I think more simplistically: when you take this group of people and average them out what you get are beliefs that benefit the large companies they represent. That's the signal that is correlated with running a big tech company, and the rest is probably mostly noise. That's all really, they aren't for or against free trade in aggregate, they are for their company trading profitably, on average.
Author of the study they were writing about here. That is the original expectation I had coming in, but I don't think what we find is totally consistent with that (although some is). We talk about that in the paper. Study here: https://www.gsb.stanford.edu/faculty-research/working-papers....
Great work. Thanks a ton for climbing onto the hackernews thread!
When I look at chart in the article (I haven't read the paper) I get really curious about how 'support for regulation' might break down by issue. A lot of the regulation that the Trump administration is rolling back are environment rules that are strongly net positive for our economy once you account for health care externalities. While many of the regulations that hurt the economy the most (e.g. restrictions on urban housing construction.) are unchallenged.
How do you think the results would change if you broke "regulation" down by type e.g. environment/labor/business? I suspect there'd be a significant break between tech elite and the republican donor class on environmental/global warming issues. I also think there's a significant break between the tech elite and some democrats on zoning reform. Though I haven't conducted formal surveys :)
I think this is particularly interesting as it's the one issue were the tech elite didn't look like 'normal democrats' in your graphs - perhaps that outcome is more nuanced then the graphic shows.
It's hard to tell exactly what the underlying principle is from just the few questions we could get folks to answer, but the general pattern seems to be about like you describe -- on the environment, founders are pretty liberal; on issues of labor and product market regulations, they're fairly conservative; on everything else, they're fairly centrist. We have all the survey questions we asked that went into this index in the Appendix.
The only way in which technology entrepreneurs deviate from what you would expect, is in their support for more redistribution. But all these people are not paying normal taxes, anyway. Why would they care? Also if you consider the risk of political or economic instability, then even redistribution might just be a self-interested policy stance.
The same logic holds for founders in other industries but they don't seem to like taxes/redistribution much (although we need and are getting more data on that). Would have been nice to ask about taxation on capital gains, but survey space was limited (you folks are busy!) and that is a relatively small share of federal receipts so not as important substantively, even if it speaks to this theoretical question.
There might also be a best-use-of-capital explanation for that discrepancy. A manufacturer with a cash surplus can typically open another factory, but how does a company like twitter usefully spend excess revenue? Tech CEOs may be more in favour of redistribution because they would have to figure out what to invest in, whereas CEOs in other industries already know what they'd like to do with the money.
Maybe tech companies know that they profit from redistribution, perhaps moreso than other companies? Tech products tend to be relatively expensive, but production is generally unlimited, because a significant proportion of the price reflects the fixed costs of development, which means that a larger market usually comes with profits. This is somewhat unlike e.g. agriculture or construction, where production quantities are more difficult to increase.
The primary reason I support it, and I don't think I'm alone among founders in this, is that I think that society is not going to work very well in the long term unless we strengthen our social safety nets. I want to live in a society that functions well, because I'm happier when surrounded by happier people.
I also think that it would enable more people to take the risk of trying something new if they knew that failing didn't mean destitution, and I think that we'd see significant upside from that in terms of economic competitiveness. I think I should be paying more taxes than I am to fund that, especially on unearned income.
There's an important distinction, however, between redistribution that seeks to create a more free and just society and retribution that seeks to prevent a society without consumers.
Most tech people in favor of redistributive schemes like UBI are in favor of the later.
Ah, well, I'm in favor of UBI and both of the reasons you mention for it - the free market is still the best way we've found to allocate resources to worthwhile projects.
Bullshit. You're committing the fallacy that comes from Marxist thought--- that one's position/class/socio-economic-factors are the determining factors in their values and beliefs. People are not so simple, their thoughts can come from elsewhere. You're wildly underestimating the sentience of these people.
I think a better model is that: People who understand economics tend to both be entrepreneurs (they understand the rules of the game they're playing) and they are in favor of free trade and less regulation.
Free trade _does not_ benefit large companies. Large companies want, and generally get, favorable regulations and tariffs that make it hard for outsiders or for small guys.
>Bullshit. You're committing the fallacy that comes from Marxist thought--- that one's position/class/socio-economic-factors are the determining factors in their values and beliefs. People are not so simple, their thoughts can come from elsewhere. You're wildly underestimating the sentience of these people.
Humans want to believe that they are not so simple, but usually they are. We're more caricatures than snowflakes. That's why there's mainstream music and movies, and most go through the same limited number of stages in life with utmost predictability.
When money is involved that's doubly so. And if Marx's not your thing (although the notion that class/position/economic factors greatly shape the man is much older than Marxism -- heck, the aristocracy believed the exact same thing), here's Upton Sinclair: “It is difficult to get a man to understand something, when his salary depends on his not understanding it.”
In other words, they can have all the other thoughts they like -- as long they fit in with their role and don't come at odds with it (In other words: "any color you like as long as it is black").
This leaves them with a more limited set of corporate compatible set of thoughts. If they're gonna be buddhists, for example, they'd be the kind of "buddhists" for which driving expensive sports cars, managing people, and selling commercial trite products is a-ok for.
There will always be some outliers when speaking of human affairs.
I mentioned mainstream movies above and it's similar: the majority loves them and flocks to them. But still some would legitimately rather watch a Tarkovsky or some really obscure creators.
To quote myself above: "Humans want to believe that they are not so simple, but _usually_ they are" (emphasis mine). In other words, you can find one Hanauer. Heck, you could find 10 Hanauers. But I doubt you can find 10,000 or even 100. Most of the SV bosses beliefs are determined by their wealth/role/position.
Heck, even old Marx (to whom they idea that people's class/position etc determines their values/beliefs was attributed above [1]) very well knew that. His friend Engels was a wealthy industrialist heir, but very much a communist. And Kropotkin was a prince from a wealthy family -- but ended an anarchist. The overwhelming majority of industrialists and princes however never made those jumps to the other side.
[1] And he indeed wrote it and popularized it, but it was not uniquely his.
Gates and Buffet want to raise the capital gain taxes, democrat multimillionaires like B. Sanders and E. Warren are in favor of taxes. That's only for the most famous. There are a lot of rich people, less famous, concerned about inequality and favoring something not in their personal interest.
So on one hand I disagree with your "hard to find 100 Hanauer" point, but it does not mean your bigger point is wrong, just that it may not come simply from their job, but maybe education/social environment.
I strongly agree with your argument regarding economic-class determinism or whatever it's called. After all, some of the most progressive policies for the poor in this country were passed by the wealthiest presidents (FDR, Kennedy, Johnson).
However, if you're suggesting that Silicon Valley CEOs are in favor of libertarian free trade, I think I agree more with the article and disagree with you. Silicon Valley CEOs loyalty is not to free trade, it's to their globalist lifestyle and outlook on life. Indeed, most of these people seem to be hardcore monopolists, and with no shame for it either.
>>After all, some of the most progressive policies for the poor in this country were passed by the wealthiest presidents (FDR, Kennedy, Johnson).
You mean regressive policies that hurt the poor, right?
The War on Poverty marked the end of the decline in the American poverty rate. The social welfare state gradually sapped American industrial vitality and the labour productivity growth that had been fueling wage gains across all income classes for decades.
Poverty rates have failed to decline during almost the entire era of rapidly increasing social spending. There is less than a decade of poverty rate reduction during the War on Poverty era, and it is all at the beginning, when the economy and populace had still not become accustomed to large social welfare programs, and when the size of these programs was much smaller than it is now.
If social programs reduced poverty these aren't the stats you'd see.
So you are going from You mean regressive policies that hurt the poor, right? to There is less than a decade of poverty rate reduction during the War on Poverty era, ....
Cutting the Poverty Rate from about 22% to about 12% is hurting the poor. Got it.
The poverty rate was declining for decades before the War on Poverty began. After its start, when its programs were still small, it continued declining for a decade. Then the decline, which had been in place since long before the WoP began, ended, and has never again resumed, despite social spending only growing.
More extreme poverty began to increase decades into the War on Poverty, when social programs were far larger than they were at the beginning.
And in addition, there has been a major increase in single parenthood, which a lot of research indicates is largely a result of government low income subsidies making single parent households more economically viable. Single-parent households are associated with much worse socioeconomic outcomes that increase future poverty, incarceration and government dependency.
So my conclusion is that these policies are most likely harming the poor, by wiping out the poverty reduction that would otherwise be happening, and moreover, that there is very good reason to doubt that they're "progressive".
>>Cutting the Poverty Rate from about 22% to about 12% is hurting the poor. Got it.
The poverty rate was declining before the War on Poverty began. There's no reason to conclude that it is responsible for the continuation of that trend for a decade longer. There's plenty of reason to blame it for the cessation of that trend of declining poverty rates, rising wages and low rates of single parenthood.
But labor productivity growth doesn't cause any wage gains anymore, hasn't for decades upon decades.
Probably worth asking if you assert that American corporate taxes are the highest in the world: sometimes there are just major, major reality-based differences in the discourse and it's useless talking any further. I know I can't believe some of your axioms here, unfortunately.
I'm curious what you mean by that, because I've never heard anyone seriously argue against that assertion. Our top marginal corporate tax rate is one of the highest, according to Wikipedia [1], though companies are generally pretty good at not being too profitable and therefore not paying a very high tax rate, if that's what you mean.
Excerpt: In 2014 the United States had the third highest general top marginal corporate income tax rate in the world at 39.1 percent (consisting of the 35% federal rate plus a combined state rate), exceeded only by Chad and the United Arab Emirates However, the average corporate tax rate in 2011 dipped to 12.1%, its lowest level since before World War I, largely due to the great recession and a bonus depreciation tax break.
Yes, I do, and no, it wasn't meant to "slip by you", which is why I asked if you meant that companies were good at not being profitable, and thus never made it to the top rate.
That graph shows the exact opposite. From near-parity with the output figures in 1947-1972, wage/compensation struggle to stay about half that in 2005-2014. In other words, the workers are not benefiting in proportion to productivity.
It's still highly correlated for most of recent history, meaning for most of the last 50 years. 2005 to 2014 is only a nine year period, and even during this period, compensation growth has been well half (0.9 vs 1.5) of output growth.
Beyond the obvious cherry-picking, that's some pretty serious statistical gamesmanship you're into. Maybe you should consider this little thing we call exponential growth, or "compounding" to a finance type. Let's look at the "Hourly Compensation (Output Price)" figures, which are the most favorable to your argument.
* For 1947-1972 it fell behind output by 0.2% per year, which sounds small, but that's 4.6% for the entire period.
* In 1972-1994 workers fell behind by another 4.1%
* In 1994-2005 (half the time) workers fell behind by another 2.9%
* In 2005-2014 (even less time) workers fell behind by another 4%
Over the entire span, workers' compensation has only increased 85% as much as productivity. More importantly, the gap is growing, not shrinking. Even using yearly figures to make differences look small, then grouping those numbers into oh-so-convenient unequal intervals, can't turn this into evidence of your original claim that wages have kept pace with productivity growth.
Isn't picking out a short period with the largest gap between compensation growth and output growth the cherry picking?
85% is a very high level of correlation. The original comment claimed:
>>But labor productivity growth doesn't cause any wage gains anymore,
Labour productivity growth obviously does cause wage gains. The data shows that the primary cause of the slowdown in wage growth has been a slowdown in labour productivity growth, not a decline in labour's share of revenue.
It's possible for both the original claim and your counterclaim to be untrue. Two lies don't make a truth. The original claim of no relationship is untrue. So is your "tracking very closely" counterclaim. There's a relationship, but it's not very strong and it's growing weaker.
> Labour productivity growth obviously does cause wage gains.
Cause? Without qualification? Not so fast, hoss. Sometimes productivity growth translates into wage increases. Other times either can change independently. The whole point - what those data really show - is that the relationship has been weakening.
> So is your "tracking very closely" counterclaim.
85% is a strong correlation. I even posted the graph for others to make up their own mind. Calling my statement a lie, when it's based on your own subjective determination of what constitutes a close correlation, is hostile and unfair.
>Cause? Without qualification? Not so fast, hoss. Sometimes productivity growth translates into wage increases
Wage growth can only come from productivity growth on any sustained basis, so yes, the latter caused the former.
> Wage growth can only come from productivity growth
To quote the top-level comment that started this thread (and which was apparently OK with everyone): bullshit. Wage growth can come increased availability of resources or funds, from regulation, from many sources besides productivity growth. Productivity growth can actually drive wage decreases, e.g. when automation makes jobs obsolete and its practitioners end up doing menial work instead. Typesetting is an example that has affected my own family. To pick another one, do you suppose that all of the long-term increase in finance-industry wage growth has been because of productivity? That repealing Glass-Steagall, or tax laws favoring certain investment vehicles and funneling trillions into mutual funds had nothing to do with it? That would be naive. The people making all that money certainly know better.
If that claim is the basis of your argument or economic beliefs, then I feel sorry for you because you're building on quicksand.
>>To quote the top-level comment that started this thread (and which was apparently OK with everyone): bullshit.
First you accuse me of lying when I was being completely honest, then you call another claim of mine "bullshit". You're being rude. Please stop if you want to carry on the discussion.
One big thing that I've started noticing, is that "migration" is incredibly easy for rich people. That may lead to their "global" mindset, and wanting it for everybody else.
There are countries out there (including America) where you can get long-term stay papers or citizenship by simply investing into the country. You're essentially "buying" your way in. Most of the necessary amounts are probably "peanuts" for the celebrities and tech-leaders we have today.
This doesn't have anything to do with Marxism. The notion that people might have ulterior motives is as old as the hills.
The actual Karl Marx, on the other hand, didn't think that people's beliefs were determined by their social class. Rather that their behavior was ultimately determined by their social class regardless of any personal beliefs.
It's true that free trade in principle doesn't benefit large companies. But in principle, it doesn't hurt them either. Free trade and largeness can be largely orthogonal issues. And so can largeness and market power.
Sorta true, but if you are in an industry with a low entry cost (hypothetical example) dairy farming, and you have a large herd and facilities. Another smaller dairy farmer comes into the market. You see that they are taking some of your business. So you call your friend Mr. Mayor and voice your concerns about how $expensive_compliance_regualtiob is necessary to "protect consumers" and a law gets passed. Your competitors cannot to afford the afore mentioned new process and are as such drive. Out of business.
So, are big companies hurt by free trade? No, it's how most get started. But once in power, they will lobby to make sure they maintain it
I'm not arguing that they don't have other thoughts. I'm arguing that those other thoughts shouldn't be correlated with being a "tech boss" unless it has some advantage to being a tech boss, because people are largely different! Like, in a completely random sample, we would expect beliefs representative of the population, but by biasing it to only leaders of tech companies, people who dedicate their lives to giant multinational corporations, we should expect to see their beliefs to correlate with what is good for those corporations. And everything else should match the general population, in aggregate.
>Bullshit. You're committing the fallacy that comes from Marxist thought--- that one's position/class/socio-economic-factors are the determining factors in their values and beliefs. People are not so simple, their thoughts can come from elsewhere. You're wildly underestimating the sentience of these people.
People's values and beliefs usually model the reinforcement signals they've actually received, not the distribution of all such signals that a human being in our world can receive.
So yes, their values and beliefs will tend to support their interests. That is, after all, what values and beliefs are for.
This is a bit reductionist. One popular example I see on HN/Reddit is when someone is supportive of market capitalism you often see this dismissive comment in response:
> "Every American think's they are a future millionaire and from this delusion they blindly defend the rights of millionaires to their own detriment."
This sounds clever but it's based on the (fallacious) assumption that everyone's political position should be reflective of their current economic status - or that the government's economic policy should be defensive of one's current economic status - and not doing so is acting against your self-interest.
But it's entirely possible to support a political position that is advantageous to people outside of your own short-term direct self-interest, because you see it as the most beneficial to the most amount of people in the country - and ultimately to yourself, family, friends, and country in the longrun.
Self-interest is often falsely perceived to be merely only about benefiting one's current direct/personal circumstances. Given that:
a) we're social beings
b) we all must live and survive within communities over an extended period of time
a natural side-effect of any one's self-interest within a economic/political system must itself factor other people's interests and external realities.
The exception of course is when an economic/social system attempts to reduce everyone to one imaginary class of people, and a singular self-interest - which is where the Marxism analogy comes in (which opens up another can of worms).
>that one's position/class/socio-economic-factors are the determining factors in their values and beliefs.
Have you actually read Marx? Nowhere does he make this claim, nor inspire this thought. I don't know where you're getting this from. Marx does not deny the indidual's individuality. Here's a little quote, which is a criticism from Marx of the very view you are accusing him of:
>The materialist doctrine that men are products of circumstances and upbringing, and that, therefore, changed men are products of changed circumstances and changed upbringing, forgets that it is men who change circumstances and that the educator must himself be educated. Hence this doctrine is bound to divide society into two parts, one of which is superior to society. The coincidence of the changing of circumstances and of human activity or self-change [Selbstveränderung] can be conceived and rationally understood only as revolutionary practice.
(From Theses on Feuerbach)
Please don't accuse us Marxists of the fallacies you can't back up. Besides, even if Marx was accused of economic determinism, it doesn't mean that the critics are right. In fact, here's yet another statement from one of the founders of Marxism (Marx's close friend Friedrich Engels):
"Marx and I are ourselves partly to blame for the fact that the younger people sometimes lay more stress on the economic side than is due to it. We had to emphasise the main principle vis-à-vis our adversaries, who denied it, and we had not always the time, the place or the opportunity to give their due to the other elements involved in the interaction. But when it came to presenting a section of history, that is, to making a practical application, it was a different matter and there no error was permissible."
People who understand capitalism tend to be entrepreneurs, as they understand the rules of the game. But capitalism does not equal economics. I would even venture to say that people who consider themselves capitalists have a woefully limited view of the field of economics, and a general misunderstanding of the origins of money, markets, and debt. Although they certainly can do a good job of making profits within the mess of an economic/political system that we currently have to endure.
Plus if you're an entrepreneur who's NOT a tycoon you might feel very differently. I've kept a business alive these past ten years in spite of anything the market threw at me, and I had to notice the sharp correlation between my own well-being, and the Fed metric for the labor share.
Globalization hurt my business just as much as it helped. Yes, overseas sales, but my domestic sales just kept getting eroded as people live on less and less money, and it got to a point where I just got onto a Patreon model because my competitors in my industry were becoming too evil: I had to get disruptive in a big way because my industry sector was in a downward spiral of dishonesty, broken promises, DRM, and increasingly ruthless business behavior.
I expect major turmoil in that market within a few years, but I jumped off the train before it went into the ravine ;)
I think these days people who understand economics lean socialist, and I see unironic embracing of even more radical doctrines. Capitalism is following an easily observable trajectory as human worker productivity gains escalate year over year, and that trajectory is not 'upward'.
To generalize, businessmen feel that free trade is great for every other business, but their business is special and should be enshrined as a government enforced monopoly :-)
You have no understanding of the marxist conception of base - superstructure relations. If marxists thought class determinism was as simple as it is then they would be baffled why revolution hadn't taken place long ago.
> You're committing the fallacy that comes from Marxist thought--- that one's position/class/socio-economic-factors are the determining factors in their values and beliefs.
Actually the apple doesn't fall far from the tree and yes, people in aggregate are pretty simple. If post-millennium Silicon Valley can be reduced to single idea, it is that predicting that simplicity is a business model.
Yeah, companies don't generally want regulations. It's almost always a headache and distraction from the core business. However when regulation is finally foisted upon them, they make sure to take the time to influence what regulation they are subject to so that it benefits them and becomes a barrier to entry for new entrants.
> Yeah, companies don't generally want regulations
I disagree strongly with this. The leading companies of any given industry sector routinely lobby for more regulations, or at the very least they lobby to retain existing regulations. As a younger man, I used to be perplexed by this until learned about regulatory capture.
The regulation doesn't have to be foisted upon them at all: Regulation that just harms new companies, or competitors of a very different shape, is introduced at the behalf of industry groups all the time.
What makes Silicon Valley tech special here is that most of the big companies have great network effects or economies of scale, so it's not as if adding regulations on top will help them much: The moats are already very large. On the other hand, they are all still growing, and regulation rarely helps anyone that is growing. The one case where regulation helps them though is when it removes lower levels of regulation.
Imagine you are a ride sharing company for a second. Would you rather have individual regulations per city, or limit them to one per state, or even one per country? The simpler the regulation, the better, as you want to enter new markets as easily as possible, and a big, umbrella regulation is far better than a lot of incompatible ones, even if said umbrella regulation happened to be more onerous than most local regulations.
We saw a lot of this with the strengthening of the EU. A lot of incompatible laws became unified, and thus selling to more markets became easier. You might even have a company push for said regulation when there is none, as long as it has provisions to stop new, smaller scale regulations from popping up.
I think more simplistically: when you take this group of people and average them out what you get are beliefs that benefit the large companies they represent. That's the signal that is correlated with running a big tech company, and the rest is probably mostly noise.
Just remove "tech" and you get the same old story. "Same as it ever was..."
You got me on the wealth redistribution, but for the socially liberal policies being inclusive gets you far more customers in the tech space than it excludes. Look at the fervor over Brendon Eich and his positions on marriage. And from where I sit in the Silicon Valley bubble, it definitely feels like that bet will continue to be good for buisiness and good for PR.
To be clear, I'm not saying that it's not motivated by the ceo's conviction that it is right, just saying that it selected for, and these policies are not incompatible at all with their buisinesses.
