
Silicon Chasm: The class divide on America’s cutting edge - continuations
http://www.weeklystandard.com/articles/silicon-chasm_768037.html?page=1
======
blisterpeanuts
Interesting article. I wonder how much of the income disparity would be
relieved if there was more room to build affordable housing, as in the
"limitless" cities like Phoenix and Las Vegas where you can buy a nice 3
bedroom 2 bath for $150K.

In Phoenix, there are also rich people and poor people, but not the stark
contrast of Silicon Valley. Fewer billionaires, I think and also the
neighborhoods are so vast and more or less homogeneous in tract size that you
don't really notice wealth disparity. The average family pretty much lives in
a house with a yard and 2-car garage, regardless of income. You can get in
your car and drive to tony gated communities in Scottsdale and peek over the
walls, but who would? You have your job, your two cars, your Harley, and your
flatscreen, and life is good.

Maybe California can find a way to build out onto the ocean as was done in
Singapore, and relieve the housing pressure a little. God, I'd love to be
making the kinds of software engineer salaries that they offer out there, but
the housing -- yikes!

~~~
ryandrake
Even if there was room for affordable housing, who would build it? Home
builders need to make a profit, and you do that by building $900K luxury
townhomes, not by building $400K roach traps that need tax payer subsidy to
break even. Do you think the tax payers lounging in their Atherton mansions
give a crap about housing for poor and middle class people?

~~~
wyclif
Whoa, wait. A $400K home is a "roach trap"??? Seriously? Seriously?

~~~
webmaven
I think what was meant was a $400k building filled with roach trap apartments.

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cheesylard
Living in the Silicon Valley after reading this article might sound awesome;
but it's far from the truth.

I grew up there. I feel like I was deprived of a childhood. I moved away a
couple of years ago and am never going back. You have nothing but sprawled out
office parks, rich internet tycoons, a police force with nothing to do,
helicopter parents, and soccer moms. The thing that topped it all off was the
super competitive vibe amongst the peers and parents. I would not recommend
living there under any circumstances.

~~~
fzzzy
Plus leaf blowers 24/7.

~~~
cheesylard
Wow, that's kind of funny, because I didn't even notice that was gone until
you mentioned it. I guess I was so used to it that I tuned it out.

------
auggierose
> Yes! Let them eat beans!

Preferably in their apartments.

No, seriously now. I've got a friend who 5 years ago decided that he needs "to
straighten his life out", and now he has a huge house in SV and is lead
engineer at Apple. That's really fine, and obviously not everyone can have
such a life. And people will really have to look inside themselves, and ask
themselves what it REALLY is they want. If they want status and big houses,
then they better be extraordinary smart & disciplined and/or rich. Me, I just
want an office where I can do my thing, not being responsible to anyone else
but myself.

A solution to this dystopian future would be the basic income as proposed in
Switzerland. This is the only way in my opinion to make sure that a
master/slave relationship will not exist, and people are really paid what the
job is worth, unpressured by the need to survive.

~~~
meddlepal
But how do you handle inflation in a base income economy? It seems that any
extra freely allocated capital would immediately be nullified by the increase
to inflation it would cause?

~~~
ominous_prime
Basic income does not increase the money supply, which would bring about
inflation. There may be an increase in the general cost of living for many,
but that's not inflation, and it wouldn't absorb the entirety of one's basic
income.

~~~
userulluipeste
It seems that "inflation" has an equivocal meaning here. I presume he meant
that the purchasing power of the currency would diminish and it's not hard to
imagine why. Look at housing - if the credit wouldn't be cheap (or if it
wouldn't be available on a large scale), the houses have to have a price
between the basic price (the combined cost of land plus house construction)
and the price that the market can bear. Given the credit, the housing becomes
able to bear a lot more. The housing credit affects just housing, but a basic
income would affect pretty much everything an average Joe would require. A
basic income would rise both the basic prices for every human-involved
activity (the payed work becomes more expensive) and the bar of what a vast
pool of potential clients could bear/afford.

~~~
meddlepal
Correct. This is what I meant.

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mark_l_watson
Great article. I have been living in Silicon Valley for the last tree months
because I accepted a contracting gig at Google. My wife absolutely loves
Mountain View and she would like to move there. I resist because our home is
in the mountains of Central Arizona - a very affordable area to live. My
argument against living in high cost areas like Silicon Valley is that for a
lot of knowledge work, location does not much matter. Remote work is very easy
to get especially if consulting rates are adjusted for lower cost of living
and no commuting costs.

I view Silicon Valley as a really fun place to visit and live for a while, but
if I was not very wealthy I would not make it a permanent home.

------
conductr
I get that this is a stark contrast and functions as a great example. But,
isn't every place in America like this?

Maybe I've lived in Texas too long but I see it when I travel too. The
immigrant labor class allows even lower-middle class families to live like
"rich people". A lot of people now use a cleaning person and who mows their
own lawn anymore?

In an economic sense, it's America's new version of slavery. Where once we
provided food and shelter in exchange for labor. Now we exchange barely enough
money for food and shelter in exchange for labor. At least the ugly parts are
mostly gone. However, I can't help but thinking that will create a passive
acceptance of this societal structure.

~~~
el_tophero
The rest of country has rich and poor areas, but most of it is 'middle class'.
The idea is that in the Bay Area you're either paying ~$1M for a shack in a
decent school area or you're in a slum.

------
recuter
Cowen bluntly predicted what he called “wage polarization.” 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 from Nordstrom) or renting out their spare
bedrooms (if they have any) to overnight lodgers via Airbnb. That is, if
they’ll be working at all. “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, a prolific media
presence whose New Geography website is an outlet for the trend’s most vocal
critics. “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 agenda of the gentry is to force the working class
to live in apartments for the rest of their lives and be serfs. But there’s a
weird cognitive dissonance. Everyone who says people ought to be living in
apartments actually lives in gigantic houses or has multiple houses.”

========================================

So? Hypocrisy is hardly a new phenomenon. People really _are_ ought to be
living in apartments, even if it is suggested as part of some supposed agenda.
I really don't understand all the anxiety that pops up on HN every once in a
while with regard to some imaginary utopia that is decades away if it will
ever come at all - Inequality is entirely secondary to the Median, the article
describes a high quality of life all around with the upper echelons of society
a sort of step-function above "everybody else". That's supposed to be
horrible?

What about the inequality between the US and the rest of the world? I guess
hypocrisy is not exclusive to any one tax bracket either.

~~~
nraynaud
I guess they are pointing the fact that as soon as West Coast got access to
the power through money, they did what the East Coast did: protect themselves
from the plebe and create a new nobility with barriers to entry instead of
using it for greater motives than simple personal accumulation.

~~~
mattgreenrocks
And this is exactly why SV is not anything revolutionary, despite the
insistence of PG and co. There is no Golden Age, just a bunch of old guys
accumulating wealth by exploiting youthful naivete by cranking out a steady
stream of technological toys designed to hook us, rather than serve us.

~~~
seiji
I liked this sidenote in the article: "made their founders billionaires (New
Economy founders typically retain large blocks of their own stock)"

Histoically, founders gave up most of their equity to investors. "A" round?
Investors take 50% for $3 million and set aside another 20% for an employee
pool. "B" round? The founders end up with 4% of the company.

I think pg helped everybody realize "Hey, us founders have the power here.
We're not giving up shit. In fact, pay us out at each round too. We need to be
millionaires sooner than any possible 5-year-out exit."

------
epistasis
The class divide is indeed huge, but I'm having trouble following some of the
article's logic. The article seems to be saying that the upper class are the
capitalists that have founded successful companies, and the middle class are
all the engineers, and the lower class are the rest of society. A lot of the
class divide seems to be most evident in housing costs.

Where do these $1 million tract house valuations come from, if the middle
class engineers can't afford to buy them? It would appear that they're mostly
owned by people that have been living in the area for the past 20 years? And
because people have not moved, even though they are apparently no longer in
the middle class, the supply has been constrained and the few houses that do
go on the market go for extremely large amounts of money.

Anyway, I'm not sure what to make of the article. There are troubling
comparisons, and glimpses at incredible wealth, but the parts of the article
don't seem to fit together very well into a picture of what's going on.

~~~
pavlov
_The article seems to be saying that the upper class are the capitalists that
have founded successful companies, and the middle class are all the engineers,
and the lower class are the rest of society._

This view of class division in an industrialized society is not particularly
new. Kurt Vonnegut's novel _Player Piano_ presents this exact scenario (upper
class of managers, middle class of engineers, unemployed masses), and it was
published in 1952.

~~~
epistasis
I agree that the class division is fairly standard (though the middle class
also includes the lawyers, doctors, and other professionals that earn as much
or more than engineers), but I guess I don't understand the connection to real
estate prices. Who owns all these homes, and buys all these homes? It seems as
though it's a bubble that's almost ready to burst, the way that it's been laid
out in the article. Or that the wealthy have been buying up huge proportions
of properties to turn them into rentals. But there should be numbers that
would back up that latter case.

~~~
prostoalex
> It seems as though it's a bubble that's almost ready to burst

It's not a bubble if you already own and keep owning - California Prop 13
prevents the tax man from raising property taxes more than 2% a year.

It's not a bubble if you paid cash, which is majority of real estate purchases
in Santa Clara County - unless you choose to go the HELOC route.

It's only a bubble if the buyer is taking out a mortgage to buy the piece of
real estate, has very little as far as rainy fund, and needs to have a job to
continue making payments.

I don't think Valley real estate prices are that reasonable (and have voted
myself out of the market by selling last month), but it's not truly a bubble
where you hope the greater fool will come around and buy the stuff from you.

------
awkward
Interesting that an article that deals this directly with class is running in
the Weekly Standard. Outside a couple swipes at green building codes and a
pass at hypocracy vis a vis apartments, this is almost something I could see
running in Mother Jones.

~~~
pmarca
Exactly. This is not left vs right, this is old vs new. The author has
(literally) a PhD in Medieval Studies.

------
krstck
This is rather surprising fare for the Weekly Standard, which is (to my
understanding) a conservative magazine. Perhaps the American political climate
is realigning in an interesting way.

~~~
zwieback
I had the same thought. I used to read the Weekly Standard to see what the
other side has to say but gave up on it. This piece was outside their usual
sphere.

------
mrcactu5
I didn't know this... that the new "Knowledge Economy" is making the imcome
gap _worse_.

[http://en.wikipedia.org/wiki/Knowledge_economy](http://en.wikipedia.org/wiki/Knowledge_economy)

------
mlyang
One important aspect of Bay Area wealth to keep in mind is that Silicon Valley
has a very supportive entrepreneurial culture-- wealthy exited entrepreneurs
generously funding seed rounds for up and coming startups, lending a hand to
pull up those around them. The mentality of modesty and collaboration greatly
detracts from the sort of dystopian and polarized picture this article paints.

~~~
potatolicious
> _" lending a hand to pull up those around them. The mentality of modesty and
> collaboration greatly detracts from the sort of dystopian and polarized
> picture this article paints."_

"Those around them" = those like themselves, who 99 times out of 100 aren't
actually from around the Bay Area.

Hell, even the businesses supported by the Bay Area elite are not at all
similar to those that already existed before. The wealthy exited entrepreneurs
aren't lending a hand to pull up the taco stand or the nail salon, they are
evicting them in favor of businesses they like better.

Which may simply be the natural order of things, but it's a far cry from this
populist "floating all boats" story you're weaving.

More importantly, wealthy exited entrepreneurs are funding new generations of
startups - but that's a far, far cry from "pulling up those around them". One
of the things that really, _really_ bothered me when living in the Bay Area
was how the tech industry literally does not give one iota of mind to anyone
who isn't in the tech industry.

The tech industry helps itself and lets the world go to shit around them. The
tech industry builds gated garages instead of helping solve crime in their
neighborhoods. They invest in bigger and fancier buses in which to transport
their own kind, instead of helping solve transportation in their cities. Even
innovations like Uber are priced in such a way that there may as well be a
"techno-elites only, kthx" sign on the door.

It's only non-dystopian and non-polarized if you already have membership to
the ol' boys club that is Silicon Valley, in which case the entrepreneurial
community is indeed supportive and has each others' backs. If you aren't lucky
enough to belong to this club though, you're shit out of luck, even if you
live just down the street.

Which, now that I think of it, isn't that different from how East Coast Old
Money works. Funny how we keep making fun of them.

------
gibbonraver
The silence is deafening.

~~~
rbanffy
This was posted on 2 AM PST. Give the discussion a couple hours.

~~~
knowaveragejoe
It's already at the bottom of the front page, I imagine it won't be there in
the next half hour or so.

------
benched
I have to think that it's always been this way in civilization. Some people
figure out how to position themselves at the top where all the money and
control is, a bunch of others can't figure out how to squeeze up there, but do
figure out how to service the people at the top for scraps, and then there are
the hoards who don't even know how to get into the game at all. I think of it
as just mechanical positioning. It's exactly the same as if you sent a crowd
of people running to touch a magic pillar. There'd be room for a few to reach
the pillar, then a bunch who could see the pillar and imagine what it would
like to be one of the ones touching it, then a mass of people on the outside,
barely able to see it at all. The only difference in real life is that the
crowd is structured by the flow of money, goods, and services, where the flow
is wider at the middle.

~~~
el_tophero
I think the idea is that the valley has taken out the middle, leaving only the
extraordinarily rich and the poor.

~~~
Domenic_S
Let's define terms.

Rich == you don't have to work for a living. You might choose to, but you
don't have to.

Poor == you're on government assistance of some kind, WIC, food stamps,
welfare.

Can you think of anyone in SV that's in between those two extremes? A "middle
class" of sorts?

There is a vast, vast middle in SV, it's just that the scale is different
which never stops blowing people's minds. Instead of a $50k income being
middle class, $150k is.

------
AsymetricCom
for some reason, the third page has most of the content.

