End of Obama's silicon honeymoon

http://www.economist.com/node/17361426

by rahooligan • 16 years ago

49 52 16 years ago

nkassis• 16 years ago

They've forgotten a few things like the current administration stance on copyrights. Things like ACTA. Also patent reforms aren't really being talked about much by this administration.

omouse• 16 years ago

tech leaders have been outraged by Mr Obama’s willingness to demonise employers for outsourcing work to foreign countries, which is especially popular within the IT industry

This is popular with management not really with employees.

tgriesser• 16 years ago

The president might need to be careful when dealing with the tech industry. Sure, they may not have as much power as the "media" now, but with the declining foothold of traditional news outlets and media sources it will be interesting to see how this dynamic changes in coming years.

Also, when it comes to wasteful spending see: http://dailycaller.com/2010/10/20/fbi-computer-system-years-... I mean come on. There needs to be some serious thought as to how to somehow apply startup principals to government endeavors.

gamble2• 16 years ago

> Many of its 2,000 members, he adds, are unwilling to invest in new initiatives while there is so much uncertainty about future policy.

What is this 'uncertainty' Obama is supposed to be responsible for? I don't think Obama has been particularly unclear about his intentions, and when he's compromised it's almost always been toward more conservative positions. His opponents have fallen in love with this term lately, but to me they feel like weasel words used because complaining about a Democrat in the White House sounds too, well, partisan.

jerf4• 16 years ago

What taxes are going to be raised to pay for the radical increase in spending? What's the next industry to be demonized and have punitive penalties, taxation, or nationalization applied to it? Is somebody else going to be shaken down the way BP Oil was even when there was no legal authority to do it [1]? What other radical changes to the economy are going to be proposed if the recovery continues to be anemic, and how many dollars are going to be vacuumed out of the private economy to accomplish these changes? How much more loan disasters have been hidden, and how will the administration react, and how many dollars will be vacuumed out of the private economy to implement the reactions? How will the government react to the oncoming pension crises, and how many dollars will be vacuumed out of the private economy to do it? By what order of magnitude will the Obama health care bill's costs be underestimated[2]?

It doesn't even matter whether these are true; I'm not really trying to argue these points or I'd back them up better, I'm just answering your question. (So, for instance, replying to me to argue about the legal authority for the BP Oil escrow account would be missing the point.) It only matters that enough people in business think they are true. It doesn't matter whether they are entirely correct, it only matters that the concerns are correct enough. Somewhat loaded terms were chosen deliberately to give a more accurate impression of how these people are thinking.

[1] http://www.cbsnews.com/stories/2010/06/16/politics/main65881... , if you don't remember this

[2]: I don't even mean this as an attack specifically on that bill; observing that governments almost without exception underestimate costs is merely realism, not politics, and when you're talking about something the size of the health care bill, being 50% off is a big deal.

gamble2• 16 years ago

Disagreements over policy don't strike me as a good reason to blame Obama for uncertainty. The financial crisis and the oil spill would have existed if Obama wasn't president, and the gov't reaction would have been just as controversial. I definitely don't agree with everything Obama has done, but I think it's difficult to lay much of the blame at his feet. If anything, Obama has been more consistent in his approach than the situation demanded.

sprout2• 16 years ago

>What taxes are going to be raised to pay for the radical increase in spending?

That's an unanswerable question. In order to determine how much taxes will have to be increased to pay for current expenditures, you would need to be able to predict what the economy will be like in a year. If the administration's economic initiatives were successful, there's a possibility taxes will not have to be raised at all. So you're getting angry at Obama because he can't predict what your company's revenues will be in a year, which is totally unreasonable.

I think that applies more generally to most of the points you raised. The Obama administration didn't make the world unpredictable, it has always been that way. I don't even think another failure in the economy makes anything the administration has done categorically bad decisions. I don't think we're in a worse position now than a year ago, and I don't think the fall can be any harder now than it could have been. (Because it could have been atrocious.)

In general I think it's reflective more of business leaders' politics, and those on the left will say that times are hard, and those on the right will say that Obama and the Democrats are making times hard, which again, is totally unreasonable.

hristov• 16 years ago

The article that you listed under [1] to support the fact that Obama lacked legal authority to "shake BP down" says absolutely nothing about Obama's legal authority. I bet you hoped no-one would actually read it.

And by the way, how do you know that "enough" people in business think these things are true? Yours is a very dangerous type of reasoning. It allows one to spread lies and disinformation, and then say "well it does not matter whether all these stories are true, it matters that people may think that they are true" ...

By now it is an obvious fact that any democrat president will be relentlessly attacked from certain corners of the media regardless of what he does. So saying that a bunch of stories or statements are out there is not saying much at all. These stories will always be out there for any even slightly liberal president.

For example, it is clear by now that the Clinton administration was very good for most business and especially silicon valley. But if you listened to certain media outlets at the time you would think that Clinton was a Maoist dictator that rounded up all business people and sent them into gulags.

pg• 16 years ago

I don't feel like people here are down on Obama at all. They're down on things the government has done and not done, which is now (to some extent) Obama's fault since he's (to some extent) in charge of it. But I don't hear any grumbling about him personally.

tel2• 16 years ago

I feel like news sources are down on him. It's a better story with a scapegoat.

tel2• 16 years ago

In a bit of meta-irony, my own comment illustrates itself. The core here is that we care about good stories much more than true ones.

devmonk• 16 years ago

A number of people I've talked to that voted for him in the last election have been saying that they're unhappy with the president and Democratically led congress. There is a good chance that many on HN are unhappy also. They might not be vocal about it, because just stating that unhappiness doesn't accomplish much, and it really isn't an appropriate forum for politics. I personally will be supporting fiscally conservative candidates in the future that have supported small business and that I think would be good leaders. I hope that the days of judging candidates by charisma are over, and instead we look at track record. A track record of being a professor and community organizer is inappropriate for the leader of the free world during a time when support of business is imperative.

weaksauce• 16 years ago

Shouldn't they be angry about the system that polarizes the two sides into waring factions that cannot get anything done in a reasonable timeframe? Look at right now, the right will not vote anything controversial in that may or may not be good for the economy because they are too worried about conceding to the left. The same thing happens when the right is in power. midterm elections make the window of possible change so small that nothing really gets done.

antidaily• 16 years ago

Ad hominem.

gfodor• 16 years ago

There's a difference between feeling unhappy with the current president and congress and feeling that you'd not have voted for them now given the same choices available at the time.

I suspect that no matter how unhappy people are with Obama, many of them will still pull the lever for him in 2012.

sportsTAKES• 16 years ago

I think most people, including from the opposite end of the political spectrum, aren't necessarily down on Obama the man. But they are down on the vagaries of his administration.

waxman2• 16 years ago

Three, concrete steps Obama should to take to redeem himself with the tech crowd and revive the economy:

1) Immigration reform. If smart engineers from abroad want to study here or work here we need to let them, and let them stay as long as they want.

2) Better science and math education. It might be a long slog to catch up with some other countries, but we need to start. One suggestion: A national "learn to program" initiative in low-income elementary schools.

3) Focus financial industry reforms on making life easier for small businesses (i.e. startups). We create the most jobs and account for the most innovation, and yet the bulk of Obama's economic policy has helped big incumbents. Easier access to credit, federal startup grants, and small business tax reform would all go a long way.

old-gregg• 16 years ago

I probably want to disagree on all 3 accounts. While they do sound good in principle they are not, in my opinion, major hurdles for anyone, lets see:

1) It is borderline trivial to come to US on an H1b visa and has always been so: as a former H1b holder I can hardly see how can government do anything here except to be more efficient (more streamlined procedures).

2) What is government supposed to do here exactly? If science and math graduates had comparable earning power prospects to law, finance and medical grads we wouldn't be discussing it. Besides, on a university level US schools are top notch.

3) Like what? I own a small business and haven't encountered any obstacles caused by the government. Getting customers, press and funding are by far my biggest headaches. And keeping in mind how notoriously inefficient governments are I'd hate to see them decide which powerpoint gets my tax dollars and which doesn't - leave that to VCs.

I'd ask Mr. Obama to invest into fundamental research, the kind of expensive, risky and long-term stuff VCs don't invest into. They built Internet to fight Russians and look how much mileage we've gotten out of it. Startups aren't building "new internet", they're in the business of making products on top of the existing one. Mr. President, give us some new shiny tech out of NASA/CIA/whatever and we'll get busy building next generations of googles and facebooks.

jforman• 16 years ago

The H1B process has gotten considerably more difficult in recent years. We've had two very frustrating rejections recently.

BCM43• 16 years ago

>2) What is government supposed to do here exactly? If science and math graduates had comparable earning power prospects to law, finance and medical grads we wouldn't be discussing it. Besides, on a university level US schools are top notch.

What about doing things to help more people reach this level? I don't have any suggestions in particular, and I think think that this is a hard problem, but it is certainly a worthwhile one.

waxman2• 16 years ago

I completely agree with a the need for more fundamental research. What about another generational project akin to the space race or the Manhattan project? These efforts did an amazing job of mobilizing both students and professionals around big, hairy goals, and the work that ensued sparked an untold number of innovations and new technologies.

Also,

1) Only larger companies can sponsor H1b's, not startups. The so-called "startup visa" would be a small step forward, but it sets a pretty high bar.

2) We rank towards the bottom of developed countries in math and science, and by college it's too late; by then you either got a good education in these areas, or you didn't.

3) I agree that government is super inefficient, and in some ways it may appear incompatible with the near-opposite agility of the startup world. That said, small businesses of all kinds need capital, and often credit, and the short-term effects of banking reform was to tighten capital markets even more.

nostrademons3• 16 years ago

"When a good manager meets a bad business, it's the business's reputation that stays intact." -- Warren Buffett

I think a lot of Obama's difficulties stem from having to steer a massive federal bureaucracy. There're lots of power centers in government besides the president - the American system is designed that way, so that any given bad president can't do too much damage. (Though that didn't seem to stop Dubya...maybe it's easier to blow things up than it is to build them.) I'm disappointed at Obama's inaction on net neutrality, but he's been distracted by other major initiatives. And the health care bill is huge for potential entrepreneurs; one of the major disincentives to quitting your job is the lack of health insurance.

ryanwaggoner3• 16 years ago

I think a lot of Obama's difficulties stem from having to steer a massive federal bureaucracy.

To my eye, he's only making the weight of bureaucracy worse.

nostrademons3• 16 years ago

I think every president makes the weight of bureaucracy worse. It seems to be a law of nature that bureaucracy only grows, never shrinks, until it consumes the society that supports it. Then we get another Dark Ages.

I also think that in general, a president's power tends to be overstated. People give Clinton a lot of credit for the 90s boom, but I think he was largely riding a technological wave that he had nothing to do with. Dubya did screw things up, but many of the things he screwed up were already set in motion before he took office. Obama fixed a few things, but he's also made things worse in ways that we probably won't see the ramifications of until several years down the line. I shudder to think of the next financial bubble, now that we've set the precedent that wanton recklessness will get you bailed out by the federal government.

hexis• 16 years ago

"And the health care bill is huge for potential entrepreneurs; one of the major disincentives to quitting your job is the lack of health insurance."

After all the debate last year, I still find claims like this so strange. As far as I have ever been able to tell, the Health Care reform merely assesses a tax on being uninsured. So, if you quit your job to start a company, you no longer have the option to forgo insurance without now paying a penalty on your taxes. How an additional penalty would either a) provide more/better health care or b) spur entrepreneurship I have never been able to understand.

nostrademons3• 16 years ago

The biggest advantage - unfortunately not taking effect until 2014 - is that people can no longer be denied coverage for pre-existing conditions. I know several people who would make excellent startup founders, but because they have chronic health conditions like diabetes or Marfan's, they're unable to work anywhere other than big companies or academia.

Small businesses also get a tax credit for 35-50% of their health insurance costs. I think there was also a provision for low-income health insurance subsidies that may affect many startup founders, since oftentimes your technical "income" when you're getting the company off the ground is near zero.

jordanb• 16 years ago

One big change that's in effect now for young entrepreneurs is that they can stay on their parent's health plan until 26. I'm not sure if this will actually encourage any more young people to try their hand at entrepreneurship because most consider themselves invincible and don't give a lot of thought to health care, but it'll certainly help prevent the experience from becoming a horror story.

philwelch• 16 years ago

I'm disappointed at Obama's inaction on net neutrality

"I'm disappointed at Obama's inaction on foo" is a constant refrain, but it's the natural result when someone is built up to be a savior.

And the health care bill is huge for potential entrepreneurs; one of the major disincentives to quitting your job is the lack of health insurance.

I don't see how the health care bill even fixes that.

anamax2• 16 years ago

> And the health care bill is huge for potential entrepreneurs; one of the major disincentives to quitting your job is the lack of health insurance.

Oh really? It's not a problem for many married folk with employed spouses. It isn't a problem for 20 year olds who can put <$100 month towards it (aka much less than rent). It isn't even a problem for 50 year olds.

Yes, there are a small number of people who have pre-existing conditions, but that's a problem only if they let their coverage lapse. (No, you can't be turned down for pre-existing conditions if you've kept up your coverage.)

ScotterC• 16 years ago

Thought this sentence was interesting: "An enigmatic politician with strong convictions, Mr Obama in many ways resembled the driven young spirits that venture capitalists love to take a punt on."

I bet in British-English it comes out right, but in reference to American Football, 'taking a punt on' would mean passing on these driven young spirits and not backing them. Ahh linguistics

c2• 16 years ago

The President controls the military, can veto bills that congress/the senate passes, and appoints supreme court justices.

Anything else the media claims Obama is responsible for is a disingenuous attempt to garner views by name dropping the President and is actually doing a disservice to all it's readers by misrepresenting how the American political system works.

raheemm• 16 years ago

When the economy improves, the president's approval will start climbing as well.

metamemetics• 16 years ago

> their backers were betting that Mr Obama would push through an energy bill that would force America to embrace alternative sources of energy more aggressively.

Give him a break, getting healthcare reform passed already involved flame-baiting half of congress to the extreme. There's a thing called filibustering that massively slows down all legislature once anyone bill becomes flame-baitable enough. There is no way any president could have halted the greatest financial collapse since the great depression, passed education reform, passed healthcare reform, AND also gotten to a new energy\immigration policy in 18 months, while filibustering exists, without assuming dictatorial power.

iko3712• 16 years ago

-Another source of friction is the reluctance in Washington to reduce hefty taxes on foreign earnings repatriated to America. As many American tech firms make a large share of their revenue and profit outside the country, they are particularly exercised by the government’s reluctance to lighten this burden.-

I agree with the Obama administration on this one. Corporations should not be allowed to move their operations overseas. If there is not a skilled labor force in this country from which to hire, corporations should call on our schools and our government to create the kind of educational system and incentives that will produce skilled Americans who can meet the demand.

-To make matters worse, tech leaders have been outraged by Mr Obama’s willingness to demonise employers for outsourcing work to foreign countries, which is especially popular within the IT industry, and by his grating sermons on the evils of corporate greed. “We’re praised for creating jobs, while being spanked at the same time,” complains Mark Heesen...-

Yes. You should spanked for your corporate greed. It is perfectly reasonable to expect entrepreneurs to pay back into the system that allowed them to create such success. Our current system reeks of thirty-odd years of corporations creeping into government and manipulating the rules, and bending, breaking or destroying regulations so as to maximize profit at the expense of the American people. It is even more reasonable to expect that to undo the damage, we will have to return to a system of tighter controls and the closing of loopholes that allow companies to get away with paying at or near 0% in taxes.

-Tech firms and venture capitalists welcome these initiatives, but are deeply frustrated by a lack of action in other areas. For instance, many cleantech start-ups and their backers were betting that Mr Obama would push through an energy bill that would force America to embrace alternative sources of energy more aggressively. But that came a cropper in the Senate.-

Right, because instead of strong-arming everything through the Senate, like the Republicans did for six years under Bush, Obama wanted to play the "reach across the aisle" game, to which nearly every single Republican spat back in his face. As a result, in two years, all we got was a mangled health care reform bill that, while a big step in the right direction, still allows huge insurance companies and pharmaceuticals to continue capitalizing on human suffering.

-In a speech in Silicon Valley, Mr Obama reiterated that he wants to create the conditions in America that would give rise to the next Google and the next Hewlett-Packard. But he will have to do much more to convince the tech industry that he really means it.-

Well, if the tech industry thinks that the path to doing that is to bringing in skilled labor from other countries, outsourcing jobs, and paying at or near 0% in net taxes, then the industry is delusional and needs a reality check. Discouraging immigration of skilled labor encourages the development of those skills in this country. Taxes generate the revenue that the government can use to create an educational system that trains people in those skills and provides incentives for people to leave colleges and universities with degrees in those field. Our current system is far too broken in this regard. Educational spending is far too low, the result of thirty years of Republicans blowing up the taxes on corporations and the richest 1%.

It seems to me that too many entrepreneurs have tunnel vision, asking "Why do I have to pay all these taxes?" and "Why can't I bring in the skilled labor I need from other countries?" The frame for these questions is self-centered. If the entrepreneur expands his frame of reference beyond himself to ask, "Who's paying to support society at this point in history?" and "Why can't I find the skilled labor I need in this country?" then the solutions to these problems become clear, and they require a progressive push even stronger than what Obama's achieved thus far.

ryanwaggoner3• 16 years ago

Discouraging immigration of skilled labor encourages the development of those skills in this country.

In a vacuum, you might be right, but companies in the US increasingly compete on a global scale, and since other countries are more friendly to immigration of skilled professionals, we risk losing our global competitive edge. It's a nice idea to think that artificial barriers will result in us ramping up education, but that's a process that will take decades. You can't just start teaching advanced computer science to high school seniors who can barely read and struggle with basic math. So what's more likely is that the lack of skilled professionals in this country will gradually reduce our pace of innovation relative to other countries and cause a relative decline in our wealth, causing us to fall further and further behind.

It's far faster and more efficient to let the hoards of skilled professionals in other countries come here, especially since many of them are willing to risk almost anything to move their families here and would stay forever if we let them. Instead we severely restrict them and then we compound the problem by letting people come here to go to school and then make them leave if they can't find a job. It's the exact opposite of what we should be doing.

gaius• 16 years ago

Which other countries? The UK and Canada are possibly a bit easier; France isn't unless for EU citizens, Germany the same, Japan has very very few immigrants, Korea, Taiwan.

iko3712• 16 years ago

I feel you have misframed the issue as well.

-In a vacuum, you might be right, but companies in the US increasingly compete on a global scale, and since other countries are more friendly to immigration of skilled professionals, we risk losing our global competitive edge.-

That there is a "global economy" and that this is somehow a new thing is a myth perpetuated by Milton Friedman's view of the "flat earth." What is a new thing is the USA relaxing tariffs and trade restrictions so that American companies can outsource work to other countries and not pay taxes on their goods if they manufacture them abroad. Besides that, there has been a "global economy" for many hundreds of years. It's at least as old as the British empire. What the US has been doing over the last thirty years has not so much been "opening markets", as it has been destroying our country's internal regulations that protect American workers from competing with the workers of foreign countries. In my opinion, such regulations were a good thing, and they built the strongest economic power the world had ever seen.

In brief, we don't have to compete on global scale if we choose not to. Your statement assumes that we do.

-It's a nice idea to think that artificial barriers will result in us ramping up education, but that's a process that will take decades.-

USA, 1945: "It's nice to think that if we eliminate artificial barriers to education, we'll have a skilled workforce that will build America into an industrial and economic superpower, but it would be easier to keep all the money in the hands of a few wealthy people. It would take decades to accomplish being an economic superpower, so it's really not worth the effort." I'm glad this wasn't the prevailing attitude then. I'm sure the country I live in would look a lot different.

-You can't just start teaching advanced computer science to high school seniors who can barely read and struggle with basic math.-

Again, reframing. The correct question is, "Why are so many American high school seniors barely able to read and struggle with basic math?" There are many facets to this problem, I'm sure, but I think a large chunk of the problem is that for many American families, there is a culture of anti-intellectualism. School, teachers and education are derided, and with this derision comes an unspoken message that being educated is not that important. And it's not just families. Our culture as a whole doesn't value education. Even in the tech industry, we have superstars Bill Gates and Mark Zuckerberg as the problem's biggest contributors -- they are both college drop outs, yet they are both ridiculously rich and famous.

I think that we could undercut this whole sociocultural phenomenon by having our government step in and do something really drastic, like waive the student loans of anyone who gets a tech degree and holds a job in the industry for some number of years. The more ridiculous the price of an education becomes, the more American teenagers you're going to have who feel that the path of least resistance to a good life doesn't lead through a university.

-So what's more likely is that the lack of skilled professionals in this country will gradually reduce our pace of innovation relative to other countries and cause a relative decline in our wealth, causing us to fall further and further behind.-

-It's far faster and more efficient to let the hoards of skilled professionals in other countries come here, especially since many of them are willing to risk almost anything to move their families here and would stay forever if we let them.-

The assumption made here is that we simply don't have enough skilled labor in this country to meet our demand, and that the only way meet it is to import that skilled labor. I disagree with you. I think we can easily create a social and economic environment conducive to creating the demand we need. Is importing it easier and cheaper? Yes. But it doesn't pay out in the long term.

Here's an example situation. Let's stay Startup X has one American engineer, but it needs fifteen more of him. For the sake of argument, let's say his skill set is utterly unique in the US. No one knows what he knows but him. So, Startup X needs fourteen more of him, but they don't exist in this country now. There do exist internationals with the skill set, and it would be really cheap to get the internationals to come over, and Startup X would have all the labor it needs within a matter of weeks. Cheap labor, lots of profit. The CEO is seeing dollar signs. But, his partner points out something else. They've got the one American engineer. The government just recently instituted a bunch of economic incentives for students who get tech degrees. Under the same bill, Startup X could also get money to pay the salaries of interns learning a skilled technology trade. Bingo! Their one American engineer could train the new engineers. Each of them might further innovate, have new ideas, form his own startup one day, and they'd be American startups. Yeah, it'll take longer. And, you might not be able to pay them the same as internationals. Since they're American, they're likely to have higher standards for pay. Oh, but right, I forgot. Using international labor is cheaper and faster, our country be damned.

Again, this kind of tunnel vision is really damaging to our industry, because all of the negative societal consequences of conservative economics come back around to bite us in the ass. If we keep addressing our problems with the same kind of thinking that caused the problems in the first place (lower taxes, fewer trade restrictions, etc.), we'll be perpetuating a vicious and dangerous downward spiral.

bwooceli• 16 years ago

I don't know which is more relevant for the HN audience - a) the discussion of how to balance and deliver promises and priorities in the government or...

b) the fact that the comments section of The Econimist is apparently completely vulnerable to spam bots.

On (a) I'm inclined to take a long view on this presidency and say that the real rubber will meet the road after the midterms. As for (b) maybe the folks over at TE would like to take advantage of the recent "Offer HN" meme.

known• 16 years ago

What problem Silicon Valley really was solving?

FluidDjango• 16 years ago

The author(s) of the piece may be right. Or not.

It's an unsigned/unattributed essay that is long on weasel words (as wikipedia would put it, e.g., "Many of its 2,000 members..."), short on evidence (a few quotes attributed to identified individuals) and devoid of quantification ("tech leaders have been outraged by..." what proportion? did some take a poll?)

Economics tries to be a quantitative behavioral science. This piece, however...

End of Obama's silicon honeymoon

Related Stories