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Google Chairman on WhatsApp: $19 Bn For 50 People? Good For Them!
theodp writes "Speaking at an SXSW panel, Google executive chairman Eric Schmidt emphasized that Google is 'very, very worried' about the class tensions that underlie recent Bay Area protests, where high-salaried techies have driven up rents. 'Ninety-nine percent of people have seen no economic improvement over the last decade,' he said, adding that 'the data suggest that the problem gets worse' and will become the 'number one issue in democracies around the world.' Schmidt's solution to this displacement? Foster conditions — e.g., better education, looser immigration laws, and deregulation in strictly-controlled areas like energy and telecommunications — that encourage the creation of fast-growing startups ('gazelles') that generate lots of jobs. When interviewer Steven Levy noted 'gazelles' like the 50-employee WhatsApp which was acquired by Facebook for a reported $19 billion seem to lead to more inequality, Schmidt brushed aside the apparent contradiction. 'Let us celebrate capitalism,' the tax-us-if-you-can Schmidt said, opening his arms. '$19 billion for 50 people? Good for them.' Eric, meet Tom."
Their solutions are not focused on getting higher paying jobs for the "99%." They are focused on lowering the amount they have to pay for their own talent.
Any time a company starts talking about deregulation and loosening immigration laws, it's french for "make our labor cheaper."
It's well-established by now that one of the most significant factors in destroying the lives of the unskilled and semi-skilled workers across the country has been the influx of similar immigrants from around the world. Legal versus illegal, its immaterial. The invisible hand doesn't give a damn whether they hold a green card or not and giving legal status to the illegals won't suddenly drive wages up because their mere presence in the economy provides at least implicit price competition.
Here's how you enact a sensible immigration policy. You crack down on the employers of illegals such that no one will hire them. You then offer a contingent amnesty to the illegals that allows them to come forward and face no charges if they leave the country of their own volition, and you even let them keep all of the money and property they've earned if they self-deport. Then, you only allow immigrants with provable skills to immigrate as singles or with their immediate family if they're married with children. None of this "let's bring the whole extended family" over. Grandma, the aunts and uncles and cousins have no business piggybacking on that green card. That's just a recipe for waking up one day and finding a large ethnic enclave in an American city (oh wait, that's precisely what's happened in many areas because of this, silly me).
When interviewer Steven Levy noted 'gazelles' like the 50-employee WhatsApp which was acquired by Facebook for a reported $19 billion seem to lead to more inequality, Schmidt brushed aside the apparent contradiction.
50 people getting a split of $19b is seen as a bad thing because it "increases inequality". Why? Would the rest of the area be better off if those 50 people were still poor? It was a transfer of wealth from Facebook's war chest to 50 individuals - the money wasn't taken from the rest of the population. Surely the measure of increasing prosperity should be how much your buying power has grown, rather than the fact that someone down the street's buying power increased more than yours.
Just because you're paranoid doesn't mean there isn't an invisible demon about to eat your face
"looser immigration laws"
No you clown, that's most of the reason wages in the US have stagnated in the first place. Supply and demand. If you supply more labor the equilibrium price will fall.
It's well-established by now that one of the most significant factors in destroying the lives of the unskilled and semi-skilled workers across the country has been the influx of similar immigrants from around the world.
Bullshit it's "well-established". What you are talking about is essentially a subsidy to labor by limiting the size of the labor pool. Limit supply and prices for the labor and every product that labor produces has to rise. Make labor cost more and you will pay more for the results of that labor. What you are forgetting is that we are in a GLOBAL economy. There are very few unskilled jobs that cannot be done elsewhere. Limit the supply of labor in the domestic market and much of that production will migrate elsewhere. If labor costs are too high relative to those available elsewhere then labor-intensive work will migrate to areas with lower labor costs like osmosis. Try to stop it and you will only drive prices higher and hurt the economy in the long run.
Here's how you enact a sensible immigration policy. You crack down on the employers of illegals such that no one will hire them.
You think that is the basis for a "sensible" immigration policy? You think a police state is somehow a good thing? It's unenforceable at any reasonable economic or humanitarian cost. It drives up costs making it harder to compete globally. Furthermore it doesn't address why they are coming into the country in the first place. They come because there is work available. What you should worry about is not whether people are coming into the US illegally. What you should worry about is if they STOP coming to the US because that means there are some serious economic problems.
hen, you only allow immigrants with provable skills to immigrate as singles or with their immediate family if they're married with children.
How does this work with unskilled workers? You think those crops are going to pick themselves? There is lots of vital work that does not depend on skilled labor. Furthermore if a family wants to migrate to the US then that is not a bad thing. Who the hell are you to tell them they cannot come?
That's just a recipe for waking up one day and finding a large ethnic enclave in an American city
Oh so it's really about race. I get it. You don't want those brown people who don't speak English immigrating to the US. Never mind that your ancestors were immigrants too and probably came here illegally as well and probably lived in "a large ethnic enclave in an American city". It's not as if we asked the Native American population if it was ok if we moved in.
Aggregating $19B in wealth in the hands of 50 people plus a handful of investors is indeed not the way to create jobs. It slows down the flow of money within the broader economy. I'm sure those $20M homes in Woodside and Los Altos Hills and Seacliff are worth every penny.
These megadeals also have the effect of creating a startup lottery environment where anyone can put together a ten page business plan and the "trend du jour" and try to make out like bandits. This is what led to the first dotcom crash and will also eventually lead to the second crash at some point. Anyone who makes an alternative to this content with having the user watch ads in the background every ten app starts will murder Whatsapp because $0 is cheaper than $1.
I think it's also important to note that Eric Schmidt wholeheartedly approves of this deal because I suspect he thinks it's to the ultimate detriment of Facebook, and a blessing \for Google in some ways. Much like unbridled immigration is to existing workers in this country for his business.
That is what I think every time I hear this idiot speak. 95% should do nicely.
Just like Google bought Youtube for its userbase. They could have made Google Videos a lot better than Youtube, but the userbase would have taken years to migrate (if at all). The point is, being the first person in the party is a very good thing if you are a startup.
It's about blaming income inequality on teachers and schools rather than the 1%.
Blaming a specific group of people for income inequality kind of misses the point. That's just scapegoating. Just because someone was fortunate enough to gain a lot of wealth doesn't mean they are responsible for others not being so fortunate. Economic growth is not a zero sum game except in the short run. In the long run it is possible for economic rewards to be shared and everyone to benefit. The top 1% of the population does not have the power by themselves (in a democracy) to dictate income inequality. That can only happen if a very large portion of the remaining 99% permits it to happen. People regularly support policies that are demonstrably not in their best interest or that of society if they were deciding rationally.
Too many people have bought into the notion that social structures that keep the playing field relatively level are somehow a bad thing. Everyone should have the chance to become rich but after a certain point some have more money than they could ever possibly need. More accumulation by one person at that point does not benefit society. Nobody likes paying taxes but a sensible progressive tax policy (or a flat tax with a floor) can have the side effect of minimizing income disparity. Healthcare is a cost that everyone experiences but in the US we historically have forced low income people to pay a disproportionate share of their income on it. We subsidize large corporations (oil companies, big agriculture firms, etc) that don't need the help. We refuse to balance our taxation levels with our expenditures. We spend a disproportionate amount of our tax revenue on maintaining an overly large military rather than on economic growth, research and jobs. These are choices we have made as a society and they aren't just the fault of the so-called 1%.
And also about washing one's hands of any social responsibility for the well-being of the roughly 70% of Americans who don't have a college degree.
Approximately 40% of Americans have at least an Associates degree and over 50% have at least some college education. Your point is valid but the data isn't correct.
(Not that a college degree guarantees middle-class success these days.)
No degree ever guaranteed success.