Friday, July 11, 2014

California's PINOT

No, this teetotaler is not blogging about pinot the wine.  I concocted PINOT to refer to Progressives in Name Only Techies!  And, of course, the PINOT people go with pinot too ;)

Listening to the techie crowd, one might easily be convinced that they are one of the most progressives of the liberals in this country.   Which is how I answer a core question that is raised in this New Yorker essay on why so many San Francisco Bay area residents hate the tech industry and its people:
What’s going on in San Francisco has been called a “culture war,” and yet the values each side espouses can sound strikingly similar. Protesters like those outside Davies Hall have fought for open and eclectic urban life. They want broader social-support systems; they’re angry about the Man’s systemic abuses. These are, at least in theory, values on which tech’s pursuits rest. Techies tend to have strong feelings about immigration barriers (they’re against them), universal health care (for that), and environmentalism (a big deal). In their minds, there’s no industry more closely aligned with the quirky culture of San Francisco—so why now, after decades in the region, are they being attacked as interlopers from the wrong side of the ideological divide?
A "culture war" that is different from that other nation-wide culture war that the Republicans are maniacal about.  A war that represents the zeitgeist since the great recession began: the income and wealth inequality.
 [The tech] industry, which derives its competitive edge from efficiency, appears to be better at capital accumulation than at job creation. This is one reason, some economists think, that unemployment has remained more or less flat since 2000, even as productivity has continued to increase. An old-line company like Citigroup has some two hundred and fifty thousand employees; Facebook, which is worth more, employs about six thousand, and most tech startups are far smaller. (When WhatsApp was acquired by Facebook, for nineteen billion dollars, it had fewer than a hundred employees.) Tech has brought good jobs to San Francisco, but almost any other industry, charged with similar growth, would have brought many more.
The result: people protesting in front of those special buses that transport the tech folks back and forth, and the intense opposition to the gentrification in a city that was always known for its diversity.

The protests matter to the affluent--the affluent tech community and their financers--not in ways that make them re-think their ways and engage in more productive partnerships with the hoi polloi but to cry that they are being harassed, writes James Surowiecki in his column in the same issue!
Although the Obama years have been boom times for America’s super-rich—recent work by the economists Emmanuel Saez and Thomas Piketty showed that ninety-five per cent of income gains in the first three years of the recovery went to the top one per cent—a lot of them believe that they’re a persecuted minority. 
The old social contract that held together the rich and the rest of us has been shredded.
The well-being of the American middle class just doesn’t matter as much to companies’ bottom lines.
Which is why even though the pinot-sipping crowd might fund the Democratic Party and its candidates, well, it is not because of any old-time populist sentiments.

Even the market-friendly Democrat, Larry Summers, is worried about the tech revolution's inability to create jobs even as we experience economic growth:
If current trends continue, it could well be that a generation from now a quarter of middle-aged men will be out of work at any given moment. In such a world, more than half of men would have an out-of-work spell of more than a year at some point during their prime years. We do not yet fully know what the capacity to come back to work after such an experience will be, but the experience of men out of work for a long time because of the Great Recession is surely troubling.
So the challenge for economic policy will increasingly be generating enough work for all who need work for income, purchasing power and dignity. What will this require? The role of government was transformed to meet the needs of an industrial age by Gladstone, Bismarck and the two Roosevelts. We will need their equivalent if we are to meet the needs of the information age.
Meanwhile, the information revolution continues to gather momentum with the passing of every nanosecond.
The robots are coming. But they won't all be shiny, Apple-designed C-3PO look-alikes with middle-aged Siri brains. I believe the robot invasion will be a hodgepodge affair, with legs, propellers and wheels; robots that run the gamut from embodied android forms to robotic technologies hidden in the woodwork of our homes. ...
Will our robot future deliver massive inequality or revolutionary empowerment? Either way, 2035 will be a disruptive year.
More disruptive than now?  Shucks!  

Maybe I should start drinking; a pinot noir, please.


Ramesh said...

Yes, the old social contract has been shredded and a new one has really not come in place. Capitalism will not survive if it believes that no social contract is needed at all (Rabid right; please note)

But it is also interesting that a diametrically opposite effect is happening in India. The information age is actually lessening income inequality rather than increasing it. Lots of people have done well because of IT. To give an example, the security industry, which employs uneducated , and otherwise unemployable, people is generating as much employment as the IT industry, and the explosion has actually been caused by the IT industry !

Sriram Khé said...

Yes, if only the rabid right, and the limousine left, will understand that they need to share even if for their own self-interest!

I disagree with your view that income inequality is decreasing in India. All the commentaries that I have read over the past couple of years have been overwhelmingly arguing the other way--on the widening inequality on both income and wealth measures. The story is similar in China too.

Ramesh said...

We have to debate what inequality is. Consider two scenarios. Scenario A - Richest has $1000. The poorest has $10. Scenario B. The richest has $ 1 m. The poorest has $ 1000.

The loony left will say inequality has increased and rail against it. If I added to both the scenarios that the richest were 1% of the population and the poorest were 99% of the population, then any day, I would take Scenario B when a large portion of the population saw their incomes and wealth increase manifold. That is exactly what has happened in China and in India.

The US (and Europe) has a different problem. Unlike in the China/India, case the large percentage of the population have seen no increase in their income at all, and possibly a decrease. That is why inequality bites more.

My argument is that lower the income levels of the poorest, greater the "inequality" irrespective of the income level of the rich. This is because the gap in living standards, when very poor is much starker than if you had a TV and a fridge and somebody else had a Ferrari.

Sriram Khé said...

As always, any discussion on inequality becomes way less objective than ever possible. All we can do is measure it and state whether it is increasing or decreasing. We don't even need your hypotheticals--the objective measures are that inequality ha increased in India and China.
The question is "if so, then what?"
Which is where you and I take different paths.
In your philosophical framework, as long as the poorest sees even an incremental boost in their welfare, it does not matter how many more times the richest might have gained. That is not how I view it.
It is not really any "loony left" as you portray it--lots of middle of the road folks also have similar concerns. It is not beyond your wildest imagination too that a middle-of-the-road Indian would wonder about the gross inequality of an Ambani mansion overlooking the slums. That is nothing but a physical manifestation of the very inequality we are talking about.

Here in the US, we often view the inequality issues with respect to the "middle class" because of the often repeated story that hard work will pay off as the fabled middle-class American Dream of a home, white picket fences, kids, and dogs. But, that hard work, and long working hours for those lucky to be employed, does not seem to anymore translate to that American Dream. Which is where that quote kicks in: "The well-being of the American middle class just doesn’t matter as much to companies’ bottom lines."

Sriram Khé said...

And ... here's John Oliver ;)

Most read this past month