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Political economist Neil Malholtra on why some in Silicon Valley turned on Gavin Newsom

Whether or not Democratic California Governor Gavin Newsom survives Tuesday’s recall election may depend to some degree on a small but vocal group of Silicon Valley power players who’ve thrown their weight behind the effort to oust him, including some who previously supported mostly Democratic politicians.

To better understand what happened, we talked recently with political economist and Stanford business school professor Neil Malhotra about research he conducted in 2017 about the political attitudes of the tech elite — and why some seemed so quick to turn on Newsom this year. Our conversation has been edited lightly for length.

TC: How did you get into this line of work?

NM: It was motivated from a historical perspective. When you look at a lot of major changes in American politics and parties, a lot of them have been driven by major business interests and sources of wealth. A good example is the robber barons, including Leland Stanford at the turn of the century. And it looks like we’re going through a similar period right now.

TC: Based on your research, how do attitudes of Silicon Valley folks differ from the California population, as well as the national population in general?

NM: Just to be clear, I use Silicon Valley as a metaphor. A lot of these people are located in other areas of the country as well, like Boston, Austin, Research Triangle, Los Angeles, etc. But just generally, I think the attitudes of this group of technology elites is unique and something you don’t see in any other part of the population. I’ve called them liberal-terian. To distinguish them from libertarians, they tend to be very liberal on social issues and issues related to globalization, like immigration and free trade. And they support redistribution, so they have very high support for universal health care. But they’re very against government regulation. So this distinguishing between redistribution and regulation is what makes this population very unique, even among very rich people in the United States.

TC: Meaning regulation around labor? Is this about limiting the number of skilled educated immigrants who can come to the U.S. or about gig workers or . . .?

NM: They are very, very supportive of immigration, and also very, very supportive of gig workers, and against the ability to restrict the labor market in any way.

They’re also very, very anti union, which also distinguishes them from other people within the Democratic Party. I think the general belief system they have is to let the market operate and then afterward redistribute money through taxes and social programs, because they feel that this is what will grow the pie the biggest and still allow for equality, rather than putting a lot of restrictions in place a priori, which will shrink innovation, shrink the pie.

TC: There are many in tech who talk about the redistribution of wealth but in practice shield their assets or their companies’ assets. Any thoughts about how sincere they are about this, based on your research?

NM: They are very supportive of high income taxes. But maybe that’s self-serving, given that a lot of their wealth comes from capital gains, and it’s very possible they would be less supportive of capital gains taxes, not because it takes away their wealth, but because they would feel that it stifles innovation.

One of the leading tech figures in Silicon Valley, Chamath Palihapitiya, has said that California’s high taxes was one of the reasons he was supporting the recall.

TC: Do you find that in general, the supporters of the recall were citing taxation as an issue or are there other issues that were more front of mind?

NM: The COVID restrictions [were also top of mind]. I think that there’s a sense that these tech entrepreneurs really identify with entrepreneurs, even if they’re not elite entrepreneurs, and that includes small business owners, restaurant owners, gym owners, small landlords. They feel like the government has been punishing these people over the course of the pandemic. Further, I think that in addition to being against unions, they’re generally against public sector unions like teachers unions. And so I think the restrictions on school openings also struck a chord with this population.

TC: Newsom’s camp has raised quite a bit of money compared with his recall opponents. Do you think that the money raised in this recall effort is going to substantially impact turnout?

NM: I think everything makes a difference on the margin. All that money does go to advertising get-out-the-vote efforts. But at the end of the day, if there’s a real movement, it can’t really overcome it. Hillary Clinton out-raised Trump tremendously, and I’m sure all that money did help. But the big question is going to be, who’s excited to turn out, who’s going to motivate, and they may need that $70 million to convince people who are not that excited about voting in this election to vote in it to save him.

TC: A number of tech luminaries who have supported this recall. How does it benefit them if Newsom loses? It seems they’re betting on chaos in a way.

NM: I think a good test case of this is [congressman] Ro Khanna. In his first campaign against Mike Honda [in 2014], he ran as a Silicon Valley technocrat and was supported by [Facebook COO Shery] Sandberg and all of these tech luminaries, and he lost that election. Then he shifted and became the Bernie Sanders guy and was, I think, the national co-chair of Bernie Sanders campaign, and now is this quasi “squad” member that’s on the far left. I just think that’s really interesting. It’s almost like a microcosm of the Democratic Party first embracing the tech community, and then now being very against it. This recall could reshape those alliances again potentially,

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