Tag: silicon valley

Silicon Valley Addresses Homelessness by Picking at the Scab

It’s frustrating to see homelessness documented in my beloved Silicon Valley, not only because homelessness is regretable, but because of the way it’s documented in this Bill Moyers piece.

Homelessness exists “in the shadow of Google, in the shadow of Oracle, in the shadow of Apple Computer,” says AP writer Martha Mendoza, whose story inspired the Moyers video. And there’s certainly editorial in the video’s images of wealthy neighborhoods and manicured corporate campuses: Wealth causes poverty, it appears.

But would Teresa Frigge really be doing better if Larry Ellison had been held to middle class wealth? In an alternate universe where Larry Page and Sergey Brin co-own the McDonalds at El Camino and Santa Cruz in Menlo Park, how is Teresa better off?

Rather than dumb juxtaposition, look for actual causes of inequality. Is it the loss of chip manufacturing? That was already declining in 1987.

Housing is hard to find in the Valley. Fifteen years ago, “for every five jobs they were adding, they were building two units of housing,” Mendoza reports.

Disambiguate “they.” For every five jobs Silicon Valley businesses were adding, Silicon Valley builders were building two units of housing.

The reason why? Zoning laws are strangling Silicon Valley. (Liberals agree.) The cap on housing artificially raised the cost of labor, driving chip manufacturing out of Silicon Valley, which still designs chips for manufacture elsewhere. The result is class striation.

But zoning reform is nowhere to be found in the reporting on this issue. Instead, Mendoza features San Jose’s increase in the minimum wage—from $8 to $10. That means that people who cannot provide well more than $20,000 in value per year to prospective employers may not work legally in that city.

The laws say that you may not work in this area if you’re not skilled, and you may not live there if you’re not rich. I don’t think it’s wealth that’s causing this homelessness.

Milton Friedman on Business’s ‘Suicidal Impulse’

In a Wall Street Journal column titled “Silicon Valley’s ‘Suicide Impulse’” (Google the title if you can’t access it), Gordon Crovitz cites Milton Friedman’s speech to a Cato Institute conference in Silicon Valley in 1999:

In 1999, economist Milton Friedman issued a warning to technology executives at a Cato Institute conference: “Is it really in the self-interest of Silicon Valley to set the government on Microsoft? Your industry, the computer industry, moves so much more rapidly than the legal process that by the time this suit is over, who knows what the shape of the industry will be? Never mind the fact that the human energy and the money that will be spent in hiring my fellow economists, as well as in other ways, would be much more productively employed in improving your products. It’s a waste!”

He predicted: “You will rue the day when you called in the government. From now on, the computer industry, which has been very fortunate in that it has been relatively free of government intrusion, will experience a continuous increase in government regulation. Antitrust very quickly becomes regulation. Here again is a case that seems to me to illustrate the suicide impulse of the business community.”

You can find the full text of Friedman’s talk here.

For more on business’s suicidal impulses, see “Why Silicon Valley Should Not Normalize Relations With Washington, D.C.” by entrepreneur T. J. Rodgers; “The Sad State of Cyber-Politics” by Adam Thierer; and my own “Apple: Too Big Not to Nail.”

Apple: Too Big Not to Nail

In Sunday’s New York Daily News, I deplore the efforts of politicians and regulators to drag successful companies into the parasite economy of Washington, the most recent example being Apple. As the article says,

Heard of “too big to fail”? Well, to Washington, Apple is now too big not to nail.

I was prompted to these reflections by a recent article in Politico. The Wall Street Journal used to call itself “the daily diary of the American dream.” Politico is the daily diary of the rent-seeking class. And that class is very upset with Apple for not hiring many lobbyists, as illustrated by Politico’s front-page cartoon:

The story begins:

Apple is taking a bruising in Washington, and insiders say there’s a reason: It’s the one place in the world where the company hasn’t built its brand.

In the first three months of this year, Google and Microsoft spent a little more than $7 million on lobbying and related federal activities combined. Apple spent $500,000 — even less than it spent the year before.

The nerve of them! How do they expect lobbyists to feed their families? Then comes my favorite part:

The company’s attitude toward D.C. — described by critics as “don’t bother us” — has left it without many inside-the-Beltway friends.

“Don’t bother us”—yes! Don’t tread on me. Laissez nous faire. Leave us alone. Just let us sit out here in Silicon Valley, inventing cool stuff and distributing it to the world. We won’t bother you. Just don’t bother us.

But no pot of money can be left unbothered by the regulators and rent-seekers.

Apple is mostly on its own when the Justice Department goes after it on e-books, when members of Congress attack it over its overseas tax avoidance or when an alphabet soup of regulators examine its business practices.

And what does the ruling class say to productive people who try to just avoid politics and make stuff? Nice little company ya got there, shame if anything happened to it:

“I never once had a meeting with anybody representing Apple,” said Jeff Miller, who served as a senior aide on the Senate Judiciary Committee’s Antitrust Subcommittee for eight years. “There have been other tech companies who chose not to engage in Washington, and for the most part that strategy did not benefit them.”

As I noted in the Daily News, back in 1998 Microsoft was in the same situation—a successful company on the West Coast, happily ignoring politics, getting too rich for politics to ignore it—and a congressional aide told Fortune’s Jeff Birnbaum, “They don’t want to play the D.C. game, that’s clear, and they’ve gotten away with it so far. The problem is, in the long run they won’t be able to.” All too true.

Watch out, aspiring entrepreneurs. You too could become too big not to nail.

Silicon Valley Doesn’t Care About Privacy, Security

That’s the buzz in the face of the revelation that a mobile social network called Path was copying address book information from users’ iPhones without notifying them. Path’s voluble CEO David Morin dismissed this as a problem until, as Nick Bilton put it on the New York TimesBits blog, he “became uncharacteristically quiet as the Internet disagreed and erupted in outrage.”

After Morin belatedly apologized and promised to destroy the wrongly gotten data, some of Silicon Valley’s heavyweights closed ranks around him. This raises the question whether “the management philosophy of ‘ask for forgiveness, not permission’ is becoming the ‘industry best practice’ ” in Silicon Valley.

Since the first big privacy firestorm (which I put in 1999, with DoubleClick/Abacus), cultural differences have been at the core of these controversies. The people inside the offending companies are utterly focused on the amazing things they plan to do with consumer data. In relation to their astoundingly (ahem) path-breaking plans, they can’t see how anyone could object. They’re wrong, of course, and when they meet sufficient resistance, they and their peers have to adjust to the reality that people don’t see the value they believe they’ll provide nor do people consent to the uses of data they’re making.

This conversation—the push and pull between innovative-excessive companies and a more reticent public made up of engineers, advocates, and ordinary people—is where the privacy policies of the future are being set. When we see legislation proposed in Congress and enforcement action from the FTC, these things are whitecaps on much more substantial waves of societal development.

An interesting contrast is the (ahem) innovative lawsuit that the Electronic Privacy Information Center filed against the Federal Trade Commission last week. EPIC is asking the court to compel the FTC to act against Google, which recently changed and streamlined its privacy policies. EPIC is unlikely to prevail—the court will be loathe to deprive the agency of discretion this way—but EPIC is working very hard to make Washington, D.C. the center of society when it comes to privacy and related values.

Washington, D.C. has no capacity to tune the balances between privacy and other values. And Silicon Valley is not a sentient being. (Heck, it’s not even a valley!) If a certain disregard for privacy and data security has developed among innovators over-excited about their plans for the digital world, that’s wrong. If a company misusing data has harmed consumers, it should pay to make those consumers whole. Path is, of course, paying various reputation costs for getting it crosswise to consumer sentiment.

And that’s the right thing. The company should answer to the community (and no other authority). This conversation is the corrective.

Speier (D-Silicon Valley) Sows Techno-panic

“Techno-Panics” are public and political crusades against the use of new media or technologies, particularly driven by the desire to protect children. As the moniker suggests, they’re not rational. Techno-panic is about imagined or trumped-up threats, often with a tenuous, coincidental, or potential relationship to the Internet. Adam Thierer and Berin Szoka of the Progress & Freedom Foundation have written extensively about techno-panics on the TechLiberationFront blog.

Talking about techno-panic does not deny the existence of serious problems. It merely identifies when policymakers and advocates lose their sense of proportion and react in ways that fail to address the genuine issues—such as censoring a web site because it reveals the fact that some few among a community of tens of millions of people will conspire to break the law.

You’d think that a congressional representative from the heart of Silicon Valley would not sow techno-panic, but here’s Jackie Speier (D-Calif.) on the Craigslist censorship issue:

“We can’t forget the victims, we can’t rest easy. Child-sex trafficking continues, and lawmakers need to fight future machinations of Internet-driven sites that peddle children.”

Of all representatives in Congress, Speier should know that Craigslist has been making it easier for law enforcement to locate and enforce the law against any perpetrators of crimes against children. Pushing them to rogue sites does law enforcement no good. Censoring Craiglist only masks the problem, which may be in the interest of politicians, but definitely not children.

One From Silicon Valley: Leave Us Alone

A passionate plea from Michael Arrington TechCrunch, the number three tech blog in the country and the number four blog overall, according to Technorati’s current rankings:

Silicon Valley has fueled much of the growth in our economy over the last few decades and has created amazing (and highly profitable) companies that are making the world a much better and more interesting place to live. All that happened while the government ignored us.

We don’t want handouts. We don’t want “public-private partnerships,” and we sure as hell don’t want legislation. Just let us do our thing and maybe say thanks to those companies that create jobs by the hundreds of thousands and send in those humongous corporate tax payments on profits. Because all you can do is screw up something beautiful. Really.

While maintaining his hugely popular site, Arrington has made himself something of a controversialist. His policy preferences aren’t strictly libertarian, but his instincts are that freedom produces innovation much better than any alternative public policies.

Siding with the Geeks on Network Neutrality

One of the perennial tropes of the network neutrality debate has been the tendency of the pro-regulation side to paint it as a David-and-Goliath struggle between big, evil corporations and the little guy. Way back in 2006, James Gattuso pointed out how silly this is: in fact, the push for network neutrality is backed by some of the largest companies in Silicon Valley. Julian points out a particularly lazy example of this kind of ad hominem that happens to target Cato: It seems that we’re one of the “15 greatest enemies of net neutrality.” And that along with CEI, Cato “seems to draw its funding from a smattering of every major corporation ever to fund lobbyists.”

As Julian points out, if “VoIP News” had done its homework, it might have discovered that Cato makes its annual report freely available online. Then they they would have noticed that corporate support accounts for about 1 percent of Cato’s budget, and that none of Cato’s corporate funders are major opponents of network neutrality regulation.

Shoddy reporting aside, the “VoIP News” article does actually highlight an important point: the people who built the Internet are deeply split on the issue of regulating the Internet, with eminent computer scientists including Bob Kahn (co-inventor of the Internet’s TCP/IP protocols with Vint Cerf) and Dave Farber (another networking pioneer) on the anti-regulation side. And based on conversations I’ve had here at Princeton, Kahn and Farber are far from the only computer scientists who are skeptical that the FCC is up to the job of regulating the Internet.

In a vacuous appearance on Rachel Maddow last week, blogger Xeni Jardin cited Vint Cerf’s support of regulation and urged viewers to “side with the geeks who actually built the Internet.” She did not, of course, mention that Kahn and Farber, who fit that description as well as Cerf does, are on the other side. “The geeks” are as split on this issue as everyone else.

Update: Tim Carney has an excellent article making a similar point: Internet companies like Google and Amazon, who have lobbied hard for network neutrality, gave overwhelmingly to Obama over McCain in the 2008 election. This doesn’t prove Obama and Chairman Genachowski are insincere in their support for network neutrality. But it does mean we should take both side’s arguments with a grain of salt.