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Monday, March 01, 2010

Winner Take All


I had the great opportunity to see the induction of Mr. Richard Elkus into Silicon Valley Engineering Hall of Fame of last week. He currently serves on the Boards of KLA-Tencor and Lam Research. The award celebrates the accomplishments of engineers in Silicon Valley who have demonstrated outstanding professional achievement and have made significant contributions to the Silicon Valley community. Past nominees included William Hewlett, David Packard, Gordon Moore, Steve Wozniak, Ken Levy and TJ Rodgers. Stan Myers was recognized in 2008 and another former boss, Bob Frankenberg, was selected to the group in 2001.

Previously, Elkus was Co-Founder, Chairman and CEO of Prometrix Corporation, which revolutionized the concept of computerized wafer mapping that is now fundamental to the analysis of wafer development and production in the semiconductor manufacturing process. Prometrix merged with Tencor and later with KLA, becoming KLA-Tencor. He spent his first 10 professional years at Ampex Corporation, where he headed the team that introduced the VCR in September 1970.

In preparation for the evening, I quickly read his book, Winner Take All, which thoughtfully explains how industries develop and how nations, not just companies, compete. Over the past thirty years, the United States has basically surrendered entire industries to Asia. Americans no longer make cameras, TVs, MP3 players, computers, cell phones, or DVD players, and increasingly semiconductors. The conventional wisdom behind this loss of industries is cheap labor costs, but the real reason is American economic policy. While Asian leaders develop and nurture high technology industries because of the spillover benefits to the economy and society, US policy makers disregard and ignore it. “Economic planning” is treated as an anathema by US policy makers, somehow akin to the failed Communist economic planners of half a century ago. Rather than ensure the growth of productive and healthy industries like high tech, US policy makers campaign on “free markets” while rigging favors for political insiders and campaign contributors.

The US has an economic plan, it’s just not rational. We spend trillions on nineteenth century industries like agriculture and banking, and let high-paying jobs in high growth industries leave for Asia. Unfortunately, high tech innovation may just follow high manufacturing overseas, forcing the US try to sustain itself on service industries alone. Unless you’re a banker huddled in well-financed bunker in NYC, this isn’t a policy that’s going to do most folks much good. Many of my Republican friends are quick to claim that jobs leave the US because high taxes and government regulation. I think it’s more complicated than that. Innovative, high technology industries require thoughtful public private partnerships to thrive. There is no free market nirvana where taxes are low and jobs are good, health care is cheap, and opportunity is unbounded. There are only well run and poorly run countries. Richard Elkus knows this well.

3 comments:

Jonathan said...

You have Republican friends?

Intel President and CEO Paul Otellini also talks about US competitiveness and the need to address immigration, math and science education, R&D and corporate tax policy problems. He argues, not for a national industrial policy; but favor of a general R&D investment policy. He appeared on Charlie Rose during his recent tour touting Intel’s Invest in America Alliance plan to revitalize US tech funding with venture capital firms.

See the talk here:

http://www.hulu.com/watch/131350/charlie-rose-paul-otellini---president-and-ceo-of-intel

Tom Morrow said...

Here's a good story on the topic from BusinessWeek, with special emphasis on LEDs and Solar. The video summation is good too.
http://www.businessweek.com/magazine/content/09_38/b4147046115750.htm

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