Listen, Liberal: Or, What Ever Happened to the Party of the People?

by Frank, Thomas

  Schmidt’s own writing makes it obvious why he and Google appeal so strongly to the Democrats: the party and the company are traveling parallel cultural tracks. Schmidt begins his 2014 management book, How Google Works, by playing up the company’s academic pedigree. After launching Google out of a dorm room, the two founders acted “like the professors in their Stanford computer science lab” and gave the smart young professionals they hired maximum freedom. The company they proceeded to build, according to Schmidt, is a “meritocracy,” a place where the smartest prevail, where bias and prejudice count for nothing, where the best ideas win out.5 The ideal economic actor in this context is the one Schmidt calls “the smart creative”:

  In our industry … she is most likely a computer scientist.… But in other industries she may be a doctor, designer, scientist, filmmaker, engineer, chef, or mathematician. She is an expert in doing.… She is analytically smart.… She is business smart.… She is competitive smart.… She is user smart.… She is curious creative.… She is risky creative.… She is self-directed creative.… She is open creative.… She is thorough creative.… She is communicative creative.6

  It is a little tiresome, is it not? We’ve heard about the learning class, the wired workers, the creative class, and now the “smart creatives.” But always it means the same thing: the well-graduated professionals.

  In a 2013 public conversation with journalist Walter Isaacson, Schmidt announced that everyone present in the audience was a faithful worshiper “in the church of the knowledge economy,” a stage of the development of civilization in which wealth is created by “entrepreneurs and innovation.” When Schmidt was asked what America might do to get its economy going again, the answer was predictable: “What we need to do is come up with policies which actually allow the creative people who can create value and invent new things” to do their stuff. If we put these people first, we will enjoy “huge new jobs, huge new choices of employment.” As an example of the kind of thing these people might come up with, Schmidt mentioned driverless cars, a legendary Google project that, if it is ever perfected, might make redundant everyone who drives a taxi, limo, or semi-trailer truck. The short-term effect of such an efficiency would obviously be to increase unemployment, not reduce it.

  In the bailout days, you might recall, people were outraged to learn that, thanks to the number of federal officials drawn from Goldman Sachs, one of its nicknames was “Government Sachs.” Now, though, as the Obama years draw to a close, it’s the “United States of Google” that should concern us more. I mean this not just in terms of the revolving door between Google and government or the weird ubiquity of Eric Schmidt in Democratic Party gatherings, but in a grander way as well. Google’s vast ambitions often seem to aim at replacing government. Its core business, to begin with, is providing services that will be the public utilities of the twenty-first century: searching the Internet, for example, or communicating via email. In my fiscally challenged hometown of Kansas City, Google even got the rights to set up a local fiber-optic broadband system, making Google a public utility by definition, although one that is not obliged to provide service to everyone.7

  Then there’s the spying. In his important 2013 book, Who Owns the Future?, the tech writer Jaron Lanier describes the emerging Internet giants of our time as “third-party spy service[s].” Many of them, he argues, make their profits via “the creation of ultrasecret mega-dossiers about what others are doing”;8 everything else they offer—retail sales, connecting with friends, searching the Internet—is secondary.

  Back to Google, the liberal class’s favorite Internet company: they track your web searches to sell you stuff; they scan your emails to sell you more stuff. For those who are worried about the loss of privacy such practices seem to portend, Eric Schmidt tells us—in a book cowritten with a former adviser to Secretary of State Hillary Clinton—that it’s all inevitable anyway, nothing we can do about it. In the future, they write, “by the time a man is in his forties, he will have accumulated and stored a comprehensive online narrative, all facts and fictions, every misstep and every triumph, spanning every phase of his life. Even the rumors will live forever.”9

  The aim of such a statement, obviously, is to make Google’s scary business model seem like no big deal, just the future doing what comes naturally. Even so, the scary side keeps peeking through. Schmidt’s single most famous statement, delivered to a CNBC talker in 2009, is a direct rationalization of surveillance-for-profit: “If you have something that you don’t want anyone to know, maybe you shouldn’t be doing it in the first place.”10 The way to react to a world in which you are under observation at all times, in other words, is simply to never step out of line.

  INNO-QUALITY

  What’s wrong with liberals embracing tech and innovation? Surely it’s not an expensive passion, like mass transit or Medicare or the hundreds of other things Democrats love to blow money on. Even if it seems like empty rhetoric, there’s still a small chance that something good will come of it. Maybe a bunch of students with a really awesome idea will enter a contest at a startup incubator somewhere and win the eye of a friendly billionaire, and next thing you know we’ll all be driving cars that don’t pollute or something. It might happen. Why not give it a shot?

  Besides, nobody is against innovation. It is the subject of an enormous literature, a literature that sells well and is almost entirely laudatory. President Obama says innovation is how to “win the future.” Democratic governors across the country agree with him. It is as purehearted an undertaking as the liberal mind can conceive.

  In fact, the culture of innovation is so pure and so stridently noble that it often sounds like advertising. You hear about the startup that is going to help with sanitation in African cities; the one that’s going to print out prosthetic hands for disabled children; the one that’s procuring clothes for homeless children. “We’re with people who are curing cancer in a different way, and changing banking technology, and helping folks who can’t see anymore,” says a woman in a short YouTube video about MassChallenge. Inno is going to solve global warming. Inno is coming up with new treatments for autism. Inno is so inherently moral that there is even a UNICEF Innovation team; dial up its homepage and you will encounter the following introductory sentence: “In 2015, innovation is vital to the state of the world’s children.”

  The fog of righteousness surrounding this concept is so thick it allows all manner of absurdly altruistic claims. “Can startups help solve Boston’s Biggest Problems?” asked an email I received last spring. Of course they can! The group that sent it, CityStart Boston (“Leveraging the Innovation Community to Tackle Civic Issues”), announced plans to mobilize “the entire Boston startup ecosystem” to “collaborate to develop viable ventures designed…” Wait! Stop here for a moment, reader, and try to guess: in what way is the startup ecosystem going to collaborate to solve Boston’s biggest problems? If you guessed “to enhance innovation in Boston’s neighborhoods,” you were right. Startups are going to collaborate to enhance startups.

  This struck me as a pretty basic misunderstanding of the way capitalism works—as does, in fact, the whole notion of a nurturing “ecosystem” dedicated to “mentoring” and “incubating” other people’s precious startups. (It’s a basic misunderstanding of ecology, too, but we will let that pass.) Other than the chance to make some money, why would a capitalist participate in such a thing? If startups really were to encourage other startups, they would be contributing pretty directly to their own competition—and robust competition is precisely what today’s thinking business person wants to avoid. The winning quality today is monopoly, not competition.

  But this is not a literature given to subtlety or introspection. As the tech writer Evgeny Morozov points out in To Save Everything, Click Here, the cult of innovation holds every info-age novelty to be “inherently good in itself, regardless of its social or political consequences.” Sure enough, as far as I have been able to determine, few of the people who wr
ite or talk about innovation even acknowledge the possibility that innovations might be harmful instead of noble and productive. And yet recent history is littered with exactly such stuff: Innovations that allow companies to spy on us. Innovations that allow terrorist groups to recruit online. Innovations that allowed Enron to do all the fine things it used to do. Come to think of it, the whole economic debacle of the last ten years owes its existence to the financial innovations of the Nineties and the Aughts—the credit default swaps, or the algorithms companies used to hand out mortgage loans—innovations that were celebrated in their day in the same mindlessly positive way we celebrate tech today.

  Somehow that stuff never comes up, however. We know what innovation is about, and it’s righteousness and triumph. Success is all you’ll find when you riffle through the inno-thoughts produced by the various foundations, institutes, websites, mentors, accelerators, incubators, and entrepreneurship competitions. You hear about startups that just raised $3.1 million in venture capital; startups that are partnering with some more established operation from California; startups that have made their starter-uppers into billionaires.

  Inno is about egalitarianism as well. Indeed, as the preeminent expression of the endless American uprising against the entrenched and the powerful, how could it be otherwise? Inequality is, by definition, just one more problem our lovable entrepreneurs have set out to solve, and in the eyes of some, they have succeeded. Marc Andreessen, the famous venture capitalist, has described the vacation rental platform Airbnb as a solution for income inequality. Chris Lehane, a former assistant to Bill Clinton and Al Gore who now does public affairs for Airbnb, has said the same. Objecting to proposed regulation of the company, Lehane has said that cities “understand that in a time of economic inequality, this is a question of whose side are you on: do you want to be on the side of the middle class, or do you want to be opposed to the middle class?”11

  David Plouffe, Obama’s great people-mobilizer, now sells the freelance taxi app Uber with the same workerist pitch he once used to sell Obama: as the solution to the recession. “There are still too many people who aren’t feeling the full effects of [the] recovery, and too many people who are still looking for work,” he said in a speech at a Washington incubator in 2015. But Uber, for whom anyone could sign up and drive, is “making a real and growing difference when it comes to the challenges of wage stagnation and underemployment.”12

  During a talk at South by Southwest in 2014, Eric Schmidt lamented the effects of growing inequality on places like San Francisco, where the cost of living has ascended out of most people’s reach, but he declared that the solutions “all involve creating more fast-growing startups.” The answer, he told the audience, was a society-wide acceptance of inno as a way of life. “Each and every one” of us must be “in favor of more education, more analytical education, more immigration, more capital formation, more creative areas, more areas that are allowed by regulation to be unregulated, so that startups can actually flourish in them, [and] we can get through this.”13

  ATOMIZED LABOR

  This is the point where I am supposed to slap down Schmidt, Plouffe, Lehane, and company for suggesting that the solution to inequality is the very thing that is causing the problem. Technology is what has destroyed the livelihoods of so many, I am supposed to say: How can anyone suggest that more of it will make matters better?

  But that’s not really the question. Oh, it’s easy to find people who say that technological advances are the root of inequality, that the massive efficiencies tech creates naturally shift wealth upward and put less-qualified people out of work. Indeed, this has been such a commonplace view for so long that Hillary Clinton herself repeated it in her 1996 book, It Takes a Village: “Changes in the economy, such as technological innovations and the globalization of commerce,” she wrote, “have combined over the past two decades to produce what economists Robert H. Frank and Philip J. Cook call a ‘winner-take-all society.’”14

  When you think about it this way, it all seems inevitable. Inequality is a thing that is happening to us the way “globalization” or the weather happens to us: as an irresistible force of nature. That it also rewards the meritorious and bids down the lives of the unskilled and the poorly graduated makes it seem even more like an act of God.

  In truth, however, nothing is inevitable and very little is new. And tech is no more the root of the problem than are trade or globalization. Many of our most vaunted innovations are simply methods—electronic or otherwise—of pulling off some age-old profit-maximizing maneuver by new and unregulated means. Sometimes they are designed to accomplish things that would be regulated or even illegal under other circumstances, or else they are designed to alter relationships of economic power in some ingenious way—to strip away this or that protection from workers or copyright holders, for example.

  Consider the many celebrated business innovations that are, in reality, nothing more than instruments to get around our society’s traditional middle-class economic arrangements. Uber is the most obvious example: much of its value comes not from the efficiencies in taxi-hailing that it has engineered but rather from the way it allows the company to circumvent state and local taxi rules having to do with safety and sometimes insurance.

  The circumvention strategy is everywhere in inno-land once you start looking for it. Airbnb allows consumers and providers to get around various safety and zoning rules with which conventional hotels must comply.15 Amazon allows customers in many places to avoid paying sales taxes. The circumvention strategy isn’t restricted to software innovations, either. One of the great attractions of credit default swaps—a big financial innovation of the last decade—is that they were completely unregulated.

  Monopoly is the telos of innovation, the holy grail fervently sought after by every young coder sweating away in the incubator. The reason is plain enough: monopoly is the most direct road to profit, and the online world offers countless opportunities to achieve it. Jaron Lanier has described all the ways dominant digital networks can use market power to coerce customers, users, and advertisers; in his account the powerful players are all patterned after Wal-Mart, which so effectively dominates its suppliers and ruins its small-town competitors.16

  With Amazon, the Wal-Mart comparison is obvious. The giant online retailer has used its position as the country’s dominant bookstore to dictate terms to book publishers and to punish those who won’t play ball. During its dispute with Hachette in 2014, the retailer actually singled out certain authors (namely, one Paul Ryan) for preferential treatment. Nice, friendly Google does similar things with its advertisers and was investigated for the practice by the Federal Trade Commission in 2012; the FTC’s staff decided that Google’s practices did “real harm to consumers and to innovation in the online search and advertising markets.” No charges were filed in either case.17

  The pharmaceutical industry, one of the great gushing sources of inno-worship, enjoys an even closer relationship with monopoly. They must be granted the power to charge whatever they want for their patented drugs, they insist, or else innovation will cease. This is the logic that has permitted Big Pharma to raise prices so emphatically in recent years, even on drugs that are many decades old. Monopoly is what makes innovation possible; take it away and the genius factory will close down.18

  But it is in the endless conflict between management and labor that our innovation class has shown true genius. It is a matter of legal record that, for years, the CEOs of Apple, Intel, Google, Pixar, and other Silicon Valley firms operated something very much like a cartel against their own employees. In a scandal that journalists now call “the Techtopus,” these worthies agreed to avoid recruiting one another’s tech workers and thus keep those workers’ wages down across the industry. In 2007, in one of the most famous chapters of the Techtopus story, the famous innovator Steve Jobs emailed Eric Schmidt, demanding that this CEO and friend of top Democrats do something about a Google recruiter who was trying to lure an employee
away from Apple. Two days later, according to the reporter who has studied the case most comprehensively, Schmidt wrote back to Jobs to tell him the recruiter had been fired. Jobs then forwarded Schmidt’s email around with this comment appended: “:)”19

  Amazon, meanwhile, is famous for devising ways to goad its executives into fighting with one another—engaging in what the New York Times calls an “experiment in how far it can push white-collar workers”—while its blue-collar workers, often recruited through local temp agencies, are electronically tracked so that their efficiency is maximized as they go about assembling items in the company’s enormous fulfillment centers.20 For the rest of us, Amazon has come up with a nifty device for casual employment called “the Mechanical Turk,” in which tasks that can’t be done by computers are tossed to the reserve army of the millions, who receive pennies for their trouble.

  This last is a good introduction to the so-called sharing economy—“sharing” because you’re using your own car or apartment or computer, not your employer’s—which has been one of the few robustly growing employment opportunities of the Obama years. The magic derives from the way just about anyone can sign up at one of these sharing companies and work as a sort of temp, only hooked up with the client and employer via software, which makes it all digital and innovative and convenient. In nearly every other way, however, the sharing economy is one of the most lopsided, antiworker employment schemes to come down the pike in many years. The costs and risks associated with this industry—insurance, owning a car, saving for sickness and retirement—are all loaded onto the shoulders of the worker, and yet the innovator back in California who has written the software still helps himself to a large cut of whatever the proceeds of your labor happen to be. It is “every man for himself” as a national employment strategy.