Wed, Nov

Big Tech, Big Lies Are Biggest Threat to Democracy


GUEST COMMENTARY - The Department of Homeland Security revealed last week that it was creating a Disinformation Governance Board to distribute "best practices" for countering disinformation.

The new board joins a growing chorus—which includes President Biden and former President Barack Obama—that views disinformation disseminated on social media as one of the biggest threats facing our democracy.

But there's a much bigger threat to democracy coming out of Silicon Valley and it's this: America's largest financial and tech increasingly act as independent countries, routinely exporting jobs, money and technology to our most significant global adversary. These companies, their assets, and increasingly their workers, exist wholly outside of America's democratic borders and under the auspices of China's anti-democratic ones. And they are bringing these undemocratic pressures back home with them, subverting our democracy from within.

Apple Computers, once the ultimate expression of American entrepreneurial innovation, epitomizes this new corporate mindset. With ever-increasing dependence on Beijing, the company is much more in line with Xi Jinping's promised "China dream" of greater wealth and technological supremacy than it is with the American Dream. The company may be based in Cupertino, but it produces two-fifths of its products in China, four times more than the share made in the U.S., and despite rising concerns about China's ascendancy, Apple is doubling down on its support for the emerging authoritarian world-state.

In 2016, Apple negotiated a $275 billion deal with China that guarantees the firm's continued dependence on the Middle Kingdom, with additional promises to share vital technology with our most important global adversary. The company recently announcedplans to source some of its chips in China, and Apple also contributes to and profitsfrom China's ever-expanding surveillance system.

An illustration picture taken in London on December 18, 2020 shows the logos of Google, Apple, Facebook, Amazon and Microsoft displayed on a mobile phone and a laptop screen. - The European Union on December 15 unveiled tough draft rules targeting tech giants like Google, Amazon and Facebook, whose power Brussels sees as a threat to competition and even democracy.JUSTIN TALLIS/AFP VIA GETTY IMAGES

But the growing divergence between Apple's interests and America's is not unique. As economic power consolidates here, some companies, notably Wall Street and the tech giants, have grown so large and powerful that they have become in essence their own nation states.

By 2020, the five largest tech companies had total revenue amounting to half of those of all state governments combined. In January this year, Apple's market cap was larger than the GDPs of all but seven countries. But this is not exceptional. Microsoft's market cap is larger than that of Canada, Brazil, Russia, Korea, or Mexico. Amazon does about the same.

But these companies don't employ masses of Americans to make their money; production is generally shifted elsewhere. Those non-elite jobs which do exist are often dangerous, short-term and driven by relentless monitoring. And even when it comes to tech workers, Big Tech goes elsewhere for (cheap) talent: Some 75 percent of Silicon Valley's workforce are not U.S. citizens. Many have H-IB visas, which make their holders essentially indentured servants, brought into the U.S. on short-term contracts to do work for tech companies that evade the burden of paying wages as high as they would to American workers.

Meanwhile, businesses like Apple have profited handsomely from China's industrial expansion. Throughout the period between 2004 and 2017, our reliance on Chinese inputs doubled. According to the Economic Policy Institute, this has cost as many as 3.7 million jobs since 2000.

We saw the high cost of this dependency during the pandemic, when we could not even get basic medical supplies, and you can see it now in the seemingly endless shortagesthat continue to bedevil the economy, going a long way toward causing the staggering inflation we're experiencing.

Yet rather than increase our capacity to meet our own needs, Apple, Microsoft and the other tech giants and Wall Street firms are much less interested in American resilience than in benefiting from "a Chinese century."

It's China's future they are building—while undermining ours.

This comes out in bizarre hypocrisies that go beyond resources and economics. Grandees will pay lip service to Black Lives Matter and the progressive race industry out of one side of their mouths, then happily look the other way when it comes to gross violations of human rights in China. Ray Dalio, founder of the giant Bridgewater Associates hedge fund, infamously dismissed China's repression of its Uyghur population and its crackdown on democratic sentiment in Hong Kong as the result of a "sacrosanct" desire for sovereignty. Facebook and Google partner with the Chinese Communist Party whose priority is to track down and punish dissenters. Here in the U.S., systemic racism is detected in the most minute form, but massive repression in China produces only excuses—and assistance.

Similarly, the Environmental, Social, and Governance (ESG) requirements pushed by Wall Street on U.S. companies reflect a de-nationalized globalism; the enlightened oligarch's "net zero" demands, celebrated by the media and many progressives, effectively place greater burdens on U.S. firms to cut carbon while demanding little from China. This bolsters the Middle Kingdom's notoriously high carbon supply chains in a country that emits more greenhouse gases than the United States and the EU combined.

The hypocrisy of financial firms like Blackrock calling to shut down U.S. energy while sending cash to China, which continues to build new coal plants, seems extreme even by Wall Street standards.

Given the size and might of these firms, only powerful entities like individual states or the U.S. government can curb their power. They must—though it won't be easy; Wall Street has long wielded power in both parties, and tech firms are now among the most powerful lobbies in Washington, employing lobbyists on both the Right and Left. They recently dragooned a host of former defense and intelligence officials to sign a letter arguing that these companies are essentially "national treasures" and should not be subject to anti-trust or other regulatory curbs.

Not surprisingly, many of these worthies, including former Obama Defense Secretary Leon Panetta and former Trump Director of National Intelligence chief Dan Coats, have close ties with firms that count Big Tech among their biggest clients.

Curbing the powers of Apple and the other Chinese satraps and bringing productive industry home can only be accomplished by looking out for fundamental American interests. This is not socialism or ultra-nationalism but common sense: Big companies are not intrinsically "post-national" and some, like Intel, are investing heavily in U.S. production. They should be encouraged to do so and rewarded for it. Returning to anti-trust enforcement would also provide running room for startups and help slow what one analyst described as "the transformation of disruptive tech companies into rent seeking monopolies."

Only a bipartisan opposition to Big Tech on the grounds of U.S. interests will achieve crucial goals like restoring competition and fending off Chinese assaults on this critical sector. And we've been missing the mark because our conversation about how to curb Big Tech has been too polarized, pitting a censored Right against a woke Left that enjoys censorship and fears any threats to it.

To stand up against such wealth and power will require a melding of the two populist movements, the right-wing nationalists and the traditional, pro-worker Left. Traditional progressives—not the woke Astro-turf version funded by oligarchs—must eschew intersectionality if they wish to make common cause with an increasingly Republican working class. Similarly, Republicans need to recognize their constituents are not instinctively pro-business; if in 2020, 57 percent of Republicans said they were satisfied with big business, today it's only 31 percent.

While the oligarchs of both parties may struggle to understand the threat of the globalism embraced by Apple and other companies, the American people are wise to it. Public opinion toward China has cratered in the past five years from over 50 percent positive to barely 20 percent. Already both parties now include factions that favor more robust efforts to meet China's mounting challenge in science and technology, such as the U.S. Innovation and Competitiveness Act, which passed the Senate by a wide margin. 

Unfortunately, the Biden administration has produced distinctly contrary signals by seeming to favor anti-trust and backing U.S. competitiveness but also pushing the appointment of pro-Beijing acolytes and weakening patent protection.

But this is more than the story of one administration. It's far more fundamental. We are at a crossroads right now with a major question that every American must answer for his or herself: Are we a nation with an economy, or just a convenient address for a few large, global companies who act essentially as nation states?

A democracy cannot work as a concert played by a few privileged players; it only works as symphony that includes the diversity and breadth of the citizenry.

It's time for the U.S. to reign in its Big Tech companies. They, not "disinformation," are the biggest threat to our democracy.

(Joel Kotkin is the Presidential Fellow in Urban Futures at Chapman University and executive director of the Urban Reform Institute. His new book, The Coming of Neo-Feudalism, is now out from Encounter. You can follow him on Twitter: @joelkotkin.)  The views expressed in this article are the author's own.