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- The Tech Takeover
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With Elon Musk regularly haunting the corridors of Mar-A-Lago, DOGE about to launch, and David Sacks getting a desk at the White House, the tech takeover of government is in motion. I’ve written before about the need for tech executives and entrepreneurs to get involved in shaping politics and government - not just contributing money in support of narrow corporate interests. Now it’s happening.
This was always inevitable. As Pericles said almost 2,500 years ago, “Just because you aren’t interested in politics doesn’t mean that politics isn’t interested in you.” Tech now dominates the US and world economy. Any industry that does that is going to have to deal with government and get used to being in the political limelight. Here are the top ten companies by total market capitalization according to Investopedia.com.
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7 out of 10 are tech companies. Below is 20 years ago with only 2 in the top 10.
Not only has tech attracted a lot of political and regulatory attention, it’s also finding itself at the intersection of government and business in new ways. Building physical domestic energy infrastructure is thought by many to be the biggest bottleneck to rolling out and advancing AI. This draws tech further into permitting and environmental issues than ever before.
Twenty years ago, social media grew to prominence without so much as a peep from government. Now bills are floated in state legislatures and executive orders are rolling out from the White House for what is a relatively nascent technology - generative AI. That shows how much impact the industry has.
Increasingly tech is merging with national security as we face a new peer competitor in China. We are even kicking social networks featuring mostly dancing videos out of our App Stores because of Chinese ownership.
The Business of America is Business
Beyond tech’s importance in politics, it has also become the default framework for understanding management and business. Books like the Steve Jobs’ biography, Zero to One, The Lean Startup, High Output Management, and my personal fav, Frank Slootman’s Amp It Up, are the go to management books of our era.
We now use Silicon Valley words like “scaling” and management fads center around “Agile Management” adapted from software development rather than the 1990’s Lean Six Sigma adapted from auto manufacturing. I and other business owners and managers adopt techniques we read about from Jobs, Bezos, and now Elon.
Tech has captured business, and whatever captures business in America eventually captures government.
The Dems are Behind
It’s striking how quickly Trump and the Republican Party have embraced tech or at least elements of the tech elite. Tech was largely absent from his first term and most his current tech backers (with notable exceptions like Peter Thiel and David Sacks) were Democrats who voted for Hillary. Trump has an instinct for powerful left behind interest groups.
There was a bit of Democratic tech fusion during Obama’s Presidency. Particularly in the aftermath of the botched Healthcare.gov roll out but it was fleeting. The Party has mostly treated tech as a source of campaign donations but not a place to take policy ideas and talent from. That has to change.
The Party has plenty of dedicated Democratic tech elites: Mark Cuban, Reid Hoffman, Vinod Khosla, Jeff Bezos, to name just a few. The talent is there but it seems the Party is rejecting it. It was disheartening to see Biden’s farewell address littered with the same old rhetoric:
“President Eisenhower spoke of the dangers of the military-industrial complex... Six decades later, I’m equally concerned about the potential rise of a tech-industrial complex that could pose real dangers for our country as well. Americans are being buried under an avalanche of misinformation and disinformation, enabling the abuse of power. The free press is crumbling. Editors are disappearing. Social media is giving up on fact-checking. The truth is smothered by lies told for power and for profit. We must hold the social platforms accountable to protect our children, our families, and our very democracy from the abuse of power.”
This is not the message a modern party can adopt and expect to remain relevant. It would be good to see one of the Democratic tech elites run for President. They could shake up the tired Democratic message and give the Republicans a run for their money. You can try to fight the trend but it’s pretty clear that tech will continue to dominate our economy and our culture. That means they will dominate politics too.
It has Ever Been Thus
There’s nothing new about an industry coming to prominence and then taking over the government. We’ve seen it several times in our history. Have you ever heard the quote, “What’s good for General Motors is good for America?”
That was a paraphrase of a statement from former General Motors CEO Charles E. Wilson in his Senate hearing to become Eisenhower’s Secretary of Defense. He said, “I thought what was good for the country was good for General Motors and vice versa.” I can imagine Elon tweeting the same thing with more colorful language about Space X.
And he wasn’t the only GM CEO to run the Defense Department. Robert McNamara did the same less than 10 years later. I think it’s fair to say that the post World War Two government was shaped by the manufacturing powerhouses that won the war for the US. In some ways our bureaucracy still reflects that imprint.
The most recent example of this phenomenon outside of tech is finance. There were quite a few finance focused firms on the 2005 leading companies list above, especially when you include General Electric after Jack Welch turned it into a financing company.
Goldman Sachs has pretty much run the Treasury Department since at least the 1990s. They were the smartest guys in the room and the place everyone wanted to work. Some of that still persists today. We’ll see conflict between the Wall Street faction as that industry declines in influence and the Palo Alto one as it rises in this Administration.
Live By the Sword…
I think this is all inevitable. The most profitable and dynamic industries attract the best talent. They also attract political attention as they grow. There’s no way for tech to avoid taking its place in the long line of industries from railroads to oil and steel to autos to finance and now to tech.
There are many advantages that accrue to these industries. GM saw the US build an interstate highway system for its cars. The military gave them big and lucrative contracts to build military hardware. The titans of the industry served in Administrations and became Senators, etc.
This is happening with tech. I’m guessing we’ll see an even fuller embrace of companies like Space X and its Starlink service. Crypto is going legit. The government will most likely apply pressure on foreign governments to let tech companies expand and attempt to limit regulation there.
They’ll intervene to help autonomous vehicles thrive and bring down permitting barriers for AI focused data centers. The tech/government synthesis will be profitable and good for the country. Wilson was mostly right.
But the downsides are just as unavoidable. GM atrophied with its success. It was shielded from international competition that was emerging from Japan and Europe. It had become too bureaucratic and slow. Finance worked to deregulate itself which made everyone a lot of money until it caused the Great Financial Crisis.
The temptation to lock in government contracts and regulatory advantages is just too great. Then, four decades later, there’s a bailout, and the whole industry goes into decline. The tech takeover is happening. Let’s enjoy the benefits while we can. The costs are still in the future.
Keep learning,
Alan
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