Google Money

If you google “money,” the search engine called Google, from which that verbification is derived, will tell you that there are 1.12 billion results. That sounds like a lot of anything, but consider this fact: Google Inc. makes $1.12 billion in profit every 33 days.

Last year approximately $60 billion in revenue flowed through Google, one of Silicon Valley’s tech giants. To put this kind of dollar churn in perspective consider that the state of California’s 2013 budget was $96 billion. Google’s own budget, it’s expenses on sales, marketing, salaries, and R&D was $45 billion, about half that of the largest state in the nation. At this point Google might as well be printing money. Google is sized like a mature blue chip industrial corporation, but it’s still growing like a startup. From 2012 to 2013 Google’s revenue rose 20 percent. It’s net income for 2013 was about $13 billion. That’s cash for the company and its shareholders. Google has so much money it has become something of a problem.

Where to put it all? The G-Men have tucked $58.6 billion into different pockets for safe keeping. Google has $10 billion in cash deposits. But why earn less than inflation when you can invest? Google’s financial engineers have bought $1.5 billion in foreign government bonds. Google owns your city’s debt, and the bonds of your local school district; the company owns $3 billion in municipal bonds. Google owns $7.3 billion in the shares of other corporations, perhaps the company you work for? Google might even own a slice of your mortgage; it holds $7.3 billion in federal agency-backed mortgage securities.

Part of the reason Google has so much cash is because it has come to dominate Silicon Valley’s key industry: advertising. More than 90 percent of Google’s earnings come through selling ads, either directly through its own web sites, or third party web sites.

But advertising is only hyper-profitable because Google has figured out how to dodge the tax man. Google’s effective tax rate was already well below the statutory 35 percent federal corporate rate, but last year it dipped even further, falling from 19.4 percent in 2012 to 15.7 percent in 2013. It’s hard to tell what Google actually forked over to the feds and to the foreign governments where it operates, but Google reports that its tax burden keeps dropping “primarily as a result of proportionately more earnings realized in countries that have lower statutory tax rates,” according to the company’s 2013 annual report. Many of the countries Google is referring to are considered tax havens.

But here too it’s hard to tell which countries specifically are hosting Google’s strategic shell companies, and how much Google is earning overseas. As Jeffrey Gramlich and Janie Whiteaker-Poe, researchers at the University of Maine pointed out in a recent study, Google began omitting information about its overseas subsidiaries in its SEC filings three years ago.

“Google’s 2009 SEC Form 10-K, filed in February 2010, disclosed 117 subsidiaries, 81 of which were located in 38 foreign countries,” note Gramlich and Whiteaker-Poe. “When Google issued its financial statements for the year ended December 31, 2010, its Exhibit 21 listed only two significant subsidiaries.”

So where did 98 percent of Google’s subsidiaries go? Did Google terminate them?

Gramlich and Whiteaker-Poe found that most of them still exist and are registered with authorities overseas, but that they have been purposefully omitted from Google’s SEC filings, likely in an effort to conceal tax planning strategies used to reduce taxes paid to the U.S. government and foreign nations. Google’s most recent filing with the SEC reveals only 3 subsidiaries. Two are in Ireland, and one is in Delaware, both jurisdictions that afford Google secrecy and basement corporate income tax rates.

Iron Cagebook: The Rational Ends of Facebook’s Patents

“No one knows who will live in this cage in the future, or whether at the end of this tremendous development, entirely new prophets will arise, or there will be a great rebirth of old ideas and ideals, or, if neither, mechanized petrification, embellished with a sort of convulsive self-importance. For of the fast stage of this cultural development, it might well be truly said: ‘Specialists without spirit, sensualists without heart; this nullity imagines that it has attained a level of civilization never before achieved.'”
—Max Weber, 1905

On November 12 Facebook, Inc. filed its 178th patent application for a consumer profiling technique the company calls “inferring household income for users of a social networking system.”

“The amount of information gathered from users,” explain Facebook programmers Justin Voskuhl and Ramesh Vyaghrapuri in their patent application, “is staggering — information describing recent moves to a new city, graduations, births, engagements, marriages, and the like.” Facebook and other so-called tech companies have been warehousing all of this information since their respective inceptions. In Facebook’s case, its data vault includes information posted as early as 2004, when the site first went live. Now in a single month the amount of information forever recorded by Facebook —dinner plans, vacation destinations, emotional states, sexual activity, political views, etc.— far surpasses what was recorded during the company’s first several years of operation. And while no one outside of the company knows for certain, it is believed that Facebook has amassed one of the widest and deepest databases in history. Facebook has over 1,189,000,000 “monthly active users” around the world as of October 2013, providing considerable width of data. And Facebook has stored away trillions and trillions of missives and images, and logged other data about the lives of this billion plus statistical sample of humanity. Adjusting for bogus or duplicate accounts it all adds up to about 1/7th of humanity from which some kind of data has been recorded.

According to Facebook’s programmers like Voskuhl and Vyaghrapuri, of all the clever uses they have already applied this pile of data toward, Facebook has so far “lacked tools to synthesize this information about users for targeting advertisements based on their perceived income.” Now they have such a tool thanks to the retention and analysis of variable the company’s positivist specialists believe are correlated with income levels.

They’ll have many more tools within the next year to run similar predictions. Indeed, Facebook, Google, Yahoo, Twitter, and the hundreds of smaller tech lesser-known tech firms that now control the main portals of social, economic, and political life on the web (which is now to say everywhere as all economic and much social activity is made cyber) are only getting started. The Big Data analytics revolutions has barely begun, and these firms are just beginning to tinker with rational-instrumental methods of predicting and manipulating human behavior.

There are few, if any, government regulations restricting their imaginations at this point. Indeed, the U.S. President himself is a true believer in Big Data; the brain of Obama’s election team was a now famous “cave” filled with young Ivy League men (and a few women) sucking up electioneering information and crunching demographic and consumer data to target individual voters with appeals timed to maximize the probability of a vote for the new Big Blue, not IBM, but the Democratic Party’s candidate of “Hope” and “Change.” The halls of power are enraptured by the potential of rational-instrumental methods paired with unprecedented access to data that describes the social lives of hundreds of millions.

Facebook’s intellectual property portfolio reads like cliff notes summarizing the aspirations of all corporations in capitalist modernity; to optimize efficiency in order to maximize profits and reduce or externalize risk. Unlike most other corporations, and unlike previous phases in the development of rational bureaucracies, Facebook and its tech peers have accumulated never before seen quantities of information about individuals and groups. Recent breakthroughs in networked computing make analysis of these gigantic data sets fast and cheap. Facebook’s patent holdings are just a taste of what’s arriving here and now.

The way you type, the rate, common mistakes, intervals between certain characters, is all unique, like your fingerprint, and there are already cyber robots that can identify you as you peck away at keys. Facebook has even patented methods of individual identification with obviously cybernetic overtones, where the machine becomes an appendage of the person. U.S. Patents 8,306,256, 8,472,662, and 8,503,718, all filed within the last year, allow Facebook’s web robots to identify a user based on the unique pixelation and other characteristics of their smartphone’s camera. Identification of the subject is the first step toward building a useful data set to file among the billion or so other user logs. Then comes analysis, then prediction, then efforts to influence a parting of money.

Many Facebook patents pertain to advertising techniques that are designed and targeted, and continuously redesigned with ever-finer calibrations by robot programs, to be absorbed by the gazes of individuals as they scroll and swipe across their Facebook feeds, or on third party web sites.

Speaking of feeds, U.S. Patent 8,352,859, Facebook’s system for “Dynamically providing a feed of stories about a user of a social networking system” is used by the company to organize the constantly updated posts and activities inputted by a user’s “friends.” Of course embedded in this system are means of inserting advertisements. According to Facebook’s programmers, a user’s feeds are frequently injected with “a depiction of a product, a depiction of a logo, a display of a trademark, an inducement to buy a product, an inducement to buy a service, an inducement to invest, an offer for sale, a product description, trade promotion, a survey, a political message, an opinion, a public service announcement, news, a religious message, educational information, a coupon, entertainment, a file of data, an article, a book, a picture, travel information, and the like.” That’s a long list for sure, but what gets injected is more often than not whatever will boost revenues for Facebook.

The advantage here, according to Facebook, is that “rather than having to initiate calls or emails to learn news of another user, a user of a social networking website may passively receive alerts to new postings by other users.” The web robot knows best. Sit back and relax and let sociality wash over you, passively. This is merely one of Facebook’s many “systems for tailoring connections between various users” so that these connections ripple with ads uncannily resonant with desires and needs revealed in the quietly observed flow of e-mails, texts, images, and clicks captured forever in dark inaccessible servers of Facebook, Google and the like. These communications services are free in order to control the freedom of data that might otherwise crash about randomly, generating few opportunities for sales.

Where this fails Facebook ratchets up the probability of influencing the user to behave as a predictable consumer. “Targeted advertisements often fail to earn a user’s trust in the advertised product,” explain Facebook’s programmers in U.S. Patent 8,527,344, filed in September of this year. “For example, the user may be skeptical of the claims made by the advertisement. Thus, targeted advertisements may not be very effective in selling an advertised product.” Facebook’s computer programmers who now profess mastery over sociological forces add that even celebrity endorsements are viewed with skepticism by the savvy citizen of the modulated Internet. They’re probably right.

Facebook’s solution is to mobilize its users as trusted advertisers in their own right. “Unlike advertisements, most users seek and read content generated by their friends within the social networking system; thus,” concludes Facebook’s mathematicians of human inducement, “advertisements generated by a friend of the user are more likely to catch the attention of the user, increasing the effectiveness of the advertisement.” That Facebook’s current So-And-So-likes-BrandX ads are often so clumsy and ineffective does not negate the qualitative shift in this model of advertising and the possibilities of un-freedom it evokes.

Forget iPhones and applications, the tech industry’s core consumer product is now advertising. Their essential practice is mass surveillance conducted in real time through continuous and multiple sensors that pass, for most people, entirely unnoticed. The autonomy and unpredictability of the individual —in Facebook’s language the individual is the “user”— is their fundamental business problem. Reducing autonomy via surveillance and predictive algorithms that can placate existing desires, and even stimulate and mold new desires is the tech industry’s reason for being. Selling their capacious surveillance and consumer stimulus capabilities to the highest bidder is the ultimate end.

Sounds too dystopian? Perhaps, and this is by no means the world we live in, not yet. It is, however, a tendency rooted in the tech economy. The advent of mobile, hand-held, wirelessly networked computers, called “smartphones,” is still so new that the technology, and its services feel like a parallel universe, a new layer of existence added upon our existing social relationships, business activities, and political affiliations. In many ways it feels liberating and often playful. Our devices can map geographic routes, identify places and things, provide information about almost anything in real time, respond to our voices, and replace our wallets. Who hasn’t consulted “Dr. Google” to answer a pressing question? Everyone and everything is seemingly within reach and there is a kind of freedom to this utility.

Most of Facebook’s “users” have only been registered on the web site since 2010, and so the quintessential social network feels new and fun, and although perhaps fraught with some privacy concerns, it does not altogether fell like a threat to the autonomy of the individual. To say it is, is a cliche sci-fi nightmare narrative of tech-bureaucracy, and we all tell one another that the reality is more complex.

Privacy continues, however, too be too narrowly conceptualized as a liberal right against incursions of government, and while the tech companies have certainly been involved in a good deal of old-fashioned mass surveillance for the sake of our federal Big Brother, there’s another means of dissolving privacy that is more fundamental to the goals of the tech companies and more threatening to social creativity and political freedom.

Georgetown University law professor Julie Cohen notes that pervasive surveillance is inimical to the spaces of privacy that are required for liberal democracy, but she adds importantly, that the surveillance and advertising strategies of the tech industry goes further.

“A society that permits the unchecked ascendancy of surveillance infrastructures, which dampen and modulate behavioral variability, cannot hope to maintain a vibrant tradition of cultural and technical innovation,” writes Cohen in a forthcoming Harvard Law Review article.

“Modulation” is Cohen’s term for the tech industry’s practice of using algorithms and other logical machine operations to mine an individual’s data so as to continuously personalize information streams. Facebook’s patents are largely techniques of modulation, as are Google’s and the rest of the industry leaders. Facebook conducts meticulous surveillance on users, collects their data, tracks their movements on the web, and feeds the individual specific content that is determined to best resonate with their desires, behaviors, and predicted future movements. The point is to perfect the form and fuction of the rational-instrumental bureaucracy as defined by Max Weber: to constantly ratchet up efficiency, calculability, predictability, and control. If they succeed in their own terms, the tech companies stand to create a feedback loop made perfectly to fit each an every one of us, an increasingly closed systems of personal development in which the great algorithms in the cloud endlessly tailor the psychological and social inputs of humans who lose the gift of randomness and irrationality.

“It is modulation, not privacy, that poses the greater threat to innovative practice,” explains Cohen. “Regimes of pervasively distributed surveillance and modulation seek to mold individual preferences and behavior in ways that reduce the serendipity and the freedom to tinker on which innovation thrives.” Cohen has pointed out the obvious irony here, not that it’s easy to miss; the tech industry is uncritically labeled America’s hothouse of innovation, but it may in fact be killing innovation by disenchanting the world and locking inspiration in an cage.

If there were limits to the reach of the tech industry’s surveillance and stimuli strategies it would indeed be less worrisome. Only parts of our lives would be subject to this modulation, and it could therefore benefit us. But the industry aspires to totalitarian visions in which universal data sets are constantly mobilized to transform an individual’s interface with society, family, the economy, and other institutions. The tech industry’s luminaries are clear in their desire to observe and log everything, and use every “data point” to establish optimum efficiency in life as the pursuit of consumer happiness. Consumer happiness is, in turn, a step toward the rational pursuit of maximum corporate profit. We are told that the “Internet of things” is arriving, that soon every object will have embedded within it a computer that is networked to the sublime cloud, and that the physical environment will be made “smart” through the same strategy of modulation so that we might be made free not just in cyberspace, but also in the meatspace.

Whereas the Internet of the late 1990s matured as an archipelago of innumerable disjointed and disconnected web sites and databases, today’s Internet is gripped by a handful of giant companies that observe much of the traffic and communications, and which deliver much of the information from an Android phone or laptop computer, to distant servers, and back. The future Internet being built by the tech giants —putting aside the Internet of things for the moment— is already well into its beta testing phase. It’s a seamlessly integrated quilt of web sites and apps that all absorb “user” data, everything from clicks and keywords to biometric voice identification and geolocation.

United States Patent 8,572,174, another of Facebook’s recent inventions, allows the company to personalize a web page outside of Facebook’s own system with content from Facebook’s databases. Facebook is selling what the company calls its “rich set of social information” to third party web sites in order to “provide personalized content for their users based on social information about those users that is maintained by, or otherwise accessible to, the social networking system.” Facebook’s users generated this rich social information, worth many billions of dollars as recent quarterly earnings of the company attest.

In this way the entire Internet becomes Facebook. The totalitarian ambition here is obvious, and it can be read in the securities filings, patent applications, and other non-sanitized business documents crafted by the tech industry for the financial analysts who supply the capital for further so-called innovation. Everywhere you go on the web, with your phone or tablet, you’re a “user,” and your social network data will be mined every second by every application, site, and service to “enhance your experience,” as Facebook and others say. The tech industry’s leaders aim to expand this into the physical world, creating modulated advertising and environmental experiences as cameras and sensors track our movements.

Facebook and the rest of the tech industry fear autonomy and unpredictability. The ultimate expression of these irrational variables that cannot be mined with algorithmic methods is absence from the networks of surveillance in which data is collected.

One of Facebook’s preventative measures is United States Patent 8,560,962, “promoting participation of low-activity users in social networking system.” This novel invention devised by programmers in Facebook’s Palo Alto and San Francisco offices involves a “process of inducing interactions,” that are meant to maximize the amount of “user-generated content” on Facebook by getting lapsed users to return, and stimulating all users to produce more and more data. User generated content is, after all, worth billions. Think twice before you hit “like” next time, or tap that conspicuously placed “share” button; a machine likely put that content and interaction before your eyes after a logical operation determined it to have the highest probability of tempting you to add to the data stream, thereby increasing corporate revenues.

Facebook’s patents on techniques of modulating “user” behavior are few compared to the real giants of the tech industry’s surveillance and influence agenda. Amazon, Microsoft, and of course Google hold some of the most fundamental patents using personal data to attempt to shape an individual’s behavior into predictable consumptive patterns. Smaller specialized firms like Choicepoint and Gist Communications have filed dozens more applications for modulation techniques. The rate of this so-called innovation is rapidly telescoping.

Perhaps we do know who will live in the iron cage. It might very well be a cage made of our own user generated content, paradoxically ushering in a new era of possibilities in shopping convenience and the delivery of satisfactory experiences even while it eradicates many degrees of chance, and pain, and struggle (the motive forces of human progress) in a robot-powered quest to have us construct identities and relationships that yield to prediction and computer-generated suggestion. Defense of individual privacy and autonomy today is rightly motivated by the reach of an Orwellian security state (the NSA, FBI, CIA). This surveillance changes our behavior by chilling us, by telling us we are always being watched by authority. Authority thereby represses in us whatever might happen to be defined as “crime,” or any anti-social behavior at the moment. But what about the surveillance that does not seek to repress us, the watching computer eyes and ears that instead hope to stimulate a particular set of monetized behaviors in us with the intimate knowledge gained from our every online utterance, even our facial expressions and finger movements?

Capital of Inequality

Part of San Francisco’s Union Square hyper-lux retail offerings, the De Beers store which features armed guards at the entrances. Ferrari recently opened a store a block away on Stockton Street. Haute Couture names obscure fill the district’s buildings offering items of conspicuous consumption.

Through the Financial Crisis and the Great Recession, inequality has intensified through income, housing, and public debt in the Bay Area. Black and Latino communities have lost wealth and power, while white and Asian communities have mostly to recovered. At the top, the wealthiest 5 to 10 percent, have made enormous gains.

Imagine a place where the hills are lined with the mansions of millionaire families, some of them billionaires. Their residences sit atop forested ridge lines with views of a peaceful ocean, or upon oak-studded peninsulas that jut into an azure bay. In this place they want for nothing. De Beers opened a retail store in one of their favorite shopping districts a few years ago, next to haute couture names like Bulgari, Cartier, and Gucci. An investment bank opened a “coffee shop” just a couple blocks from the headquarters of no less than seven Fortune 500 corporations, to catch their employees after work for talks over lattes about what to do with all that money crowding their bank accounts. Posh towers filled with luxury apartments sprout from the city center where multiple cranes seem to perpetually dot the skyline. iPhones pop from the palms of pedestrians like third hands, and newfangled apps like third eyes give them instantaneous information about the latest opulent consumer activities. Everything glows with money and power, a lot of it.

Below the hillsides glittering with wealth are even more expansive terrains of crumbling homes and apartment buildings —many foreclosed upon and awaiting some kind of financial death— packed with families that barely scrape together twenty thousand dollars a year to live on. Their views: smokestacks, port cranes, freeway overpasses, and scrap yards, or, sometimes on a clear day, if they ever think to pause from survival mode, they can see the hills, the mansions, the gleaming skyscrapers beyond reach, the towering campaniles of universities where they can never afford to send their children.

This place is characterized by the crowding of impoverished human beings, most of them of African and Latin American descent, into hollowed out industrial zones where factory buildings and abandoned warehouses echo the bustle of past decades. This economy of yesterday was exported to the new shop floors of China. Among the only things left are the toxic plumes of chemicals spreading slowly under fence lines. In this place entire generations face severe poverty and a decimated public sector – especially the schools. Tens of thousands of adults exist, persist, somehow without meaningful work or income. Tens of thousands of house-less persons —likely no longer even part of the statistical surveys used to calculate joblessness and income— wander the streets and sleep in the cracks of weathered concrete each night. Every few months the police slay a youngster under questionable circumstances. Crime is rampant. Violent crime is hard to avoid, part of the overall suffering.

The splendid heights and stratospheric wealth would not be so contemptible was it not hanging directly over such desperate poverty. Of course the two things are not unrelated.

Welcome to the San Francisco Bay Area, in the Golden State of California.

The West Coast financial center of the United States.

The epicenter of the tech industry.

The global vortex of venture capital.

One of the most brutally unequal places in America, indeed the world.

If measured by the same metrics that are used to gauge income inequality within nation states, the Bay Area’s internal divide between its rich and its poor would place San Francisco between China and the Dominican Republic, making it roughly the 30th most unequal state in the world. China is now the estimated home to 317 billionaires. California counts perhaps 90 billionaires. Half of these, mostly white men, live in San Francisco and Silicon Valley. The Census counted 4.2 million persons slipping below their definition of poverty last year in California.

In the distribution of income and wealth, California more resembles the neocolonial territories of rapacious resource extraction and maquiladora capitalism than it does Western Europe. Oakland is more El Salvador than it is EU. The Bay Area metropolis is more Bangladesh than Belgium.

California is just one of seven states that has the distinction of ranking higher than the national average on three basic metrics of income inequality, as measured by the Bureau of the Census. Its gini coefficient of income inequality was most recently measured at 0.47.

The ratio of income between the top 10 percent and the bottom ten percent, as well as the ratio of income between the top five percent and the bottom twenty percent show staggering divides in economic power that few other places in America, indeed the world, surpass.

Source: Weinberg, Daniel H., “U.S. Neighborhood Income Inequality in the 2005-2009 Period,” American Community Survey Reports, U.S. Census Bureau, October, 2011.

The only states that compare to California’s harsh inequalities are deep southern states structured by centuries of racist fortune building by pseudo-aristocratic ruling classes, and the East Coast capitals of the financial sector.

Source: Weinberg, Daniel H., “U.S. Neighborhood Income Inequality in the 2005-2009 Period,” American Community Survey Reports, U.S. Census Bureau, October, 2011.

The economies of Louisiana, Mississippi, and Alabama remain bound by racial inequalities founded in slavery and plantation agriculture; the wealthy elite of all three states remain a handful of white families who control the largest holdings of fertile land, and own the extractive mineral and timber industries, and the regional banks.

Texas, with its sprawling cities, global banks, energy corporations, universities, and tech companies, is more like California in that its extreme economic inequalities are as new as they are old. Stolen land and racial segregation combine with unworldly new fortunes built on the Internet and logistical revolutions in manufacturing and markets to manifest a gaping divide in power and wealth between the few and the many. The Texas border, like California’s, opens up vast pools of Mexican and immigrant labor for super-exploitation by agribusiness and industry.

The same goes for New York, Connecticut, and Washington D.C. the other most unequal places in the United States. New York and Connecticut, like California, have become societies divided by an upper stratum of financial-sector workers and corporate employees whose salaries and investments simply dwarf the bottom half of the population’s earnings, and unlike the South, this extreme level of inequality is rather new in its source of valorization. Washington D.C. is split between the federal haves, mostly fattened contractors who run the military, or who represent the interests of the billionaires in California and New York, and the have-nots, mostly Black and immigrant service sector workers who wait on these technocrats of empire.

It’s a strange club, the super-inequitable states of the U.S. This exclusive list pairs the bluest coastal enclaves of liberal power with the reddest Southern conservative states. In terms of wages and wealth these places have a lot in common.

San Francisco’s real estate roller coaster. The Financial Crisis cut 20% off home values in San Francisco, but the U.S. Federal Reserve’s bond buying program, coupled with broader tax and fiscal policies, has created a rally in securities markets, handing the wealthiest Americans enormous gains in net worth. These economic policies benefiting the rich are evident in San Francisco’s real estate prices. Secondarily is the Tech 2.0 boom in San Francisco and Silicon Valley, pulling in thousands of new residents to work in Internet, biotech, and other industries where six figure salaries are the norm.

In San Francisco homes now routinely sell for millions. Not mansions. Not even particularly large houses. Just simple homes built decades ago. In most other markets they would fetch the national median home price of about $170,000. San Francisco, which locals like to call “the City,” sees dozens of real estate deals every month in which a cool million or two pass hands, and afterward the new owner, usually someone with freshly minted tech or finance money, has the modest structure demolished and scraped away. The new thing is to build upward, and lavishly, from scratch. Heated stone bathroom floors and wine cellars are popular. Securing a pad in Noe Valley or Bernal Heights for a few million is seen as a reasonable way to spend money.

In San Francisco the western end of Broadway is known as “billionaire’s row.” Quite a few of the side streets and parallel avenues like Jackson, Pacific, and Washington are lined with estates that trade hands on occasion for a few tens of millions. No tear downs here. The villas and manors along these avenues were built by sugar barons and banking tycoons of centuries past. Silicon Valley’s most senior executives, and the City’s hedge fund managers, buyout barons, bankers, and a few celebrities make up most of the neighborhood’s owners. Their children attend exclusive private schools in Pacific Heights where they are preened for Stanford and Princeton.

It is becoming hard to identify any part of San Francisco as an “elite” enclave. Tech 2.0, as the Google and Facebook-led regional boom is being called now, has vested thousands of twenty somethings as well as senior executives with billions in IPO cash and billions more in salaries to hunt for real estate, and they have chosen San Francisco, nearly all of it, as their preferred stomping grounds. Maybe it will only be another decade until Broadway starts getting called trillionaire’s row.

Sea View Avenue, Piedmont, California. 71 percent white, only 5 percent of Piedmont’s population is Black or Latino. Median household income is $200,000, and wealth holdings are much more. Piedmont supports its own public schools, police force, parks, and libraries.

Across the Bay is a slightly more modest version of billionaire’s row, probably better called a millionaire’s row running across the ridge line from Oakland north to Kensington. In the middle of Oakland, in fact completely surrounded by the scrappy industrial city by the Bay, is the city of Piedmont. When it was founded in the 1920s its first residents gave it the nickname “city of millionaires.” They restricted housing to single family residential homes on large lots from the start to prevent Black and immigrant families from moving up the hillside. Sea View Avenue is where the big money that wants to show off buys real estate, but the entire city boast a median home price of $1.4 million. The Berkeley hills are similarly rich and populated by an unusually high number of lawyers.

Lawyers, especially tort defense, corporate, and tax lawyers who serve the wealthy and defend corporate America from labor unions, environmentalist, and consumer advocates, also love Marin County. Across the Golden Gate from San Francisco, Marin is not much more than a bedroom community for corporate lawyers and CEOs who want a little more room and sun than San Francisco provides. If Piedmont was a city shelter to exclude the working class, then Marin is similar, but on the level of a county. Despite growing pockets of Latino poverty in older towns like Novato and San Rafael, Marin remains one of the wealthiest counties in the U.S. on a per capita basis. Marin’s Black population is segregated into the tiny Marin City, one of the only places public housing was allowed to be built. Marin City’s residents work in the retail sector and some of the industry along San Rafael’s waterfront. They earn near the bottom of the region’s wage scale and subsist on a fraction of the income their wealthy neighbors take in each month.

Hagenberger Road, East Oakland. Oakland is over 50 percent Black and Latino. Sections of the city such as the area pictured above are 90 percent non-white. In the typical pattern of environmental racism, residential homes are in close proximity to major roadways, highways, rail lines, industrial facilities, scrap yards, and utilities.

Unemployment stalks the working poor of the Bay Area, threatening to force them into insolvency and bankruptcy, foreclosure and displacement. During the first Dot Com boom of the late 1990s unemployment was at five percent for white Bay Area residents. For those living along the billionaire’s and millionaire’s rows, unemployment is a meaningless concept. The capital invested by the rich, by their clever advisers who run the hedge funds and private equity shops, earns interests and returns on equity far larger than any years honest wage labor can eek out. The tax code provides for this with carried interest and the lowest personal income tax rates for top earners in many decades. Hordes of tax lawyers, many who live in Marin, the Oakland hills, and San Francisco, will eagerly structure a family’s investments and bills to minimize taxes, so long as they possess a minimum of $5 million in liquid assets – preferably more.

Black men in the Bay Area have consistently suffered an unemployment rate double that of white men. Through the entire George W. Bush presidency, a period characterized by an economic policy to benefit the wealthiest with low taxes and interest rates, Black men endured double digit unemployment rates, reaching about 13 percent when Obama took office. The Financial Crisis sent Black unemployment rates skyrocketing in San Francisco, Oakland, Richmond, and Vallejo, upwards of 22 percent in 2010.

Economic policies under Obama —both those he championed, and those he compromised on— have been very good for the wealthy, and that’s reflected best by the real estate and consumption bubbles frothing over places like San Francisco. The Federal Reserve Bank’s unprecedented purchases of bonds and its low lending rates have produced rallies in stock and debt markets which have greatly re-inflated the fortunes of the rich.

The Pew Research Center recently summed up this polarizing redistribution of wealth from the bottom to the top by noting simply that since 2009 the wealthiest 7 percent of Americans experienced an increase of 28% in their net worth, while the bottom 93 percent actually lost 4 percent of their savings.

The San Francisco Bay Area’s current tech boom is further dividing the wealthy few from the impoverished masses. Companies like Google, Apple, and Oracle are among the least diverse workplaces places where men outnumber women, and white and Asian employees dominate the ranks of lowly programmers and senior executives. The need to hire thousands of engineers is drawing waves of college graduates to Silicon Valley and San Francisco, and they’re washing over the current residents like a tide of suffocating oil. Some of the tech buses —private transit systems operated by Silicon Valley’s largest firms to shuttle employees from San Francisco to their suburban campuses in Santa Clara County— now run lines into Oakland and Hayward, a sign that their employees are increasingly colonizing formerly undesirable zones of real estate.

The drift apart between the pale wealthy few and the impoverished multitudes of darker-skinned peoples is evident on the level of whole cities. San Francisco enjoys robust public finances, high credit ratings, low per capita debt to income ratios, and many well funded public services. However, two decades of intense gentrification mean that this healthy public sector increasingly caters only to those “citizens” who can afford to live in San Francisco.

Pushed out of the region’s urban core, in the 1990s and 2000s Black, Latino, and some Asian immigrants found themselves in the affordable locales of Vallejo, Stockton, Richmond and Oakland. Further out towns like Antioch, Brentwood, and Pittsburg became increasingly non-white and working class. In the Financial Crisis these cities hemorrhaged residents and revenues due to some of the highest foreclosure rates in the nation. Vallejo and Stockton went bankrupt after slashing the most basic services. Vallejo is 75 percent non-white. Stockton is 80 percent non-white.

The wealthiest Bay Area communities, the “towns” of Hillsborough, Woodside, Atherton, Los Altos Hills, and the city of Piedmont are three quarters white with median incomes in the six figures. Public finances barely flinched during the Great Recession. A few of these local governments in fact have no outstanding public debt.

Atherton and Los Altos Hills have zero bonded public debt.

Oakland has almost a billion just in bonded debt.

In the tony Marin hamlet of Fairfax the public debt burden resting on each resident is about 1.7 percent of their annual income.

In Richmond the ratio of public debt to personal income for each resident is 16 percent.

Richmond, a quarter Black and a third Latino, is a tangle of oil and chemical refineries run primarily by Chevron. Not a year ago a massive fire at one of the company’s plants spewed toxic vapors and smoke into the sky, poisoning thousands of residents.

Chevron is headquartered in San Ramon, another exclusive, mostly white suburban environment with low municipal debt and a household median income of $121,000 a year.

The San Francisco Giants of Real Estate, Tech, Finance

Easily the biggest winners of this year’s World Series are the owners of the San Francisco Giants baseball club. The Giants franchise is owned by a limited partnership called San Francisco Baseball Associates, L.P. There are 32 partners invested in the club, but it’s widely understood that most just possess a couple million in share equity, while a few hold the controlling shares. None of the owners are purported to be very active in the team’s management except Lawrence Baer, a minority owner and president and CEO of the club.

Share values in the Giants partnership have grown enormously since roughly two-dozen investors bought the baseball club in 1992 for about $100 million. At last estimate the Giants franchise was valued at $643 million. With their second World Series title in under three years sealed and their fan-base rapidly growing, that price is likely to have shot up. So who exactly is getting rich?

Charles B. Johnson

The largest Giants shareholder is Charles B. Johnson, estimated net worth of around $4-5 billion. That makes Johnson the wealthiest man in baseball. Whatever money Johnson has made off the Giants is small potatoes compared to the fortune he started with.

Johnson’s money comes from Franklin Resources, a mutual fund company his father founded. Johnson is pretty much Bay Area royalty, about as elite in both the social and economic sense as they come. He’s a trustee of Stanford’s conservative Hoover Institution, and has been a member of the corporate policy lobbying group the Bay Area Council.

Johnson lavishes money on conservative, anti-labor causes and political candidates. Just this year Johnson gave $200,000 to Karl Rove’s American Crossroads super PAC, and $50,000 to the pro-Mitt Romney Restore Our Future super PAC, in addition to many other causes. Johnson is also the largest funder of the campaign against California’s Proposition 30 which would raise taxes on the super wealthy to fund education; he gave an anti-30 committee $200,000. Johnson has also contributed $50,000 to Proposition 32, the California ballot initiative that would virtually ban union money in California politics.

Charles B. Johnson’s home, the Carolands Chateau in Hillsbourough, CA.

Earlier this year Johnson held lavish fundraising events for Mitt Romney in his opulent Hillsborough mansion, the Carolands Chateau. In previous years Johnson invited George W. Bush to hold fundraisers at Carolands also.

Charles Johnson’s partner in business at Franklin Resources, a man named Harmon Burns, was until 2006 the largest share owner of the Giants. His death in that year passed his shares on to his wife, who then died in 2009 leaving the stake to be split between their daughters, Tori and Trina. In other words, majority ownership of the Giants rest with three people whose fortunes come from the Franklin Resources, Inc. company.

Peter Magowan, the Giants’ former managing partner who is credited as the catalyst for bringing the current group of owners together to buy the team in 1993, remains a large shareholder. Like his fellow owners, Magowan’s money doesn’t originate in baseball. And like more than a few of his fellow owners Magowan inherited his fortune. Magowan also shares the conservative, anti-labor values of some of his fellow Giants owners.

Peter Magowan (picture from Caterpillar, Inc.’s web site).

His grandfather was the founder of the investment bank behemoth Merrill Lynch (now part of Bank of America) and also a founder of the Safeway Corporation. Magowan’s father ran Safeway, and Magowan himself was elevated to the position of CEO of Safeway in 1979. By then the company had become the supermarket titan it is today.

Like Charles Johnson, Peter Magowan is a reactionary conservative who actively throws money against social justice causes. Magowan has lavished hundreds of thousands of dollars on Republican Party candidates John McCain, Carley Fiorina, and Paul Ryan. Earlier this year Magowan gave Karl Rove’s American Crossroads a $75,000 contribution toward defeating Barack Obama and other Democrats in key states, as well as $25,000 to the Restore Our Future super PAC. Earlier this year Magowan gave Wisconsin governor Scott Walker a $10,000 contribution to fight the recall campaign initiated against him by labor unions after Walker attempted to abolish collective bargaining.

Magowan is known as an anti-union corporate manager from his earlier years running Safeway. When Safeway was taken private in an LBO orchestrated by KKR in 1986, Magowan led an effort to bust up unions inside the company and drive down wages so as to drive up profits for the new private equity owners. “Our intention is to discuss with the unions those divisions that are having profitability problems, in our opinion entirely because of the fact that we pay higher labor costs than our competition in several markets that we operate,” Magowan told the LA Times during the company’s restructuring.

In addition to his current ownership stake in the Giants, Magowan also sits on the boards of Caterpillar, Inc. and DiamlerChrysler. Caterpillar has been widely criticized for selling bulldozers to the Israeli government through U.S. Foreign Military Sales Program. These bulldozers are used to demolish the homes, businesses, and farms of Palestinians.

The Giants owners aren’t just conservative tycoons. Among the minority owners of the Giants are some Democrats also. Giants owner Philip Halperin runs the Silver Giving Foundation, a philanthropy he created with money he amassed while working as a partner in the Weston Presidio private equity firm. Halperin’s official biography on the Stanford Freeman Spogli Institute for International Studies web site (where he sits on the advisory board trustee) says that at Weston he was, “focused on information technology, consumer branding, telecommunications and media,” and that he “previously worked at Lehman Brothers and Montgomery Securities.”

Halperin contributes relatively small amounts to the Democratic Party and candidates in any given year. He also sits on the board of Autonomy Virage, a company that specializes in developing surveillance systems for corporate and military clients.

More than several of the Giants minority owners are real estate tycoons, a fitting source of wealth given that the Giants baseball franchise itself has been a major force in a broader effort by San Francisco’s landlords to further gentrify the entire city and drive up land values. The Giants’ downtown stadium seamless connects the financial district (the product of 1960s and 1970s urban “renewal”) with China Basin and Mission Bay. The latter areas have seen enormous real estate investment in the 1990s and 2000s, including numerous luxury condo and high-rise apartment projects ringing the AT&T Park and the University of California’s brand new medical school campus (around which biotech companies are in a frenzied push to claim land).

Some of the Giants’ current owners have been keen to cash in on this speculative frenzy. An article from a 1997 issue of the San Francisco Business Times describes one case:

“In March, Allan Byer, a minority partner of the San Francisco Giants and owner of the Byer California clothing manufacturing company, beat out three other investors to plunk down $3.15 million for an aging and empty brick warehouse at 128 King St. On paper, the deal makes little sense. According to the San Francisco Tax Assessor’s office, the building is worth just $316,194. Why pay 10 times that much for an old building that hasn’t earned a dime in decades? The answer lies directly across the street, where in the middle of November, the Giants will hold a groundbreaking ceremony to start construction of PacBell Park, the team’s new 42,000-seat stadium. On opening day in April 2000, tens of thousands of people will stream into the stadium for the game, most of them passing directly in front of Byer’s property, which by then likely will house two or more restaurants — tables packed and cash registers humming.”

Other big shot real estate investors who own minority stakes in the Giants include David S. Wolff of the Wolff Companies, and Scott Seligman of the Seligman Group. Wolff controls a huge portfolio of Houston office properties.

Scott Seligman’s company owns the Sterling Bank & Trust, and numerous office properties in California, Nevada, and Michigan. Seligman has been singled out as the ugly face of gentrification in San Francisco by non other than Lawrence Ferlinghetti, the famed poet and owner of City Lights books. Back in 2001 Seligman was in the process of evicting tenants from a building he controlled in the Mid-Market area (the same part of San Francisco now being colonized by Twitter thanks to a big tax break the Board of Supervisors gave the company). In a press release Ferlinghetti lashed out:

“A developer from Michigan, Scott Seligman, who runs Sterling Bank and Seligman Western Enterprises, wants to gentrify the Mid-Market zone. Not to make the City a better place but to make his bank account a little fatter. He wants a better class of tenant. No more photographers or poets or translators or editors or painters. No more small businesses serving the City. No more small nonprofits, like Streetside Stories, which publishes work by 650 middle school kids every year to foster a love of reading and writing.”

Ferlinghetti was trying to draw a line: “It’s long past time for San Francisco—the people who live here and care about the place, the politicians, the small businesses, the kids who will inherit either a theme park or an exciting, urbane City—to stand up and stop the development juggernaut.”

AT&T Park from the air, obviously a jewel in king gentrification’s crown.

Of course the development juggernaut stumbled for a couple years, but then raged on. The Giants new ballpark was a key piece in advancing the juggernaut not only because it linked gentrifying regions of the city, but also because it secured a much desired form of high-priced entertainment for the tech and finance employees quickly populating trendy neighborhoods like Soma and the Mission. These highly paid, college educated urban pioneers have driven out thousands of long-time residents, mostly Black and Latino families whose existence sullies the theme park atmosphere, and who can’t pay the rapidly rising rents making men like Seligman very wealthy.

Meanwhile tickets to a Giants baseball game have shot up in price, making an outing to even the most mundane mid-season match too costly for some San Franciscans. Ball games have become something of a posh affair. The restaurants that ring AT&T Park are pricey, as is the food and drink inside the games.

Nowadays many of Silicon Valley’s big companies —Google, Yahoo, Facebook— send fleets of company buses into San Francisco’s hipster enclaves like Noe Valley, the Mission, Bernal Heights and Soma to pick up their twenty to forty-something year-old engineers and code geeks, shuttling them on these private transit systems directly to work with onboard wi-fi and other so-called perks to keep them satiated. In the 1990s it was no surprise that the young workforce fueling California’s booming technology capital wanted to live in an exciting city and shunned the quiet suburbia of Palo Alto, Cupertino, and Santa Clara. They wanted city lights, “gritty” urban experiences, 2 AM burritos on 24th Street, over-priced coffee along Valencia, art galleries on Natoma, endless music and clubs, and yes, of course they’d want baseball. Most importantly, they’d be willing to shell out hundreds of dollars or more every year for tickets.

The owners of San Francisco Baseball Associates, L.P., and the companies, foundations, and non-profit corporations they control, own, or direct.

So it should be no surprise that filling out the minority owners of the Giants baseball club are mostly technology executives. They had both the money to burn thanks to their IPOs and buyouts, and they had the larger reasons of class interest to make what was seemingly a philanthropic investment in the 1990s when the Giants almost left San Francisco for Florida. The team’s majority owner back then complained he had been losing money after voters thrice rejected his efforts to get public funds to build a new stadium. Many observers thought the new owners were simply sacrificing a few million to keep the team in San Francisco; the Giants were also a pretty mediocre ball club then, and attendance at games, held out at the windy Candlestick Park, wasn’t the greatest. When the new owners took over they ended up getting millions in public subsidies to build the new downtown stadium by the water. Even though they claim to have been the first franchise to “go private” with ballpark financing, the Giants’ owners did in fact receive at least $80 million in infrastructure upgrades paid for by taxpayers. The stadium also sits on public land, leased to the Giants at a very cheap rate.

Of course the new owners weren’t philanthropists. They were operating as sharp business executives. The baseball club was a keen real estate investment, and a very strategic investment toward their larger project of keeping San Francisco hegemonic in the tech economy. This larger vision of urban development has involved rapidly eradicating working class communities and replacing them with yuppified landscapes populated by mostly white college educated newcomers. Surprisingly few in San Francisco have consistently criticized the Giants baseball club for playing a key part in this harsh gentrification campaign executed on a city-wide level.