For better or worse, Hillary may very well be the Silicon Valley favorite in 2016
It’s a good time to be rich and powerful in America.
Corporations make record profits, pay some of the lowest effective tax rates in decades, and pass fewer and fewer of those spoils onto employees, as executive compensation has reached unprecedented heights.
But while an entrepreneur's first $1 million is usually the product of innovation and invention, making and holding onto one's next $1 billion usually requires having some friends in Washington. And as the young Silicon Valley elite grows up, they're less interested in buying sports cars and more interested in buying elections.
Lucky for technology firms like Facebook and Google, they’re coming up at a moment in history when campaign contribution regulations have never been so lax. Thanks to Supreme Court decisions in 2010’s Citizens United v. FEC and 2014’s McCutcheon v. FEC, corporations -- and the rich individuals who control them – can donate to committees and parties in support of candidates virtually without limit. Where limitations do exist, they can be easily sidestepped thanks to a wickedly complex apparatus of non-profits. In many cases, contributions can even be made in secret, reserved for the kind of Koch Brother-scale contributions that expose the government to so much corruption, even the remarkably forgiving American public cannot stomach it.
Absurdly high CEO pay, record corporate profits in Silicon Valley, and an erosion by the highest court of the laws shielding America from pay-to-play corruption, have made 2016 arguably the most important election in the history of the tech industry.
So who will receive Silicon Valley’s biggest votes of confidence and cash? Libertarian Rand Paul? Establishment Democrat Hillary Clinton? The more the Bulworthian tell-it-like-this bomb-thrower Bernie Sanders?
According to a report filed yesterday with the Federal Election Commission, in the last quarter of 2015 the Clinton campaign raised more money in California than in any other state, thanks in part to contributions from tech heavyweights like Tesla CEO Elon Musk, Facebook COO Sheryl Sandberg, YouTube CEO Susan Wojcicki, and eBay CEO John Donahoe. Her California haul totaled $8.1 million, or 17 percent of the $47 million she raised nationwide last quarter.
Clinton may not immediately come to mind when imagining Silicon Valley’s ideal president, but perhaps she should. It’s true that, between Uber CEO Travis Kalanick, early Facebook investor Peter Thiel*, and scores of Reddit-damaged wantrapreneurs, there’s a strong undercurrent of libertarian politics that have invaded the Valley – one which candidate Rand Paul is eager to play up.
But there’s a tendency within the tech and politics press – as well as among libertarians themselves – to overestimate the influence and prevalence in the Valley of Ayn Rand’s free market dreams. Although contributions have shifted right over the past four years, observers shouldn’t forget that this is an industry of Eric Schmidts and Elon Musks, that threw virtually its unanimous support behind President Obama in 2012.
Moreover, the libertarianism espoused by Republicans like Paul – and, to a larger extent, Ted Cruz – has been filtered through the funhouse mirror of homophobic, racist Tea Party politics, which run counter to the cultures of openness fostered by the Silicon Valley elite, at least on paper. Paul and Cruz oppose big government, unless the government is telling you who you’re allowed to marry.
And finally, Libertarian support in the Valley may also prove to be too fractured to coalesce around one candidate. According to Politico, billionaire Thiel, the closest thing to a household name among the techno-libertarian set, was said to be unhappy with Paul’s policy rollout and/or skeptical of his chances for victory. And while in past elections Thiel has donated $2.6 million to Ron Paul, Rand’s father, the PayPal founder has also made large contributions to Cruz over the years.
So what can Hillary do for the Silicon Valley elite?
Her pitch is hilariously simple: She’s not a lunatic.
“Nobody [in the Valley] is arguing about gay marriage, nobody here is arguing about climate change, nobody here is arguing about evolution,” said Wade Randlett, one of California’s top Democratic fundraisers, speaking to Politico. “It leaves Hillary a wide open [opportunity] to say, ‘Look, I am in the middle of the standard deviation of political thinking in Silicon Valley, and everyone running against me is not.”
It’s not enough, however, for Hillary to merely reject some of the grosser positions of the Republican party as they relate to equal rights and the denial of scientific evidence. While Silicon Valley has built its brand of capitalism independent of the influence of evangelical politics, it’s still capitalism. And they need to know that whoever wins the White House in 2016 will be sympathetic to their corporate needs.
Which is why Bernie Sanders, who over the past few weeks has been closing his second-place gap against Hillary, is likely a non-starter. The Senator told PBS’ Charlie Rose that he supports raising the top marginal tax rate to over 50 percent. He even co-authored a bill called the Corporate Tax Fairness Act, which would hinder the efforts of companies like Apple to keep as much of their profits as possible abroad to avoid paying the US’s higher-than-average corporate tax rate. (Though that rate is only high on paper. Thanks to loopholes, the effective tax paid by US corporations is among the lowest in the Western world).
Meanwhile Hillary’s approach toward corporate excess and worsening income inequality is to repeat the talking points of her predecessor while bringing little new or specific to the table. Her adherence to party talking points when it comes to taxing wealthy individuals and companies betrays an agenda that is far less mindful of middle and lower class Americans than Sanders’. The only thing that’s at all novel or innovative about her plan is in fact rooted in Silicon Valley traditions: Offering tax breaks to firms that share their profits with employees.
It’s still early days for the 2016 presidential race. And once a Republican frontrunner becomes clear, we may find out where the tech industry’s loyalties really lie.
But as a pro-business Democrat without any wacky ideas about gay people or climate-change being God’s-punishment, Hillary may be better suited than any other candidate to a Silicon Valley that’s grown up – and grown richer -- since the Obama days of Hope and Change. Because while Change is good news for companies at the vanguard of disruption, as these firms become more and more a part of the establishment, the status quo starts looking pretty good.
*Peter Thiel is an investor in Pando through Founders Fund