After Silicon Valley
I'm reading my just-arrived copy of Mark Steyn's latest, After America: Get Ready for Armageddon, a surprisingly enjoyable way to snuggle up to the near-inevitable global calamity in our immediate future. In fact, I've never had more fun becoming depressed. After the all too accurate description of the constitutionally lethal effect of our nation's sovereign debt trajectory, Steyn explains why just about the only area of visible progress in modern American life is in information technology.
Google and Apple and other latter day American success stories started in somebody’s garage—the one place where innovation isn’t immediately buried by bureaucracy, or at least in most states, not until some minor municipal functionary discovers you neglected to apply for a Not Sitting Around on My Ass All Day permit. What did Apple and company do in those garages? They invented and refined home computers—an entirely logical response to late twentieth-century America: when reality seizes up, freedom retreats and retrenches to virtual reality, to the internal. We’re in the Wilbur & Orville era of the Internet right now, but at the Federal Communications Commission and other agencies they’re already designing the TSA uniforms for the enhanced cyber-patdown.
Rings true to this Silicon Valley entrepreneur. Airplanes, spacecraft, medical treatments; all these are stagnating. But you can still write some compelling computer code on your laptop in your dorm room, start a company and make a fortune.
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Feb '11
Re: After Silicon Valley
Much truth to this....as long as you stay out of the *physical world*, you are in a less-regulated environment. But even the so-called "tech" industries need to intersect with the physical sooner or later, viz cloud computing data centers and their dependence on reasonably-priced electricity, which in turn is vulnerable to regulatory insanity.
Regarding pure software companies: the scope of patent coverage has expanded to encompass software patents with very broad claims, business-process patents, etc, such that even a tiny garage startup probably needs a good patent lawyer. Any thoughts on this, George?
Jun '10
Re: After Silicon Valley
In the virtual world, code modules never go on strike for more health benefits. They usually don't have lawyers either
Mar '11
Re: After Silicon Valley
That's the root cause of America's problem. Hardware is what creates jobs, which creates taxpayers. Software does indeed make money for a few founders and programmers, but very little else - we still need to import stuff from China, and borrow money from them to pay for their goods - what could go wrong?
The remaining hardware companies, such as Apple, employ a few designers - but the hardware is produced in.... China! Hundreds of thousands of Chinese are employed, as a result - some jump out of the factory windows, so they put nets around the factories and are starting to change over to robots.
Even if Mr Ryan were to become the next President, the US still has this basic problem - we do not make enough hardware to support an ageing population.
Edited on Aug 11, 2011 at 8:24amMay '10
Re: After Silicon Valley
This is the result of the hyper-regulated and over-credentialed world of the technocrat. Thomas Edison, with his three months of public schooling, would be "unqualified" to participate in a in a government "investment" in the future. His friend, Henry Ford, would have been hounded out of business for his abhorrent political views (And they weren't just politically incorrect - they were of the nasty anti-Semitic variety.)
Feb '11
Re: After Silicon Valley
No question, there is a societal prejudice in the US against manufacturing. Kathleen Fasanella, who runs the interesting blog Fashion Incubator, tells this story:
"I once stood next to a woman in a store who complained nothing was made in the USA and when I said I worked in US manufacturing, she sneered at me and said “sweatshop”"
I've seen data from a survey conducted by an on-line dating site---they asked women "what attributes would make you definitely un-interested in a guy?" In the responses, "works in manufacturing" was right up there with "is bald."
I go into these cultural issues in considerable depth in my post faux manufacturing nostalgia.
Feb '11
Re: After Silicon Valley
May '10
Re: After Silicon Valley
I don't think it is fair to say innovation overall has dropped. A lot of innovation has moved to computers and they are pervasive in almost any old technology making it better. Communication has been vastly improved and we are approaching a point when even cheap things will know where they are and be able to communicate with each other providing the opportunity for solutions that e.g. cut cost by improving market pricing. A lot of this is not visible directly as e.g. a farm tractor may still look like a tractor while it really is a 'moving data center' measuring soil quality, communication with satellites and optimizing its production process in real time.
Or look at George Savage's computer in a pill!
OK - cars don't go much faster but that is more due to human driver limitations. With self driven cars - which is technically possible if we want it - we can increase speed safely.
That so much innovation is done in computers is just because it is still an area with a lot of unexplored possibility.
Re: After Silicon Valley
"I've never had more fun becoming depressed."
Just wanted to say, George, that that's a lovely sentence.
May '10
Re: After Silicon Valley
The video game industry is booming. While DC drives us into ruin, I will be playing this.
Re: After Silicon Valley
Growing up, I remember my father telling me to apply for every license or credential I could earn. He pointed to the various ways he had earned his living along the way: self-taught court reporter, real estate broker, insurance agency owner, state-certified general contractor. If starting from scratch, he explained, the only license Dad could qualify for by the latter half of the 1970s was his first position upon leaving the USMC: a Florida Power & Light meter reader. It seems that each of his professions in turn teamed up with regulators--in the name of the public interest!--to erect castle walls around themselves. As with any good medieval pile of stone, professional fortifications accrete over time: the walls get thicker, the moat deeper. And as we see today, the economy withers.
Dec '10
Re: After Silicon Valley
The only way I can win work from industry/manufacturing clients is to study their operations and find ways to improve their environmental situation, while saving them money. Even then, with the exception of utilities, my customers keep disappearing.
That means that even though we keep becoming better at doing things more cleanly and cheaply, we still wind up handing off any large-scale manufacturing and industry to overseas competitors, where they can throw their waste into the nearest ditch.
America can compete with anyone on anything like a level field, but even excepting our horrendous regulatory burdens (field now not level), we can compete. We cannot compete in manufacturing and industry when our own companies move away and we no longer have anybody on the field.
Any business in this country can compete, up to a certain point, then the bean counters take over and see their opportunities in the third world.
Has anyone on this Blog ever used a "come along"? Has anyone ever managed to get a Chinese-made one work more than a few times? I have two that were bought new and are now useless. Where do I buy an American-made one?
Aug '10
Re: After Silicon Valley
We have to be careful here to not buy into the myths propagated by the other side. "American Manufacturing" was doing quite well until the recession, and has been growing at a 4% rate almost continually. There's an illusion that manufacturing is moving away because the largest amount of outsourcing is occurring in the manufacture of consumer goods and textiles, which are low margin and labor intensive compared to their cost, but quite visible to everyone. But America excels at building big, complex things: Aircraft, turbines, heavy machinery like cranes and earth movers, factory machines, etc. Just before the recession, U.S. manufacturing output in constant dollars was at an all-time high.
Now, manufacturing employment is declining, but that's not because of outsourcing. It's declining for the same reason farm labor declined massively in the 20th century - we're getting more efficient at building things, and we're automating more of our factories. This is a good thing, but it means we won't have the kinds of large scale blue-collar manufacturing jobs we had before. The economy must adapt and absorb them, as it absorbed the millions of farm workers displaced by farm machinery.
Re: After Silicon Valley
CJRun, I agree that US businesses can compete successfully, even on a tilted playing field. But the bean counters aren't moving to the third world for cheaper labor, they're emigrating to survive.
Consider: A California company will pay 45 percent of its profits in state and federal income tax. Meanwhile, the same company in Singapore will pay approximately 5 percent tax, leaving more to plough back into the business--a critical consideration for a growth company. Let's face it, if similarly situated competitors can pay higher dividends and simultaneously invest dramatically more in R&D, they will eventually crush a US-based company, or just buy it out from under the entrepreneurs.
On the regulatory front, the US purposely promises worsening conditions. For example, both the Obama administration and the State of California share an explicit policy of raising electricity prices dramatically over time. Meanwhile getting the environmental permits to open or expand a new semiconductor fab--cleantech, mind you-- takes two years.