Class War with a Smiley Face
In Silicon Valley there really is a class war going on, a wage-fixing cartel that’s pitting the one percent against everyone else. Thomas Piketty, the economist who wrote the new book Capital in the Twenty-First Century, is most famous for his insight that economic inequality is mostly driven by the top one percent of income earners. The incomes of the top one percent have pulled away from the rest of us and their economic interests have, over time, come to diverge dramatically from those of the mainstream of American society. The one percenters are waging class war not just on the traditional targets, poor and working class Americans, but increasingly, on middle class professionals as well.
A dramatic example of class war by the one percent on the middle class is the Silicon Valley wage-fixing case. As revealed by Pandodaily’s Mark Ames in a series of reports (here, here, and here), in 2010, the U.S. Justice Department launched an antitrust investigation into Google, Apple, Intel, and several other tech companies. Investigators discovered that, beginning in 2005, the firms had secretly conspired to suppress the wages of engineers and other tech workers by agreeing not to poach each others’ employees. The companies also “shared their salary data with each other”—which violates antitrust law—and they did so “in order to coordinate and keep down wages.”
The scope of the illegal wage-fixing cartel was vast. It reportedly affected at least 100,000 employees at half a dozen of the world’s leading tech firms and cost them over $9 billion in lost wages. The government’s antitrust case was settled when the firms involved agreed to drop the no-poaching practice. A class action suit on behalf of the workers affected has been filed and is set to go to trial in May. Additional lawsuits may follow. Recently released documents suggest that the wage-fixing scheme was even broader, possibly including dozens of companies and over a million tech employees. Both the federal government and the state of California are currently investigating eBay in similar antitrust cases.
The documents Ames has uncovered provide a ringside seat to the depredations of late capitalism. It is an unlovely spectacle. Put aside, for now, the shameless hypocrisy of these self-styled heroes of the free market secretly engaging in such grotesquely anti-competitive practices. What’s particularly interesting to witness is how, in contrast to the smarmy public face of the Silicon Valley execs (the corporate mottos of Apple and Google are “Think Different” and “Don’t Be Evil”), in fact, when it comes to protecting their profits, these companies demonstrate the kind of ruthlessness that would do the old-school robber barons proud.
Perhaps unsurprisingly, it is Steve Jobs who comes across as the most cutthroat of this cold-blooded lot. When he learned Google was considering hiring some of Apple’s Safari team, he shot off an email to Google’s Sergey Brin:
if you hire a single one of these people that means war.
Brin backed off. Naturally.
In 2007, when one Google recruiter mistakenly extended an offer to an Apple employee and Jobs got wind of it, he was furious. He fired an email of complaint to Google’s Eric Schmidt. Much groveling ensued—as Ames notes, “[a]pologizing and groveling to Steve Jobs is a recurring theme throughout these court dockets.” The Google recruiter was terminated within an hour of Schmidt’s email being sent.
As for Jobs’s reaction to the employee being let go with such brutal dispatch? His response to the email, in toto, was a smiley face, i.e., : )
In deposition last year, Brin was questioned about the smiley face. In his answer, he sounded a distinct note of petulance: “Wow, Steve used a smiley. God, I never got one of those.”
When we hear about wage theft, we usually think of cases involving low-wage-earning retail or fast-food workers. But middle-class professionals have also frequently been victims of the practice. For example, like the Silicon Valley workers, nurses have had their earnings artificially depressed by wage-fixing cartels of their own.
More broadly, middle class wages have declined or stagnated for years now (depending on which income group you look at), with economic gains being siphoned off by those at the top. It’s not just poor people or blue- and pink-collar types who are hurting . As the Silicon Valley wage-fixing case demonstrates, even upper middle class professionals have become victims of the one percenters’ class warfare.
Two of the inequality-themed books I’ve read in the past couple of years, Chris Hayes’s Twilight of the Elites and Göran Therborn’s The Killing Fields of Inequality made similar arguments about how the masses can take back the world from the one percent. Since both are men of the left, I had expected them to argue, as Adolph Reed recently has, that the answer is to bring back the labor movement. But instead, they both concluded that the key to the fight is the middle class.
Therborn’s analysis is that, due to the decline of the industrial working class, labor unions are no longer well positioned to take a central role in these struggles. Hayes’s argument is that, while it is often very difficult to persuade poor and working class people that they are entitled to anything better, “[T]here are few forces more powerful in politics than downward mobility, the dispossession of the formerly privileged.”
Their calls-to-arms to the middle class seemed so counter-intuitive that I initially dismissed them. But now, I’m not so sure. As Piketty notes in his book, we are once again approaching levels of inequality that, at least in the past, have proved politically unsustainable in democratic societies. When this country’s economic overlords overreach themselves and declare war on people’s livelihoods—not only of low-wage workers, but of middle-class professionals as well—they may get more than they bargained for.