Welcome To Our New Economic World Order: The Silicon Valley Consensus
The dominant economic idea used to be to cut all barriers to capital flows, the so-called Washington Consensus. But since the 2008 financial collapse, the tech industry's hold on global consumption rules the day, and anything impeding it is considere
BUENOS AIRES — Remember Washington Consensus? It was the theory in vogue in the 1990s, espousing the need to deregulate and privatize economies, from Argentina to New Zealand, in the name of economic efficiency and market superiority.
The Great Recession of 2008 has swept away a good portion of this intellectual structure. Companies the size of General Motors and Citibank have had to be rescued by those nation states that were supposed to be outdated and receding, both in Europe and the United States. The idea of "too big to fail" imposed itself — a term hitherto absent in the Washington Consensus glossary.
It seemed that bankruptcy procedures — the dungeon of capitalism — did not apply to inefficient, over-indebted and poorly run companies. No, rather they were sent to the protective embrace of governments of any ideological hue. Thus marked the end of the famous consensus.
The pivot of a new consensus has now shifted from the East Coast to California's Silicon Valley, the cradle of the tech industry. The rise and expansion of digital economy giants (Google, Facebook, Amazon) have collided with the old economy and its rules, from copyright norms to privacy rights. This time, though, calls for deregulation are not in the name of economic efficiency but of technological advance, which is basically being touted as a natural force that it would be futile to oppose.
Internet giants present themselves as benevolent. They are not just businesses. They are here to save the world, end hunger or give work to millions of people — as in the so-called "sharing economy." Just a few days ago, the digitial car-service Uber, now operating in 80 cities, was re-valued at $40 billion. The company owns no automobiles, though lobbying to persuade city authorities to allow its operation in dozens of cities doesn't come cheap.
Europe is currently at the forefront of regulating new tech services, beginning with its ruling that people have a "right to be forgotten" on the Internet. Brussels is mulling proposals on a kind of Google tax.
In our Latin American region, Brazil prefers storing its citizens' Big Data inside its own national borders. In Argentina, the debate on such questions is just beginning. While Uber itself in just the past week has been banned in Spain, Thailand and India.
The Silicon Valley Consensus is firmly in command, but already has its first dissenters.