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News : Innovation Last Updated: Nov 10, 2013 - 3:53 PM


Wall Street Journal on Silicon Valley dreams of techno-utopias and arrogance
By Michael Hennigan, Finfacts founder and editor
Nov 6, 2013 - 5:38 AM

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Twitter's rooftop garden which provides the tweeties with safe vegetables. In an effort to "call attention to corporate tax breaks and the tech company’s role in the San Francisco eviction crisis," a protest has been organised for outside Twitter headquarters on Thursday to coincide with the IPO (initial public offering) Photo: Twitter.  

Last month the anti-government/ conservative Tea Party caucus of the US Republican Party, mainly comprising older whites living in so-called Red States that receive the highest federal government transfers per capita, brought the United States close to its first public debt default. Also in October, a successful entrepreneur proposed that Silicon Valley disengage itself from bureaucratic government hassle by establishing a type of techno-utopia that again like the Tea Partiers' mindset, wants government à la carte - - Cold War defense and space program demand was the genesis of Silicon Valley and today it's messy politics that provides tech companies with a controlled flexible and inexpensive Foxconn workforce of 1.5m in China. Farhad Manjoo in The Wall Street Journal criticises the arrogance and says the "tech stars have sought to declare the Valley the nation's leading center of power and to dismiss non-techies as unimportant to the nation's future" while losing "all humility about their place in the world."

Last July, Peter Thiel, a co-founder of PayPal and early financial backer of Facebook, gave a $1m donation to the Tea Party-aligned Club for Growth. In 2012, in this interview with Francis Fukuyama, he did acknowledge the right's blind spot on growing inequality in the US and said: "In the history of the modern world, inequality has only been ended through communist revolution."

Last month we wrote on inequality in Silicon Valley where the male-dominated tech elite has prospered while in recent decades tech companies have shifted manufacturing and midlevel jobs overseas:

Finfacts: Women, African-Americans and Hispanics/ Latinos are unwanted in Silicon Valley

Farhad Manjoo, who joined The Wall Street Journal last September as a technology columnist from Slate, the online magazine, writes that Balaji Srinivasan, a Stanford University lecturer and co-founder of Counsyl, a startup that scans the DNA of parents in 3% of all births in the United States, wants a "peaceful exit" for Silicon Valley similar to his father's emigration from India.

Srinivasan opened his Y Combinator startup school talk (see video below) by asking is the US the Microsoft of nations? He said Larry Page and Sergey Brin, co-founders of Google, were what Bill Gates feared when he said in 1998 that two people in a garage working on something new was Microsoft's biggest threat.

A government agency provided funds for the development of the Google prototype at Stanford and the National Science Foundation also funded Sergey Brin's graduate course at the university.

Srinivasan said the development of techno-utopian spaces is dependent on exiting the current system instead of using one's voice to reform from within, the very way Page and Brin decided to found their search engine company to seek new ways to solve new problems.

Farhad Manjoo says in his Journal piece:

His idea seemed a more expansive version of Google chief executive Larry Page's call for setting aside "a piece of the world" to try out controversial new technologies, and investor Peter Thiel's "Seastead" movement, which aims to launch tech-utopian island nations.

But there was something more significant about Mr. Srinivasan's talk than simply a rehash of Silicon Valley's grievances. It was one of several recent episodes in which tech stars have sought to declare the Valley the nation's leading center of power and to dismiss non-techies as unimportant to the nation's future.

For instance, on "This Week in Start-Ups," a popular tech podcast, the venture capitalist Chamath Palihapitiya recently argued that "it's becoming excruciatingly, obviously clear to everyone else that where value is created is no longer in New York; it's no longer in Washington; it's no longer in LA; it's in San Francisco and the Bay Area."]

Manjoo met Srinivasan in Palo Alto and the latter warned about a risk of a public reaction to robots taking over people's jobs and therefore the need to be secure in the techno-utopia.

Manjoo said he found Srinivasan's thesis to be naive as the industry's own hype is that technologies like robotics, artificial intelligence, data mining and ubiquitous networking are poised to usher in profound changes in how we all work and live even though initially the technologies could cause enormous economic and social hardships for lots of people.

Last Friday, Bill Gates in an extensive interview with The Financial Times said he does not believe that IT can solve a tangle of entrenched and interrelated problems that afflict humanity’s most vulnerable: the spread of diseases in the developing world and the poverty, lack of opportunity and despair they engender. “I certainly love the IT thing,” he says. “But when we want to improve lives, you’ve got to deal with more basic things like child survival, child nutrition.”

In recent times, Mark Zuckerberg, Facebook co-founder, outlined a plan for getting the world’s unconnected 5bn people online, an effort the Facebook boss called “one of the greatest challenges of our generation.”

The FT said when asked whether giving the planet an internet connection is more important than finding a vaccination for malaria, the co-founder of Microsoft and world’s second-richest man did not hide his irritation: “As a priority? It’s a joke.”

The dreams of techno-utopias dovetails with playing one country off against another and avoiding taxes on a massive scale.

The shakedowns are also costly within the United States

The New York Times reported last December that for local governments, incentives have become the cost of doing business with almost every business. "The Times found that the awards go to companies big and small, those gushing in profits and those sinking in losses, American companies and foreign companies, and every industry imaginable."

While workers are a vital ingredient in any business, yet companies and government officials increasingly view the creation of jobs as an expense that should be subsidised by taxpayers, private consultants and local officials said.

The NYT said that when Twitter threatened to leave San Francisco in 2011, officials scrambled to assuage the company.

Twitter was not short on money — it soon received a $300m investment from a Saudi prince and $800m from a private consortium. The two received Twitter equity, but San Francisco got a different sort of deal.

The city exempted Twitter from what could total $22m in payroll taxes, and the company agreed to stay put. The city estimates that Twitter’s workforce could grow to 2,600 employees, although the company made no such promise."

Twitter also demanded that a police officer should walk the pavement outside its new office.

Louise Story of the NYT wrote that while the budgets of the public parks of the city were cut, the company’s plush new office had a rooftop garden with great views and amenities. Enjoying the perks, one employee sent out a tweet:

Tanned on Twitter’s new roof deck this morning as some dude served me smoothie shots. This is real life?"

Finfacts: US company profits per Irish employee at $970,000; Tax paid in Ireland at $25,000

Finfacts report before trading began on the New York Stock Exchange, Nov 07, 2013: Twitter's backstabbing founders set for IPO and firm valued at $18bn

Check out our subscription service, Finfacts Premium , at a low annual charge of €25.

Farhad Manjoo discusses his take on Silicon Valley:

Balaji Srinivasan at Startup School 2013 on "Silicon Valley's Ultimate Exit"

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© Copyright 2011 by Finfacts.com

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