worker 10 times more productive than average workers.
What I discovered through my survey was that Silicon Valley represents an entirely new political category: not quite liberal and not quite libertarian. They make a fascinating mix of collectivists and avid capitalists.
On the capitalistic side, tech founders were extraordinarily optimistic about the nature of change, especially the kind of unpredictable “creative destruction” associated with free markets. The tech industry’s obsession with innovation is, at its core, a belief that the future gets better.
But Silicon Valley philosophically diverges with libertarians and conservatives in a key way: they aren’t individualists. Indeed, in my survey, founders displayed a strong orientation toward collectivism.
The tech people I interviewed valued contribution above all. Unearthing the latent talent of each individual is the top priority. The government’s role is as an investor, rather than as a regulator, that taxes the wealthy — and gives everyone else lots of cash.
A number of Silicon Valley luminaries, including Facebook cofounder Chris Hughes, have begun investigating the possibility of a government-provided universal basic income. A no-strings-attached mass cash transfer will ensure that no matter what happens in the future, everyone will have a reasonable income. How would such a massive new entitlement be paid for? By taxing the innovators in Silicon Valley.
“You give this money to a lot of people,” says Y Combinator president Sam Altman. “Most fail at whatever they do, and some are these wild outlier successes. And if you can enable a lot of people to take a swing, most will fail and some will generate incredible economic value. And, tax the hell out of that and do more basic income.”
Thus, the government serves an essential purpose in not only helping people become “wild outliers” but ensuring that such success gets more widely shared throughout society.
While millions of Americans know the most famous names and the most prominent companies, and we all use the products, the broad philosophy and long-term economic vision of Silicon Valley remain little understood. As tech leaders move to the forefront of economic and public policy, Americans should understand better how they think. In many respects, their vision represents something new. Whether it is something that Americans as a whole will embrace and support remains to be seen.
This piece originally appeared in the Orange County Register (adapted from the Winter 2017 Issue of City Journal)
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Gregory Ferenstein is a technology journalist and editor of the Ferenstein Wire, a syndicated service that publishes news about tech, health, education and society.
This piece originally appeared in Orange County Register