Political economist Neil Malholtra explains why some in Silicon Valley have turned on Gavin Newsom – TechCrunch


Whether or not Democratic California Governor Gavin Newsom survives Tuesday’s recall election may depend to some extent on a small but noisy group of powerful Silicon Valley players who have helped in efforts to oust him, including some who previously supported mostly Democratic politicians.

To better understand what happened, we recently spoke with Neil Malhotra, a political economist and professor at Stanford School of Business, about research he conducted in 2017 on the political attitudes of the tech elite – and why some seemed so quick to activate Newsom this year. Our conversation has been changed slightly.

TC: How did you get into this profession?

NM: It was historically motivated. When you look at many major changes in American politics and parties, many of them have been driven by major business interests and sources of wealth. A good example is that of the robber barons, including Leland Stanford at the turn of the century. And it looks like we’re going through a similar time right now.

TC: Based on your research, how do the attitudes of the people of Silicon Valley differ from the Californian population, as well as the national population in general?

NM: Just to be clear, I’m using Silicon Valley as a metaphor. Many of these people are also located in other parts of the country like Boston, Austin, Research Triangle, Los Angeles, etc. But generally speaking, I think the attitude of this group of tech elites is unique and something that you don’t see in any other part of the population. I called them liberal-terian. To distinguish them from libertarians, they tend to be very liberal on social issues and issues related to globalization, like immigration and free trade. And they support redistribution, so they have very high support for universal health care. But they are very much against government regulation. This distinction between redistribution and regulation is therefore what makes this population very unique, even among the very wealthy in the United States.

TC: Do you mean regulations around work? Is it limiting the number of skilled and educated immigrants who can come to the United States or work on concerts or. . .?

NM: They are very, very supportive of immigration, and also very, very supportive of concert workers, and against the possibility of restricting the labor market in any way.

They are also very, very anti-union, which also sets them apart from other members of the Democratic Party. I think the general belief system they have is to let the market work and then redistribute the money through taxes and social programs, because they feel that is what will make it grow the most. the cake and will still allow equality, rather than putting a lot of restrictions in place a priori, which will reduce innovation, will reduce the pie.

TC: There are many in tech who talk about the redistribution of wealth but in practice protect their assets or the assets of their companies. Do you have any idea of ​​their sincerity on this, based on your research?

NM: They are very supportive of high income taxes. But that may be selfish, given that so much of their wealth comes from capital gains, and it is very possible that they are less supportive of capital gains tax, not because it takes away their wealth, but because they would have the impression that it stifles innovation.

One of Silicon Valley’s top tech figures, Chamath Palihapitiya, said California’s high taxes were one of the reasons he was supporting the recall.

TC: Do you find that in general the proponents of the recall cited taxation as an issue or were there other issues that were more present in mind?

NM: COVID restrictions [were also top of mind]. I think there’s a feeling that these tech entrepreneurs really identify with entrepreneurs, even though they’re not elite entrepreneurs, and that includes small business owners, restaurant owners, restaurant owners. gyms, small owners. They feel the government punished these people during the pandemic. Also, I think that besides being against unions, they are generally against public sector unions like teachers unions. And so I think the restrictions on school openings struck a chord with this population as well.

TC: Newsom’s camp raised quite a bit of money compared to their recall opponents. Do you think the money raised as part of this recall effort is going to have a substantial impact on participation?

NM: I think everything makes a difference at the margin. All that money is spent on advertising efforts to get the vote. But at the end of the day, if there is real movement, he can’t really overcome it. Hillary Clinton hugely uplifted Trump, and I’m sure all that money helped. But the big question will be who is excited to participate, who is going to motivate, and they might need that $ 70 million to convince people who are not so excited to vote in this election. to vote to save it.

TC: A number of tech luminaries who have supported this recall. How does it benefit them if Newsom loses? It seems they are betting on chaos in a certain way.

NM: I think a good test case is [congressman] Ro Khanna. In his first campaign against Mike Honda [in 2014], he ran as a Silicon Valley technocrat and was backed by [Facebook COO Shery] Sandberg and all these tech luminaries, and he lost this election. Then he changed and became Bernie Sanders ‘guy and was, I think, Bernie Sanders’ national campaign co-chair, and now it’s that quasi “squad” member on the far left. I just think it’s really interesting. It’s almost like a microcosm of the Democratic Party embracing the tech community first, then now very against it. This recall could potentially reshape these alliances,

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