U.S. Tech Leadership Under Threat

I thought about putting a question mark in the title of this post, but of course our leadership is under threat from countries who desperately want the wealth and prestige that come with being a technology innovator to the rest of the world. The real question is whether the challengers will be successful in overcoming the U.S. and that is a question I nor anyone else for that matter can answer.

However that doeesn’t stop any number of groups from sounding the alarm.

The United States’ position of leadership in science and technology is steadily being eroded by a series of missteps, a Washington-based high-tech industry group warns in a report being released today.

Using member testimonials and U.S. government data, the AeA – formerly known as the American Electronics Association – paints a disquieting picture in its 32-page, six-month-long study.

In reading the article, but not the report itself, it appears that they are primarily calling for reform of the U.S. visa process, a development that I would certainly support. I’m in the process of relocating two key employees from the UK and the process is, simply put, maddening as well as expensive and time consuming. There are several varieties of visas and they are all distributed on a first come first serve basis on different calendars.

What is really frustrating is that here are two senior developers, one a CTO, and have professional spouses who will have to go through seperate visa processes. In one case, a spouse is a physican with an impressive CV but because H1-Bs don’t allow spouses to work she will have to be sidelined while a separate visa is obtained for her. How crazy is that? The last time I checked, the U.S. wasn’t exactly swimming in doctors. Having a system in place that discourages the brightest and most skilled from entering the U.S. in order to become a productive contributor to the economy is simply beyond any excuses that could be made.

More to the point of U.S. technology competitiveness, there are many root causes that could ultimately undo our undisputed leadership and all have a policy element. I won’t go into education, anyone who has read my blog knows this is a big issue for me and I have strong opinions for what we, as a society and a government, should be doing about it.

Intellectual property law also needs reform, but let me be clear in saying that doing away with technology, in particular software, patents is not the answer. We need a streamlined and transparent process for the application of technology patents and the approval process, as well as the protections that are afforded after such rights are granted.

Telecom reform also can have an impact on U.S. technology leadership, but I am not a supporter of public subsidy for national broadband coverage. The U.S. is an enormous country by geography, so to compare it to South Korea just isn’t reasonable, and our system of government requires that the individual states have a strong hand in regulating providers operating in their state.

I would look for investment in backbone technology couple with real telecom industry reform (unlike the 1996 Act) that really does create conditions for more competition in telecom markets.

Investment and tax law is in pretty good shape, except for that god awful AMT which despite nearly everyone agreeing that it’s outlived it’s utility and represents a genuinely onerous tax on the middle class, nobody has succeeded in getting rid of it or reforming it. I suppose we could go into a larger debate about the strength of the dollar and public markets attracting foreign capital, but there’s simply not enough space for that here and point in fact it appears that the Federal government has little control of the strength of the dollar these days anyway.

Even more to the point, the Federal government actually has an incentive to see the dollar remain weak becuase it 1) increases the price competiveness of U.S. manufacturing exports, 2) hurts European manufacturers, and 3) drags down the Chinese Yuan which is pegged against the dollar (and everyone who understands this topic also acknowledges that the Yuan actually drags down the dollar because of the fixed exchange rate… the dollar representing a proxy currency for the Yuan).

Insofar as China and India are concerned, while they are impressive in their respective development the fact of the matter is that both countries have challenges that include vast swaths of their population being left out of economic development and highly centralized governments that history proves to be brittle. India’s infastructure, specifically lack of investment in, leaves the particularly exposed at this point in time with Intel’s recent decision to build a manufacturing plants in Vietnam and China sounding a wake up call that shocked the nation’s leadership.

Lastly, back to the research report in that spurred this post there was this comment:

Of the shortage of engineers in the United States, Matloff called it "baloney. We have plenty of engineers. All you have to do is look at starting salaries. They’re not going up, and they would be if there were a shortage."

Excuse my quick dismissal but Matloff doesn’t know what he’s talking about or he is looking at one slice of the broader market. I would encourage him to get his butt out of his academic chair up in Davis and come down here and try to build a team. Google is literally hiring the best engineers by the busload and all of my friends that are running companies say they are hiring out of the area and either relocating engineers here or having them work remotely. Also, salaries are indeed going up…

Like a great many issues facing our society today it would be easy to pick and choose what to attack but that in the end will prove futile. We need structural reform across a broad array of issues but government has consistently proven, under every political party, to be incapable of broad reform so I’m skeptical we’ll actually see any progress on the issues I touched on in this post.

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4 thoughts on U.S. Tech Leadership Under Threat

  1. Jeff,

    Sorry I have to disagree with your conclusion about India “particularly exposed at this point in time with Intel’s recent decision to build a manufacturing plants in Vietnam and China sounding a wake up call that shocked the nation’s leadership.”.

    Intel was looking for 15 year tax break plus free land, water, electricity and subprime loan for the project. India said go take Hike. Iam sure Intel got used payola from Isreal, New Mexico and other places where they have fecilities. India does things it’s own they. They say giving benefits to one company is nothing more than discremnation. India does not need Intel. It is Intel who needs India.

    AMD, Hynduai, Infinera are putting 3+ billion fabs this year.

    Regarding Visa Process. You should hire Americans who are well qualified.

  2. Overall I agree with several things in post. Definitely there is dearth of engineers in the valley. Problem is not the salaries, but perception of reward for learning supposedly complex subject as maths and science. Only way to change is more scuess stories like Google and YouTube.

    Visa reforms must be the first thing, in some ways it is bad for the third world countries as it results in brain drain from those countries. On the other hand, free trade should mean free flow of lot of things not just capital or work.

    Regarding, taxes, I feel that Inheritance tax is a great thing in US. It allows new billionaires to be created in each generation. Where as in India, in absence of such laws, aristocracies are maintained. Lot of next generation kids try to live off their fathers wealth. Justice system is clogged with so many disputes related to inheritance. So, many people get killed by their own blood relatives in these disputes.

    I really believe that tax code should be simplified (reform or abolish AMT at the first instance). Allow people to enjoy what they earn, I feel it is justified to tax the dead. As lot of philosophers say “you come to this world with nothing and go out of this world with nothing”

  3. you know I fret about this every so often about this on my blog…but every time I go overseas (as I did 2 weeks ago), I see the maddening process pollution in most countries even when they are picking up the tech adoption lead from us in mbility, broadband etc..they muck it up with people, politics or whatever. Yankee ingenuity often makes up for other weaknesses. No reason for our tech lead to slip but I usually come back to the US not feeling so bad…

  4. Speaking of pollution… everytime I come back from China I can’t help but notice how blue the sky is here.

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