American workers are bored and disillusioned. Here's what may bring them back
In Silicon Valley, Elizabeth Warren — who is running on a platform that includes breaking up Google — is getting more employees at Google to donate to her campaign than any other Democratic presidential candidate.
Google is renowned for its luxurious treatment of its engineers, with Business Insider running a story focused entirely on pictures of the free food the corporation offers to employees, including “Banana cheesecake, lobster for lunch, poké bowls.” It’s a famously idealistic company; people work at Google to make the world a better place. So the donations to Warren seem like a paradox, if you think about Google as a company where all employees and executives are aligned around the same goals of organizing the world’s information.
But something has gone wrong in paradise, the utopian idealism of the corporation is now being strangled by the monopoly power wielded by its executives.
Nitasha Tiku’s remarkable August story in Wired shows, Google is a miserable place these days. It is riven by factional disputes, bureaucracy and unsolvable political disagreements. Its product lines are stale and, increasingly, the company organizes itself to find ways to squeeze more ad revenue from its search box. It has become boring, a middle-age monopolist. Its employees increasingly fight over politics, not products, and there are mass walkouts over executive-level misbehavior and unfair treatment of workers.
Perhaps Google has a special culture. It is full of former entrepreneurs whose startups were bought by the company. These people do not like being caged, even if the cage is gilded with golden fetters and free poké bowls. But in fact, no one likes being caged. I hear from people across the corporate world all the time, both in Silicon Valley and at companies like Boeing, Procter & Gamble, Boston Consulting Group and so forth. Corporate America is miserable.
I received a letter from a young engineer trying to find his way, and he told me about how alienating it was to work at P&G. “Very few white-collar workers at P&G really did anything,” he said. “There was zero exposure to actual risk or competition, but everyone had to pretend to be innovating and competing in order to justify their success…. I swear to God, my manager actually took me aside at the beginning of my internship and said, "At the end of the day, nothing you or I do is really going to impact P&G's bottom line, so I wouldn't stress too much about your projects."
Fortunately, there is a solution. It’s called competition. There’s an old legal framework, unenforced for decades, intended to stimulate the American economy by breaking up companies that have grown too large. To understand how and why it works, we have to go back seventy years.
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In 1952, an old man, Thomas Watson Sr., sat in the office of H. Graham Morison, the Truman administration’s Department of Justice antitrust chief. And Watson was crying. Morison was going to pursue an antitrust suit against Watson’ lifelong work, a corporation called International Business Machines, better known as IBM.
IBM was the most important name in technology. It produced, serviced and rented the tabular punch card business machines that powered the analytical work of most large organizations, including much of the military apparatus itself. It was one of the most remarkable business success stories in history. Watson’s company had 400 employees before World War I and grew it to tens of thousands during the Korean War. The company brought in roughly $250 million a year in revenue from renting its machines. Had you bought 100 shares of IBM in 1914, the year Watson took over, it would have cost you $2,750. By 1956, when Watson died, you would be a millionaire several times over.
But Watson was also a tyrant who bullied those in the company, including his son. More importantly, he was missing out on the future, which lay not in the punch card business IBM dominated but in a machine developed during World War II: the electronic computer. Watson Sr. knew this technology and had personally approved IBM helping the government build such machines. But going forward, he didn’t think electronic computers were a particularly good business. Watson believed IBM’s business lay with its legacy punch card tabulators; electronic computers were unreliable and would not be profitable.
His son, however, saw the future. In 1952, Thomas Watson Jr. was ready to take over the company, but he was still in the shadow of his famous and domineering father. For much of his adolescence, Watson Jr. had suffered from what today we would call clinical depression; some said he was brutalized by his erratic father. After a brief and unremarkable stint at IBM, he joined the U.S. Army Air Corps. He loved flying, and as a pilot he gained the confidence he needed to lead. In 1946, Watson Jr. came back to IBM as an executive, and he realized that electronic computers would require a strategic transformation in the business. The success of the company’s 604 electronic calculator further persuaded him that’s where the company’s future lay. But Thomas Watson Sr. dominated the company, making dissenting views — even from his son — difficult.
Morison, however, had no problems telling Watson Sr. to invest in the future rather than hold onto the past with monopolistic tactics. And he did. Morison was filing a lawsuit against IBM for attempting to control the tabular punch card industry. The company had been sued already for doing this, in 1936, and it lost.
Morison was straightforward with Watson Sr in a way no one at IBM could be: “You have suppressed competition,” he said, “You have control of all of your paper stock of cards, no other cards can be profitably made that will fit the IBM machines, so they have to buy the essential cards from you. You will only rent your machines, you won't sell, you have taken aggressive action against the beginnings of potential competitors who had other like machines.” He was even being lenient, “IBM really deserves a criminal suit, but I've only filed a civil suit against your company.”
But Morison also said something that the younger Watson agreed with. “I believe, Mr. Watson, that in time, if you would go in right now and accept the decree, don't litigate, this will save your company.” As Morrison explained, the old punch card business line, though lucrative, was giving way to a digital world of electronics, and IBM should simply invest there instead of trying to milk cash out of its legacy business through anti-competitive tactics.
Watson Sr. did not want to accept this reality, and, in another era, he would not have had to. He was a remarkable, and remarkably cynical, political operator. He had, for instance, found a way to sell punch card machines to both Nazi Germany and the United States during the war. He had put his political influence to work on Morison. Watson had had about “a hundred and sixteen people,” childhood friends of Morison, call the antitrust chief and plead IBM’s case. But Morison wasn’t buying it. Watson had been a “robber baron” in Morison’s words, “violating the antitrust laws and getting away with it for years.” A powerful Nevada Senator threatened Morison, but he went ahead anyway.
Morison wasn’t just a courageous public servant, though he was certainly that. He was also pursuing administration policy. Truman’s chief economic advisor, Leon Keyserling, had argued to the President that research by the TNEC revealed the relationship between monopoly and technology. “The realm of science and its application to technology is expanding at a startling pace,” he wrote, “And its limits are beyond calculation. The advances of the future can be made to serve the common welfare by affording opportunities for initiative and enterprise. Or they can contribute increasingly to the growth of private monopoly.” Morison was to ensure that the electronic century would serve the common welfare, that engineers all over the country could create, as entrepreneurs, their own ventures.
IBM fought the suit, for years, but it also moved heavily into the electronic computer industry. This was mostly spurred by the suit, but also by the market in analytical machines, which had become competitive. IBM, under the leadership of Thomas Watson’s son, made the IBM 650, the “Model T” of computers, and in the middle of the 20th century, became the institution to organize the computing business. Watson Jr. cut investment in tabular punch cards while increasing the number of technicians and engineers at IBM from five hundred to five thousand in just six years. The company created one of the first high level programming languages, FORTRAN, and it helped write the industry-wide COBOL (common business-oriented language). A threat of another antitrust suit spurred the company to unbundle its software business, leading to the modern software industry.
Years later, when IBM was dominating the computer industry, Thomas Watson Jr. saw Morison at a Roper Conference. His father had died, and he was now head of IBM. “I've never forgotten what you told my father,” he said. “I know you did it gently, and he, of course, was emotionally upset, but you are absolutely right. And as his son, I couldn't say it, but we were going to be passed by and just the pressure of this decree, because he dominated the company, was the only thing that saved us.”
IBM was a close-knit company for decades afterwards, running one of the most remarkable research labs in the world and pursuing a culture designed around engineering excellence until the 1980s.
And such stories, of employees liberated to pursue meaningful work, were common. In the aluminum industry, the monopoly that Alcoa held was finally broken up in the late 1940s through a combination of antitrust action and direct financing of competitors by the government. One top leader explained what happened to the slothful giant, describing antitrust as “a bum deal,” but, he continued, “basically it stimulated the company.”
Employees could now leave Alcoa and go to competitors like Reynolds or Kaiser, and corporate management became much more attentive to the ideas and passion of the engineers and workers who made the products. Alcoa’s research division churned out innovations in basic production and fabrication of such metals as magnesium, beryllium, gallium, and titanium, while its more consumer-oriented engineers helped create a special aluminum alloy to produce the aluminum beer and soda can.
In the late 1940s, antitrust, or the threat of antitrust, stimulated and changed corporations like General Motors, DuPont, and General Electric, all of whom faced suits. Big companies now had to be concerned about the attitude of multiple stakeholders, including shareholders, employees, customers, and communities. The net effect was an explosion of innovation by small companies, often started by former employees of these companies, as well as a better, more open environment within the companies themselves.
This era took special hold in Northern California for a number of reasons, but one of the most important was competition. Because of unrelated 19th century political choices, California – unlike most states – did not allow employers to enforce agreements barring their employees from working for competitors. So in what became known as Silicon Valley, job-hopping was common, and a unique ecosystem of innovation and exciting engineering took hold.
During the era of strong antitrust action, the 1930s to the 1970s, Americans were liberated to tinker, produce, and trade. Hollywood stars and producers, once controlled by domineering men in the “studio system,” was set free by antitrust suits culminating in the Paramount Consent decrees of 1948. That set the stage for the New Hollywood of counter-culture filmmakers of the 1960s. The Federal Communications Commission blocked television networks from producing their own content in 1970, a soft corporate break-up mandate. These rules, known as “financial syndication” regulations, unleashed remarkable creativity in prime time TV, from All in the Family to The Mary Tyler Moore Show to Sanford and Sons.
Even as late as the 1980s and 1990s, when financiers were gaining control of the U.S. economy, break-ups and antitrust suits still had remarkable impacts on American culture. The AT&T break-up from 1982-1984 spurred the creation of Compuserve and AOL, and ultimately, the internet economy. And the Microsoft antitrust suit in 1998 helped ensure that Microsoft wouldn’t block the vitality of the web 2.0 ecosystem of Silicon Valley engineers, who then went on to create amazing tools for search and connectivity.
Today, American workers are increasingly bored and disillusioned, locked in increasingly centralized castles of lazy profit. Some are mistreated, but for even the most scientifically in demand, luxurious poké bowls don’t substitute for doing meaningful work. As one former Facebook engineer put it, “The best minds of my generation are thinking about how to make people click ads.” It’s time to set American producers free once again to solve real problems. We’ve done it before. It’s called competition.
Matt Stoller is the author of "Goliath: The 100-Year War Between Monopoly Power and Democracy," from which this article is adapted.