UPDATED 12:02 EDT / DECEMBER 02 2011

Obama’s War on Silicon Valley

In 2008, Silicon Valley’s executives, investors and foot soldiers were tripping all over themselves to support Obama. As with the other 53% of voters, they painted onto Obama’s image their hopes for a president.

In contrast, McCain was viewed as a man deeply out of sync with popular culture. At 72, his age, in a culture that supports younger and computer-savvy people, also likely played against him.

Hey, Obama even used a BlackBerry! (Despite Android’s best efforts, so did Google’s then-CEO Eric Schmidt.)

So because Obama uses a BlackBerry, and was under 50 years old and had been recently seen exercising on a basketball court, he must have been the ideal president for Silicon Valley, right?

Wrong.

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As soon as he became president in January 2009, Obama launched an all-out offensive to destroy Silicon Valley, that continues to this day. The catalog of grievances Silicon Valley now has with Obama includes, but is far from limited to, the following actions and inactions:

1. Immigration. It used to be the case, in the 1960s and 1970s, that the Democrats loved Mexicans — but only in Mexico. They loved foreign aid, but didn’t want the Mexicans here because their union buddies didn’t want competition that would bid down wages. On the other hand, Democrats were in favor of immigration for well-educated workers, because they would help advance science and bring about economic growth and industrial excellence.

These tables have now turned. Democrats are now strongly in favor of Mexican immigration, because the industries were they compete have been de-unionized anyway, and they have turned to welfare benefits — including free health care and free education — as de-facto bribes in exchange for votes.

In contrast, Democrats and Obama have turned against immigration of educated people who are looking to earn a lot of money — the kinds of people sought in Silicon Valley. They generally don’t want people who will be faced with high tax rates and therefore would oppose Obama’s war on “millionaires and billionaires.” And God forbid they would be educated enough to do some math with respect to what Obama is doing to the budget and national debt.

It should therefore come as no surprise that Obama has not lifted a finger to help Silicon Valley hire talent from abroad. Qualified workers have attended U.S. universities, but have to return to their home countries after a relatively short period of time. In other cases, the ability to bring people to the U.S. on work visas, is a very bureaucratic and expensive effort that can take many years, if it is at all feasible.

It ought to be a relatively simple and inexpensive process for any U.S. company to hire someone who is not a U.S. resident or citizen. It is obviously not. It is axiomatic that only the specific employer knows which employee is best for the company’s prospects, and therefore the company should be allowed to hire any candidate from anywhere in the world, without having to worry about expensive or complicated time-consuming bureaucratic nonsense.

If Obama wanted to help U.S. economic growth, he would ensure that any U.S. company that wants to hire a non-American, can get a speedy approval, subject to only a national security check. Obama’s efforts in this regard: zero.

2. SOPA. This is the so-called “Stop Online Piracy Act” that is currently being negotiated in the U.S. House of Representatives. I’m not going to bother you with a lot of detail on what SOPA is really about — you can look that up on Wikipedia at your leisure — but suffice it to say that many Silicon Valley companies such as Google, eBay, Facebook, Twitter and Yahoo, just to mention a few — believe that SOPA will be detrimental to their businesses, and therefore oppose it in the strongest of terms.

In essence, the argument against SOPA is that a company such as Google cannot reasonably have any responsibility for what people post on their own Web sites, just like the owner of a hotel can’t be responsible for everything that a guest may do while the surf the Web in the hotel room. The supporters of SOPA include most prominently Hollywood music and movie owners, who would like more big targets to sue for copyright infringement.

SOPA has both bipartisan support and opposition in Congress. Those who oppose are as diverse as Ron Paul (R-TX) and Nancy Pelosi (D-CA) — pretty much the extremes on both sides of the political spectrum, the #1 capitalist in Congress and the #1 statist.

People at Google in particular are going positively apoplectic about SOPA. Just follow Google’s management team on its own social network Google+ and you will quickly see what I am talking about. They are calling for the good old-fashioned “call your Congressman and tell him to vote NO” campaign against SOPA.

But why bother calling your Congressperson? A bill that passes both houses of Congress doesn’t become law unless the President signs it — or unless it passes with a two-thirds majority in both houses. There are no signs that SOPA will get a two-thirds majority in both houses. So why not just ask Obama if he supports SOPA or not?

All of these Silicon Valley executives could save themselves a lot of effort if instead of drumming up a campaign to change the minds of hundreds of Congresspersons, they first found out whether Obama supports SOPA or not. If Obama promises to veto SOPA, Silicon Valley has nothing to fear.

So where is Obama on SOPA? Nobody seems to know. I have asked the question several times from the Google people on Google+, but nobody can cough up an answer.

Obama spent 88 days of his presidency so far on the golf course. Would it be too much to ask that he takes 10 seconds out of his precious 88 days on the golf course to simply state whether he is for or against SOPA?

Alternatively, if Obama doesn’t want to type his position on SOPA in ink, or appear on camera or on radio proclaiming if he’s a “yes” or “no” on SOPA, perhaps he can speak through a surrogate? Google’s own Eric Schmidt comes to mind. If Eric Schmidt is nearly as much buddy-buddy with Obama as we are led to believe, he should just be able to pick up the phone and ask him. Then, Schmidt can get back to the rest of us and say “All right, no need to worry, we’re safe now” or “He’s going to sign it, so let’s roll up our sleeves.”

In lieu of Obama simply volunteering a position on SOPA, nobody except me seems to be asking Obama to cough up a straight yes or no. In response to my question posted on Google+, Gene Moore provided the following candid analysis on November 21: “We’ve gotten to the point where Obama’s supporters no longer want to know what his position is, out of fear that he might disagree with them.”

3. Obama’s war on wireless broadband. Obama’s Department of Justice as well as his Federal Communications Commission are doing their best to block AT&T’s proposed acquisition of T-Mobile USA.

Here’s the background: T-Mobile USA is a fine operator, but running out of spectrum, so it can’t launch high-speed broadband, a technology called LTE, anytime soon, if ever. Verizon launched LTE a year ago, and AT&T has started launching LTE in nine initial cities in the recent weeks. Sprint has announced that its LTE rollout will begin in 2012 and become significant in 2013.

Without LTE, T-Mobile USA will over time find itself unable to compete, and therefore eventually dwindle itself down into a shrinking customer base. As for AT&T, it has launched LTE only on 2×5 MHz and in some places still-tiny 2×10 MHz worth of spectrum in the 700 MHz band. In order to compete with Verizon, it needs more spectrum.

Unlike his predecessors Clinton and Bush 43, Obama has thus far refused to privatize any spectrum that could be used for wireless broadband.

Sprint in turn will have access to even more spectrum for wireless broadband, once it starts to use Clearwire’s superior spectrum position (120 MHz!) in most cities for LTE.

Key to Silicon Valley’s technologies such as cloud and IP communications, mobile video and more, is to have as fast wireless broadband networks as possible. This requires a combination of spectrum and investment scale. As a result, AT&T and T-Mobile USA’s owner — Deutsche Telekom — jointly decided that they would not allow themselves to face a near-certain death in the market over time, because Sprint and Verizon would have more LTE over time, but rather merge so as to offer more and faster broadband.

Obama and his bureaucrats have decided that T-Mobile USA and AT&T, respectively, are going to have to go it alone, rather than pooling their interests so as to create wireless broadband that’s competitive in the market. Talk about a knife in Silicon Valley! Without an expansion of wireless broadband, Silicon Valley’s growth prospects are not as great as they otherwise would have been.

Additional Gripes

The list of Silicon Valley’s grievances with Obama goes much further, but I will just make a few more short points with examples:

    1. A world of cloud services is a world of huge data centers. They consume gigantic amounts of electricity, which Obama has promised to increase dramatically.”Under my plan, electricity rates would necessarily skyrocket” in Obama’s own words.In other words, Obama has effectively launched a war on cloud computing. That’s a huge percentage of Silicon Valley’s otherwise most promising companies, ranging from VMWare, EMC, Cisco, Apple, Google and many others. Higher electricity prices — Obama’s dream — is a direct attack on data centers

.

    1. The “Patent Reform bill” signed into law by Obama earlier this year is a tremendous injury to smaller Silicon Valley companies, because they now need to file for patents a lot earlier and a lot more frequently than before. This is of course a comparative advantage for big companies such as IBM, but not so good for the smaller companies that tend to constitute most of the economic growth in Silicon Valley.Previously, companies could wait to file for patents until they had enough money to pay for the expensive progress or filing a patent. This gave small companies such as Apple the ability to spend their precious start-up dollars to first pay for product development and take the product to market and generate some revenue, before they sought more financing that could help pay for the filing of the patents later. No longer. You have to file right away, and that’s when the large established old-world companies will crush you in the process.So long, Silicon Valley, as we knew you. It was fun while it lasted. And thanks for nothing, Obama. What a hit-job

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  1. Obama’s war on capital gains is also a huge war disproportionately on Silicon Valley financing. Venture capital is what fuels Silicon Valley more than any other industry in America, and it’s all equity — almost no debt. Obama’s constant proposals to dramatically increase taxes on capital gains could just as well be called a tax on financing Silicon Valley start-ups.

What is the bottom line of these attacks on Silicon Valley by Obama? Chances are that in 2012, Obama’s support in Silicon Valley won’t be anywhere near the surge he enjoyed in 2008 — whether by fund raising dollars or in terms of votes. His opponent, whoever that might be, is likely to dramatically improve the Republican prospects in Silicon Valley in 2012, compared to 2008.

After Obama’s war on Silicon Valley, can we please turn this ship around with a pro-free market president next?

 

[Cross-posted at The Street]


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