Silicon Seduction: Politics and the New Economy

It was only a matter of time before the billions of dollars in new wealth that has attracted so many entrepreneurs to Silicon Valley and other high tech meccas attracted the politicians too.

First, there was Jesse Jackson who made a trip to San Jose this past spring to criticize high tech firms for not hiring and promoting minorities yet importing workers from other countries. He said his organization would buy stock in their companies (what a threat) and lobby for jobs at stockholder meetings.

Then came Al Gore, self-professed “father of the Internet.” Gore raised eyebrows on his tour by highlighting his fabulous idea to launch a 24-hour satellite to take pictures of the earth. “That’s just silly,” responded a young capitalist on his way up the Silicon food chain. “You can see pictures of the earth on digital cable TV as well as all over the Internet any time you want. So who needs a round the clock satellite? Maybe Gore should become a weatherman.”

In June, Congressional Republicans got in the act by unveiling their “e-Contract”, a symbolic resolution pledging to “do no harm” to those on the cutting edge and promising tax cuts to promote investment, research, and development resources to ensure Y2K readiness. Minority Leader Dick Gephardt dismissed the plan as “e-pandering” and an effort by Republicans to get a bigger piece of the campaign contribution pie.

At the same time politicians are fumbling their way through the fast paced and high stakes world of the new economy, today’s fast companies are learning a thing or two about politics and the long arm of government. Most high tech business leaders are consciously apathetic toward the process of governing and power politics. In fact, they wish big brother would just leave them alone and forget they exist. They have other things to worry about like making shareholders happy and getting the next version of their product on-line.

Yet, events such as California’s proposition 211, an initiative on the 1996 ballot that opened the door to lawsuits against the industry and the U.S. Department of Justice’s investigation and subsequent suit against Microsoft have shaken high tech leaders into understanding the unfortunate necessity of political organization. They have begun to take a serious look at how government could affect their industry, profits, and futures.

In 1997, a group of 12 leading high tech companies formed a bipartisan lobbying arm, The Technology Network. In two years, the group has grown to 140 members and hopes to expand into the 50 states. Last Congress, “TechNet” experienced significant success educating lawmakers on their policy agenda of securities litigation reform, charter public schools legislation and raising the cap on H-1b visas that allow highly trained foreigners to work for American firms.

This year, high tech business leaders are doling out campaign cash at a rate that could eventually shatter records set by other industries. In 1994, high tech and biotech leaders contributed a mere $4 million to candidates for Congress. By 1998, they doubled their total to more than $8 million.

But both sides, politicians and high tech leaders alike, have misstepped often in the early stages of this emerging relationship between new economy, high tech companies and old-school, back room politicians.

Jesse Jackson missed the ball. His pronouncement that “we have seen patterns of exclusion in Silicon Valley” hit the Bay Area with a huge thud. The truth is that corporate boards are made up of the best talent in business, medicine, and engineering. Jobs and promotions are based on merit-not color, religion, or ethnic origin. The new economy simply won’t tolerate anything less.

Of course, Al Gore’s claimed husbandry of the Internet (not to mention his other high tech guffaws) has been summarily laughed out of print and credibility. Preliminary discussions and the protocol for the Internet started in the mid-1960s when Gore was still in law school. And while he enjoys photo-ops with high tech leaders, he by no means has Silicon Valley in his pocket. And the Republicans e-contract, while well intentioned, is rhetoric that must be followed by swift action.

For their part, newly minted e-millionaires may be shooting themselves in the foot by supporting politicians who have historically been in favor of increased taxation, regulation, and government control. They have been more willing than usual to listen and contribute to candidates they believe are worthy of defending their issues and regulatory agenda. But they should know better than to be fooled by campaign promises. They should do a “quality assurance” test on candidates’ records to ensure consistency before writing their checks to those who may do more harm than good to them once in office.

Despite its rocky start, the courtship between wired money and wily politicians is bound to intensify. Fortunately for policy makers and candidates that support the free market and individual responsibility, it is exactly these principles that have led to the growth and wealth creation of the new economy. The success of the Internet and the wealth created by new high tech companies are the results of hard work acting within a market place free of burdensome regulation and taxation. Results are all that matter and the reward for exceptional business acumen is prosperity and recognition by their peers not a government hand out. These are conservative principles in practice. Libertarians and conservatives should focus on demonstrating how our view is their view.

At the same time, there might also be opportunities to motivate gifted entrepreneurs to political action in a positive sense and challenge the politics of apathy by better educating Americans on the rigors of big government and its negative impact on job creation and personal freedom.