Winners and Losers

Writing for the Weekly Standard, Charlotte Allen goes to Silicon…Chasm. First she visits the enclaves of the super-rich, and then the “middle”:

Berkey himself doesn’t live in Atherton. He can’t afford to. He’s a research fellow at Stanford’s Hoover Institution, and his wife, Eleanor Lacey, is general counsel at SurveyMonkey, which occupies Facebook’s old startup quarters in downtown Palo Alto. That makes them part of what is known as the “middle class” of Silicon Valley: two-career couples with family incomes in the low-to-mid six-figure-range. They and their two daughters live in neighboring Menlo Park, in what is essentially a modest 1950s tract house, the kind of flat-roofed, three-bedroom, two-bath, sliding-glass-patio-door, under-2,000-square-foot residences, pleasant but not pretentious, that were built en masse well into the 1970s as cheap starter homes, because back then it was conceivable that there could be such a thing as a cheap starter home in the valley. Berkey says his own house is currently valued at $1.2 million.

Relative economic displacement is thus beginning, however gently, to bite people who never imagined that this was what their futures would hold.

You can laud this underbelly barrio as vibrant immigrant culture or you can decry it as an instant-slum product of untrammeled illegal border-crossing, but it represents an important fact on the ground: These are the people who earn their livings tending to the needs of the high-tech “creative class” that has made Silicon Valley famous. I could see them on Atherton Avenue, the amanuensis class heading up from Menlo Park in their wee panel trucks and Dodge minivans and their Ford flatbeds fitted out with racks for garden tools among the Bentleys, BMWs, Audis, and Lexuses that are the standard Atherton vehicles. They tend the meticulously clipped lawns, flower beds, hedges, and trees of Atherton (Berkey said that it’s not uncommon for an Atherton sentence to begin, “My arborist . . . ”). They clean the houses and the swimming pools, they deliver the catering, they watch the children, and they repair the roofs, the plumbing, the balconies, and the wine cellars of the very affluent and the very busy. You might say that across-the-tracks Menlo Park, along with down-market Latino neighborhoods just like it up and down the peninsula—East Palo Alto, parts of Redwood City, the southern end of San Jose—functions as a kind of oversize servants’ wing.

And, as night follows day, we get to Tyler Cowen and Average is Over. Keep that terrifying book in mind as you read this:

The big names in tech might be awash in capital and might have made their founders billionaires (New Economy founders typically retain large blocks of their own stock), but they employ surprisingly small numbers of U.S. workers. Google, the valley’s largest employer, has 46,000 people on its payroll. Facebook employs only 4,600, and Twitter, in San Francisco, fewer than 2,000. Apple claims 400,000 people putting together components and creating apps and other extras for its iPhones, iPads, iPods, MacBooks, and desktop computers. Yet only 16,000 of those are on the payroll in Cupertino. Another 31,000 work at Apple operations in Texas and other states, but the vast bulk of manufacturing is outsourced abroad via contractors to China and other cheap-labor purgatories. Yet those 16,000 in Cupertino make Apple the second-largest employer in the valley…

Furthermore, the oligarchs of Silicon Valley seem intent on keeping the social pyramid stacked in exactly the same layers in which it’s stacked right now. After decades of political quietism during which Silicon Valley entrepreneurs expressed libertarian sentiments but mostly voted Democratic and funded Democratic candidates who shared their elite-class social and political views, Silicon Valley has finally mobilized—for immigration expansion. In April Mark Zuckerberg, with help from Yahoo CEO Marissa Mayer, LinkedIn cofounder Reid Hoffman, and venture capitalist John Doerr, launched FWD.us, a $25 million-and-counting lobbying group aimed at lawmakers in both political parties. FWD.us, unlike other pro-immigration groups, isn’t much interested in amnesty for illegal immigrants or easier border-crossing for lettuce-pickers. Its chief interest is in expanding the H-1B work visa program for “highly skilled” workers that’s mostly used by tech employers to hire temporary guest-workers from foreign countries, usually from East and South Asia….

…The anti-H-1B faction has a response to that: statistics. One of them, from an April 24 briefing paper produced by the liberal Economic Policy Institute, is that only one out of every two U.S. college graduates with a degree in engineering or computer and information science is hired into those fields, despite a doubling of the number of homegrown computer-science graduates between 1998 and 2004. Others argue that employers mostly don’t use H-1B workers to fill “best and brightest” jobs, but, rather, relatively low-paying routine programming positions, and that the most avid users of the visas are India-based outsourcing companies that use the visas to provide a few months of U.S. training for their employees, who then return to India.

Most damning of all is that, despite persistent claims of tech-worker shortages, programmer salaries overall have inched only slightly higher from what they were 20 years ago: from $60,000 a year to about $75,000 a year in 2012 dollars, according to the Economic Policy Institute. Engineers fare somewhat better: The average annual starting salary at top valley employers such as Google is about $100,000, with the median for experienced engineers at about $150,000….

…Tyler Cowen in Average Is Over … advises the construction of Rio de Janeiro-style shantytowns for the 85 percent of Americans whose livelihoods will be swept away by the New Knowledge Economy he touts—although no shantytowns, please, in Cowen’s own neighborhood in upscale Fairfax County, Virginia! And also, says Cowen:

“There is one final way in which we will adjust to uneven wage patterns and that is with our tastes. Many of society’s lower earners will reshape their tastes—will have to reshape their tastes—toward cheaper desires. Caviar is an expensive desire and Goya canned beans is a relatively cheap desire. Don’t scoff at the beans: With an income above the national average, I receive more pleasure from the beans, which I cook with freshly ground cumin and rehydrated pureed chilies.”

Yes! Let them eat beans! Master and servant. Oligarchs and serfs. Two years ago the Occupy movement of progressives raised a battle cry against the “1 percent,” who were supposed to be striped-pants, Republican-voting tycoons lifted from the Monopoly board. What they didn’t know was that the 1 percent actually wear rubber shower sandals, ride bicycles—$20,000 bicycles—and vote Democratic and green, green, green. It was them. It was the future, and it has already arrived in the Silicon Valley.

And anyone who thinks that the articulate and intelligent people who do not make the cut (and there will be plenty of them) will accept that fate quietly is badly mistaken.

There is a clear strain of social unease, and with it, discontent, that runs through this brilliant piece (written, remember, for a conservative magazine) by a (conservative) writer and that there is is a harbinger of much greater trouble to come.

Quite what to do about all this is, I do not know (a harshly redistributionist tax policy is certainly not the answer), but if the state could stop pursuing policies (such as facilitating mass immigration, unskilled or skilled) that actively make things worse, it would be a start.

This is what you get with Free Trade Communist Globalism....high unemployment and illegal alienism.

The only way to encourage American companies to hire Americans is to eliminate all taxes on income and return to tariffs and foreign outsource fees. Lets stop the Economic Anti Americanism and start rewarding American entrepreneurs

Free Traders are the most Anti American of any group. They support illegal aliens and non-Americans over Americans...support income taxes over foreign tariffs...and support liberalism over conservatism.

Cynical Statists is a very accurate term for Free Traders...especially when they support such sovereignty robbing institutions like World Trade Organization, EU, UN, World Bank, IMF and others

Free Trader statism is so bad we now have WTO Trade Courts and NAFTA Courts that are allowed to overrule US courts

You can laud this underbelly barrio as vibrant immigrant culture or you can decry it as an instant-slum product of untrammeled illegal border-crossing, but it represents an important fact on the ground: These are the people who earn their livings tending to the needs of the high-tech “creative class” that has made Silicon Valley famous. I could see them on Atherton Avenue, the amanuensis class heading up from Menlo Park in their wee panel trucks and Dodge minivans and their Ford flatbeds fitted out with racks for garden tools among the Bentleys, BMWs, Audis, and Lexuses that are the standard Atherton vehicles. They tend the meticulously clipped lawns, flower beds, hedges, and trees of Atherton (Berkey said that it’s not uncommon for an Atherton sentence to begin, “My arborist . . . ). They clean the houses and the swimming pools, they deliver the catering, they watch the children, and they repair the roofs, the plumbing, the balconies, and the wine cellars of the very affluent and the very busy. You might say that across-the-tracks Menlo Park, along with down-market Latino neighborhoods just like it up and down the peninsula—East Palo Alto, parts of Redwood City, the southern end of San Jose—functions as a kind of oversize servants’ wing.

Thanks Cincinatus' Wife.

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