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Wall Street has long been unpopular with the public, making the financial industry a punching bag for politicians on both sides of the aisle and a frequent target for increased regulation and bureaucratic scrutiny. In contrast, Silicon Valley’s traditional reputation as young, innovative, and benevolent has made it a tougher target for critics. We may, however, be reaching an inflection point that will change that perception and endanger the industry’s plans for the future.
The positive view of Silicon Valley has been predicated on an implied social contract, in which, similar to TV and radio before it, “we get free access to an enormous amount of information, in exchange for which we know we’re going to get bombarded with some ads.”
As this model has shifted to collecting the personal information about the habits and preferences of customers, it has led to increased public discussion in recent months about this industry’s flaws and questioning of whether these companies can be trusted. Simply selling products to the general population was one thing; recent developments, however, have made this bargain seem much more ominous.
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Behind this increased skepticism is also the awareness that the economic divide between Silicon Valley and the rest of the country continues to grow. While some in tech have accumulated a record net worth, the average American’s income has stagnated. The industry celebrates the age of entrepreneurship and start-ups, but business births have declined overall.
Many leaders in the tech industry have responded to this concern by proposing a universal basic income (UBI) to support workers who lose their jobs through automation. Yet, this idea, as well as the industry’s general support for immigration policies that increase competition and drive down wages in the labor pool, only reinforces the view of Silicon Valley as out-of-touch elitists throwing the crumbs of their success to the rest of the country.
With the public developing greater fear and suspicion of both the culture and technology coming out of Silicon Valley, the tech industry is increasingly vulnerable to activist pressure and government intervention on a range of issues. These are just a few of the developing challenges to the tech industry:
- Anti-Trust Challenges: While much of the focus on anti-trust tech challenges in Europe, there is a quietly emerging backlash to tech mergers and acquisitions in the United States. A growing chorus of academics and think tanks have begun questioning whether tech companies like Amazon, in particular, but also Apple, Microsoft, and others, have become too big, while new advocacy groups have launched to focus on this issue. Even President Trump recently attacked Amazon as a “monopoly.” These factors are adding fuel to the fire for activists, who are looking to exert pressure on politicians and regulators to more forcefully take on these companies.
- Too Big To Trust: Following the election, tech firms like Google and Facebook have increasingly come under fire for how they treat fake news and offensive speech on their platforms, with some demanding they do more to remove this content, and others attacking their attempts to do so as censorship. The concerns reflect fears that these companies can use their market power and control over the free flow of information to promote or disrupt political agendas. Many argue the subconscious biases of the engineers who design computers ensures certain views are favored over others. Regardless of how these companies approach the issue, they are likely to face a backlash and perhaps calls for state intervention from at least one side of the political spectrum.
- Gender And Racial Bias: A paradox of the tech industry is that although many of these firms preach diversity, they continue to be largely made up of white males. This dynamic leaves Silicon Valley vulnerable to pressure from activists and the possibility of government intervention to crack down on perceived bias against minorities. The decision of the Labor Department earlier this year to sue Google to obtain its employee compensation data for the purposes of investigating any possible gender gap is just one example of how government may assert itself. In addition, stories from this year documenting dozens of allegations of sexual harassment against tech VCs shows the industry has yet to grapple with the extent of this issue, and could push it further away from the tech-savvy “woke” demographic whose support and goodwill the industry needs.
- Economic Disruption: Earlier this year, Microsoft founder Bill Gates proposed taxing robots to slow the speed of automation, replace tax revenue losses from diminished employment, provide assistance to displaced workers, and fund jobs in sectors where human skills are required. This idea was driven by the fear of artificial intelligence (AI) displacing workers in both a wide range of industries, from truck driving to financial advising. As this technology continues to develop, it is likely to lead to even more calls for government to contain the impact of AI or halt its progress altogether.
With these and other emerging challenges, we may be approaching an inflection point that could fundamentally change the relationship between the tech industry, the government, and the public. If the industry fails to preempt or adjust to this new political and policy environment, Silicon Valley may become the new punching bag.
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WHERE DID MANUFACTURING WORKERS REALLY GO?
Politicians from both parties routinely pledge to bring back lost manufacturing jobs, which have declined by nearly 30 percent over the past 17 years. Yet, according to an analysisfrom the St. Louis Federal Reserve Bank, manufacturing workers are choosing to leave this sector as often as they are being laid off.
This trend raises questions with important policy implications about whether workers are finding better opportunities in other sectors or dropping out of the workforce for other reasons. While policymakers often use topline economic data to validate their political ideologies, a far deeper dive into the data is needed to understand the source of these economic trends and how policy should be designed to respond to them.
TWITTER’S HIDDEN ORGANIZING TOOL
A Twitter feature introduced in 2015 that lets groups of people privately message each other appears to have revolutionized the way activists coordinate and amplify their messaging. During the campaign, many Trump supporters began using the tool to pick up new followers, share content to retweet, and coach each other on social media strategies.
However, because of its hidden nature, many experts failed to understand what was causing the surge in activity in support of Trump and largely attributed it to bots. As more activists attempt to replicate the success of this strategy, sophisticated monitoring strategies will be necessary to understand and reveal the coordination occurring away from public view.
ITALY’S TAX REFORM MOMENTUM
Italy has one of the largest and most deeply entrenched welfare states in Europe, but too many people remain impoverished. Those who aren’t feel overtaxed, in part because they actually are. A new proposal from Italian think tank called Istutito Bruno Leoni (IBL) has been making waves in the Italian media by offering a straightforward way to would tackle both of these issues at once by limiting the government’s spending to 25 percent of GDP (it’s currently 43.5 percent of GDP), and preventing the government from taking more than 25 percent of individuals’ income each year.
By presenting the reform in this broad framework that emphasizes increased economic freedom for all Italians, it allows the public to understand the common-sense reasoning behind the plan, and avoids getting the debate bogged down in details. As Republicans look to pass their own version of tax reform, the success of “Twenty-five for all” in capturing Italy’s attention offers a lesson in the importance of focusing the public on the big picture purpose of reform efforts.
WHEN FACTS COME LAST
The New York Times recently sounded the alarm with a page one story claiming federal scientists feared the Trump Administration would prevent a forthcoming report on climate change from becoming public. The problem with the Times’ narrative was that a draft version of the report had been available for public comment since January. Although The New York Times later issued a correction, the story had already traveled far and wide.
The egregious mistake is just another in a series of instances this year where the paper, as well as many other mainstream outlets, have pushed sensationalist headlines before doing the necessary due diligence on their own reporting. In today’s fast-moving news cycle where increasingly unchecked bias can easily lead to bad journalism, having the facts on hand is critical for organizations to prevent falsehoods from becoming accepted truths.
THE OBAMA-TRUMP VOCABULARY
Many would assume that Presidents Trump and Obama are polar opposites in their rhetorical approach when speaking to Americans. However, an analysis from researchers at the University of Minnesota looking into hundreds of presidential speeches found that by some measures, the two leaders’ language choices have more in common with each other than all of their post-World War Two predecessors.
Obama and Trump both use first-person pronouns, as well as uncompromising language like “must” and “need,” far more than prior presidents. This change may be indicative of a long-term trend of the public looking for more assertive and confident rhetoric from the president. However, it may also reflect that in this more narcissistic culture, our politicians have become more focused on virtue signaling than concrete policy achievements.