A Future Perfect: The Challenge and Promise of Globalization

by John Micklethwait

  This growing inequality has a potentially explosive ethnic component. Latinos make up 23 percent of the region’s population and more than 30 percent of the children under fifteen. But when the San Francisco Chronicle investigated thirty-three high-tech firms in 1998, it found that only 7 percent of the workforce were Latinos, and hardly any of these held managerial jobs. That is not wholly disastrous: A large number of the Latinos are poorly p. 217 educated immigrants who are better off with the crumbs of Silicon Valley than the fruits of rural Mexico. So long as there is a ladder of opportunity from Taco Bell to Intel, there would be really no need to worry. Unfortunately, Latinos are finding it ever harder to make it out of poverty. Only around a fifth complete the basic high-school courses you need to get into college. The barrios of East Palo Alto and East San Jose are as rough and tough as the rest of the region is soft and cerebral. East Palo Alto even earned the dubious distinction of being dubbed homicide capital of the United States by the FBI in 1992.

  Ruben Barrales, the former president of Joint Venture: Silicon Valley, which collects many of the above statistics, points out that his father, who immigrated from Mexico in the late 1950s, began as a laborer but eventually started a roofing business and bought his own house, along with several other bits of property. His investments have set him up well for retirement. Such upward mobility is a lot harder to achieve now. A survey of the area’s fastest-growing companies found that 84 percent of their jobs required education beyond high school. And given the average house price, even the middle classes, let alone the poor, cannot get into the housing market.

  Do They Care?

  One might imagine that this degree of poverty on their doorstep would have sparked off a reaction among Silicon Valley’s rich. After all, these are educated, liberal people who endlessly tell you that they want to improve the world, not the cruel blood-and-thunder businessmen of yesteryear. In fact, most of Silicon Valley’s winners seem oddly detached from their surroundings.

  One or two locals—notably the founders of Hewlett-Packard—have tried to instill a charitable sense in their peers. But there is not much sign of it. As a whole, workers in Silicon Valley give away around 2 percent of their income to charity—about the same as the rest of the nation. According to a 1998 report by Community Foundation Silicon Valley (CFSV), around one third of households there earning more than $100,000 give $1,000 or less to charity. The Santa Clara county branch of the United Way collapsed in May 1999 after donations fell short of expectations.

  Indeed, you only have to visit Silicon Valley to see how much its winners care about the place. The Valley is one of the ugliest commercial meccas the world has ever produced: a boundaryless sprawl of freeways, low-lying factories, shopping malls, and unremarkable (but remarkably expensive) subp. 218urban bungalows. In their heyday, Venetian merchants created a city so stunning that people have not ceased to marvel at it. Silicon Valley appears to have been built by people who think that Aliens versus Predator (the computer-game version) passes for high culture.

  In many cases, the problem does not seem to be miserliness so much as ignorance. As the CFSV report notes, one third of the “high net worth” individuals in the Valley were paid with shares, but only 7 percent gave away shares, even though there are tax advantages in doing so. There is no shortage of venture angels prepared to reinvest in the cluster as a business; why don’t they think about their social community in the same way? One explanation is that they are all simply too young: It will come in time. Another factor seems to be a complete absence of guilt. Many of England’s finest museums, hospitals, and schools were built by slavers. But who can feel guilty about Yahoo!? Another problem is that obsession with the product: Not only does there seem to be very little time to do anything else, but the product itself, at least in the eyes of its creators, is a great social good. Very few people in Silicon Valley have come to understand the dark side of technology, that most of their wonderful programs are increasing inequality just around the corner from them.

  This lack of interest ties into a wider aversion to politics. The deeply held prejudice that “government is the ultimate big company” began to change in the late 1990s. John Heilemann, a San Francisco-based author, argues that the Valley’s exceptionalism—the idea “that the industry expected nothing from the government except to be left alone”—has given way to a pragmatic understanding that lobbying works. Politicians are tripping over each other to be identified with technologists. There is also, according to Eric Schmidt, head of Novell, a gradual acceptance by some technologists that if they really are “defining the economic structure of the world,” then that brings responsibilities. One of Washington’s newest think tanks, the New America Foundation, is funded largely by Silicon Valley money and devoted to exploring the sort of political topics that will be at the heart of the digital age: digital democracy, the future of privacy, and the digital divide.

  Even so, the Valley has clearly failed to redefine politics in anything like the bold way that it has redefined commerce. Silicon Valley may have the potential to reinvent individualism, re-creating Thomas Jefferson’s yeoman farmer with a PC rather than a plowshare, yet so far it has done far less to reshape politics than did the business barons and trade unionists of the late nineteenth century. And it remains in general much less trustful of the political process. Even the bitterest opponents of Bill Gates regretted having to involve Washington’s antitrust authorities in their squabble.

  p. 219 The best place to look for signs that the cyberelite is taking politics seriously is in its own backyard. Joint Venture: Silicon Valley tries to bring the Valley’s social networks together so that the cyberelite rub shoulders with minorities. Some local firms such as Intel and Cisco Systems are bringing both computers and computer education to schools. At Wilcox High School, which is about 30 percent Latino, students “recycle” old computers, revamping them with the latest chips and then handing them down to local elementary schools; they also help to create and maintain computer networks for the school district.

  The question is how much this matters. Getting involved in society is still seen as a necessary evil rather than a positive good. In terms of Heilemann’s exceptionalism, Silicon Valley may no longer expect to be left alone, but it has plainly not made the jump to thinking that it should put something back. Indeed, there is a strong feeling in many Silicon Valley offices that the virtual world matters more than the real one. Its ruling class would rather remain in that pure sphere where only intelligence matters than try to fix problems, such as awful freeways.

  All this makes Silicon Valley look like a grander version of one of California’s less attractive features, the gated community: rich, elitist, and insular. It is hard to see why Silicon Valley should give up being rich and elitist; those are just the flip sides of being successful and meritocratic. But it may regret its insularity.

  Indeed, one could argue that the new economy is colliding with the new demographics. Latinos are becoming a powerful political force in the Valley: In 1998, San Jose became the first major California city to elect a Latino mayor, Ron Gonzales. The trade unions have been notably more successful in recruiting Latinos than high-tech bosses, scoring big hits with their “justice for janitors” and “living wage” campaigns. The area’s deeply rooted black population also feels left out. In 1998, local blacks demonstrated outside Intel, singing, “Intel, Intel, You’re No Good: Bring Computers in the Hood.”[15] Blacks make up only 4 percent of the Valley’s workforce, though they account for a tenth of its population.

  Future Not Quite Perfect

  However, one can only take this nitpicking so far. Most other societies would kill to have the Valley’s problems. Silicon Valley may be imperfect, but, as even a quick look at the jobs pages in any other area’s local newspaper can tell you, it certainly tends to beat any of the alternatives.

  We would not pretend that Silicon Valley answers all the questions about p. 220 globalization and the winner-take-all economy. But in broad
terms, we still think that the Valley, which is closer to realizing the future economy than anywhere else is, gives the lie to the idea that globalization favors only a few. Silicon Valley, like globalization, certainly provides its winners with breathtaking rewards. But then, there are a lot of them; they tend to win for good reasons; and the whole system seems to be built around trying to create more of them.

  Two other similarities with globalization also stand out immediately. The first is that many of the Valley’s weaknesses are the fault of local people—usually politicians—rather than the system itself. There is nothing Siliconesque or indeed global about the bad schools that turn out poorly educated Latinos. The second thing is that critics seldom consider the alternatives. If, for instance, America tightened its immigration rules or imposed a wealth tax, Valley firms might have to employ more locals, and the gap between its wealthiest and its poorest might narrow, but what then?

  “If you sit on the lid of progress, you will be blown to pieces.” Henry Kaiser’s aphorism, nailed to the wall just above a “virtual snowboard” in one of Palo Alto’s shops, is a reminder that Silicon Valley has avoided that fate better than most. For all its faults, there is nowhere else in the world that begins the twenty-first century with as many advantages as the Valley of Heart’s Delight.

  12 – The Cosmocrats: An Anxious Elite

  p. 221 GREG POWER, a thirty-seven-year-old Irishman who works as a banker in New York, has a poor record when it comes to making speeches at weddings. His first performance, as a best man in Las Vegas, was, he admits, mildly disappointing. His next outing, again as a best man but this time in Gloucestershire, flopped so terribly that the next day a stranger walked up to him in the pub and declared to all and sundry, “Son, we will all live for thirty years before we hear another speech as terrible as the one we witnessed yesterday.” Yet when Greg began his speech at the party for his own engagement to Victoria Lam, a consultant from Hong Kong, by announcing “I feel like I am addressing the United Nations,” everybody laughed.

  The reason lay in the speeches before. As the microphone had been passed from table to table, a babel of accents—Irish (“We know where all the bodies are buried”), English (“I’d just like to say how poor we are, so we’ll go anywhere for a meal”), American (“I met Greg at remedial math at business school”), Chinese (“Victoria and I went to school in England, and we had to speak to each other because we couldn’t understand anybody else”), even a few mutterings from what Greg referred to as “the Iranian contingent”—had risen to toast the happy couple. The three people jocularly competing to be the couple’s best friend were a Brazilian, a Spaniard who grew up in Argentina, and an American who grew up in Greece. Friends flew in from Beirut and Baku.

  Perhaps the most remarkable thing about Greg and Victoria’s engagement party was that nobody seemed to find it remarkable: an Irishman marrying a Chinese girl in New York. Every other facet of the couple’s characters p. 222 was teased, lauded, or forgiven, but nobody thought the couple was doing anything strange. For the sizable number of guests who had been with them at Columbia, it was just another business-school match. For the thirty somethings who had flown from London for a long weekend, it was certainly a treat, but not a special one. (“I left the children with my sister; it’s really not that much more difficult than going to Yorkshire.”) Despite having been born into just about every conceivable level of every conceivable society, everybody seemed to know their way around New York, just as they would Los Angeles, London, or Hong Kong. Everybody seemed to have been to a lot of universities, and everybody seemed to work extremely hard.

  If you were looking for an indication of just how hard the sort of people who attended Greg and Victoria’s party work, you might try dropping in on Ellen Knapp’s office in New York. The chances are that you wouldn’t find her there. Her staff still talk about the last time the fifty-one-year-old spent a whole week in her office. Normally, one day every two weeks is all that she can manage.

  One reason for this is that the company she works for, Pricewaterhouse Coopers (PwC), is the product of a big merger, as its rather clumsy name suggests, and Knapp, who is its chief knowledge officer and chief information officer, is one of the people trying to knit together the two giant accountancies-cum-consultancies. Yet even before the merger in 1997, Knapp spent barely a day a week in the office. Nor is she alone in her peregrinations. At one point in her travels, she congratulated herself on having taken three red-eye flights in six days; then, at a meeting near Heathrow Airport, she met a colleague who was undergoing such ordeals on successive nights. At another point, en route from her home in Florida to Frankfurt and London, she bumped into her equivalent at McKinsey, who was on her way to New Delhi. Five nights later, the two knowledge officers met again, picking up their luggage at Kennedy Airport in New York.

  A few tycoons have always been famous for keeping their bodies (if not their heads) perpetually in the clouds. Rupert Murdoch maintains offices on three continents. When he was head of Asea Brown Boveri, Percy Barnevik used to claim that his office at the company’s headquarters in Zurich was simply the place “where my mail arrives before the important letters are faxed to wherever I happen to be.”[1] One airline boss even designed his drawing room to resemble the front of a 747, to make himself feel at home.[2]

  Yet globalization has given a less glamorous cast to the international jet-set. In 1998, The Wall Street Journal followed Michael Bonsignore, the chairman of Honeywell, on a typically grueling nine-cities-in-eleven-days trip p. 223 around China and Europe: Deprived at different times of sleep, showers, and the correct backup, Bonsignore, who “did” a mere two hundred thousand miles a year, kept going on Unisom, a mild muscle relaxant.[3] For every boss in a corporate jet, there are plenty of road warriors like Knapp filling business-class seats. And for every Knapp, there are plenty of humbler creatures crammed into cattle class. Knapp points out that her regional knowledge and technology officers move people around “their” continents (or “theaters” as Knapp likes to call them) just as busily. Most big multinationals now expect much of their growth to come from emerging markets, whose cultures they do not understand well. Bringing places such as New Delhi and São Paulo into the system will require yet more meetings and yet more frequent-flyer miles for people like Knapp.

  You might think that advances in technology would reduce the amount of necessary travel. But Knapp spends a small fortune of her firm’s money in that pursuit, since e-mail and video conferencing can go only so far—particularly for the officers of PwC. Technology, Knapp says, depends on trust, and trust depends on personal communication. PwC employs nearly 150,000 people in 152 countries; a bossy e-mail from somebody you have never met might well solicit a less than positive response, particularly if that somebody was on “the other side” before the merger. Knapp thinks that you have to meet people first: “It is important to gesticulate.” A bubbly lady with an endearing manner, Knapp and her powers of persuasion would indeed be diminished by e-mail.

  This sort of life requires dedication and organization. The resolutely cheerful Knapp says that her blessings include a constitution that is immune to jet lag, the fact that her two children have grown up, and two extremely efficient assistants, whom she compares to Mission Control at NASA. She sticks to airlines and hotels that she knows well—hotels that have been “rewired,” notably the London Ritz, are particular favorites—and exercises whenever she can. Like many other big firms, PwC tries to make life easier for her, scheduling meetings at hubs (all the partners from the western United States come to Los Angeles to meet, for example); it also has started a “hoteling policy” at its offices, providing itinerants with a desk and a phone connection whenever they turn up. “My place of work,” she says, “is simply where I am.”

  This sounds endearingly contemporary. But it is hard to listen to Knapp describe a typical week without feeling exhausted oneself. The perpetual peregrinations of today’s managers provide much of the explanation for
the rising figures for executive stress. They also provide much of the explanation p. 224 for why so many people are earning more but feeling less fulfilled. The overworked manager is usually an overtraveled one.

  Today Belongs to Us

  The idea of “a global ruling class” has been one of the great canards of modern history—a trigger for resentment, persecution, and paranoia. Before the rise of democracy, European politics were indeed the preserve of a fairly coherent elite. Most monarchs—and many leading politicians—were related to one another. Everybody who mattered had read the same classical texts. French had established itself so firmly as an international language that both Frederick the Great of Prussia and Metternich wrote their memoirs in it. National leaders were so pally that they even held honorary positions in each other’s armies. In 1910, for example, Kaiser Wilhelm II of Germany turned up at Edward VII’s funeral dressed in the scarlet uniform of a British field marshal. Some fragments of this life survive even today. (It is still possible to meet elderly French aristocrats who insist that Prince Charles should have married Princess Astrid of Belgium.) But in general this dandified class has been swept away by revolutions, nationalism, the “discovery” of the Americas, Africa, and the East, and let’s face it, progress.

  Since then, the idea of an elite has become both more global and more soiled by trade. By the time that Marx came to consider the enemy in the mid-nineteenth century, he was thinking about not the aristocracy but an interlocking network of all-seeing capitalists and financiers. More positively, Cecil Rhodes dreamed of creating a clique of clean-cut men who could knit the English-speaking world together, while H. G. Wells and his fellow Fabians argued that the only way to save the world from self-destruction was to create an international class of Platonic guardians. At the end of the Second World War, some people imagined that the United Nations might represent some new seat of power. With the exception of the odd Republican congressman scanning the skies for black helicopters and of the Montana Militia, nobody seems to take that very seriously today.