Michael Arrington has a rather ridiculous post up at Tech Crunch about the government’s need to leave Silicon Valley aloooone. It starts with his recollection of Barack Obama as a good candidate for the tech industry and his bitter disappointment at how those hopes have been dashed. But ultimately it suggests how his blind, hypocritical, ideological dislike of government leaves him unable to see the real problem: corruption.
But it’s more than broken promises. Our government is just way too interested in mucking around in Silicon Valley by creating and enforcing rules based on little or no understanding of the consequences. A perfect example – recent proposed financial reform legislation by Senator Chris Dodd added on a few random provisions that could have devastated Silicon Valley’s delicate venture capital ecosystem.
Earlier this year I was invited to a small closed door meeting with Victoria Espinel, the U.S. Intellectual Property Enforcement Coordinator appointed by Obama. In attendance were CEOs and other senior executives of a number of large and small Silicon Valley companies. The meeting was supposed to be about how her office can help Silicon Valley thrive. But it became very apparent very quickly that Espinel has a single agenda when it comes to copyright issues – helping the music labels and TV/Movie studios deal with the Internet on their own terms.
The problem Arrington identifies here is NOT “government.” There’s nothing, nothing whatsoever, inherent in government that causes it to “screw up everything it touches,” in Arrington’s ideologically biased framing.
The problem here is corruption, plain and simple. Nowhere in his article does he explain how the large corporations and the vested interests trying to preserve a failed status quo have come to dominate the federal government, are perverting regulation to protect their own dinosaur-like existence and choke off new entrepreneurship and new innovation. Nowhere does he assess the role of campaign contributions that distort and misshape government policy.
Other Silicon Valley experts understand this reality quite well. Lawrence Lessig eventually realized the problem wasn’t “government” but “corruption” and started Change Congress. Lessig is now promoting Fix Congress First, an effort to implement a national Fair Elections Act, a federal version of Prop 15 that would create clean money for Congressional races. Lessig understands that until corporate money is taken out of our elections, government will continue to get the key choices wrong.
Someone needs to sit Arrington down with Lessig, because Arrington doesn’t understand this rather obvious point. He blames “government” as a whole, a stance which is only going to hurt him in the end. If government wasn’t involved, there’d be little at all to protect his beloved startups from the market-dominating money of the large corporations whose interests his startups threaten. Government regulation helps give those startups and Silicon Valley the ability to thrive. But corporate money is corrupting our democracy and enabling government to be used for anti-innovative, anti-creative ends.
Arrington actually understands the need for government, ironically enough. After saying “government screws up everything it touches” he then makes a sweeping call for government intervention:
If the government wants to help innovation in this country they should get busy with infrastructure. Lay fiber to every home and business in the U.S. Actually start building some of these high speed train networks to make travel easier. Get computers into the hands of every child in the country as soon as they are physically able to press buttons. Heck, put a woman on the moon. I don’t know if that last one will do much, but at least they’ll be busy not screwing up Silicon Valley while they’re at it.
This kind of massive government intervention is desperately needed – especially a U.S. broadband program – but it won’t happen at all if people start buying the anti-government bullshit Arrington is spewing. He even goes on to tell the myth that Silicon Valley’s success had nothing to do with the government at all, something might surprise those who worked on the federally-funded research projects that fueled the semiconductor industry, or the folks at DARPA.
Arrington’s enemy isn’t government, it’s corporate corruption of government. Instead of channeling his inner Ayn Rand, he needs to throw his weight behind Proposition 15, which starts to clean up California elections and improve our state government by beginning the process of getting corporate money out of our elections. He needs to get active in support of the full range of federal proposals, from Lessig’s to a full repeal of Citizens United, a constitutional amendment that says money is not speech, and elimination of corporate personhood. That will create the kind of positive relationship between government and Silicon Valley that Arrington wants.
He might also want to pay attention to the governor’s and US Senate race in California this fall. Silicon Valley has its own tendency to use large sums of money to dominate politics and corrupt government. Meg Whitman and Carly Fiorina would both hand over more government power to large corporations and gut the public services and infrastructure needed to sustain innovation and creativity.
Arrington can either have his silly anti-government attitude, or he can have a functional Silicon Valley. He can’t have both.
but it’s hidden in a very large and steaming heap of muck. For example, here’s what he wanted / expected Obama to do:
Each and every one of those things requires significant government intervention, just like the massive infrastructure project he proposes. But Arrington likes those things because they benefit the interest groups that Arrington favors — Silicon Valley employers and investors. Note that the H1-B visa increase is not helpful for Silicon Valley employees.
On the other hand, he doesn’t like “interference” that doesn’t benefit the interest groups he favors:
It’s true that the interests of (most of) Silicon Valley are opposed to the interests of the giant content rentier cartels. That’s mostly because Silicon Valley, vaguely libertarian politics aside, mostly can’t figure out how to make money by aligning itself with the content rentier cartels — don’t think that technology companies aren’t trying to crack that nut. And the content rentier cartels are desperately trying to stack the legal deck in their favor in order to preserve a business model that depends on government-enforced oligopoly, at the expense of both technology innovators and the general public.
The grain of truth is that the content rentier cartels do have a significant foothold in the Democratic Party, even more so than in the Republican Party. This is an accident of geography and culture — the content industries are located in massive metropolitan areas, and are culturally liberal in many ways. If the Republicans could give up on the cultural revanchism demanded by their Southern base, the content industries would turn on a dime and support the Republicans.
Hiring, most notably a very corporate friendly H1B visa policy. This allows the big Silicon Valley companies to put downward pressure on wages and also allows them to hire skilled people and require those people to work only for their company for the lifetime of the visa. Great for the businesses, not exactly “free market.”
This is a bigger question. Unfortunately, it seems like to the likes of Arrington and the Federal Government, it is the established technology companies. But is it?
I’ve always viewed Silicon Valley’s biggest strength as being a place where new ideas are given the chance to be realized. For a brief period of time, Silicon Valley excelled at this role, but the current Silicon Valley/government climate does work against this, in a really big way.
One of the biggest blocks is anti-trust law, or more precisely, the lack of enforcement of anti-trust law. Consolidation of large vertical monopolies works to smother new ideas that are outside the plans of the large companies (A good example is when, in the 1990’s, Microsoft essentially told VC’s not to invest in certain product categories. It is no coincidence that the real boom in Silicon Valley took place when the Justice Department tried to enforce anti-trust law.)
A second block is the current interpretations of intellectual property law. When a company can file patents just to block development of certain technologies, or when you have “patent trolls” who essentially demand a skim on new ideas, you have a systemic block to innovation.
Changing these systemic problems requires government action, not government withdrawl.
(I highly recommend “Free the Market” by Gary Reback for a history of the failures of enforcing anti-trust law.)