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Silicon Valley's Libertarian Problem

Many entrepreneurs and VCs claim pure libertarianism is the only political position that makes sense. Here's why that doesn't work.
Rep. Ron Paul on the campaign trail earlier this year.
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“The task of the state consists solely and exclusively in guaranteeing the protection of life, health, liberty, and private property against violent attacks. Everything that goes beyond this is an evil.” -- Ludwig von Mises

Silicon Valley is having a libertarian moment. When I say “libertarian,” I’m referring to the purist strain most prominently embodied by Rep. Ron Paul and family, embraced by an increasing number of entrepreneurs and VCs.

But there’s something uneasy about Silicon Valley’s libertarianism, because the purist theory behind it doesn’t quite square with the facts. The theory is that Silicon Valley doesn’t need the government. The Pauls, in fact, recently wrote up a manifesto arguing “[t]he true technology revolutionaries have little need for big government and never have.”

The facts suggest otherwise. The government has funded a wide variety of research critical to the technology industry and, more recently, supported a flourishing Internet sector with a very important piece of legislation requiring “net neutrality.” However, with the major exceptions of the foregoing, the government also has been problematic in its attempt to control Silicon Valley’s new technologies and freedoms. Libertarianism may offer the single best ideological response--but only with important concessions to the role of government.

The Problems With SV Libertarianism

Let’s stipulate that the government is an imperfect partner. SOPA, export controls, a medieval immigration policy, an IP system designed by Kafka, and incoherent tax policies provide plenty of libertarian ammunition.  

But the Valley’s history complicates matters. Among other things, the government helped fund the first global radio network, the aerospace trade, non-trivial segments of the semiconductor industry, the Internet, GPS, and half of the technology Doug Englebart and SRI developed for the personal computer. So things like Rep. Paul’s statement that Apple’s success is independent of government subsidies and regulations are flatly wrong. Every time you use Maps on the iPhone or retrieve information from the Internet, a libertarian kitten dies.   

There are two standard libertarian responses. The first is that private industry would have achieved all of this anyway. With the possible exception of semiconductors, it’s difficult to imagine any private company with the patience and means to develop these technologies from scratch.

The second libertarian response works better: All of those technologies were funded by the military, which libertarians generally accept as a valid instantiation of government. (Silicon Valley’s military history, by the way, is one fact that doesn’t sit well with a large swath of the Valley’s left.) Fair enough--we might as well have gotten something out of the military-industrial complex, although it’s questionable how essential hard-core libertarians would consider DARPA.

But this response doesn’t quite address all the other “soft” government programs, including the federal and state relationships with the academy, which helped bring about any number of other Valley industries like biotechnology. (Non-military funding for the liberal academy, as long as we’re taking aim across the political spectrum, is what makes Silicon Valley’s history uncomfortable for large swaths of the right.)

A fundamental question is whether we need to have this debate at all--many people argue that the government’s prowess in technology investment has slipped so badly since the 1960s that there’s nothing to fight about. But when it comes to emerging technologies it’s always difficult to assess the present from the perspective of the present itself. NASA, for example, has played an important role in supporting new private space companies. Genetics, robotics, and AI have all benefitted from heavy government spending, supporting major new industries. Green power generation is probably the one area where the government seems demonstrably off course, although that may be because the government operates best when it’s agnostic on the outcome of science and engineering projects, rather than picking a result and hoping the laws of physics oblige.

The Net Neutrality Dilemma

Perhaps the most problematic issue for libertarians is net neutrality, which requires carriers to treat data without discrimination. Should not the carriers be free to use their property as they wish? But the general conclusion from Silicon Valley is that net neutrality has ensured there is space for many start-ups, not just start-ups that have connections to the carriers or ventures spun out of some carrier’s research division. Vint Cerf--who invented the protocol that established the architecture of the Internet back in the early 70s--put it bluntly to Congress: “Allowing broadband carriers to control what people see and do online would fundamentally undermine the principles that have made the Internet such a success.” 

The conundrum is that the same government which did Silicon Valley the favor of net neutrality is busy undermining its good work by conjuring up unworkable privacy and piracy legislation, attempting to track people using cell phone GPS data, pestering Google and phone companies with millions of requests for personal data, making nannyish intrusions into pornography free expression, and so on, none of which a libertarian can get behind. The Bill of Rights contains the first and fourth amendments because the natural tendency of government is to regulate information and invade privacy in the name of the common interest, as defined by the state. The explosion of information technology companies whose very existence makes the exertion of government control more difficult represents probably the greatest misalignment between Silicon Valley and the state. Microchips and routers are a lot less political than social networks and search engines.    

One of the difficulties with libertarianism is that it’s so pure ideologically that compromising at the edges is aesthetically distasteful. (An aside: One of my partners, Peter Thiel, is perhaps the most famous libertarian in the Valley and a major Paul donor. I think he’s also one of the most pragmatic--he is willing to work within the system, and has a good way of pushing the debate toward greater personal freedom. Also, Thiel is involved with Seasteading, which would just start the system from scratch and is logically coherent.)  

But libertarianism is a theory, and Silicon Valley is an empirical society. If the data do not fit the theory, the theory must be tweaked to fit the data. The Valley has many reasons to embrace libertarianism. In some form, it is probably the set of theories that sits easiest with a technological/information society. But start-up entrepreneurs and investors have an obligation to be honest about how technology and government interact and to help candidates form a more nuanced view of that very complicated relationship. Aside from the fact that its policies sit uneasily with the data, pure libertarianism is not going to run the country any time soon. A softer version might. And that would be a very good day for Silicon Valley.  

IMAGE: Flickr/Gage Skidmore
Last updated: Aug 13, 2012

BRUCE GIBNEY | Partner, Founders Fund

Bruce Gibney is a partner at Founders Fund, with a focus on growth-stage investing.




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