Now I'm usually a fan of Mr. Kotkin, but in this I think he's gone off the deep end. Reduced to bullet points, his argument is as follows:
- They're rich ("they" being the wealthy, technology oligarchs, such as the Google guys, Steve Jobs, Jeff Bezos, etc.).
- They don't hire many Americans.
- They hire way too many Chinese.
- They don't pay taxes.
- They live in a bubble.
- They want to take over the country.
- They're out to steal your soul.
Let's take the bullet points in turn.
- They're rich.
Well, duh! But they got rich by creating great wealth. The iPhone established a whole new industry. So did Google. According to Free: The Future Of A Radical Price, Google gives 80% of it's content away for $0.00. I write this blog on Google, and I haven't paid them a dime. It is probably impossible to estimate the total value to society created by Google, but the share captured by the Page & Brin, et al., is a minuscule fraction.
- They don't hire many Americans.
Well, good, I say. Mr. Kotkin can't have it both ways. On the one hand he complains these people are too rich, and on the other hand he wants us to hire more of them. No--the fewer employees the better. Just that much more money for the rest of us (in the form of better and cheaper goods and services). What earthly purpose is there in featherbedding the technology industry?
Mr. Kotkin also opposes the H1B visa program bringing in "cheap" foreign engineers. Here he has a point, but it's not the point he wants to make. The problem is not with the foreign engineers; the problem is the visa program that renders them indentured laborers. That is what unfairly distorts the market. We need a much more open immigration system--if foreigners want to come here and work for cheap, then that's wonderful. More money for the rest of us. But for the consumer to capture the product they have to come as free individuals and not bound to a specific employer.
- They hire too many Chinese.
Mr. Kotkin should check out the data here: the manufacturing cost of an iPhone is $8 per phone. So all those zillions of Chinese workers that Mr. Kotkin so envies--they're netting less than 2% of the value of the product. This site speculates that it takes about 17 hours to assemble an iPhone--so the Chinese are paid less than $0.50/hour. Are these jobs we want to repatriate to the US? I don't think so.
- They don't pay taxes.
Again, I say good. Government in this country (and every other country) is a rat hole and not worth the money we spend on it. Cash that the tech industry holds on to will eventually either be a) returned to the consumer, or b) invested in new enterprises. Either way, any penny saved in taxes is a penny that makes us richer. If they can legally avoid paying taxes, then so much the better.
- They live in a bubble.
Mr. Kotkin worries that the tech gurus all live in a self-contained community gated off from the rest of the world. In his telling, Silicon Valley is a bubble served by fancy sex workers, private planes, maids, and luxury cars. The people who live there have lost touch with reality. So--what's the problem? Mr. Kotkin compares this with the desperate circumstances of East Bay communities nearby. Of course there's no connection--the problems of the East Bay are not in any way caused by tech geeks in Silicon Valley. This is all a reprise of the Marxist meme: we're poor because the rich people stole all the money. Are the people in South Sudan poor because Mr. Kotkin lives in a middle class house? Same argument.
- They want to take over the country.
Mr. Kotkin panics about fwd.us, a supposedly surreptitious and vile plot by the technocrats to buy influence in Washington. He cites Twitter's founder, 37-year-old Jack Dorsey, who says he wants to be mayor of New York City, despite never having lived there. I have no doubt that a bunch of very successful, wealthy, self-righteous youngsters dream of world conquest. But it won't work--witness the money they've spent on the now-imploding Obama administration. Every political action invites a reaction, and the closer the tech oligarchs get to their goal, the greater the opposition will be. Remember the phrase "what's good for General Motors is good for the country"? GM had hundreds of thousands of employees spread across the entire nation, and they still couldn't pull it off. There's no way the tech guys--living in a bubble with only a few employees and disconnected from the larger culture--are going to take over the world. Mr. Dorsey's utterly silly comment is proof of that.
- They're out to steal your soul.
Google (and others) actually make money giving away stuff for free by collecting data. They use that data to specifically target advertising to individuals. There's the famous story (apocryphal?) about a father getting ads for baby supplies from a local store before his daughter had even told him she was pregnant. Such are the wily ways of Big Data. Mr. Kotkin thinks this is a huge problem. I disagree.
There are two parts to this.
First are ads that help consumers buy things they want to buy. Amazon's recommendations are in this category--very often I find books there that interest me that I would never have encountered otherwise. I regard this as a benefit that enhances my standard of living. Google Local apparently is an effort to turn people on to area restaurants that might be good. I think this is unobjectionable.
Second are ads that try to convince you to buy something you don't want to buy. This turf still belongs to the personable salesman--hawking encyclopedias, or diet fads, or some status symbol. I don't think Big Data will be particularly effective doing this--it depends on personal interaction. Banner ads, pop-ups, animations, etc., are a proven bust.
Mr. Kotkin may be old enough to remember The Hidden Persuaders, written at the dawn of the television age. When I was in high school everybody was talking about subliminal advertising, i.e., if Coca Cola appears for microseconds during the movie, then people will unconsciously be inspired to go out and buy a Coke. I don't think that worked very well. The fact is people learn how to game the system and will push back against buying stuff they don't want to buy. Mr. Kotkin's panic is unwarranted.
In truth, advertisers are not trying to beat the consumer. They're just trying to be more effective than other advertisers. I think that's a zero-sum game--there is no way that Big Data is going to increase the (small) fraction of income spent on involuntary purchases.
In summary, Mr. Kotkin has gotten too Marxist for me.
Further Reading:
Good point there about the Chinese making the i-phones, conservatives like Joel and more so Pat Buchnaan don't think a white guy can do anything but work in a factory. In fact, before these jobs went overseas either Asian or Hispanic Immirgants were manufactoring them. I use to live in Southern California in Orange County and few whites were working in factories in the 1990's. Whites in factories in California were mainly doing machinists jobs, Drafting and so forth. Hispanics were doing anything from the low skilled facotry work to the machinsts and so forth. Joel lives in the past where he thinks the average Joe gives factory work.
ReplyDeleteI mean does factory work.
ReplyDeleteWell, one of the reasons why whites left factories is they could make better money outside of factories, not all factories pay jobs at 20.00 an average, there are a lot of low skilled ones that pay about 8 per hr for bottling frangrance in Huntington Beach and they are trying to get someone that speaks both english and spanish or about 9 per hr to package in a meat processing plant in the inland empire, yet Joel Kotkin who is factory crazy assumes all manufactoring jobs pay at least 20 per hr, he is comparing the guy that got laid off from the factory that goes into walmart but in Southern Cal a lot of folks that were laid off from the aerospace became realtors that made a 6 figure income that they could not get in a factory, granted, the real estate boom hurt, and Hispanics also left the factory during the housing boom since they could make 50,000 instead of 8 to 15 per hr in a factory.
ReplyDelete