The New Feudalism In Silicon Valley

valleyVia the Weekly Standard, Charlotte Allen writes that the tech bastion offers a preview of where society as a whole is headed:

Master and servant. Cornucopian wealth for a few tech oligarchs plus relatively steady but relatively low-paying work for their lucky retainers. No middle class, unless the top 5 percent U.S. income bracket counts as middle class. Silicon Valley is a tableau vivant of what many economists and professional futurologists say is the coming fate of America itself, a fate to which Americans, if they can’t embrace it as some futurologists hope, should at least resign themselves.

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).

“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. “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 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. The New Economy generates prosperity all right, prosperity that mostly flows to those in the upper echelons.

30 Comments on "The New Feudalism In Silicon Valley"

  1. Gnome Voynich | Dec 5, 2013 at 12:53 pm |

    or… Universal Basic Income

  2. Cortacespedes | Dec 5, 2013 at 1:08 pm |

    “Tyler Cowen in Average Is Over is more forthright. He 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.

    Now really, Mr. Cowen! Canned beans? How gauche! We of the sophisticated peasantry prefer our beans dry, from a 50lb sack, soaked overnight, then cooked until tender. Seasoned only with a bit of salt, two jalapenos and half an onion.

    And cumin, sir, egads! It’s such a ghastly spice, with a stench redolent of stale armpit and feculent feet.

    And no, Ms. Allen, Silicon Valley is not the tableau vivant of America’s destiny, that honor belongs to Mexico. Goodbye Detroit, (once proud home to middle class blue collar jobs) and hello Tijuana!

    Ladies, gentlemen… ready your pitchforks.

  3. Ted Heistman | Dec 5, 2013 at 2:10 pm |

    I don’t think everyone is interested in putting up with being a peasant. I really think once the American dream dies fewer and fewer people will simply stay in line.

    • Many may not realise that they are a peasnat or akin to being one.

      • Simon Valentine | Dec 5, 2013 at 5:39 pm |

        it is good to be ki-*consumed*

        heil the emperor’s new emperor!
        heil the mouseman’s new cheese wagon maze trails!
        heil the alchemist’s apothecarian domicile!
        heil!

    • It’s an interesting question: how bad do things have to get before enough people wake up and demand justice?
      I’m pretty sure TPTB are betting they can continue their relatively unhampered vampirism for as long as they like. Hopefully they are in for a rude awakening. Then again, the US public pretty fucking stupid, so who knows.

      • Consumerism may distract from a realisation by providing a feeling of being a gots, but the real gots surely do gets.

        • Ted Heistman | Dec 5, 2013 at 5:01 pm |

          There’s the rub. Its hard to be distracted by consumerism if you can’t afford shit.

          • Being homeless, or near at times, transformed my perceptions on things. The best Snickers bar I ever ate was after not being able to afford candy for a long time.

            It’s like solaris (the book or movie). If you always have what you most want, then that act of always having makes you unhappy.

  4. Ted Heistman | Dec 5, 2013 at 2:29 pm |

    I think this counter culture of DIY and home gardens and homesteading, recycling, has the potential for cutting this feudal dynamic out of the loop. Or maybe it will support it in some ways. Not sure but frankly I don’t see people really admiring silicon valley billionaires all that much, like peasants admire royalty. Its mostly a hidden world they live in these new potentates.

  5. DeepCough | Dec 5, 2013 at 5:28 pm |

    Well, we can’t have a Future Renaissance without a Future Dark Age, now can we?

  6. Simon Valentine | Dec 5, 2013 at 5:35 pm |

    includes the assumption that technology will not outpace human capability and capacity to manage it (that computer won’t become a species)

    incorrect.

    what this is is an extrapolative interpretation of the current tech plateau (see steppe pyramid) ‘height’, given the morass that is the equilibria (steppe)

    see: millennium prize problems, the frankenstein father-master of the goose that laid the golden egg, and future iterations of the same god damn shi… shit, computer specia will save us from stupidity…

  7. Ron Chandler | Dec 6, 2013 at 10:43 am |

    Please! These ruminations by paid flacks touting the One Percenter wet dreams are so lame! Feudalism is over: it ain’t coming back. No technologically-advanced country will stay up with developments without a highly-educated workforce: they’ll have to be healthy too, and have a high degree of intellectual independence i.e. freedom from brainwashing, and from FEAR, currenlty oozing from Americans’ pores.
    Remember that ‘freedom’ concept? FDR wrote it into his Second Bill of (Economic) Rights. Dr Tarpley has mapped out the cycle, current phase started with Nixon, will end any time now.

    You Yanks are currently such soft wimps, you can’t even go out and shoot Blankfein and the Kochs. How lame is that? There’s a strike wave on, but you’re too deaf to notice. Syria has said no to Amerikan sadism by al-Qaeda proxies. Russia and the BRICS are gonna edge America out. Once it starts to bite, it’ll be lock and load time: Wall Street banksters will be fair game. Then you can have your Second American Revolution, and try catching up to half of the rest of the world. Best luck, and aim right!

  8. just the facts | Jan 1, 2014 at 2:37 pm |

    It also pints the error in using GDP as a proxy for the financial health of the nation. Because Zuckerberg added billions to the GDP at Facebook’s IPO doesn’t mean that we as a whole are wealthier.

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