How Kevin McCarthy's District and its Economy Might Explain Why He So Casually Threatens to Blowup Capital Markets

House Speaker Kevin McCarthy is toying with the possibility of blowing up the global financial system by refusing to raise the debt limit. It's a terrorist act that threatens to eradicate tens of trillions of dollars in assets in an instant.

McCarthy is a Californian but he's from an inland district more likely to employ farm workers than programmers. I think this may be part of why he feels like a functioning capital market is less important than, say, other California House representatives from places like Silicon Valley or any districts where they support rational thought.

The biggest employers in McCarthy's district (outside of the hospitals) are farms and oil companies. These are industries that rely on land - natural resources like oil, water, and sun - more than knowledge workers and generally trying to resist innovation. The value of an oil company could rapidly be halved with a breakthrough in new technology like fusion or solar energy. It is certainly possible that McCarthy sees financial markets as engines for disruption, financing the very technologies and industries that could obsolete jobs in his district. Why worry too much about the capital markets that seemingly worry so little about the industries that your district is home to?

The biggest employers in Silicon Valley are information companies like Apple, Meta (Facebook), Intel, Alphabet (Google), Cisco, and Adobe. These companies are heavily reliant on well educated knowledge workers from all around the world, people intent on developing new products. The value of one of these information companies could rapidly be doubled with a breakthrough in new technology. People and their representatives here rightfully see the plot to blow up financial markets that funnel money into a constant stream of startups and inventions as a threat to their economy.

McCarthy's casual disregard for international capital markets is a weird reminder that as capital markets have become more disruptive, the Republican Party has morphed from its pro-capitalists origins. Loudly anti-communist and now anti-capitalist as well, the Republican Party has become a refuge for anarchists who protest stifling regulation from government and the disruptive progress of capitalism alike, seemingly longing for an imagined past of in which capital markets created stable jobs and governments didn't funnel any tax money into unworthy people or programs.

For those of you from outside our great state of California, here are some comparisons from Kevin McCarthy's district and the 3 districts that comprise most of Silicon Valley. The districts most appalled at McCarthy's tactics have double the portion of college educated, about 3.5X as many households making more than $200k, and more than 3X as many foreign-born residents. Oh, and a voter in Silicon Valley is 2.5X as likely to vote for a Democrat rather than a Republican who might think it sport to eradicate trillions in global assets as a tactic to force cuts in funding for food stamps.