Friday, October 24, 1997

Planting an Economy in Silicon Valley

What makes an economy grow? It must create or increase value. From a bare piece of ground, one can add value by planting seeds and reap the resulting crop. Through mechanization, the farmer can till more land for the same effort. By using fertilizer, the yield is increased from the same amount of land.

How else can one increase value beside planting, that is, besides being a farmer? One can dig up the minerals from the ground. Or one can build machinery and manufacture goods out of the natural resources from earth. With technology, one can build smarter machines to make more and higher value goods with greater efficiency.

As one produces high demand goods, one can expand the operation and hire more people, i.e., create jobs. Others may seize the opportunity to build factories to make and supply intermediate materials and thus create a secondary industry. Perhaps a proliferation of tertiary markets is then created by such things as retail outlets, service and repair centers, and second hand stores.

For example, sand is the starting material for semiconductors. Intel and many other companies in the valley have done wonders making integrated circuits out of this humble and readily available material. Other companies follow suit by manufacturing production equipment needed to run the factories. The finished semiconductor chips are shipped to distributors and dealers; they in turn sell to the personal computer makers.

The PC industry grows by leaps and bounds with new products built around new generations of chips from Intel and its competitors and complementary chips from others. The industry growth include not just those assemblying computers, but all the makers of computer peripherals that attach to the PC, the software houses, the publishers of PC related books and magazines, and of course, training firms that teaches increasing number of new users. These products and services are sold in increasing number of department stores, warehouse stores, chains of computer stores, hotel meeting rooms and through the mail. More new jobs are thus created.

Since each generation of personal computers offers more performance for less money, more and more are sold. And that, in a nutshell, is how an economy can grow.

So what is the one essential element that is absolutely necessary in order for a technology-based economy to grow? Isn't it obvious that it would take people? Not any people but people trained to use the technology, develop new applications and further its advances. As the rate of change in technology accelerates, the more critical is the training of the people.

California and especially Silicon Valley revolves around technology. The irony and contradiction is that this is a state that no longer seems to believe in the value of a sound education system. This is a state that cares more about illegal immigrants taking advantage of our education system, a system, mind you, whose elementary schools rank No. 49 out of 50 states, and more about "wasting" tax money on schools and teachers.

If the voters of California do not wake up soon, we will not have the needed trained people to staff the high tech industry. The high tech companies would have to relocate to where such skilled people are available. Then Silicon Valley can go back to being fruit orchards. Jobs will be so hard to come by that we will have to pick our own fruits and vegetables. We wouldn't have to worry about the illigal immigrants because there wouldn't be any vacancies for them.

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