Gavin Newsom’s American dystopia

‘President Gavin Newsom met today in Carmel, California with the representatives of the “Ten” – a consortium of giant tech and finance firms who control most of America’s business assets. Facing a challenge from front-running New York senator Alexandria Ocasio-Cortez, who is pushing for a radical redistribution of wealth and property, Newsom has struck a deal with the oligarchs. He has imposed a universal basic income to head off a mounting populist revolt.

Some have called it a second Magna Carta – an accommodation between state and oligarchy. Others see the outlines of a new feudalism, or a technocratic fascism, rather than anything resembling liberal democracy.’

Implausible? Hardly. At a time when a handful of firms now dominate industries from tech to entertainment and media, and incomes for all but the wealthy are stagnating or falling, ever fewer see the system as working for them. According to Edelman, a strong majority in 22 countries now believe capitalism does more harm than good.

In the US, rising inequality and fear of downward mobility are fuelling support for state expansion and redistribution. Most under-40s favour socialism. Worse for the oligarchs, a majority of young people also favour limiting higher incomes. A new radical politics is incubating in cities like Oakland, Minneapolis, Seattle, Los Angeles and, most obviously, New York – its likely next mayor, Zohran Mamdani, is a self-described ‘democratic socialist’.

The rise of artificial intelligence (AI) could accelerate this trend, cutting even white-collar and graduate employment while boosting the profits, as well as the market share, of a handful of giant firms. Like Mickey Mouse, as the sorcerer’s apprentice in Fantasia, techies have unleashed forces that threaten many in their own class of educated professionals. Some 82 per cent of millennials believe AI will damage their careers. The displacement could soon reach 30 per cent of the workforce. Skilled professionals in finance, media and the arts could be undercut as AI trains itself on their past work. As one Marxist writer put it, no power on Earth is more fearsome than ‘the swelling population of college graduates caught in a vice of low-paying jobs’.

AI evangelists like McKinsey insist it will enrich society. But such elite enthusiasm for the future is not widely shared. A Wall Street Journal-NORC poll recently found that only 25 per cent of Americans believe they have a good chance of improving their living standards – the lowest proportion since 1987. Almost 70 per cent say the ‘American dream’ – that if you work hard, you can get ahead – no longer holds true. Among Democrats, pessimism is overwhelming, with 90 per cent holding a negative view of the future, almost twice as many as Republicans.

Having foreseen these trends, much of the Silicon Valley elite sees the mass of humanity, some of whom already eschew the value of hard work, as increasingly redundant. As they automate everything – even companionship – the oligarchical elites rarely mention mobility or opportunity. Researcher Gregory Ferenstein, who interviewed 147 digital founders, found little interest in expanding property ownership or entrepreneurship. The preference is for redistribution sufficient for the masses to subsist while the elites luxuriate. At the same time, unions are suppressed by ‘progressive’ firms like Apple and Amazon, and responsibility for workers’ incomes is shifted to the state.

This is all of the essence of oligarchic feudalism. Mark Zuckerberg, Elon Musk, Travis Kalanick (former head of Uber) and Sam Altman (founder of OpenAI) all favour a guaranteed annual income – not out of solidarity with the masses, but to stave off unrest. Unlike the ‘Penthouse Bolsheviks’ of the 1930s, they have no intention of paying for this themselves. The burden would fall instead on the squeezed middle class, who would likely foot much of the bill for guaranteed wages, healthcare, free college and housing assistance, alongside subsidising gig workers, who do not receive benefits from their employers.

Unlike traditional capitalists, who needed mass markets and the incomes of the working and middle classes, today’s oligarchs embrace a technocratic nihilism. This is epitomised by Altman’s quip that ‘AI will probably, most likely, sort of lead to the end of the world. But in the meantime, there will be great companies created with serious machine learning.’

To see the oligarchs as left or right is to miss the point. Despite a few ‘tech bros’ gravitating to Donald Trump, the vast majority of Silicon Valley executives and their employees lean heavily left, funding groups like Black Lives Matter and pushing draconian climate policies. Bill Gates has even funded EquitableMath.org, which brands traditional maths instruction as ‘racist’.

But oligarchs are not suited to the frank give-and-take compromises of conventional politics. They embrace instead what Marxist academic David Harvey calls a ‘fetishism of technology’, where machines, not people, are the engines of progress.

Ray Kurzweil of Google dreams of a ‘posthuman’ future, with minds uploaded into machines and ageing reversed. Venture capitalists Marc Andreessen and Peter Thiel – both Trump backers – are equally intoxicated by techno-utopianism, even flirting with the racial thinking of Curtis Yarvin, who calls for a tech monarchy, jokes about converting ‘non-productive’ people into biodiesel and questions whether emancipation benefited black Americans.

What unites the oligarchs is disdain for ordinary people. Their concern is preserving their mansions, assets and power. Oligarchic socialism offers neither property nor independence to normal people, but a serf-like existence in rented flats, anaesthetised by drugs, sex and what Marx called ‘the proletarian alms-bag’.

One can see why the oligarchs might ally themselves with their favoured governor, Gavin Newsom. In the words of two leading cheerleading academics, ‘California Capitalism’ represents a model of an environmentally friendly economy, one that is fiscally responsible, innovative as well as ‘inclusive [and] sustainable’.

The reality of California today is far grimmer. It has America’s highest poverty rate, highest levels of unemployment, a yawning gap between rich and middle classes, one of the lowest home-ownership rates, and inequality levels more akin to Guatemala than America. A fifth of its wealth sits in just 30 postcodes.

Newsom has responded to these inequalities by handing out subsidies to poorer Californians, creating what the Nation enthusiastically describes as an ideal ‘blue welfare state’. As Michael Bernick, a former director of California’s employment-development department, put it, this political approach consists ‘of benefits (and now guaranteed income), not a jobs strategy’.

California spends more of its budget on welfare than virtually any other state – twice as much per capita as archrival Texas – while neglecting basic infrastructure, such as roads and the water supply. The state’s economy, anchored in Silicon Valley, is increasingly bifurcated, with its financial rewards heading mostly to elite investors and top-flight tech talent. Rather than the epitome of democratic capitalism, Silicon Valley now resembles, as analyst Antonio García Martínez puts it, a ‘feudalism with better marketing’.

California’s model has failed most of its people. Oligarchic socialism depends on the vast profits of a handful of firms – four of the top eight are based in California. As long as the super-rich continue to find California’s delightful climate and natural beauty alluring enough to endure its high taxes and wasteful government, the state may be able to keep its largely stagnant working and middle classes fed and housed, albeit as renters. But if Newsom’s California model is applied at a national level, it would devastate America’s industrial heartlands – manufacturing, logistics, farming, energy – just as California’s green regime has driven up power costs and driven out industry.

Young families and immigrants are already fleeing California for Texas, Nevada and Arizona. A national Newsom experiment would complete the shift from a productive to a consumption economy, leaving finance and the culture industry in command.

A Newsomised America would resemble the Golden State, but only far poorer. The rise of oligarchical socialism signals the end of upward mobility for all but the super-skilled or well-connected. It would be a society much like that portrayed in Aldous Huxley’s Brave New World, where ‘controllers’ offer the masses pleasure, entertainment and enough propaganda to accept a new, increasingly posthuman order directed by the very few. It is a future no one should want.

Joel Kotkin is a spiked columnist, a presidential fellow in Urban Studies at Chapman University in Orange, California, and a senior research fellow at the University of Texas’ Civitas Institute.