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Are Silicon Valley's Glory Days Over?
Hugh Pickens writes "Pete Carey writes in the Mercury News that there are 'clear warning signs' that Silicon Valley has entered 'a new phase of uncertainty' in which its standing as a tech center is at risk and that decisive action by business, government and education is needed if the region is to retain its standing as the world's center of technical innovation. 'It could be that Silicon Valley has a different future coming,' says Russell Hancock. 'It's not a given that we will continue to be the epicenter of innovation.' Among the troubling indicators in the Silicon Valley Index (PDF): 90,000 jobs lost in the last two years; the influx of foreign science and engineering talent has slowed; venture capital funding has declined; per capita income is down 5 percent from 2007; and the number of people working as contractors rather than full-time employees is rising. Adding to the valley's problems is a malfunctioning state government that is shortchanging investment in education and infrastructure."
I keep telling these idiots that the first option you should look at when jobs are declining is to increase the importation of foreign workers but do they listen?
nnnnNOOOOOoooooooo....
Seastead this.
In California? Are you serious? California has always rewarded bright, young students interested in the sciences. Here's a recent example:
http://www.signonsandiego.com/news/2010/jan/15/students-evacuated-school-chollas-view/
"The average reporter we talk to is 27 years old......They literally know nothing." - Ben Rhodes
The synergy of government, university, corporation in Silicon valley
is glued there by one critical component -- the venture capital lives
down the block and they like to see how their money is spent --
daily. Perhaps others have more direct life experience but I've
definitely seen it in biotech.
As soon as the lure of big bucks goes away, tech will be a commodity
to be found in any medium sized city's office park. The cost of life in
CA is insane.
We are all in a global recession. As such, there are no "Glory Days" for anyone anywhere. I wouldn't count Silicon Valley out just yet.
My advice? Keep your current job if you can, and suck wind like the rest of us do.
Life is not for the lazy.
Actually we needed the exact opposite of H-1B, V1, B1 and all the rest. We built the tech industry without these corporate communist regulations because without them wages went up. Rising wages brought people into the field and encouraged risk.
All the federal government's interference in the US labor market has driven down wages and increased fear. It has also discouraged the best and brightest American students from entering tech. And what people seem to not understand is that Americans bring unique skills to technology. A diverse workplace is good. We had that back in the '90s. But today, we are way past that. In my office I am the only American. Mostly we have Indians. When you get over 25% Indians on a team you start to see their cultural influence. Hindus believe in a cast system where certain people are just better than others.
It starts to kill the team. And that's were I see most teams today in my company. They are Hindu teams where it matters which cast you are from more than anything else.
Does this imply that continually electing right wing governors and the like has a little bitty teenie weenie something to do with economies falling into the toilet? Could it be?
I believe you'll find it's bloated government spending that's bankrupt California. And I'd hardly call Arnie 'right wing', except perhaps by Hollywood's standards.
Just flood it, and we can turn it into a lake.
The only thing necessary for evil to triumph is for it to be pitted against a slightly greater evil
We're talking about California, what money?
Bad joke. If California were a separate nation, it would be the eighth largest economy in the world, right after Italy and before Spain, Canada, Brazil, Russia, India, and on and on. Australia is an entire continent, and its economy is less than half the size of California's. What Californians are pissed about is that we also have some of the highest taxes in the nation, and we have no idea where that money is all going.
Breakfast served all day!
And thanks to proposition 13, only some people pay the taxes. Older residents (and the kids who inherit their homes) get a free ride, because, while the houses they bought for peanuts are now worth millions, they pay hardly any property tax. Meanwhile their neighbors shoulder the burden.
The actual problem is the set-asides imposed by referendums.
Indeed, California is suffering from too much democracy. It is especially easy to get well-meaning things (or at least things that sound well-meaning) on the ballot. People vote for them because they sound nice and the voters don't have to try to balance the state budget. This commits money to all sorts of things and prevents the government from fixing the budget. The Economist recently did an article on this topic that is very enlightening. As bad as politicians may be at budgeting, the voters are far, far more dangerous
First, bypassing the "story" and a layer of blogs, is the actual report.
What's really happened in Silicon Valley is that it's been hollowed out. Silicon Valley used to be a major manufacturing center. San Jose once had the highest percentage of manufacturing employees of the major US cities, something like 54%. Today, the assembly plants are gone. Most of the fabs are gone. Much of the engineering is gone. This is what happens when you "outsource". Eventually, everything moves to where the production is, including management and finance.
Part of the problem was the "dot com boom", with its fake companies and fake prosperity. That caused a major change in the culture, away from engineering and towards marketing. When the bottom fell out of the dot-com boom, most of the marketing types left. The number of twentysomethings in San Francisco dropped by half. (A friend in the club business says "and the other half are working their butts off and don't go out much.") The big name in Silicon Valley now is not HP or Intel or IBM or National Semiconductor or Fairchild. It's Google, which is an ad agency. That's a huge change in emphasis.
The innovation culture is declining. Portola Valley (a rich suburb) used to have the highest percentage of patent holders of any US community. That's dropped. There's not that much exciting innovation going on. I go to venture capital meetings, and the ideas being presented are just not very exciting. (I've heard a pitch for a social network for cats. And that made it through two rounds of filtering before I heard it.)
People are still struggling to get semiconductor line widths down, solar fab costs down, and such. But that's a grind. Mobile devices are not a fun area in which to work - the weight budget, the cost budget, the power budget, and the time budget are all very tight. The manufacturing is in Asia, anyway, and the engineering is going there. New areas aren't appearing.
There's noise about "green tech", but realistically, "green tech" is either vaporware, like the "smart grid", silly, like small windmills, or something that requires massive manufacturing, like big windmills. Five years ago, the noise was about "biotech", which doesn't employ many people.
Fewer young people in the US are going into engineering, and that's a rational decision. It's hard, it's expensive to study, your job may be outsourced, and it's now a low-status field. In 1970, lawyers and electrical engineers made about the same amount of money. That was a long time ago. On the other hand, in Asia, an EE degree puts you in the top few percent of the population in terms of income and status.
US government polices haven't really had much of an effect one way or the other on Silicon Valley, except that allowing the runup in real estate increased living costs substantially and that free trade has made outsourcing so easy.
Part of the problem in Silicon Valley is that the venture capital community has become noticeably more risk averse than it was many years ago.
Looking at some of the Web startups that got funded in the 90s, I wouldn't describe the VC community of that era as "less risk averse" so much as "plain stupid." No sane person should have believed some of those businesses would go anywhere, yet VCs were playing a shell game, hoping some bigger company would come along to buy up their stake before the whole thing fell apart.
The role of venture capital should be to capitalize ventures, with the aim of creating wealth through innovation. Instead, VCs of that era were going for short-term profit, and many of them didn't seem to care what happened to their portfolio at all. As soon as they started getting impatient, they'd fire senior management and start dismantling the company in the most expedient way possible.
Breakfast served all day!
Agree completely. To further illustrate to people who don't understand what we're talking about, say some group or another puts a measure on the ballot that reads something like this:
After-school sports programs are a valuable part of youth education. They increase socialization among youth, promote general health, and combat the rise of obesity in America. In addition, studies have shown that after-school sports programs typically lower rates of violent crime in affected areas by 29 percent. At present, however, such programs are dangerously underfunded. This bill proposes that California earmark $18 million per year to promote after-school sports programs. As this money will come from the general fund, it will require no new taxes. School district administrators will be required to submit budgets to state agencies for approval of their share of the funds, to ensure full accountability to the taxpayer.
So Joe Voter reads this, goes, "Sure, my lazy-ass kid probably should get out and play sports more," and votes Yes. The bill passes.
What Joe Voter has done is take $18 million per year out of the general fund, where it could have been spent on various under-funded services in tough economic times, and earmarked it for after-school sports programs, come hell or high water. School can't afford books? At least it has an after-school sports program.
And what Joe Voter might not have even understood at the time he voted for this measure is that traditionally, after-school sports programs had been managed by local nonprofits, rather than being funded by school districts. Under the language of the new law, school administrators now have the additional administrative burden of producing a budget for after-school sports, or their share of the funding will be cut. And if they take the money but don't spend it on after-school sports, they will be called to task for "accountability." And who wrote this bill? The accounting firm who stands to gain the contract for managing the invoicing and budgeting of the after-school sports programs.
This is a totally made-up example; I don't know the specifics of any bill that resembles this one. It's just to give you an idea. But each election, California ballots have a dozen or so bills that read just like this one, and if you don't read the information carefully, it's easy to make mistakes.
Breakfast served all day!
That's because Californians and Californian companies are some of the greediest mofo's on the planet.
I think you misunderstand me. I'm not saying we're mad because we have to pay taxes. We're mad because we seem to be paying taxes into a black hole.
California has a higher gross state product than any other state. It also has the highest income taxes and state taxes. Simple math will tell you that means California's income is higher than any other state's. And yet we are cutting social services, slashing development budgets, and letting roads fall into disrepair. Our schools used to rank among the best in the nation; now they're at the bottom of the list. Meanwhile we're funding a prison industrial complex fueled by misguided laws and private interests. The problem goes far deeper than "liberal policies" or "Republican greed"... the whole state government is broken.
I'm not the only one who thinks this, either. There is a concerted effort underway right now to call a constitutional convention to reform the state constitution. Californians will probably get to vote for it in November, and if they can, they will.
Breakfast served all day!
Policies that you can't argue against without putting yourself in an inferior position:
Patriot Act-->Who wants to be labeled as unpatriot in a time of grave danger?
Accounting by Fair Values-->Who wants to support "unfair" values?
Tax Relief-->Who the hell can be against relief?
etc; ad nauseam... The problem is that examples such as these are all complex laws with hordes of pages and technicalities, yet they sound FAIR, COMMONSENSICAL, HONEST, and with CA's direct democracy, Joe Average will be sucked into this type of framing trick.
I for one have always thought that ThePirateBay.org should change its name to "OurSharedCulture.org", or "AllHumanCulture.org". I REALLY Want to see a politician screaming on TV "We gotta shut down those bloody criminals from "OurSharedCulture.org"!!
this can only increase.
Until those bright and capable people get a cough and discover that their insurance is now $1000/mo and if they leave it they'll never get insurance again.
Then again, our company's group policy just increased another $100/mo (company pays half) to for a middle-aged male, excluding family. And to get that ONLY $100 increase, we had to raise our deductible and ER care now has a 50% coinsurance. 50%! Why am I paying for insurance if my first accident will drive me to bankrupty, when I could be spending that $225 on movies or something fun and just declaring bankrupty when I have an accident?!?
Oh wait, it's because I have MS and need about $2000 worth of drugs a month to keep me a productive member of society. Thank God I was employed and insured when I was diagnosed with it, even though I'll probably never be able to switch jobs again and the insurance company will probably just keep raising the rates until the company fires me to get affordable insurance again.
I'm sure contracting is great for young, healthy people. Just remember: you don't stay young and healthy for long. Enjoy it while you can.
And stop with the Prop 13 blame. It's BS. Jebus, even many progressive politicians here don't trot that one out anymore. Go back and look at what led up to Prop 13. It didn't form out of a vacuum. People were having to get *loans* to pay their property taxes. It is INSANE to tax people on unrealized gains!
You may think its insane, but it is clearly benefiting property owners over tenants. Over a long enough time, there will be the few with property, and the rest that rent from them, because it will no longer be economical to buy or sell property to lose the locked in property tax rates.
Also, there is stupid stuff in prop 13 which allows for commercial property to qualify for the locked in rates. Companies just buy and sell the shell companies that own the real estate, rather than buy it outright and reset the property taxes.
Its simply broken.
Wanna blame? Blame yourselves !
Silicon Valley's glory and gloom has nothing to do with H-1.
Silicon Valley bloomed in yesteryears because of the incentives that were there for innovators to innovate.
Innovators were aplenty, and they were willing to share the findings to each others, and they actually encouraging each others to do more !
There were no patent trolls back then. No teams of lawyers who will sue innovators to bankruptcy or subpoena them to court to explain why they come up with this little piece of code/gadget/idea which happens to have similarity to another piece of code/gadget/idea.
In other words, there were no rent-seekers back then.
Nowadays? There are more rent-seekers in Silicon Valley than the innovators.
Blaming the H-1 visa is too easy, and everyone is doing just that. But will that help Silicon Valley?
What if all the H-1 visas are revoked tomorrow? Do you seriously think that Silicon Valleys can magically bloom again, just like that?
C'mon, guys ! Use your brain for once and stop regurgitating the vomit of others.
And PS. I was in Silicon Valley when it blooms, and yes, I was one of the innovators. Now I am no longer in the Silicon Valley, and heck, I am no longer staying in the United States, and you know why? Because I have had enough of those rent-seekers !
then your problem is the draconian, almost near feudal insurance system in usa.
Read radical news here
Either you'll have more HB1s inside America, or you'll have competition from abroad. This is a binary decision.
Err, no.
A 3rd way would be to scrap the H1B visa program and replace it with a visa that is officially an immigration visa, not a temporary worker visa. The way it is now, H1B visa holders are at the mercy of their employers if they want to immigrate because switching employers means restarting the green card process and the green card process generally works out to about the same duration as an H1B visa + renewal. So, switch employers more than once or after a couple of years and you are essentially guaranteeing that you won't get a green card. A fix to the system like that puts visa holders on an even competitive field with citizens which will serve to increase the bargaining position of all employees.
Long-term, that's better for the country anyway. We need to encourage the brain-drain into the US to continue as it is now, we've become less hospitable to foreigners and at the same time their home countries have become a lot more hospitable to highly educated workers. Changing H1B into an official immigration-path visa would go a long way towards tilting the scales back in our favor.
When information is power, privacy is freedom.
Dude, take your pick. Either you'll have more HB1s inside America, or you'll have competition from abroad. This is a binary decision.
Wow, this is so completely wrong that I'd think even Slashdot mods would see through the fallacy.
It's not a binary decision. The U.S. will see fierce competition from abroad whether or not we import hordes of H1-B workers during an economic crisis when unemployment is already high.
And if you think importing hordes of H1-B workers will "save" the U.S., you're a deluded fool. The main impediment to the U.S. competing is our cost of living, and no, importing a horde of H1-B workers won't help.
But of course, all of those 5.700.000.000 people from outside America aren't as smart or deserving as real Americans...
Ah, yes. You don't have a real argument, so you throw in an appeal to emotion.
Now I am fully aware that this is a fine and dandy way to waste some good earned karma, but sorry, it's much closer to the truth.
Good job, lock in your +5 with the old "I know this will get me modded down..." trick.