Written by Loretta Napoleoni
Technology can benefit us all if tech companies allow it
When high technology and high finance come together, the world will never be the same.
There is no better lesson on inequality today than the extraordinary rise of tech giants who have used technology to amass unimaginable wealth and power, but have prevented it from benefiting the common good. Is there?
Consider a small number of people at the helm of the “Magnificent Seven” companies in high-tech companies. Take Tesla (TSLA) CEO Elon Musk, for example. In 2018, Tesla's board “gifted” him $55.8 billion in stock options. When a Delaware court overturned that decision earlier this year, an irate Musk promised a Tesla shareholder vote to move the company from Delaware to Texas, where Tesla is already based.
Mark Zuckerberg, CEO of Meta Platforms (META), is not very capricious, but he is arrogantly aware of transcending rules and regulations, and he has always been proud of his company's products, especially social media. has apologized to parents for the harm it may cause to teenagers. This expression of contrition was made during a recent U.S. Senate Judiciary Committee hearing. There, Meta and four of his other tech companies – Discord, Snap, TikTok, and X (formerly Twitter) – were slammed for the dangerous effects their products had on his teenage users. But the stock market rewarded Meta shareholders as the company released an impressive quarterly earnings report just days after Mr. Zuckerberg's grave charges and the Senate committee's evidence.
For the past 15 years, the extraordinary achievements of Big Tech companies have been mistakenly attributed to the superhuman “genius” of their creators. Examples include Tesla and SpaceX's Mr. Musk, Meta's Mr. Zuckerberg, and Amazon.com (AMZN)'s Jeff Bezos. . It’s not just market herd mentality that exacerbates this illusion, but so do employees and boards of directors.
Far from being modern-day gods, these tech giants are modern-day robber barons who have stolen what is ours: innovation, while posing as our saviors. A monumental theft carried out thanks to exceptional circumstances. The timing was perfect for investors who were deeply scarred by the 2008 financial crisis and were looking for higher returns in a new era of near-zero interest rates.
The financial sector had enough capital to pursue new high-profit ventures with the 2008 U.S. government bailout, and a small number of high-tech startups provided investment opportunities. And the field of technological innovation was broad enough that investors could choose where to put their money, from machine learning and artificial intelligence to device miniaturization, cryptocurrencies to self-driving cars.
After the 2008 crash, seed money in the technology industry had the least impact of early-stage funding rounds across all sectors, according to data from Crunchbase, a business information platform for private and public companies. has been confirmed. While other industries saw investment dry up due to the financial crisis, the technology industry has seen year-over-year increases in seed dollars since then.
When high technology and high finance come together, the world will never be the same. For several years starting in late 2008, the technology business cycle ran in the opposite direction of the financial cycle and the broader economy, and high-tech stock valuations rose to the top in the United States. He drove up the stock market index and led an incredible recovery in the stock market. By 2021, during the COVID-19 pandemic, Apple (AAPL), Meta, Alphabet (GOOGL), Amazon, and Microsoft (MSFT) were among the top 10 companies in the S&P 500 SPX index.
At the core of the technology sector's activities is data mining: collecting our thoughts.
The domination of high-tech companies at the top of the business food chain has happened so quickly that the law has lagged dangerously behind. In the absence of proper regulation, especially regarding competition policy, and thanks to the transfer of professional talent from Wall Street, the Magnificent Seven formed the high-tech sector into their own global oligopoly. Flush with cash, they offered astronomical rewards for each new innovation and bought out all competitors who rejected their high offers, driving them out of the market. This strategy turned out to be very beneficial.
Far from making the world a better place, technological innovations have enabled the sale of the modern equivalent of the town square, a public space for news and community. Ironically, the core of what the tech industry does is data mining, or collecting our thoughts. This data gives its owners incredible leverage. That means giving them the ability to tamper with democratic elections, spread fake news, harm vulnerable teens, and widen inequality.
Modern day robber barons hiding behind masks of genius and modern gods are stealing not only our innovations but also our souls.
Loretta Napoleoni is an economist and author of Technocapitalism: The Rise of the New Robber Barons and the Fight for the Common Good. (Seven Stories Press, 2024)
Also read: We are all paying a high price for giving corporations free reign
Read more: Tesla shareholders shouldn't be fooled again by Elon Musk's pay package
-Loretta Napoleoni
This content was generated by MarketWatch, a Dow Jones Company. MarketWatch is published independently of the Dow Jones Newswires and the Wall Street Journal.
(Ended) Dow Jones News
05/18/24 0905ET
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