Vanity Fair frets over Silicon Valley’s success. Lacking real metrics to show the tech boom is in peril, the magazine throws together a hodge-podge of scare indicators, including the ever-popular canard that the art market is an indicator of excess and impending doom:
Yet there may be no greater monument to what’s going on in the Valley than the 1,070-foot edifice under construction at 415 Mission Street. The new, glassy Salesforce Tower is slated to soon become the tallest building in San Francisco, rising more than 200 feet above the Transamerica Pyramid. And that may be a big problem. Vikram Mansharamani, a Yale lecturer and author of the book Boombustology, has argued that virtually every great bubble bursting has been preceded by an attempt to build the tallest buildings. Forty Wall Street, the Chrysler Building, and the Empire State Building were under construction during the onset of the Great Depression. The Petronas Towers, in Kuala Lumpur, were completed in time to inaugurate the Asian economic crisis. The Taipei 101 tower, once the tallest building in the world, laid its foundation right at the height of the dot-com boom.
Some of these buildings, which were erected through money obtained partly from bubble-gotten gains, rode on the assumption that the markets would continue to rise and there would be enough tenants to fill their floors. This trend has historically been true in other industries, too. An inflated art market, according to Mansharamani, is another troubling indicator of overconfidence. (Last May, Christie’s, Sotheby’s, and Phillips broke records by selling a total of $2.7 billion of art in a week and a half.) There’s also a precocious indicator some economists refer to as the Prostitute Bubble, where the filles de joie flock to increasingly frothy markets. (While it’s difficult to substantiate this theory, several bars in the city are well known for this kind of deal-making.) “I think we are absolutely in a condition that you would qualify as bubbly by any stretch of the imagination,” Mansharamani told me. “This is hubris, chest-bumping behavior: Bigger. Better. Wider. Me.”
Is Silicon Valley in Another Tech Bubble? (Vanity Fair)