Techies Turn to Education; DeLong Suggests Girding for Battle
WASHINGTON, D.C. - Silicon Valley is in the midst of a major political battle for its financial future, which its executives seem unwilling or unable to comprehend, writes Progress & Freedom Foundation Senior Fellow James V. DeLong in an article in today’s TechCentralStation.
In a place where hard corporate assets now represent approximately a third of capitalization and the rest of corporate value is made up of intangibles, including intellectual property, stock options are a preferred method of compensation. But, according to DeLong, the “expense-the-stock bandwagon keeps rolling along,” with a major political coalition in favor of a Financial Accounting Standards Board ruling that would gore the Valley’s compensation ox. Meanwhile, the “techies” – as reported by National Journal’s TechDaily this week – believe they have enough votes in Congress to prevent a FASB rule. “This could be whistling past the graveyard,” writes DeLong. “If the tech industries had sufficient political support, the FASB bandwagon would have run down before now.”
“The basic problem is that the techies show little awareness of the game they are playing,” he writes. “They assume they have a problem in public education, that those who are trying to stick it to them just don’t understand, and that once the issues are explained the opponents will say ‘eureka!’ and go away.”
“In this contest, the techies are hobbled by the fact that many of them are Democrats and the opponents of options are the core constituencies of the Democratic Party – unions, public employees, and large bastions of entrenched capital, such as the Warren Buffets of the world and the TIAA,” DeLong writes. “Each of these groups has good reason to oppose the trend toward broad grants of stock options. Unions do not want to blur distinctions between capital and labor. Conventional capitalists see options as the tool of the venture capitalists, and as a mechanism by which they might be forced to share with the upstart creative classes. Public employees have no interest in helping the bad guys, and to admit that their opponents understand full well what they are doing would force the techies to admit to the reality of an intraparty war.”
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