From Silicon Valley, A Modest Proposal for Saving America

Older US industries are losing in the new globalized economy, yet Silicon Valley giants like Apple and Google are winning hugely. Why?
Posted August 24, 2011

Mike Elgan

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While America is turning into a rustbelt ghost town, Silicon Valley is a gold-rush boom town.

While older American industries are taking a beating in the new globalized economy, Silicon Valley giants like Apple and Google are destroying their Asian, European and even Canadian competitors.

Maybe it’s time for Washington to stop bickering with itself and start listening to Silicon Valley.

Where Googles Come From

When computer science PhD students Larry Page and Sergey Brin first launched the Google Search engine in 1996, they did so from a dorm room on the Stanford University campus. Within a year or two, the site became a huge hit, at least among geeks, consuming up to half the university’s T3 line.

At the time, there was no way the two impoverished students could have afforded that kind of bandwidth. Google may never have happened without access to high-bandwidth Internet access.

When Mark Zuckerberg launched “The Facebook” in 2004, he relied heavily on Harvard’s fast and reliable Internet connection to handle rapid growth.

Fast, high-bandwidth Internet connectivity is the new garage. While Silicon Valley technology startups used to originate in garages (HP, Apple, etc.), the new ones start at college campuses because they tend to offer subsidized T3 lines to students.

Why We Need Fiber, Not Asphalt

When talking-head politicians talk about repairing crumbling infrastructure, everybody nods in agreement. Nobody likes to see potholes and cracked bridges and declining infrastructure.

But that stuff all happens when we have the money. We’ll have the money if we have a thriving economy. We’ll have a thriving economy if we invest in the future.

Over the next 20 years, an enormous number of new jobs will be created by new startups that offer their services online. Those jobs will be created primarily in Asia, where governments are investing in super-fast Internet connectivity, or they will happen in the United States if we do the same.

This fact presents an enormous opportunity, because the costs and risks of such businesses can be far lower than brick-and-mortar businesses, because you need to invest in neither brick nor mortar.

President Obama is expected to announce after Labor Day a new plan for addressing the plight of the chronically unemployed. Obama’s spokesman says the plan will include “reasonable ideas” that have a “tangible impact.”

Translation: The plan will include politically safe ideas that help with the upcoming election.

This is why the plan will fail. It’s about beltway politics, rather than preparing America to lead the 21st Century.

The reason politicians tend to oppose good ideas for investing in the future is that they fear efficient new businesses might threaten the inefficient existing companies that line their pockets with campaign contributions.

Since the $787 billion stimulus package was passed by Congress in early 2009, the official unemployment rate has grown from 8.1 percent to 9.5 percent.

Whether the stimulus succeeded in preventing much higher unemployment, or failed to bring it down is a pointless argument. The biggest problem is the chronically unemployed, the un-hirable millions.

The longer people are unemployed, the harder it is for them to find work. Now many big firms aren’t even willing to interview people who don’t already have jobs.

And that’s why the government should focus on startups. Instead of hoping that existing companies hire the chronically unemployed, which they probably won’t do even in a strong recovery, the focus should be on new companies launched by those same unemployed millions.

Obama’s jobs council will hold public forums Aug. 31 and Sept. 1 to come up with ideas for how to spend a second round of stimulus funds.

The best idea for achieving the president’s stated goals is already being implemented. By Google.

Google’s Google Fiber for Communities project is an experiment to see what happens when cities have crazy-fast Internet access. How fast? Try 1 gigabit-per-second speeds – about 100 times as fast as the average American has access to.

The first recipient of this subsidized fiber will be Kansas City, Kansas, which was selected out of 1,100 cities, many of which lobbied hard to get the service.


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Tags: Apple, Silicon Valley, high speed Internet, Google +

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