Wall Street And Silicon Valley: Not That Different After All

Why East Coast finance hates the government, but West Coast green startups love it.


Daniel Gross of Slate says: East Coast financial suits bite the government hand that feeds them, while West Coast cleantech gurus, with their "wide-eyed hucksterish world-changing idealism," are happy to accept hope and change.

It's simple enough to explain why the finance guys are so skeptical.

Having saved the banking system from failure and taken a significant ownership stake in the system, the government is now interested in telling banks how much they should pay employees, how much leverage they should use, and how aggressive they should be in modifying mortgages. And since such proposals would influence profitability, Wall Street detests them.

Now the Silicon Valley guys--is it really the case that, as Gross puts it, what they really care about is "changing the world," and if government funding is needed to do that, all the better?

I think the much simpler explanation is that these guys know good opportunities when they see them. If Obama (or probably another Democrat) got in the White House, it would mean $150 billion in free money to their industry—without the big strings attached like the financial sector is getting. Even Republicans have supported subsidies for clean energy.

The subsidies are far from a side benefit—they're a reason to act. Anybody with lots of cash planning a green startup in the past few years could make a fair bet that they would be part of Washington's favored class.

Compared to the East Coast people, from a sheer moneymaking standpoint, the cleantech guys look like the smarter profiteers right now. And you can believe they wouldn't be too happy if Washington started making demands like executive compensation requirements along with their subsidies.