The idea that protesters should “Occupy Silicon Valley” is not entirely new. It was floated more than five years ago, in the midst of the Occupy Wall Street protests, perhaps unsurprisingly in a Forbes opinion piece by a defender of business as usual on Wall Street. Recently, though, the prediction of a populist backlash against tech companies is back in the news — coming again from the world of finance, but this time from Bank of America Merrill Lynch’s chief investment strategist.
Surging tech stock prices “could ultimately lead to populist calls for redistribution of the increasingly concentrated wealth of Silicon Valley as the gap between tech capital and human capital grows ever wider,” the BofA Merrill Lynch strategist, Michael Hartnett, wrote in a recent report (titled “Occupy Silicon Valley”). He also told the San Francisco Chronicle that tech stocks “look pretty spicily valued” by some metrics.
A CNBC report on Hartnett’s tech backlash prediction also notes that some indicators point to tech stocks being overvalued:
Big tech stocks have accounted for 40 percent of the S&P 500’s run to record highs this year, according to Goldman Sachs. The index Monday was at 2,391, within 1 percent of its all-time high hit last Tuesday.
BofAML’s Hartnett estimates if the S&P 500 hits 2,630, the ratio of global market cap to global GDP will exceed all-time highs hit in 1999 and 2007, both times just before major market collapses.
The disconnect between an S&P 500 led by technology and the global economy “is ultimately unsustainable,” Hartnett said. Against the forces of economic nationalism, he recommends investing in resources, banks, the euro zone and gold.
If there is another tech bubble forming, it may not burst tomorrow. “Investors are still pretty positive on technology,” Hartnett told the Chronicle. But for all the investment in technology, it doesn’t always translate into widely shared economic benefits. “While the high-tech industry creates impressive wealth for itself, much of the country is mired in a sluggish economy,” MIT Technology Review editor David Rotman noted last June.
No widespread backlash against Silicon Valley may be perceptible yet. But the rising power of the tech industry at the highest levels of politics is apparent, for example, in lists of those invited to attend and plan elite meetings such as those of the secretive Bilderberg Group, which convenes at a different location every year somewhere in Europe or North America.
The meetings were once dominated by representatives of industries such as finance and oil, along with professional diplomats and politicians. But former steering committee member David Rockefeller died earlier this year. Former steering committee member Henry Kissinger has apparently been replaced by the likes of Alphabet’s Eric Schmidt, PayPal co-founder Peter Thiel, and Thiel’s friend and Palantir co-founder Alex Karp, the surveillance company’s CEO. The Bilderberg participant list for 2017 has not been released as of this writing, but the meeting is soon — scheduled for June 1 to June 4 in Chantilly, Virginia. We’ll see who shows up.
Silicon Valley’s public relations departments expertly control the corporate images of their respective companies. They may continue to succeed at largely dodging or easily deflecting criticism for some time to come. Yet as major tech companies move ever closer towards a clearer alignment with an elite establishment that is miserably out of touch with the plight of ordinary people both in America and worldwide, the PR campaign may grow more challenging.