First, there are two VC industries. There is the one that funds biotech and clean-tech and there is the bubble-centric consumer web one that gets all the press here. The first exists to fill a gap (R&D projects that the mainstream private sector is too cowardly to try) and isn't sexy because the upfront capital costs are very high, meaning VCs take a lot of the money, meaning that founders becoming billionaires is next to impossible. But on the whole, the VCs in that sector are actually pretty ethical. Obviously, they're in the game to make money, but they're trying to make it the honest way: by capitalizing good businesses. The second, sleazier VC industry-- the one with the slimy co-funding/back-channeling culture that funds a lot of stupid ideas and frat boys-- is the one that gets all the press here.
As for that sector of VC, they're in the business of taking strategies that are profitable but illegal in public markets (e.g. market manipulation, insider trading) and applying them to private stocks that are less well-regulated. They encourage (and, sometimes, demand) extreme risk taking because they don't really care which businesses go up and down, they just want volatility (for it's own sake) in the market, never mind if this leads to bad decisions and damages the careers of people they view as peasants.
The slimy consumer-web build-to-flip VC will also never leave California. Why? Because a lot of the note-sharing that VCs engage in is illegal and simply can't be done except in-person, because it would be too devastating if the phone logs or emails ever surfaced in discovery. For one of many examples, they make a lot of back-channel reference calls in deciding whether to fund someone, and it's a well-known fact of HR that the main (if not the only) reason to make a back-channel reference call is to violate EEOC provisions.