Tech’s innovation boom may have been bad for the economy

Giants such as Facebook, Amazon, and Google have become some of the wealthiest corporations in history, seen by many as indestructible money-making machines. Even as the nation struggled through a “jobless recovery” after the Great Recession of 2008, Big Tech was the Ayn Randian sector proving America had the best of all capitalisms. Technology has been criticized for harming American democracy, youth mental health, and even contributing to long-term economic stagnation. But the sector argued that its innovation made it exceptional enough to operate in its own quasi-libertarian golden state — that regulatory burdens shouldn’t apply, and that its geniuses should be free to work without hurdles. They pointed to the FAANGs outperforming the S&P 500 as proof.

For a time, things seemed to work. Buoyed by over a decade of near-zero interest rates, capital was seemingly everywhere in tech. Then the early pandemic sent tech stocks soaring even higher. But that party ended a year ago, when Mark Zuckerberg’s Meta empire suffered the largest single-day drop of any publicly traded company in American history. Big tech firms have since become exceptional in all the bad ways: the rest of the once-mighty FAANG companies seeing record drops in market cap; and tech giants laying off thousands upon thousands of workers, even as the rest of the economy grows. Meanwhile the ultimate risk and innovation asset, cryptocurrencies, have lost roughly two-thirds of their value, as crypto’s “market cap” shrank from $3 trillion to roughly $1 trillion in a year marked by several huge meltdowns.

The notion, too, that the big brains of the innovators in our startup economy are truly exceptional took a beating last week, when the “thought leaders” that populate the venture capital industry fell victim to the most old-fashioned kind of financial panic. The blow-up of Silicon Valley Bank has been blamed on lax regulation by the Federal Reserve, rules weakened by a feckless Trump-era Congress, mismanagement by bank executives, and even, bizarrely, on “wokeness” or too much remote working. SVB was not a normal bank, and its relatively unstable…