After the banking crash of 2008, there was a brief moment when progressives could hope that the American cult of billionaire worship would end. It's been hard to shake those paternalistic fantasies that the rich are better than the rest of us: Smarter, more industrious, more prudent. Donald Trump, for instance, benefited from this assumption, allowing the millions of viewers of "The Apprentice" to ignore telltale signs that he's a barking moron. But the Great Recession rattled faith in the economic elite, brought on as it was by a bunch of very rich people making very stupid decisions. The popularity of the Occupy Wall Street movement, for instance, suggested that Americans were finally ready to question the stranglehold on our culture enjoyed by the ridiculously wealthy.
Americans may still have no love of bankers, but alas, the myth of the genius billionaire came roaring back, stronger than ever, thanks to the tech industry. For years, Americans have been served up one celebrity tech billionaire after another, complete with reassurances that these titans of the digital industry are too smart to bog down with government regulation. We were told that this new class of pampered white men was different than the old: younger, more down-to-earth and more civic-minded. They wear hoodies! They sometimes give to Democrats! They have a surface-level social liberalism, in that they're fine with gay marriage and abortion! Republicans are always raving about how "woke" they supposedly are! You can trust these guys, right?
There were always hints that the myth of "progressive" Silicon Valley was way overblown, at least when it comes to the venture capitalist class. (The actual workers, as is true in most industries, lean more left than management.) One red flag: All these tech CEOs are buddies with major investor Peter Thiel, a sniveling Trump supporter who once questioned whether women's suffrage was a good idea. But in the past year, the fable of the benevolent tech billionaire has really taken a beating. The collapse of the Silicon Valley Bank (SVB), which appears to be due to the same deregulation mania and rich guy hubris that led to the 2008 collapse, may be the final nail in the coffin of the hero worship of tech billionaires.
The story of the rapid disintegration of this bank, which has been a mainstay of the computer industry for years now, has been rife with 2008-level details of rich people's egos and entitlement. Even as depositors were panicking after a run on the bank, Axios reported, annual bonuses were being paid out to bank executives. Sure enough, it was quickly revealed that SVB's CEO, Greg Becker, dumped stock two weeks ago, netting a cool $3.6 million.
Peter Thiel's fingers are, unsurprisingly, all over this situation.
As Sen. Elizabeth Warren, D-Mass., reminded the public in the New York Times Monday, Becker "was one of the many high-powered executives who lobbied Congress to weaken" the banking regulations that had been passed in the aftermath of the 2008 crisis. Trump signed a big rollback of those regulations in 2018. Alas, the blame for this can't just be pinned on Republicans. As Warren notes, some Democrats ignored her warnings and backed the deregulation scheme. The faith that these Silicon Valley types were somehow "different" than the greedy bankers of old likely helped some Democrats talk themselves into playing along.
The greed spilled way beyond those directly employed by SVB. The entire tech industry investor class showed levels of entitlement to rival that of the finance bros of the early 2000s. "[A] group of extremely online venture capitalists spent four days emoting on Twitter, ginning up confusion and hysteria about the threat of a systemic risk if depositors didn't get all their money back, pronto," Edward Ongweso Jr. of Slate explained. Their expectation of an immediate taxpayer bailout is only rivaled by their longstanding contempt for government oversight.
One of the chief architects of the recent Thielian assault on our federal government, regulation and democracy itself cries out of federal govt help at the first instance of pain.
— Jesse Eisinger (@eisingerj) March 10, 2023
No libertarians in foxholes. https://t.co/OAhqEVtogC
Thiel's fingers are, unsurprisingly, all over this situation. His Founder's Fund helped kickstart the SVB bank run, by pulling millions out rather suddenly, right before things went straight to hell. Now there's speculation about which vulture in the venture capitalist world is going to take advantage to buy the bank at cut rate prices. No surprise that Tesla CEO Elon Musk stuck his hand up, saying he's "open to the idea" of buying SVB, even as his reputation as a businessman is getting wrecked by his mismanagement of both his car company and his newest acquisition, Twitter.
Beyond the thin veneer of social liberalism, Silicon Valley libertarians have the same ugly views about the economy that old school Republicans have: The government has no role in regulating business but the taxpayers should be on the hook for bailing out rich people from their own mistakes. It also, as the fallout from the 2008 banking crisis shows, is a wildly unpopular attitude with said taxpaying voters. After all, we do not have the government swooping in to save us when we gamble and lose.
So President Joe Biden is trying a balancing act where he's reassuring depositors they'll get their money while letting the bank's investors take the loss for their poor choices. But considering how many of the depositors were also spoiled rich boys complaining that the FDIC's insurance limit of $250,000 is "too low," the class distinction between depositors and investors might not be super obvious. Most people don't have $25,000 in a bank account, much less a quarter of a million. Biden is now boxed into working overtime to reassure people that making such huge depositors whole will not come out of the taxpayer wallet.
Thanks to actions we've taken over the past few days to protect depositors from Silicon Valley and Signature Banks, Americans can have confidence that our system is safe.
— President Biden (@POTUS) March 13, 2023
People’s deposits will be there when they need them – at no cost to the taxpayer.
The disintegration of the esteem of tech bros is perhaps best illustrated by the reputational destruction that Elon Musk has delivered unto himself.
On its own, the collapse of SVB would probably not have done a whole bunch to dismantle the idealized image of tech billionaires as bounteous stewards of American society. But this is coming on the heels of what has truly been a series of devastating series of splashy stories showing exposing both the audacity and the stupidity of this new, tech-centric group of "smartest guys in the room."
A year and a half ago, former Facebook executive Frances Haugen made a big splash with a series of whistleblowing releases showing how predatory and irresponsible the company is towards its users. Then Theranos CEO Elizabeth Holmes was convicted of fraud, in a trial that dramatically illustrated how much tech investing is fueled by people who have no idea what their money is going towards. Then there was the collapse of FTX, a much-hyped cryptocurrency exchange that is looking like it was also fraudulent. This only reinforced what many have been saying for a long time, which is that cryptocurrency isn't a hot new financial instrument, but a scam that exists to evade traditional banking regulations. Even the current hysteria over chatbots — which aren't actually "artificial intelligence" so much just really well-programmed software — is sympathetic in this light. It at least demonstrates that the public, thankfully, no longer trusts our tech overlords, even to the point where skepticism is shading into paranoia.
The disintegration of the esteem of tech bros is perhaps best illustrated by the reputational destruction that Musk has delivered unto himself. His "brilliance" was always overrated, to be clear. This is a guy who literally accused a man of pedophilia for nothing more than knowing better than Musk how to rescue Thai children trapped in a cave. But somehow the myth of rich tech bro superiority helped shove that particular incident down the memory hole. Musk was coasting along on a wave of undeserved adulation, at least until he bought Twitter. Since then, Musk has not let anyone forget that he is actually a pea-brained reactionary. He tweets unhinged conspiracy theories and juvenile, alt-right memes. His ego is so big and so fragile that he forced the Twitter staff to rewrite the algorithm to foist his non-entertaining tweets into people's feeds. His public psychology feels like an alarming mix of the worst drunk uncle on Facebook and a high school troll who frequents "incel" message boards.
Hopefully, people are starting to see that Musk isn't an outlier. He exists precisely because the Silicon Valley economy is corrupted by libertarian ideology. Republicans are trying to distract from this fact, making silly claims that SVB was a "woke" bank, whatever that means. It's all a ruse to confuse the public about the fundamental reality of this situation: Conservative economic theories don't work.
Tech billionaires, like banking billionaires before them, pushed this notion that deregulation spurs innovation and wealth-building for everyone. But all that it actually does is allow robber barons to swoop in and steal everything while leaving ordinary working people holding an empty bag. You can call it Republicanism or libertarianism or even Silicon Valley-style euphemisms like "effective altruism," but it's all the same thing: A con that an elite class of hyper-wealthy people is playing on the rest of the nation.
