Larry Ellison was ready to pony up more that $400 million of his own money to buy the Golden State Warriors but, alas, it was not to be. A couple of entertainment moguls came up with the winning bid. The loser is what you might call a Silicon Valley entrepreneur; CEO of Oracle and reportedly the sixth richest person in the world. The news got me thinking about the numerous references to the virtues of “entrepreneurship” being injected into the discussion about the current economic crisis. If you listen to some of the New York Times commentators the key to overcoming the present situation – including high unemployment – is pouring resources into high technology research and development. The genius and the future, it is said, lie with bolstering young innovators toiling away in garages. After all, that’s what produced the internet and it’s where people like Ellison got started.
Obviously there are two sides to the Silicon Valley story. On the one hand, there are the creative innovators working alone or in small groups, sharing knowledge freely and coming up with the fantastic technology we enjoy today. On the other hand, there is the business side. Capitalism hasn’t gone away and internet technology hasn’t fundamentally changed its nature. The growing wealth inequality is as present in the lands just south of San Francisco as it is in the country as a whole. What’s more, today there are politicians who made their fortunes in advanced technology and are today trying to buy anything they covet, including government power.
Take Meg Whitman, former CEO of eBay. Sometimes when I turn on the television I am forced to listen to her at nearly every commercial break, talking about unemployment. Other politicians, she says, don’t really sense the seriousness of the situation because “they don’t see it every day,” followed by: “I see it every day.” And, I’m like, where does she see it every day? Surely not from the window of her $3.2 million Atherton mansion – population 7,535 – second wealthiest city in the country. Perhaps she sees it every night when she closes her eyes, only to be taunted by the recollection of tech industry workers she has, in her various boss positions, laid off, plus the ones she proposes to add to the state’s jobless rolls.
Whitman has chalked up quite a record of eliminating jobs and arranging big bonuses for herself and other management personnel. The California Labor Federation calls her a “serial outsourcer” who sent 40 percent of eBay’s jobs to low wage areas abroad. Between 2002 and 2007, Whitman increased the number of overseas workers at eBay by 666 percent, rather than keeping jobs in California.
Whitman has proposed cutting 40,000 state workers from the payroll, including employees of the University of California system. She has also joined the disreputable bandwagon of those who would try to solve government financial deficit by cutting retirement benefits for public workers through raising the retirement age and doubling the percentage of salaries going into retirement accounts.
Whitman spent $71 million of her own money to win the California gubernatorial nomination and is expected to spend $150 million more trying to win the general election.
Then there’s Carly Fiorina, CEO of Hewlett-Packard from 1999 to 2005 and previously an executive vice president at AT&T, who also spent several million dollars of her fortune to win nomination as the Republican candidate for Senate from California, and is laying out even more trying to snag a general election victory.
Heading up HP, Fiorina oversaw the layoff of thousands of workers, sent jobs overseas and garnered big bonuses and perks for herself and others in management. At her victory party Whitman hailed the victories of “two businesswomen from the real world who know how to create jobs, balance budgets and get things done.” Well, not exactly. Fiorina was actually pushed out at HP with a $21 million severance package.
“We have been entertaining ourselves with theories about how this election year is going to be all about voter anger,” observes Times columnist Gail Collins. “Or Washington insiders. Or health care. Or TARP. But really, it’s going to be about money. Gobs of cash falling on campaigns like tar balls on a beach.”
Oh yes, and there’s Steve Jobs over at Apple. He recently got into the discussion by correctly noting that the high tech resources we have today are largely the outcome of government spending. He’s now arguing for more government outlays for research and development. Concurrently, his latest product has given the English language a new word: Applegate. It’s hard to imagine a worse quality control mishap than a new massively promoted glorified cellphone that doesn’t really work too well. Since 2004, Apple products like the iPhone and iPod have been manufactured and assembled in China. Currently they are assembled by Foxconn. They are only conceived and engineered in Silicon Valley.
Conservative Financial Times columnist, Christopher Caldwell, had an interesting comment last week on Bill Gates of Microsoft and his family’s well known philanthropic activity. Writing about Berkshire Hathaway’s Warren Buffett, and his recent pledge to leave 99 per cent of his fortune to charity, Caldwell, senior editor at the Weekly Standard, wrote, “Most readers of the Fortune magazine exclusive in which the Giving Pledge was rolled out were pleased with the idea…Yet the most striking thing in the hundreds of letters posted on the magazine’s website was the level of anger in many of them. ‘I guess Mr. Bill Gates will give all his money to India,’ runs a fairly typical negative comment, ‘since he was so fond of outsourcing all American computer systems analysts / programmer jobs to India.’ The Gateses and Mr. Buffett may have misjudged the public mood. In opening their wallets, they have opened a debate on whether it is right that they should have so much money to begin with.”
Caldwell makes another interesting comment about the billionaires’ largess:
“If there is something wrong about businessmen campaigning through their money, there should be something even more wrong about businessmen governing through their money. Yet governing through money is what most present-day philanthropy does. Very few billionaires ‘give away’ their money, in the sense of surrendering control over it. They deploy it, through tax-exempt foundations, to ends of their own choosing, and this can have disruptive effects on democracy, no matter how noble the hubristic billionaire believes his aims to be.”
Back to Larry Ellison. With a fortune estimated to be $28 billion, he is reportedly the sixth richest person in the world, the third richest in the U.S. and likely the wealthiest in California. He has homes in San Francisco, Malibu and Atherton and a compound in Woodside in the Valley. I don’t begrudge the man the money, even if along the way he outsourced a few jobs to earn it. What bothers me is that, at a moment, when a lot of sanctimonious criticism is leveled at a former Cleveland Cavalier, the great Lebron James, for acting in his own best interest, playing by the rules of the system when selling one’s labor power (albeit with a touch of Hollywood and Madison Avenue), this entrepreneur sets out to buy a whole basketball team. That would have put him in a position to make even more money off the labors of players like Steve Curry, Monta Ellis, David Lee and Vladimir Radmanovic. I’m glad it didn’t happen.
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