Silicon Chasm: The class divide on America’s cutting edge

http://www.weeklystandard.com/articles/silicon-chasm_768037.html?page=1

by continuations • 13 years ago

117 89 13 years ago

weeklystandard.com

AsymetricCom• 13 years ago

for some reason, the third page has most of the content.

gibbonraver• 13 years ago

The silence is deafening.

rbanffy2• 13 years ago

This was posted on 2 AM PST. Give the discussion a couple hours.

knowaveragejoe5• 13 years ago

It's already at the bottom of the front page, I imagine it won't be there in the next half hour or so.

knowaveragejoe5• 13 years ago

Probably because the "bad guys" in this article are the majority of HN's readership.

epistasis2• 13 years ago

The class divide is indeed huge, but I'm having trouble following some of the article's logic. The article seems to be saying that the upper class are the capitalists that have founded successful companies, and the middle class are all the engineers, and the lower class are the rest of society. A lot of the class divide seems to be most evident in housing costs.

Where do these $1 million tract house valuations come from, if the middle class engineers can't afford to buy them? It would appear that they're mostly owned by people that have been living in the area for the past 20 years? And because people have not moved, even though they are apparently no longer in the middle class, the supply has been constrained and the few houses that do go on the market go for extremely large amounts of money.

Anyway, I'm not sure what to make of the article. There are troubling comparisons, and glimpses at incredible wealth, but the parts of the article don't seem to fit together very well into a picture of what's going on.

pavlov• 13 years ago

The article seems to be saying that the upper class are the capitalists that have founded successful companies, and the middle class are all the engineers, and the lower class are the rest of society.

This view of class division in an industrialized society is not particularly new. Kurt Vonnegut's novel Player Piano presents this exact scenario (upper class of managers, middle class of engineers, unemployed masses), and it was published in 1952.

epistasis2• 13 years ago

I agree that the class division is fairly standard (though the middle class also includes the lawyers, doctors, and other professionals that earn as much or more than engineers), but I guess I don't understand the connection to real estate prices. Who owns all these homes, and buys all these homes? It seems as though it's a bubble that's almost ready to burst, the way that it's been laid out in the article. Or that the wealthy have been buying up huge proportions of properties to turn them into rentals. But there should be numbers that would back up that latter case.

stdgy• 13 years ago

I believe the author would argue that these 'middle class' Valley engineers really aren't middle class at all, but rather upper class. They're likely up in the 95th percentile of earners. Though I struggle to come to terms with how to control for living costs and geographic inflationary trends. I would like to see an accounting of how wages across the employment spectrum are adjusted, as well.

In my mind, if wages for other forms of employment aren't similarly inflated, it makes a much stronger argument for a further bifurcated society.

prostoalex3• 13 years ago

They're likely up in the 95th percentile of earners.

For 95% of people in the Valley to earn less than average software engineering salary, 95% of people would have to be employed outside of tech specialties outside of tech companies. And that's not the case.

recuter• 13 years ago

Cowen bluntly predicted what he called “wage polarization.” The increasing ability of computers to perform ordinary tasks will inexorably transform America into an income oligarchy in which the top 15 percent of people—with skills “that are a complement to the computer”—will enjoy “cheery” labor-market prospects and soaring incomes, while the bottom 85 percent, that is to say, 267 million out of America’s 315 million people, will be lucky to find Walmart-level jobs or scrape together marginal “freelance” livings running $25-a-pop errands for their betters via TaskRabbit (say, picking up and delivering a pair of designer shoes from Nordstrom) or renting out their spare bedrooms (if they have any) to overnight lodgers via Airbnb. That is, if they’ll be working at all. “There are many other historical periods, including medieval times, where inequality is high, upward mobility is fairly low, and the social order is fairly stable, even if we as moderns find some aspects of that order objectionable,” Cowen writes in his new book.

In other words, what is coming is the “new feudalism,” a phrase coined by Chapman University urban studies professor Joel Kotkin, a prolific media presence whose New Geography website is an outlet for the trend’s most vocal critics. “It’s a weird Upstairs, Downstairs world in which there’s the gentry, and the role for everybody else is to be their servants,” Kotkin said in a telephone interview. “The agenda of the gentry is to force the working class to live in apartments for the rest of their lives and be serfs. But there’s a weird cognitive dissonance. Everyone who says people ought to be living in apartments actually lives in gigantic houses or has multiple houses.”

========================================

So? Hypocrisy is hardly a new phenomenon. People really are ought to be living in apartments, even if it is suggested as part of some supposed agenda. I really don't understand all the anxiety that pops up on HN every once in a while with regard to some imaginary utopia that is decades away if it will ever come at all - Inequality is entirely secondary to the Median, the article describes a high quality of life all around with the upper echelons of society a sort of step-function above "everybody else". That's supposed to be horrible?

What about the inequality between the US and the rest of the world? I guess hypocrisy is not exclusive to any one tax bracket either.

nraynaud2• 13 years ago

I guess they are pointing the fact that as soon as West Coast got access to the power through money, they did what the East Coast did: protect themselves from the plebe and create a new nobility with barriers to entry instead of using it for greater motives than simple personal accumulation.

mattgreenrocks• 13 years ago

And this is exactly why SV is not anything revolutionary, despite the insistence of PG and co. There is no Golden Age, just a bunch of old guys accumulating wealth by exploiting youthful naivete by cranking out a steady stream of technological toys designed to hook us, rather than serve us.

FedRegister3• 13 years ago

Yet you'll still hear many people parrot the line that SV is a "meritocracy".

JVIDEL• 13 years ago

I think the real news here is stuff like this:

According to figures collected by Joel Kotkin, the dotcom crash wiped out 70,000 jobs in the valley in a little over a single year, and since then the tech industry has added only 30,000 new ones, leaving the bay region with a net 40,000 fewer jobs than existed in 2001.

UweSchmidt2• 13 years ago

If it's true that anyone who could say "HTML" in 2001 was called a "programmer", then that year is not a good baseline for tech job statistics.

walshemj2• 13 years ago

and compared to central London and the UK a 5 mill dollar house isn't that expensive.

In my little commuter town in the UK on the same street as my doctors surgery there is a house going for just under 1.6 Million dollars

cgore• 13 years ago

London is always going to be a worst-case scenario. You guys don't just have the journalist-making-a-hyperbolic-statement sort of royalty, you still have the for-real kind.

auggierose2• 13 years ago

Yes! Let them eat beans!

Preferably in their apartments.

No, seriously now. I've got a friend who 5 years ago decided that he needs "to straighten his life out", and now he has a huge house in SV and is lead engineer at Apple. That's really fine, and obviously not everyone can have such a life. And people will really have to look inside themselves, and ask themselves what it REALLY is they want. If they want status and big houses, then they better be extraordinary smart & disciplined and/or rich. Me, I just want an office where I can do my thing, not being responsible to anyone else but myself.

A solution to this dystopian future would be the basic income as proposed in Switzerland. This is the only way in my opinion to make sure that a master/slave relationship will not exist, and people are really paid what the job is worth, unpressured by the need to survive.

meddlepal2• 13 years ago

But how do you handle inflation in a base income economy? It seems that any extra freely allocated capital would immediately be nullified by the increase to inflation it would cause?

legutierr• 13 years ago

Why do you think inflation would go up? I have never understood this argument. It seems to me as likely for the price of consumer goods to go down as for them to go up in such a scenario. Or you may see no movement at all.

ominous_prime• 13 years ago

Basic income does not increase the money supply, which would bring about inflation. There may be an increase in the general cost of living for many, but that's not inflation, and it wouldn't absorb the entirety of one's basic income.

auggierose2• 13 years ago

There are probably a host of questions like that, and I am not an economist, so I cannot answer them (I am not sure economists can, though).

What is important is to have the will to do something like that. Only then will it become apparent if we can actually do it.

I think this is very similar to writing software. You know roughly what you want it to achieve, but you don't know yet exactly how.

vasilipupkin• 13 years ago

the idea is to replace current system of welfare transfers with basic income for an equivalent amount of money, not simply to print more money and give it away

rbanffy2• 13 years ago

I believe a basic income would be a great idea, but it would have to be, in part, subsidized by increased taxes on the working population.

Another approach would be the 1:12 rule that Switzerland didn't adopt.[1]

1: http://www.bbc.co.uk/news/business-25076879

riggins3• 13 years ago

A solution to this dystopian future would be the basic income

I'm fascinated to see how philanthropic society will choose to be. Here's why. With the advent of robots I believe that something fundamental has changed. Elites, if they so choose, will not need to accommodate lower classes.

Previously, there had to be some sharing because elites still had to rely on other humans for policing and military. However, it seems like robots might cut that connection. What will happen when elites feel like they don't need a large part of the population? Will they be altruistic?

I don't know. Personally I'm pretty cynical and think we're heading for a future that's both more egalitarian and dystopian. The internet will give people a similar opportunity to succeed but those who do succeed won't be charitable to those who don't.

venomsnake3• 13 years ago

Think of the other side ... all the hacker movies that we watched - they could become a reality. When you launch your startup why not just try to use zero day exploit to mess with the brakes of Zuckeberg's tesla (that is PS4 on wheels) while he is near a cliff.

Home made drones - with the advance of 3d printing why not? If 10 people could create a billion dollar company today just think what a rogue genius could do in 10 years if he is hell bent on eating the rich.

Technology is an enabler. It also enables the nasty stuff. And the elites while more powerful than ever will also be more fragile and vulnerable. And if they unravel the social fabric that keeps them safe now ...

userulluipeste5• 13 years ago

"Previously, there had to be some sharing because elites still had to rely on other humans for policing and military. However, it seems like robots might cut that connection."

You're right. Out of sight, out of mind. Or probably it would be a sentiment similar with how the African subsistence is thought about. There is some sympathy involved, maybe some occasional donation even, but how much and how often the problem actually falls on one's agenda?

mlyang• 13 years ago

One important aspect of Bay Area wealth to keep in mind is that Silicon Valley has a very supportive entrepreneurial culture-- wealthy exited entrepreneurs generously funding seed rounds for up and coming startups, lending a hand to pull up those around them. The mentality of modesty and collaboration greatly detracts from the sort of dystopian and polarized picture this article paints.

potatolicious• 13 years ago

"lending a hand to pull up those around them. The mentality of modesty and collaboration greatly detracts from the sort of dystopian and polarized picture this article paints."

"Those around them" = those like themselves, who 99 times out of 100 aren't actually from around the Bay Area.

Hell, even the businesses supported by the Bay Area elite are not at all similar to those that already existed before. The wealthy exited entrepreneurs aren't lending a hand to pull up the taco stand or the nail salon, they are evicting them in favor of businesses they like better.

Which may simply be the natural order of things, but it's a far cry from this populist "floating all boats" story you're weaving.

More importantly, wealthy exited entrepreneurs are funding new generations of startups - but that's a far, far cry from "pulling up those around them". One of the things that really, really bothered me when living in the Bay Area was how the tech industry literally does not give one iota of mind to anyone who isn't in the tech industry.

The tech industry helps itself and lets the world go to shit around them. The tech industry builds gated garages instead of helping solve crime in their neighborhoods. They invest in bigger and fancier buses in which to transport their own kind, instead of helping solve transportation in their cities. Even innovations like Uber are priced in such a way that there may as well be a "techno-elites only, kthx" sign on the door.

It's only non-dystopian and non-polarized if you already have membership to the ol' boys club that is Silicon Valley, in which case the entrepreneurial community is indeed supportive and has each others' backs. If you aren't lucky enough to belong to this club though, you're shit out of luck, even if you live just down the street.

Which, now that I think of it, isn't that different from how East Coast Old Money works. Funny how we keep making fun of them.

el_tophero3• 13 years ago

Generously helping startups built by people already in the club, and with the intent that it makes the wealthy exited entrepreneurs even more money.

conductr• 13 years ago

I get that this is a stark contrast and functions as a great example. But, isn't every place in America like this?

Maybe I've lived in Texas too long but I see it when I travel too. The immigrant labor class allows even lower-middle class families to live like "rich people". A lot of people now use a cleaning person and who mows their own lawn anymore?

In an economic sense, it's America's new version of slavery. Where once we provided food and shelter in exchange for labor. Now we exchange barely enough money for food and shelter in exchange for labor. At least the ugly parts are mostly gone. However, I can't help but thinking that will create a passive acceptance of this societal structure.

userulluipeste5• 13 years ago

"I can't help but thinking that will create a passive acceptance of this societal structure"

Giving the fact that there are American activists trying to combat external social problems such as the Indian caste system, I can't help but laugh when I come to read something like this. Irony!

(+1 from me)

el_tophero3• 13 years ago

The rest of country has rich and poor areas, but most of it is 'middle class'. The idea is that in the Bay Area you're either paying ~$1M for a shack in a decent school area or you're in a slum.

krstck• 13 years ago

This is rather surprising fare for the Weekly Standard, which is (to my understanding) a conservative magazine. Perhaps the American political climate is realigning in an interesting way.

zwieback2• 13 years ago

I had the same thought. I used to read the Weekly Standard to see what the other side has to say but gave up on it. This piece was outside their usual sphere.

awkward• 13 years ago

Interesting that an article that deals this directly with class is running in the Weekly Standard. Outside a couple swipes at green building codes and a pass at hypocracy vis a vis apartments, this is almost something I could see running in Mother Jones.

pmarca• 13 years ago

Exactly. This is not left vs right, this is old vs new. The author has (literally) a PhD in Medieval Studies.

mrcactu5• 13 years ago

I didn't know this... that the new "Knowledge Economy" is making the imcome gap worse.

http://en.wikipedia.org/wiki/Knowledge_economy

benched• 13 years ago

I have to think that it's always been this way in civilization. Some people figure out how to position themselves at the top where all the money and control is, a bunch of others can't figure out how to squeeze up there, but do figure out how to service the people at the top for scraps, and then there are the hoards who don't even know how to get into the game at all. I think of it as just mechanical positioning. It's exactly the same as if you sent a crowd of people running to touch a magic pillar. There'd be room for a few to reach the pillar, then a bunch who could see the pillar and imagine what it would like to be one of the ones touching it, then a mass of people on the outside, barely able to see it at all. The only difference in real life is that the crowd is structured by the flow of money, goods, and services, where the flow is wider at the middle.

el_tophero3• 13 years ago

I think the idea is that the valley has taken out the middle, leaving only the extraordinarily rich and the poor.

Domenic_S• 13 years ago

Let's define terms.

Rich == you don't have to work for a living. You might choose to, but you don't have to.

Poor == you're on government assistance of some kind, WIC, food stamps, welfare.

Can you think of anyone in SV that's in between those two extremes? A "middle class" of sorts?

There is a vast, vast middle in SV, it's just that the scale is different which never stops blowing people's minds. Instead of a $50k income being middle class, $150k is.

cheesylard2• 13 years ago

Living in the Silicon Valley after reading this article might sound awesome; but it's far from the truth.

I grew up there. I feel like I was deprived of a childhood. I moved away a couple of years ago and am never going back. You have nothing but sprawled out office parks, rich internet tycoons, a police force with nothing to do, helicopter parents, and soccer moms. The thing that topped it all off was the super competitive vibe amongst the peers and parents. I would not recommend living there under any circumstances.

fzzzy• 13 years ago

Plus leaf blowers 24/7.

cheesylard2• 13 years ago

Wow, that's kind of funny, because I didn't even notice that was gone until you mentioned it. I guess I was so used to it that I tuned it out.

blisterpeanuts2• 13 years ago

Interesting article. I wonder how much of the income disparity would be relieved if there was more room to build affordable housing, as in the "limitless" cities like Phoenix and Las Vegas where you can buy a nice 3 bedroom 2 bath for $150K.

In Phoenix, there are also rich people and poor people, but not the stark contrast of Silicon Valley. Fewer billionaires, I think and also the neighborhoods are so vast and more or less homogeneous in tract size that you don't really notice wealth disparity. The average family pretty much lives in a house with a yard and 2-car garage, regardless of income. You can get in your car and drive to tony gated communities in Scottsdale and peek over the walls, but who would? You have your job, your two cars, your Harley, and your flatscreen, and life is good.

Maybe California can find a way to build out onto the ocean as was done in Singapore, and relieve the housing pressure a little. God, I'd love to be making the kinds of software engineer salaries that they offer out there, but the housing -- yikes!

ryandrake• 13 years ago

Even if there was room for affordable housing, who would build it? Home builders need to make a profit, and you do that by building $900K luxury townhomes, not by building $400K roach traps that need tax payer subsidy to break even. Do you think the tax payers lounging in their Atherton mansions give a crap about housing for poor and middle class people?

wyclif• 13 years ago

Whoa, wait. A $400K home is a "roach trap"??? Seriously? Seriously?

blisterpeanuts2• 13 years ago

If market conditions warranted it, someone would find a way to make a profit on modest construction. I would think that the Bay area is bursting with people yearning to buy a real house for around $350K or less. If you could magically find the land to create such a subdivision, I'd bet you'd sell out in days.

woah2• 13 years ago

Screw the ocean, I wish California could find a way to build in the Sunset!

malyk• 13 years ago

The absolute last thing anybody needs is more horrible sprawling "cities" like those in the sunbelt.

qq66• 13 years ago

What, specifically, is wrong with them?

joshAg• 13 years ago

sacramento might be a good comparison for that perspective.

mark_l_watson• 13 years ago

Great article. I have been living in Silicon Valley for the last tree months because I accepted a contracting gig at Google. My wife absolutely loves Mountain View and she would like to move there. I resist because our home is in the mountains of Central Arizona - a very affordable area to live. My argument against living in high cost areas like Silicon Valley is that for a lot of knowledge work, location does not much matter. Remote work is very easy to get especially if consulting rates are adjusted for lower cost of living and no commuting costs.

I view Silicon Valley as a really fun place to visit and live for a while, but if I was not very wealthy I would not make it a permanent home.

Silicon Chasm: The class divide on America’s cutting edge

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