What Is The Connection Between Silicon Valley And 1990s Economic Policy

Will the next crash in Silicon Valley cause a recession in the United States?

Since the 2001 tech burst, the tech industry has become increasingly decoupled from the broader economy. Valuations of established 1990's survivors (Apple, Google, Microsoft, Amazon, IBM, HP) have not driven overall stock market performance and are also relatively dissonant with other indicators of economic vitality (as opposed to the situation in the 1990's). Its important to remember that much of the boom of the 90s was driven by an expectation that the kind of exponential increases in productivity seen in tech would somehow rub off on the rest of the economy in perpetuity. Today, the consensus view is that the tech world and the start-up mentality erodes (i.e. disrupts) the foundations of the old economy, rather than empowering it. What a lot of investors and entrepreneurs are realizing is that basically all software and SaaS can and will be commoditized. So I think going into the future, the place where value has to be created to sustain the massive growth of the past few years is... the physical world. Its not going to be offering established blue chips a better way to x with a computer. Its gonna be applying the start-up mentality to compete directly with products and services traditional offered by long established firms.The point is that I think a successful Silicon Valley would probably pose more of a risk to blue chip corporate profits than a failed one.

Is wage theft as serious an issue in Silicon Valley as this article claims it to be?

A2AThere are two activities (which are mentioned in the cited article) that have blatantly violated wage and hour laws and about which I have blogged during the past several years. (I don't use the term "wage theft", but many people apparently do.)The first is misclassification employees as independent contractors, which serves, largely, to deprive personnel of benefits and to deprive governments of revenue. See, e.g., Independent Contractors: Misclassification Can Be Expensive and the links in that post.The second is misclassification of employees as unpaid interns, which deprives them of all compensation (and which strikes me as a more accurate use of the term "wage theft"). See, e.g., Unpaid Interns: What You Need to Know.As for whether these problems have gotten worse, I have found some research suggesting that this is the case, but that this phenomenon is not necessarily limited to (or worse in) Silicon Valley.Consider, for example, the Economic Policy Institute report on (In)dependent Contractor Misclassification. According to this report (emphasis added):"[I]n 2014 the California labor commissioner’s office examined more than 300 claims for wage theft related to misclassification, a “dramatic rise from 2011,” according to news accounts.""Misclassification is most common in industries where it is most profitable (such as construction, where workers’ compensation insurance premiums are high), and in industries with scattered worksites where work is performed in isolation. Housecleaning, in-home care, and trucking are industries in which misclassification is particularly common. New “sharing economy” businesses create cause for concern about possible misclassification because it is unclear how “autonomous” these workers really are."So, to get back to the question as asked: I suspect that such misclassification is rampant among small startups for short periods of time (e.g., hiring software developers to get the first version of a product released). But if one is considering (as in the cited article) companies that misclassify dozens of workers, depriving them and governmental entities of hundreds of thousands of dollars, I believe that the term "epidemic" is hyperbolic.

Did the Clinton administration support the Dot-Com bubble?

During the 1990s, I had the pleasure of working with one of Al Gore's pet groups within the executive branch, the National Telecommunications Infrastructure Authority (NTIA) within the Department of Commerce.  These folks were not only all over the dotcom thing, but also very much about internet access to schools, homes, and nonprofit groups.When you talk about supporting the dotcom "bubble" you have to consider what that means.  The Clinton administration without any doubt was pushing the privatized internet as a new infrastructure for all kinds of commercial and non-commercial interaction in American society.  They were starting to encourage government to use web pages.  They were encouraging the digitization of large databases that could be shared among agencies and with the public (for which many of the executive branch agencies did not thank them).The Small Business Administration was doing its darndest to keep up with the times and man they were dogpaddling bravely, but always way behind anything you could find at, say, any reasonable size city's entrepreneur networking event.  But then again -- the SBA weren't advising people to take risks or blow smoke either.  And they weren't giving loans to people who were blowing smoke.  You had to have a business plan that looked a lot like a mail order house to get a loan from the SBA for an e-commerce business.But privately?  You could talk fast and get angel or VC investment.What did the administration have to do with that?So...I don't know.  Clinton at heart was pretty much a free market type.  He didn't come down on the VC market as he possibly could have a couple different ways.  But the VCs tend to cover themselves legally by essentially saying, "If we cut our own throats, we bleed."Markets are self correcting, they tell me.So, I'd love to know what the original poster means by an administration supporting a "bubble."  They supported a boom, and the boom -- like the gold rush a century earlier -- came with its share of scams and idiots.  People who saw deals too good to be true, and many many times, they were.Caveat emptor, right?