Silicon Valley Analyst Says U.S. Should Control 'Supermoney'

Silicon Valley analyst Tim O’Reilly says the US government should stop pampering tech billionaires and cast away the “pernicious fantasy” that entrepreneurs will stop innovating if they are not rewarded with billions.

Photo Insert: Silicon Valley, San Jose, California

O’Reilly stressed in an essay written for Evonomics that hundreds of millions in incentives were plowed into Silicon Valley and the tech billionaires are swimming in cash, much of it undeserved winnings in the betting economy, which pushes the values of companies sky-high due to the operation of the stock market.

“Taxing the rich and redistributing the proceeds might seem like it would solve the problem. After all, during the 1950s, ’60s, and ’70s, progressive income tax rates as high as 90% did a good job of redistributing wealth and creating a broad-based middle class. But we also need to put a brake on the betting economy that is creating so much phantom wealth by essentially letting one segment of society borrow from the future while another is stuck in an increasingly impoverished present,” O’Reilly argued.

Until we recognize the systemic role that supermoney plays in our economy, we will never make much of a dent in inequality. Simply raising taxes is a bit like sending out firefighters with hoses spraying water while another team is spraying gasoline.

The problem is that government policy is biased in favor of supermoney. The mandate for central bankers around the world is to keep growth rates up without triggering inflation.

Since the 2009 financial crisis, they have tried to do this by “quantitative easing,” that is, flooding the world with money created out of nothing.

“This has kept interest rates low, which in theory should have sparked investment in the operating economy, funding jobs, factories, and infrastructure. But far too much of it went instead to the betting economy,” O’Reilly concluded.

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