A Slice of American Insanity

No, this is not some evil socialist, pinko, “I hate America.” screed. It’s not about the Bush Administration, Iraq or any of those subjects.

It’s about a New York Times article about how it is entirely possible for a millionaire, someone who is making enough money to propel themselves into the top 2% of American families so far as wealth is concerned, to not even consider themselves as being rich. I know some people who live in the San Francisco area. Frankly, I don’t ask them how much they make but it is always a source of amazement to me that they can make it given the cost of living there. But the article points out that there is more at work in the social dynamics of Silicon Valley. There is not so much a “keeping up with the Joneses” issue as knowing what the Joneses have. This psychological factor in an area of so much wealth makes some feel like they aren’t all that high up the economic food chain even if the raw numbers say different.

One of the people interviewed for this article puts it into perspective this way

David Koblas, a computer programmer with a net worth of $5 million to $10 million, imagines what his life would be like if he left Silicon Valley. He could move to a small town like Elko, Nev., he says, and be a ski bum. Or he could move his family to the middle of the country and live like a prince in a spacious McMansion in the nicest neighborhood in town.

But Mr. Koblas, 39, lives with his wife, Michelle, and their two children in Los Altos, south of Palo Alto, where the schools are highly regarded and the housing prices are inflated accordingly. So instead of a luxury home, the family lives in a relatively modest 2,000-square-foot house — not much bigger than the average American home — and he puts in long hours at Wink, a search engine start-up founded in 2005.

“I’d be rich in Kansas City,” he said. “People would seek me out for boards. But here I’m a dime a dozen.”

And he’s right. When Sprint was a rapidly growing concern and was consolidating operations in the Kansas City metro area they were shutting down IT operations in California and trying to lure their people to Kansas City. They would bring them here and show them what their housing budget could buy. They could purchase a house twice the size with a backyard facing a lake and the development had a golf course as part of the deal for less than they were spending in California. It was a persuasive argument to many.

Why do I title this post “A Slice of American Insanity”? First, what kind of technology company can be taken seriously as doing the best they can for their stockholders when they stay someplace that drives their costs for real estate and employee compensation to these kinds of levels? The standard excuses are that this is where everyone is and that this produces advantages and the educational system producing good tech workers is also here and it just can’t be reproduced anywhere else. Isn’t it nice to have arguments that your board and shareholders buy into that just can’t be quantified? And these folks are some of the staunchest defenders of the free market system and existing structures for all things economic. Also, why do companies whose life blood is technology feel so strongly that e-mail, phone calls and video conferencing just aren’t good enough? They don’t seem to mind it when they outsource jobs to India and China? That distance doesn’t seem to matter but the idea of just maybe placing their company or at least some major components of it somewhere in the United States that could save many millions of dollars terrifies them. Yep, they’re irrational and just maybe certifiable.