Silicon Valley Almost Suggests That Detroit Should Be Left To Die in Washington Post
by
on January 26, 2009,
There is a very interesting article in the Washington Post today that basically sets Silicon Valley against Detroit, hi-tech against automobile industry, and poses a question of which industry actually deserves to be supported by the government during the current recession. The article quotes executives from HP, the largest hi-tech company in the world with net profit of over $8 billion last year, basically claiming that the leadership of the US in technology is in danger and could be totally lost in the next years if the government does not do something to support the industry and the scientific research.
The explanation is simple: the companies working in hi-tech and investing in R&D themselves see that they could eventually be conquered by their foreign rivals from countries like China or India where support of research is very visible everywhere - unless the government in the US actually changes its own politics and boosts support of education and scientific research.
Actually living in Russia myself in one of the scientific centers of the country I can confirm that this concern could be very real and the signs of this reality are visible even from here. Since the early 90s we’ve been watching Russian science losing the financial support from the government so it is no wonder many of the young and talented scientists were more than willing to leave Russia for a research laboratory somewhere in the US where they were offered much better financial conditions and a comfortable life.
This process was definitely a large-scale one and we lost lots of young and talented scientists to many countries but mostly to the US. But what I am watching now is that the process seems to be taking the reverse order little by little with some of those who left back in the 90s are returning back here because they are offered better conditions in laboratories and private research centers.
Of course Russia is hardly the most important source of foreign-born scientists in the US and the article quotes many examples of how this trend is visible in other countries, India and China in particular so the doom and gloom predictions made by HP could very well be close to reality.
But of course HP executives have not come up with these predictions only to terrify everyone in the industry. Instead, they are here to suggest a solution that has four main points to it: a permanent R&D tax credit to encourage companies undertake more basic research; increasing government funding for basic science research; boosting spending on education; modifying immigration laws to make staying to work in the US easier for foreign students after they finish their studies.
So of course it is quite obvious that these doom and gloom predictions are more of a cry for help than anything else trying to save the industry before it is too late. But the big question is if the government of the US is actually prepared to work towards maintaining technological and scientific leadership of the country and support the hi-tech sector with money now that the entire world is in such a huge financial crisis many of us have not seen before in our lives.
Sure, the extraordinary crisis takes extraordinary measures to solve it but the problems in hi-tech are not as obvious and don’t look to be as demanding as those in the automaking industry looked to be when the manufacturers pleaded for government bailout. But HP is actually here with an explanation of why Silicon Valley deserves support much better than Detroit. Basically they claim that the difference is obvious: where automakers ignored the market needs and kept manufacturing the cars that could not compete with imported ones and asking the government for import limitations, Silicon Valley is manufacturing the best products in the world and only asks for investment in education and basic scientific research that could eventually benefit everyone in the country.
These differences in approaches in the two industries that now seem to behave like rivals fighting for support from the government are basically the reason why HP seems to think that the stronger one should get additional support instead of helping the industry that does not seem to know how to be strong on its own and will probably not benefit from what the government provides them with and will only become lazier.
And while I can understand all the arguments used by HP to prove that technology and IT deserve better treatment simply because they know how to do pretty well on their own but do need support to be able to maintain this leadership, my personal guess is that with all the pressing issues caused by the recession any increase in support and investment in R&D and fundamental science that technology companies are beginning to talk about will be postponed at least until more urgent problems of the recession are taken care of. But it is not quite clear if it will not be too late to try and maintain the leadership in technology when the government has enough time and money for it when more urgent things are taken care of. But of course these rudiments of a conflict between the Silicon Valley and Detroit are interesting to watch and it will obviously be a fascinating fight for support to witness.
