EARLY in 2016 Schumpeter went to a dinner with one of Silicon Valley’s luminaries, a man of towering intelligence and negligible humility. Asked about the upcoming election, he scoffed: it didn’t matter who America’s president was. Politics had become irrelevant, he said. Technology firms, and their leaders, would carry on fashioning brilliant products and generally carrying out God’s work on Earth, regardless of who occupied the White House. Cue smirks and more Hawaiian Kampachi all round.
Now Silicon Valley has thrust itself into a presidential stink. Technology groups were the first among big firms to slam Donald Trump’s executive order of January 27th, which temporarily bans people from seven mainly-Muslim countries in the Middle East from entering America. Tim Cook, Apple’s boss, criticised it to employees. Mark Zuckerberg at Facebook said he was “concerned”. Sundar Pichai, CEO of Google, told staff he was “upset” on the day of the order, and a day later the firm’s co-founder, Sergey Brin, was spotted among hundreds of protesters at San Francisco airport.
Just a month earlier all these technology firms and more had paid tribute at Trump Tower, their leaders laughing for the cameras while Mr Trump promised: “I’m here to help you folks.” The honeymoon has now abruptly ended because immigrants are so important to the technology industry. But the sector’s liberal tendencies—it has few of the instinctive Republicans who populate most boardrooms—also play a part.
Attracting hyper-brainy people from around the world is at the heart of the tech business model. Mr Brin was born in Moscow, Mr Pichai in Tamil Nadu and Satya Nadella, the head of Microsoft, in Hyderabad. The biological father of the late Steve Jobs was a Syrian who moved to America, a journey that as of this week would be impossible. Half of all the American startups that are worth more than $1bn were founded by migrants. Many of the engineers at tech firms were born abroad, too. In Cupertino, a posh suburb in Silicon Valley, half the population is foreign-born.
The industry has long supported immigration, therefore. But taking a vocal stand on political subjects has not been its habit, and by entering the fray it will draw attention to its own hypocrisies. For decades tech bosses have pushed a convenient doublespeak to explain their firms’ rise. Their dazzling products are the creations of their leaders. The resulting fortunes are these visionaries’ just reward. But the economic and social consequences of the industry’s output, not all of them good, are no one’s responsibility. Instead, the industry argues, they are the result of unavoidable shifts in technology, in turn responding to society’s broad demands. This logic has allowed tech firms to avoid responsibility for the stolen or bilious content that they publish and for the jobs that their algorithms help eliminate—to say nothing of their own oligopolistic market shares. Silicon Valley boasts of its own might and shrugs at its own impotence both at once.
The election campaign underlined that this trick is by now exhausted. It is obvious to all that technology firms are political beasts. Politicians rely on Twitter and Facebook messages, social-media advertising and data mining. Tech platforms are used to disseminate fake news. And tech firms are prominent actors in the economic debate that drives populism. The job losses in manufacturing that infuriate Americans have resulted far more from decades of technological advance than from globalisation. The piles of uninvested cash stashed unpatriotically abroad, which Mr Trump now wants to bring home, belong chiefly to technology firms. The low share of American profits that is reinvested partly reflects the heft of Silicon Valley. For every dollar of cash the tech industry makes, it reinvests 24 cents; that compares with 50 cents for other non-financial firms. Growing inequality is partly the result of its concentrated ownership, with a small group of individuals taking a big share of a giant stream of profits.
In the weeks since November 8th, the technology industry has started to come clean. Google and Facebook have announced measures to try to tackle fake news. In January Mr Zuckerberg said he would travel to 30 American states this year to meet ordinary Americans and hear how globalisation and technology have affected them. Mr Nadella is talking publicly about the effects of artificial intelligence on employment. Others have chosen to make their mark by helping the new government. Elon Musk, the head of Tesla, an electric-car firm, and Travis Kalanick, of Uber, have both become advisers to the president (this week they promised to confront him about his stance on immigration).
Swipe for the next ethical dilemma
Coming out of the closet as among the most important actors in American society boosts technology bosses. So does standing up for their beliefs in things like immigration. It is more intellectually honest. It goes down well with employees. And it is probably popular with customers, too. Most consumer-facing technology firms have user bases that are skewed towards the young and non-Americans, both groups that dislike Mr Trump. After taxis went on strike at JFK airport in New York in protest against the travel ban, Uber came under fire for not boycotting the airport, too, and the hashtag “#DeleteUber” went viral.
Yet tech firms still have an awfully long way to go. Often they define virtue as what they judge to be in their business interests. Last year, Mr Cook dismissed a demand by the European Union to pay more tax as “political crap”. In December Apple agreed to a state request to ban the New York Times’s app in China, where the firm makes just over a fifth of its sales. Mr Zuckerberg fits the same pattern: he says he wants to give away 99% of his fortune and that he believes in the ideal of free expression, but his firm paid a tax rate of just 6% over the past half-decade, and he has toadied up to China’s censors, too. Oligopolistic, hubristic and ruthless to its core, Silicon Valley is no beacon of moral leadership.