The robber barons of Silicon Valley

January 8, 2018

Today's high-tech robber barons use old-school techniques to make piles of money from the skilled and unskilled workers that they exploit, explains Christopher Baum.

AMONG THE many lamentable "highlights" of 2017, the Guardian reports the following: "The world's super-rich hold the greatest concentration of wealth since the U.S. Gilded Age at the turn of the 20th century, when families like the Carnegies, Rockefellers and Vanderbilts controlled vast fortunes."

The comparison to figures of the Gilded Age such as steel magnate Andrew Carnegie, oil tycoon J.D. Rockefeller and railroad and shipping mogul Cornelius Vanderbilt is apt, but there's more to it than their "vast fortunes."

These men, along with other leading figures such as J.P. Morgan (finance and industrial consolidation), Jay Gould (railroads) and Andrew Mellon (banking and oil), weren't merely rich. They were rich because they controlled and manipulated the very markets in which they operated, squeezing greater and greater profits by exploiting workers and crushing any competitors who dared to challenge their ever-expanding monopolies.

Not for nothing are they known to history as the "robber barons."

Clockwise from to left: Jeff Bezos, Mark Zuckerberg, Bill Gates and Tim Cook
Clockwise from to left: Jeff Bezos, Mark Zuckerberg, Bill Gates and Tim Cook

There are many candidates for the status of robber baron in our own day. But perhaps the most notable examples can be found in the world of Silicon Valley.

The leaders of companies such as Amazon, Google, Facebook, Microsoft and Apple offer striking parallels to the robber barons of the late 19th century. As Rob Cox, writing in Newsweek in 2012, put it:

Behind the hoodies and flip-flops lurk businesspeople as rapacious as the black-suited and top-hatted industrialists of the late 19th century. Like their predecessors in railroads, steel, banking, and oil a century ago, Silicon Valley's new entrepreneurs are harnessing technology to make the world more efficient. But along the way, that process is bringing great economic and labor dislocation, as well as an unequal share of the spoils. [In early 2012], the Justice Department warned Apple that it planned to sue the company along with several U.S. publishers for colluding to raise the price of electronic books--monopolistic behavior that would have made John D. Rockefeller proud.

Apple ultimately lost that case and was ordered to pay a settlement of $450 million.

But before the case was decided, it attracted the attention of Democratic Sen. Chuck Schumer of New York, who penned an op-ed in the Wall Street Journal defending Apple and its co-defendants and calling on the Department of Justice to drop the suit, on the grounds that going ahead would "empower monopolists and hurt innovators." Schumer said the suit could "wipe out the publishing industry as we know it."

So far, this hasn't happened.

But the case does highlight another feature that the current tech overlords have in common with their robber-baron predecessors: They can always count on certain politicians to take their side in any fight.

ONE OF the most notorious characteristics of the earlier robber barons was their callous disregard for the health and safety--to say nothing of the living standards--of workers.

Apple once again serves as a parallel example.

For years, the world's most valuable corporation has been under fire for outsourcing product assembly to suppliers such as the China-based Foxconn, which faces widespread reports of brutal and unsafe working conditions, excessive overtime, overcrowded dormitories, lack of concern for workers' health, use of underage workers, and even workers driven to suicide.

When the New York Times investigated a 2011 explosion at a Foxconn factory in Chengdu in China's Sichuan province, the off-the-record comments they obtained from former executives would again have seemed all-too-familiar to miners or railroad workers in the era of Vanderbilt:

"We've known about labor abuses in some factories for four years, and they're still going on," a former Apple executive told the Times on the condition of anonymity. "Why? Because the system works for us. Suppliers would change everything tomorrow if Apple told them they didn't have another choice."

Apple insisted then, as it does today, that it has a supplier "code of conduct" and an auditing system to identify abuses on the part of their suppliers. The Times report noted that "Apple's annual supplier responsibility reports, in many cases, are the first to report abuses."

But, of course, that doesn't explain why the abuses were allowed to go on.

In April 2016, eager to show off the improvements they had made, Apple and another of its Chinese suppliers, Pegatron, led journalist Shai Oster on a guided tour of a Pegatron factory in Shanghai.

The centerpiece of the factory's "improvements," according to Oster's report, is a computerized employee ID system that limits employees to around 80 hours of overtime per month and supposedly prevents them even signing in to work once this total is reached.

But there are two rather serious problems with this. First, Oster says, the advocacy group China Labor Watch has pointed out that "base pay remains so low that workers need overtime simply to make ends meet," a point echoed by several employees interviewed for the article.

Thus, whatever concerns may be driving Apple's supposed improvements, they still seem utterly unconcerned with providing their workers with a living wage.

Second, and following directly from the previous point, China Labor Watch claims that employees are, in fact, continuing to work massive amounts of overtime. According to its analysis, during March 2016--right around the time of Oster's tour--some 63 percent of workers at this same factory logged more than 100 hours of overtime.

It is difficult to reconcile these reports with Apple's supplier code of conduct, which stipulates that employees should have at least one day off per week and work no more than 60 hours.

WORKPLACE CONDITIONS aren't just a problem overseas, as Amazon's recent history readily shows.

As long ago as 2011, there were reports of brutal conditions at the company's warehouse in Breinigsville, Pennsylvania.

Despite summertime temperatures inside the facility of 100 degrees or more, workers were hounded to maintain a brutal work pace or else face termination. "Pickers," who physically retrieve items for packing, would routinely walk 10 to 15 miles a day in such conditions and face constant threats of termination, with fired workers being escorted off the premises.

Management reportedly refused to open loading bay doors for ventilation, even on the hottest days, to prevent theft. Instead, they stationed paramedics outside.

There have been many similar reports since from Amazon facilities all over the world.

And brutal working conditions are not merely found in Amazon's warehouses and distribution centers, but in its corporate offices as well. As the New York Times reported in 2015:

At Amazon, workers are encouraged to tear apart one another's ideas in meetings, toil long and late (e-mails arrive past midnight, followed by text messages asking why they were not answered), and held to standards that the company boasts are "unreasonably high." The internal phone directory instructs colleagues on how to send secret feedback to one another's bosses. Employees say it is frequently used to sabotage others. (The tool offers sample texts, including this: "I felt concerned about his inflexibility and openly complaining about minor tasks.")

One former employee quoted in the Times article "said that his enduring image was watching people weep in the office, a sight other workers described as well. 'You walk out of a conference room and you'll see a grown man covering his face,' he said. 'Nearly every person I worked with I saw cry at their desk.'"

In response to all this, there have, of course, been many protestations from Amazon's higher-ups, including company founder Jeff Bezos--who recently eclipsed Microsoft's Bill Gates as the world's richest person, with a net worth of just under $100 billion.

Bezos preaches about how seriously the company takes its employees' well-being, how much it values its workers, and how proud it is to give so many people such great jobs.

And yet the reports of abusive conditions continue.

In late November, British journalist Alan Selby issued a damning report detailing the five weeks he spent working undercover at an Amazon warehouse in the UK.

Selby reported employees regularly being taken away in ambulances (some due to injuries and others due to exhaustion), workers falling asleep on their feet, relentless haranguing of staff to meet unrealistic output targets, timed toilet breaks, unsanitary lavatory conditions--all for less than a living wage.

Selby's work builds on the efforts of an unnamed BBC reporter who, in November 2016, went undercover as an Amazon delivery driver, revealing similarly brutal conditions, including stories of drivers urinating and even defecating in their trucks in order to stay on schedule to deliver the required 150 to 200 parcels a day--all "on a fixed salary the equivalent of less than the minimum wage."

This is how the richest person in the world, head of one of the world's most powerful and successful companies, treats his workers. If Jeff Bezos isn't a robber baron, then no one is.

TODAY'S TECH robber barons also carry on their forebears' tradition of exploiting immigrant labor here in the U.S.

Most Silicon Valley companies, including Google and Facebook, offer permanent resident sponsorship to employees on temporary H-1B visas, which are issued to skilled workers from other countries to come work under the U.S. government's employment-based (EB) sponsorship program.

As Norm Matloff writes in the Huffington Post, "EB sponsorship renders the workers de facto indentured servants; though they have the right to move to another employer, they do not dare do so, as it would mean starting the lengthy green card process all over again."

Actually, since H-1B visas are employer-specific, the same could really be said even of foreign workers who are not pursuing permanent residency: once your job ends, your visa expires as well, and as of that moment, you are in the country illegally.

So unless an H1-B worker has another job lined up that will itself provide a new visa, they face very powerful pressures to stay with their current employer, whether or not they are seeking a green card.

Matloff continues:

This stranglehold on foreign workers enables firms to pay low wages...And while the industry's clout gives it bipartisan congressional support concerning H-1B and green card policy, Congress' own commissioned report found that H-1B workers "received lower wages, less senior job titles, smaller signing bonuses and smaller pay and compensation increases than would be typical for the work they actually did."

In addition, and in common with immigrant labor under capitalism at all times, H-1B workers are targets of xenophobia and racism, which (again as always) the ruling class is only too happy to exploit in order to keep the working class divided against itself.

This, too, is a dynamic with which the railroad, oil and mining tycoons of the late 19th century would have been entirely familiar.

BUT IF we are in some ways living in a new Gilded Age, we can at least draw lessons from how the last one came to an end.

In a speech before Congress in 1890 in favor of antitrust legislation, Sen. John Sherman sounded an ominous note of popular uprising:

Sir, now the people of the United States as well as of other countries are feeling the power and grasp of these combinations, and are demanding of every Legislature and of Congress a remedy for this evil...You must heed their appeal or be ready for the socialist, the communist, and the nihilist. Society is now disturbed by forces never felt before.

"Be ready for the socialist." Indeed, beginning already in the 1880s, in response to the robber barons' continued exploitation, oppression and deliberate segmentation of the working class, there arose the first great flowering of working-class revolt in the U.S.

This was the era of the Knights of Labor, the Populist movement and the birth of the Socialist Party in the U.S. It was the time of the 1886 Southwestern Railroad strike, the New Orleans general strike of 1892, the Homestead Steel strike that same year, the Pullman strike of 1894 and many others.

None of these stories, it is true, ended happily for the working class. It should also be noted that the Sherman Antitrust Act, when it was passed, was quite often employed against striking workers, whom the courts tended to pursue far more vigorously than they did the robber barons themselves.

Still, out of the confused political movements and overmatched strike actions of the period grew a spirit of solidarity, class consciousness and rebellion that survives, however bloody and bruised, to this day. It is up to us to cultivate that spirit as we join together to rise up against the robber barons of our own day--and against their friends and enablers in the halls of government.

According to the Guardian report cited at the beginning of this article:

The big increase in the fortunes of the ultra-wealthy comes as billions of poorer people across the world have seen their wealth stand still or decline. The gap between the very rich and everyone else has widened to the biggest it has been in a century...

The article later quotes UBS executive Josef Stadler, who "said his billionaire clients were concerned that growing inequality between rich and poor could lead to a 'strike back'."

The Guardian did not pursue the point further, but we should.

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