America Is Falling Out of Love With Silicon Valley. What’s Next?

(Bloomberg Opinion) -- America is falling out of love with tech. For the first time since the dot-com bust in 2001, this year we've seen a broad cultural backlash against the tech industry, culminating perhaps with the recent rout of tech stocks. Tech has become such a part of everyday life and such an engine of society that a turn against it would have greater significance than 2001's speculative bust did. It would leave a vacuum in American culture that something else would need to fill.

Tech's increasing role in American identity coincided with the financial crisis and the collapse of institutional trust. It's not that tech started becoming economically and culturally significant only in 2008; it certainly already was. PCs became the center of American households starting with Microsoft's Windows 95; middle-class Americans were picking tech stocks in the late 1990s for their retirement portfolios; Apple's iPod became a hit in the early 2000s, followed by the transformative iPhone in 2007. So tech was big before the financial crisis.

But Silicon Valley started to take on a new mythology about eight years ago. The film “The Social Network” appeared in October 2010, loosely based on the founding of Facebook at Harvard. The next summer, venture capitalist and Netscape co-founder Marc Andreessen wrote an op-ed, “Software Is Eating the World,” that captured the fancy of the business world. Then came Steve Jobs's death and Walter Isaacson's biography of him, both in October 2011. In a post-crisis America struggling for answers, the Silicon Valley vision of American ingenuity and global dominance seemed to have them.

Perhaps tech would inevitably have taken a broader role in the national identity, but the 2008 financial crisis certainly felled the competition: The downturn killed any credibility of Wall Street, the housing market and the auto industry, and government lost some of its standing with the subsequent bailouts by the Bush administration. Power shifted from New York and Washington to San Francisco. If the “ownership society” of the 2000s had collapsed, perhaps the “sharing economy” represented by Uber and Airbnb were the future. If the established pillars of commerce could collapse overnight, Americans might as well embrace “disruptive innovation.”

Or so it seemed back then in the midst of the financial crisis. By now the “Social Network”/Steve Jobs/Marc Andreessen “disruptive” mythology is showing some very real flaws: the industry's treatment of user data epitomized by Facebook; how the industry gets its money; bizarre behavior by a cult CEO like Tesla's Elon Musk; and just plain old valuations and business models turning south. The near-term future of tech is more questionable than it has looked in a generation.

If tech's role in American culture wanes, what will rise to take its place?

I'll offer up a couple possibilities. The first is the energy behind whatever Democratic electoral wave we get next week. This doesn't mean Democrats will take over a divided country — which increasingly seems to lurch from left to right every six to eight years — but that they might set the terms of the national debate much as Republicans have since the Tea Party wave of 2010. The next several years of politics might be shaped more by Democrats like New York's Alexandria Ocasio-Cortez or Florida's Andrew Gillum rather than Republicans like Wisconsin's Paul Ryan or Texas' Ted Cruz.

Another possibility is rather than the national conversation being set by an industry or a political party, we could go back to seeing the world through an international rivalry, specifically with China. Perhaps the priorities of national politics, the tech industry and the broader economy will be secondary to asking “How does this impact U.S.-China dynamics?” For those of us too young to remember the Cold War with the Soviet Union, this would be unfamiliar territory.

Historians might someday argue that after the Second Age of Tech (2008-2018) came Cold War II or the New New Deal. Next week's midterm elections could be one of the deciding points.

To contact the editor responsible for this story: Philip Gray at philipgray@bloomberg.net

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Conor Sen is a Bloomberg Opinion columnist. He is a portfolio manager for New River Investments in Atlanta and has been a contributor to the Atlantic and Business Insider.

©2018 Bloomberg L.P.