Silicon Valley’s Incoherent Idealism (@pmarca, #SV, #politics, #economics, #ideology, #America)

A friend linked me to Why does Silicon Valley seem to love Democrats and dismiss the GOP? A Q&A with journalist Greg Ferenstein which contains an interesting summary of the philosophy of many Silicon Valley entrepreneurs with regards to an ideal society and the role that government can play in bringing it about:

The high level elevator pitch is that Silicon Valley and, broadly, urbanized professionals, represent an entirely new political category — not libertarian, not Democrat, and not Republican. I argue that they are pro-capitalism and pro-government and their belief is that the government should be an investor in citizens to make them more educated, entrepreneurial and civic, rather than act as a regulator of the two parties.

[T]he internet was created by a government lab. Much of Silicon Valley is based on government funding, whether it be basic research or education or outreach for free trade the internet requires pretty substantial government involvement.

[T]hey are not fans of libertarians. Libertarians have threatened to cut funding for economic studies, basic research in the sciences, education. These things are absolutely crucial to emerging industries and governments roll [sic] in it.

[C]rucial to what is distinct between libertarians and valley folk that Silicon Valley’s ideology is pro-market but it is not pro-liberty. Liberty is not a value. They are highly, highly, collectivist. They believe that every single person has a positive obligation to society and the government can help people or coerce people or incentive into making a unique contribution.

Silicon Valley is all about inequity and unpredictability. They really believe that some people are much more productive or inventive than others. One of the ways in which this manifests itself is performance based funding, where they will encourage competition among schools and will give some schools more money than other.

If anyone wants to make best friends immediately with Silicon Valley, say you’re going to fix housing. It is a crisis out here; we’re talking about median rents over $4,000, people are getting evicted left and right, and it’s because the super-left progressive wing in San Francisco has basically made it impossible to build anything but single family homes, and it can take years to get anything approved. It is a regulation jungle.

What they want to do is they basically want everyone to live like they lived in college, where you get to play all day long, discover new things, you don’t have to work much, maybe you have a part time job and you just get to chill. The working phrase for this is automated luxury communism. And the way for automated luxury communism to work, and this is a real thing that could be happening within our lifetimes, is that robots replace most work and you just get a check from the government every month that allows you to spend as you want. And it comes from a very, very high tax on the relatively few workers who do have economic value.

When the Atlantic’s James Bennet asked Zuckerberg what his political ideology was, “are you a conservative or a Democrat”, he said, no I’m pro-knowledge economy. And the knowledge economy is a distinctly different beast. Boeing and the other things are also technology companies — missiles and planes. The act of creating information, and believing that information alone can be a solution is a distinct ideology. Most companies will not be information technology companies, and that is why it will remain a distinct way of life.

I will attempt to summarize this into a few key stances, the Silicon Valley philosophy is described by:

  • Pro-capitalism; competition will provide the best solution
  • Pro-government; government can improve people and outcomes by subsidizing the right activities rather than trying to control interactions and exchanges
  • Anti-libertarian; libertarians want to restrict the size and role of government which they see as critical to building the infrastructure and knowledge networks they view as critically important to society’s well-being
  • Anti-liberty; individuals have positive obligations to society to make it better and should not have the freedom to shirk their responsibility
  • Pro-collectivism; “We’re all in this together, play as a team”
  • Anti-egalitarian/pro-elitism; recognize the inherent differences in ability and talent and let competition raise society on the coat tails of the winner
  • Anti-scarcity; they believe economic scarcity is an artifact of technological constraints which are being removed by the march of progress
  • Pro-taxation; high levels of taxation are a leveler and generate resources for government to use to promote the well-being of society as a whole
  • Pro-housing; affordable housing is a fundamental human right and government should assist in providing it

Let’s look at some of these principles and the fundamental contradictions they represent.

First, pro-capitalism and pro-government are antagonistic ideas. Capitalism is a voluntary, competitive market resting on the institution of private property. Government is an involuntary, monopolistic institution resting on the institution of public property. If capitalism produces a competitive outcome where the best idea wins, government handicaps it by taking resources from these competitive winners and using them to subsidize the runners-up.

Libertarians are pro-capitalism. Libertarians believe in individual freedom derived from individual property rights. To be anti-libertarian is to be pro-government and anti-capitalism. Libertarians aren’t against infrastructure and knowledge networks– they’re against provisioning these things via government, that is, taxation and monopoly force. Why does it require violence to build a road, or a telecom network? What does it say about the true value of these things if that really were the only way to build them?

Anti-liberty means to be anti-capitalism. The competition of capitalism entails allowing people the liberty to pick their own valued ends and then to select the most efficient means they can think of to achieve those ends. If you are anti-liberty, then you are into telling people what ends they may or may not value and quest after. It also means you are for taking the resources, the scarce means, that they’d employ to chase those ends and forcing them to be happy watching them get used for something else.

Pro-collectivism is anti-capitalism. Competition entails differences amongst individuals, if “we’re all in this together” then there is no value to competition and no one to provide it. If everyone is on team A, there is no team B to face off against. You can have cooperation and competition existing simultaneously, but you can not have collectivism and competition existing simultaneously.

Anti-egalitarian/pro-elitism is pro-libertarian, anti-collectivist and pro-capitalist. If the best are allowed to shine, it means the worst are allowed to suffer what they will. Libertarians don’t believe in handicapping society’s most able or serving the “least common denominator”; they do not believe in sawing off the legs of the tall to create fairness for the midgets. If the midgets want to get stilts that’s fine, but let the tall slam dunk as much as they want. Being pro-elite and anti-egalitarian is decidedly not pro-collectivist because recognizing differences implies there is no “team” on which we all play.

Anti-scarcity is anti-capitalism. Capitalism doesn’t CREATE scarcity, it is a method of dealing with the reality of it. If scarcity doesn’t exist, there is no need for exchange or competition because everyone can have all they need without the help of anyone else. Anti-scarcity is actually anti-physics, too, because it implies that discrete material matter can occupy multiple segments of space-time simultaneously.

Pro-taxation is anti-capitalism and anti-elite/pro-egalitarian. “Leveling” social outcomes is another word for denying competition and the existence of meaningful differences between people, which is implied in anti-egalitarianism. Using taxation to steal what the most able create under the competitive dynamics of capitalism is to destroy the process of capital accumulation which leads to higher productivity economy-wide. Accumulated capital is a time saver, and saving time means doing more work and thus having more goods in the same amount of time. Being pro-taxation is pro-poverty because you’re making society poorer than it otherwise would be if capital could accumulate according to capitalist outcomes.

Pro-housing is actually pro-scarcity. If goods and services aren’t scarce, there is no need for government to subsidize their production or distribution, now is there?

This “ideology” is completely incoherent. It is so bafflingly confused, it almost makes you wonder if it is intentionally so to hide the real ideology. This ideology also isn’t new. What the Silicon Valley folks are advocating is crony capitalism, the vaunted “middle way” the eternal quest of social philosopher charlatans since time immemorial. What Silicon Valley wants is the right to innovate, compete and become wealthy for themselves, but then once they’ve gotten some for themselves, to put in place restrictions, controls and limits for everyone else that will protect their gains. Government is a tool for restricting competition and buying off people who might upset the apple cart, while using resources you’ve taken from other people to do it.

I think the Silicon Valley ideologues have innovated a non-solution to many non-problems. Here is a quick summary of what I think is a real solution to some of their perceived problems, which I will refer to simply as “the private property society”.

Democrats and Republicans claim to be on different sides of the issues, but the place where they align strongly is their shared belief in the necessity of violent interference in social affairs, that is, using government (a monopoly on violence) to achieve desired social ends. Anyone who shares the philosophy that government is a reasonable tool for solving social problems, especially economic problems, is ideologically aligned with the Democrats and the Republicans. The truly radical position is to recognize violent interference in social affairs as a moral and practical non-starter. You can not make people better by force.

For government to invest in one person, it must de-invest (tax) another. This is a zero sum game and in fact it’s likely worse because by definition every time the government takes from the original owner of a resource by taxation and gives to an arbitrary recipient it has selected a less-valued state of affairs; if this were not true, it would mean individuals were routinely engaging in exchanges they perceived to make them worse off and getting poorer and poorer each time they did so.

It is not the role of the government to build the internet, to provide education, to fund basic research in science, etc. The government has no objective way of knowing which of the many projects it might support are actually more valuable than the projects which would’ve been supported by freely chosen, voluntary exchanges amongst the individuals who would be taxed to provide what the government hands out.

Liberty IS a value, although not a value unto itself. Liberty is valuable specifically because of what liberty allows, for each person to pursue those plans he deems most beneficial to his well-being. Without liberty, individuals are forced to accede to the demands and the plans of government, and these demands and plans may not only be worse than the ones they had in mind, but against their very values and ideas of right and wrong.

It is true that people are unequal– unequal in their starting position in life and unequal in their ending position, for every person will die at a different time and place and under different circumstances. People have different abilities, and different means, and their abilities and means will change continually over the course of their lives. The question is not “How can we make people more equal?” but rather “Will people be allowed to be the primary determinant of those inevitable changes, or will they be forced to change according to the pattern of a will other than their own?” The inequality of life provides all the incentive, encouragement and reward necessary for the best to strive to be better, and the worst to do what they must. Nothing can be added to that equation without inadvertently taking something else away.

Housing is a particular problem in San Francisco and Silicon Valley because that part of the country is particularly in love with the promise and power of government. In a competitive market environment, scarcity results in higher prices; this is the “housing shortage” the Silicon Valley crowd is witnessing and experiencing. Normally, higher prices would incentivize an increased supply. Is it not profitable to build housing in the Bay Area? If it is profitable, why aren’t more investors/business people trying to take advantage by increasing the supply of housing? The fact that a problem that is normally solved by investor activity chasing profits is not only occurring, but getting worse and worse every day in the midst of one of the densest communities of super-investor/business people in the entire country suggests that housing in the Bay Area is not controlled by market forces but political forces. The solution is simple– get the political forces out of the way. Eliminate zoning restrictions, eliminate permitting, eliminate taxes on the sale of land and housing, etc. Let markets work.

Information and knowledge are not new to the economy. And knowledge is not valuable without the liberty to pursue what one has learned. Silicon Valley should be strongly aligned with the private property society and the liberty to employ valuable knowledge that comes with it. The fact that they are not raises my suspicion and concern.

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