[IP] Now is time to face facts, make needed investment - Dan Gilmor
From: Bill Brasier <bill@xxxxxxxxxx>
Dave,
Another Gilmor column for IP
-Bill Brasier
http://www.mercurynews.com/mld/mercurynews/business/columnists/dan_gillmor/8184128.htm
Can Silicon Valley compete in a true global economy? Once, this would have
seemed like a foolish question. No more.
The valley, and America as a whole, had enormous competitive advantages for
decades. But conditions have changed in dramatic ways -- such as the
composition of the global workforce and emerging entrepreneurialism in
other places.
With few exceptions, our leaders are not facing up to some of the most
serious issues. But if we don't start planning -- and investing -- right
now for the challenge, we could face troubles that would make even the
worst recessions of the past half-century seem tame.
The situation is simple enough on the surface. Core elements of Silicon
Valley's economy, and the nation's, are moving offshore. And what remains
will be under severe price and wage pressure.
Why now? Because the technology of communications and collaboration has
shrunk the world. And because the world economy is being flooded with
well-educated people, many of whom speak English and are willing to work
for a fraction of what Americans earn.
This trend offers major positives in a big-picture sense. Anything that
raises the standard of living in developing nations is good by definition,
both in terms of an expanding global economy and a reduction of the kinds
of political tensions that afflict poorer societies.
And it's good for some American companies. Eric Schmidt, chief executive at
Google, Silicon Valley's fast-growing star, observes that his company
benefits from any expansion in the number of people who need better tools
for managing information.
``It's likely,'' he says, ``that China will be the biggest opportunity
before Google for the next 20 years.''
Lowered expectations
But the next two decades won't be good to everyone. The rise of China,
India and other nations could bring difficult, and potentially
catastrophic, consequences for America as a whole and the valley by
consequence. The tech industry may be recovering in a macroeconomic sense
-- that is, businesses based here are growing faster again -- but Silicon
Valley's recovery, like the nation's, is essentially jobless. And the signs
are not positive.
Craig Barrett, CEO of Intel, the giant Santa Clara-based chip-maker, didn't
use words like ``catastrophe'' when he sat down with Mercury News reporters
and editors several months ago.
But when we asked him whether Americans entering the workforce in coming
years face a generation of lowered expectations, his answer was blunt:
``It's tough to come to any other conclusion.''
What political leader is willing even to address this subject without
resorting to knee-jerk protectionism or equally knee-jerk assurances that
what's happening is just fine? Tell the truth, folks. We can take it.
More jobs disappearing
If we carve out the heart of the middle-class economy, we'll be hurting for
a long time to come. Yes, America rebounded when blue-collar jobs left for
markets where labor was cheap. And, yes, there's something ugly about
white-collar workers only sounding the alarm now that their employment
prospects are melting. But this time, things truly do seem different.
Harsh as it may have been for unskilled, less-educated people who lost jobs
in the first wave of globalization, our overall economy managed to move up
the economic value chain. We should be ashamed, however, at the way we
abandoned a generation of blue-collar workers when their jobs disappeared.
Where will we move when people who are at least as educated and skilled as
we are, and who vastly outnumber us, have joined the workforce? Maybe this
time we'll replace the jobs we lose with worse ones; for many Americans,
this is already the case.
The choices are clear enough. First, we have to face facts. Then we have to
invest.
We have to invest in our domestic communications infrastructure, which
boasts excellent superhighways (high-capacity data ``backbone networks'')
but lousy local roads and driveways. Leaving this to the telecom
oligopolists will not work.
We have to put more into basic research, and we have to invest in
education, for real, instead of cheating our kids as we've done for
decades. Our top universities are the envy of the world, but our public
schools are a disaster. We have to invest in lifelong education for
everyone, in science and math and other skills for a new century.
We have to deal with the health care meltdown. Sooner or later America will
have national, single-payer health care, because we can't compete without it.
And we have to stop living so far beyond our means. The unprecedented twin
deficits in trade and the domestic federal budget, plus sky-high borrowing
at the consumer level, are unsustainable and, ultimately, dangerous.
Losing cultural advantage
We still have one big advantage: risk-taking. More than any other developed
nation, the United States encourages people to take economic risks, and our
renewed culture of entrepreneurialism has brought us a long way in recent
years.
But other places are moving in that direction, too. They have a long way to
go, but as the rule of law grows and societies learn to see failure (at
least the right kind) as something to value, not find shame in, America's
lead even here will shrink.
I'm often asked, when visiting other parts of America and the world, why
Silicon Valley has been such an economic powerhouse for so long. I tick off
key reasons, including a risk-taking culture; lots of investment capital;
smart, well-educated people who work hard; and great research universities.
To some extent, the nation as a whole shares those qualities.
America isn't losing any of those assets. But the rest of the world,
especially Asia, is gaining all of them, and now has a competitive wage
advantage to boot.
Troubling times are ahead. We can emerge stronger if we face up to what's
coming. Will we?
Dan Gillmor's column appears each Sunday and Wednesday. Visit Dan's online
column, eJournal (www.dangillmor.com/blog). E-mail
dgillmor@xxxxxxxxxxxxxxx; phone (408) 920-5016; fax (408) 920-5917.
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