Blame it on Gray Davis


There is so much similarity between Iran and Silicon Valley of California, both suffering because of the errors of their political leaders.


In less than two months, on Oct 7, 2003, Democrat Gray Davis will be the first California governor to face a recall attempt since the law allowing such ballots was passed in 1911.  And actor Republican Arnold Schwarzenegger is one of the possible candidates who is known for his movie Terminator, which resonates well with the wishes of Californians today, hoping for some miracle to end the agony of over three years of down economy and layoffs at the technology leader of the world, the Silicon Valley of California, heart of the new technologies that were driving the world into the new Millennium.


Why is the California economy in such a catastrophic situation?  Is it all Gray Davis's fault.  I can say that the fault of Gray Davis is more in a negative respect, meaning that he did not stand up to the economic plans of Bush Administration, the policies that are the main reason not only for the collapse of California economy, but the U.S. economy and the rest of the world too, although Silicon Valley is harmed the most, because it is totally focused on developing the new technologies.  As I had written before, although I think the policies of Bush Administration in supporting democracy in the Middle East have been very correct, this team's economic strategy has been more than disastrous and a number of top U.S. economists had noted it many times, but the Administration continued to neglect their advice.


The current crisis of U.S. economy, contrary to any other crisis of the last quarter century, is due to lack of business spending and not lack of consumer spending, and thus to stimulate this economy, one would need major infrastructural projects by the government, whereas Bush Administration's solution, was as if the crisis was that of consumer spending, and its remedy was a tax cut which adds to the national deficit, without even creating a stimulus to the business spending which was the problem in the first place.


If the main employees of the Silicon Valley were blue color workers, Bush would have seen strikes and demonstrations all over the Silicon Valley of California in the last two years.  The reality is that the new social groups, who work in the new technologies, do not have any social organizations like the trade unions, and the first action by these groups about the current situation was to collect signatures to get rid of the governor, who is directly responsible for the state.


It is true that California from the first days of Gray Davis faced the issue of energy crisis, which had been built up by the mistakes and neglect of the past planning following deregulation.  True that deregulation had opened a new horizon for the development of energy in the state, but it should have been accompanied by bringing more players to the state, especially the makers of power plants. And the issues of electricity costs caused some businesses to move out of the state.  Nonetheless all these had happened before Gray Davis. 


I am not trying to justify Gray Davis or the Democrats.  Some California Democrats like Dianne Feinstein are so out of touch with the realities of the modern world that she is the initiator of many legislations that alienated many ethnic groups in California, when the new economy not only needs the participation of these ethnic groups in the workplace, it also needs these minorities to be able to attract international capital, and these investments are particularly critical in the high tech. 


It is said that "America is more dependent on the rest of the world for capital than at any time in the past 50 years."  Unilateralism and alienating various ethnic groups, nations, and governments is not conducive to growth in the current global economy, and Democrat Dianne Feinstein is as backward as those Republicans who cause similar alienations.  Thus some Democrats in California are as outdated as some Republicans to understand the requirements of the development of post-industrial society and the related new technologies.


The problem of Silicon Valley of the last 3 years has not been local issues of California and the economic policies of George Bush's Administration are responsible for the disaster.  Even before Bush's election, I noted the importance of Internet in the coming years and even wrote at the time that growth of Internet by itself was a good reason to vote for Al Gore. The impact of neglect of high tech in Bush's economic policies was clearly obvious within a year but he did not change course, and we are seeing the scope of the disaster in Silicon Valley of California and other high tech ventures in other parts of the U.S. and rest of the world now. 


I have noted an example of building a fiber optic network to all homes in the U.S., as the infrastructure initiative that government should have taken, and the typical answer not only by the Bush Administration, but even by the Congress, has been that we have over-capacity in the networking infrastructure, and thus what I am noting seems "superfluous", because even the current capacity is considered as if it is "not needed", and therefore any such projects are dropped.  Are their arguments right?  Well, it depends. Let me explain below.


If in the years when cars had just started to be built, somebody looked at the the country roads that horse carriages used, and said they are over-capacity and thus there was no need to build modern highways, were they right or wrong?  I think if one wanted to look at the world as that of horse carriages, then such assessment was right, but if one wanted to envisage a world where the cars were going to be the future, then the whole world needed to build a whole new infrastructure of new roads, highways and freeways and there definitely was no over-capacity.


The same is true of Internet today.  If it is to be just what it is today in terms of applications that one sees, maybe the current infrastructure is even more than adequate.  But if one wants a whole new league of applications to start being conceived and built, then new fiber optic connection to every home is needed to create a high-capacity Internet infrastructure of the 21st Century that can allow a whole new class of applications that would be meaningless even to think of in the current Internet structure. 


As long as the roads were fit for horse carriages, no car manufacturer could ever dream of building 24-wheel trucks for transportation.


The problem of Bush's economic advisors is that they have no vision of the post-industrial future and this is why they have caused an unbelievable economic disaster by putting the biggest asset of the U.S., i.e. the Silicon Valley of California, at the risk of annihilation.  The Silicon Valley economy has collapsed unbelievably.  The many buildings in the area are all empty and a great number of the best experts who can build the future technologies have shifted to other areas or other jobs.  Many critical high tech businesses have either gone out of business or have lost critical mass in terms of investment and human resources, disabling them from being able to to take up on any significant work in the near future.


I hope if a new governor in California is elected, he or she first and foremost stand up to the erroneous national economic polices that are the reason for the downfall of California's Silicon Valley.  The market of Silicon Valley is the world and just a local market is not going to make it succeed even if the governor has the best plans locally.  A project like fiber optic wiring of the whole U.S. would have created the same echo in other parts of the world, whereas now the major producers of future oriented technologies have stopped development.


The development of high technologies in the new Millennium is as critical as development of industrial engine was for the Industrial Age, and governments that neglected the new world requirements then, that is the important colonial powers of the time like Spain and Portugal, lost their significance, whereas England and France that understood the technologies of the industrial era, took the leadership of the industrial world from 18th thru the 20th century.  If the U.S. fails to lead in the Post-Industrial Age, not only California, but the U.S. and world economy will continue to suffer, and surely others in the world who understand the significance of high tech will take the leadership role of the new Millennium. 


The Post-Industrial development is not going to wait for a region that its political leaders mismanage, and the people of those areas will suffer because of such mistakes, the way California's Silicon Valley is suffering today and Iran's economy has been suffering for 24 years.  Obsolete political leadership is not just about ideals and it is an immediate danger, in this time and age, to the people who are affected by the decisions of those leaders.


Sam Ghandchi, Publisher/Editor
August 14, 2003






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