Speaking lately on the National Conservatism Conference in Miami, Peter Thiel, an investor and mental, made a provocative argument. He prompt that California suffers from a “tech curse”: a play on the “resource curse”, the notion that international locations with ample pure assets usually have weak economies and corrupt political programs. If information is the brand new oil, then California is the brand new Saudi Arabia—even, he stated, if issues aren’t fairly “as bad as Equatorial Guinea”.
Mr Thiel made the Equatorial Guinea comparability with tongue firmly in cheek, however he was lethal severe in regards to the tech-curse idea. At first look it appears believable. California’s tech trade has lately produced astonishing wealth. The state can be in some ways dysfunctional. Parts of downtown San Francisco resemble an open-air drug den. Many of the state’s public faculties appear keener on speaking about social justice than educating youngsters. Each yr, one in each 100 Californians, on web, leaves for one more state.
Mr Thiel thinks that California’s poverty and prosperity are two sides of the identical coin, with state and native governments offering the hyperlink. Public-sector staff draw on tech’s huge tax revenues to overpay themselves and do no work, he says. The state’s tech moguls in impact purchase off politicians, guaranteeing, for instance, that they enact super-restrictive planning laws to maintain home costs excessive.
It is in vogue to criticise each California and tech: doing each on the similar time left the viewers in raptures. There can be a grain of fact to what Mr Thiel says. But there are two massive issues together with his idea.
Take the advantages provided by California’s tech trade first. Tech has, actually, turned the state right into a progress celebrity, not a laggard. In the previous 5 years, California’s state-level gdp has grown by 18%, the fourth-fastest fee within the nation and a greater efficiency than both Florida or Texas (see chart). Even subtracting tech, California’s progress was above common, in accordance with our calculations. Less trendy industries reminiscent of chemical substances manufacturing have additionally performed properly lately.
Many of the proceeds of this progress have gone on huge mansions in Atherton and Los Altos, however they’ve additionally trickled all the way down to a higher extent than Mr Thiel appreciates. Just over a decade in the past the median Californian family had an revenue 7% larger than the median American one. Now their revenue is 15% larger. The unemployment fee, relative to the nationwide common, has fallen. So has poverty. And there may be little to recommend that the decline in joblessness or poverty is attributable to poor folks leaving the state.
Mr Thiel additionally overstates tech’s prices. It is true that a few of California’s politicians behave with practically as a lot impunity because the Saudi elite. Yet anybody with a passing information of Californian historical past is aware of that soiled dealing in politics lengthy predates tech. San Francisco’s politics right this moment is tame compared with the Nineteen Seventies.
It is equally onerous responsible tech for California’s housing market. The ratio of California’s common home worth to America’s is far decrease than within the mid-2000s. Meanwhile, California’s anti-building guidelines, the reason for sky-high costs, emerged with the environmentalist motion of the Nineteen Seventies, not Mark Zuckerberg and Elon Musk. There is quite a bit to dislike about Big Tech, however it’s not as malign as Mr Thiel believes. ■
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Source: www.economist.com”