Tech for Trump: Silicon Valley’s swing away from Democrats goes well beyond the presidential race.

1/4July 24, 2024

Silicon Valley’s swing away from Democrats goes well beyond the presidential race.

A sea change is underway in the tech industry. It is increasingly not just permitted, but downright fashionable, for technologists to reside on the political right. Moments after the Trump assassination attempt, Elon Musk “fully endorse[d]” the former president. In the following days, venture capitalist and PayPal alumnus David Sacks spoke at the Republican National Convention, leadingventure capitalists Marc Andreessen and Ben Horowitz announced their support for Trump, and Trumptapped former venture capitalist J. D. Vance as his running mate.A new Trump super PACenjoys the backing of Palantir’s Joe Lonsdale, the Winklevoss twins of early Facebook notoriety, and Musk himself.

What’s going on?The tech industry, after all, has never exactly been a bastion of conservatism. In recent decades, its political stance has generally ranged from solidly Democratic to an apolitical libertarianism that sought to circumvent the government altogether. Republican megadonor and Vance mentor Peter Thiel, of PayPal and Palantir, has long been the exception proving the rule of tech’s alignment with liberalism. Not anymore.The nascent “tech bros for Trump” movement demands an explanation.

An initial reason for the shift is that the technology industry is still an industry. Technologists’ emerging support for the Republican ticket becomes less surprising ifone views tech as an industry like any other, naturally looking out for its own interests. It’s no mystery why oil companies support the GOP and teachers’ unions back Democrats. In announcing their agenda for “Little Tech”—startups—a few weeks before announcing their support for Trump, Andreessen and Horowitz declared thattheir efforts were about what was good for the tech industry, not any broader political agenda: “We support or oppose politicians regardless of party and regardless of their positions on other issues.”

If anything, it’s surprising that it took the tech industry this long to throw itself into politics in defense of its own interests. For decades, venture capital firms and startup institutions mostly ignored politics, except on a narrow set of issues. It was not even a year ago that Y Combinator, a legendary incubator behind companies such as Dropbox and Airbnb, hired its first head of public policy. Even senior business leaders in the Valley gave less to politicians than mid-tier energy executives, andthey tended to focus on national races over important state and local ones.

Surveying the political scene,technologists don’t like what they see on the left. From hysteria over misinformation and AI bias to a long-term hostility to cryptocurrency,Democrats have consistently treated new technologies as a problem to be regulated away, rather than an opportunity to be embraced. As Andreessen and Horowitz put it, “We believe bad government policies are now the #1 threat to Little Tech.”

President Biden’s chair of the Securities and Exchange Commission, Gary Gensler, for example, has refused to announce regulations for the crypto industry, instead issuing investigatory Wells notices to crypto firms for not complying with regulations that the SEC refuses to clarify.Coinbase, the largest cryptocurrency exchange, has sued the SEC for its refusal to comply even with transparency lawsover its targeting of crypto firms, including efforts to debank the entire industry. The safety-first approach of Biden’s executive order on AI, meantime, is seen as risking a slowdown in the sector’s progress and imposing onerous compliance requirements that only the biggest AI companies can afford, again tipping the scales against startups.

The Trump-Vance ticket has shown a far greater openness to new technologies=. Trump can tout a track record of cutting regulations. He has promised to “Make America First in AI” by, among other things, creating “industry-led” agencies to oversee AI development==. He will speak at a major Bitcoin conference later this month. For his part, Vance hails from the venture capital scene, reported owning six figures’ worth of Bitcoin in his public financial filings, and has taken a strong public stance in favor of open-source AI. Through the lens of specific interests of tech startups, the Biden administration has proved preferable only in a handful of technology areas (such as renewable energy). Biden, of course, has now withdrawn from the presidential race; whether a prospective Kamala Harris administration would present a different picture is unclear….

https://www.city-journal.org/article/tech-for-trump

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But the tech industry’s opposition to Biden and Harris goes beyond the administration’s positionon particular tech concerns, which brings us to a second reason for the shift to the right: venture capitalists are still capitalists.

The tech industry’s specific policy priorities operate in a larger business environment. Here, Republicans are seen as by far the better option.Horowitz has explicitly cited Democrats’ proposed tax on unrealized capital gains as an eye-opening shock. For entrepreneurs and founders (as well as for their backers), such a tax would be extraordinarily punishing, to the point of jeopardizing entire business models and destroying the American innovation system. The tax, in the administration’s proposed 2025 budget,would also require the creation of an annual wealth reporting requirement and open the door to further taxes, including on illiquid assets such as shares in privately held companies—the bread and butter of the startup world.

If the tax on unrealized capital gains is a prospective horror,the macroeconomic climate over which the Biden administration has presided is a living nightmare. Under Lina Khan’s leadership, the =Federal Trade Commission has aggressively opposed mergers and acquisitions, not only of major players but also of small startups. Yet, the possibility of acquisition by a bigger firm is central to the VC business model. If startups can’t aspire to acquisition by a bigger player, they must stay in for the long haul and struggle to become major firms in their own right. The prospects for this option have worsened under the Biden administration: rising interest rates have made large institutional investors less interested in risky tech investments== compared with rising, safer returns in other asset classes. The aggregate result is a tough economic environment with depressed activity. Last year saw the lowest number of “exits” of venture-backed firms—which includes public listings, mergers, and acquisitions—in a decade.

Not all conservatives are solicitous of the tech economy. Vance has broken with most of his Republican colleagues in expressing admiration for Khan, a potential point of tension between the Republican presidential ticket and its new tech supporters. But the Democrats can’t pretend to offer a better alternative.

In any event, tech leaders’ feeling of betrayal goes deeper than their bank accounts. Compared with Manhattan financiers or heartland business titans,successful Silicon Valley technologists (a few die-hard libertarians excepted) have tended to accept government intervention in the economy. Many benefited from muscular federal investment in scientific research and know that the Internet might not even exist had it not been for the government’s own research and development. But the Clinton Democrat consensus—cooperation with business, federal spending on science, and moderate taxes—has given way to a more adversarial approach.

Tech elites may be less sensitive to generic criticisms of capitalism or oligarchy than traditional business Republicans. But industry culture worships audacious founders, successful entrepreneurs, and the ambition to build world-changing technologies. If Obama-era Democrats celebrated Silicon Valley innovation,the “techlash” that started after 2016 has spurred media and political criticism of the industry. When Musk recently announced his intention to leave California and move SpaceX’s headquarters to Texas, prominent state senator ScottWiener retorted that “California literally made you,” echoing Barack Obama’s much-maligned comment, “You didn’t build that.” Wealthy technologists, remembering the sacrifices they made to build great companies, feel indignation at this attitude, and the backlash toward what their wealth has brought California and America.=Compare this with the RNC platform, which promises to “champion innovation” and “pave the way for future Economic Greatnessby leading the World in Emerging Industries.” For all its populist fulminations, the Right is still seen as the stronger ally of business.

https://www.city-journal.org/article/tech-for-trump