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Government intervention may stifle tech industry

Tue, 08/04/2009 - 7:18am
Jason Lomberg, Technical Editor

The most terrifying words in the English language are: I'm from the government and I'm here to help.”
                                                                                                                                         - Ronald Reagan

 

Jason_Pic130On October 20, 2005 Congress passed the Digital Transition and Public Safety Act of 2005. The act mandated the cessation of analog broadcasting by February 18, 2009, and the subsequent reign of digital. It also set aside up to $1.5 billion to ease the transition. Under the terms of the program, families could request up to two $40 coupons towards the purchase of an analog-to-digital converter box. Predictably, demand far outstripped supply. Moreover, the public was confused about the transition. The public service announcements were less-than-helpful. Instead of offering solutions, government operators directed confused individuals to the internet. One problem—most callers weren't exactly savvy web surfers. 

The program floundered, leaving the public woefully unprepared for the February deadline. So the Senate passed the DTV Delay Act, pushing the deadline out to June 12, 2009. And yet, by June 11, an estimated 1.75 million were still unprepared. This example illustrates how badly the government can mangle an enterprise. In the midst of unprecedented federal growth and massive investment in new tech (some $42 billion by my count), the question is worth asking—is government the right man for the job?

A few months back, Gary Shapiro (President and CEO of the Consumer Electronics Association) wrote an editorial titled, “Next generation won't have a Bill Gates.” Shapiro laments the state of the industry and casts scorn on routine government bailouts. He criticizes government for, “refusing to allow bad companies to fail.” Mostly, he fears for the future. “If we cannot borrow money, then our children won't be able get the mortgage to buy a house and our neighbor won't have access to a small business loan to finance a new venture. The next generation won't have a Bill Gates, a Steve Jobs or a Mark Zuckerberg because the budding American entrepreneur won't be able to secure the financing to create the next dynamic technology company that would have energized the economy,” says Shapiro.

Where is the industry headed? If I had a crystal ball, I’d tell you, but I can foresee trouble. If we spend billions developing new technologies, we’ll all reap the benefits (or so say the proponents of government intervention). But at what cost? Our autonomy? Our can-do spirit? Innovation will certainly come. You can’t throw that much money at something and not expect some results. But can government create its own Silicon Valley? Can they truly grow the economy? Could companies like Texas Instruments, Microsoft, or Apple have blossomed in this environment?

The tech industry will weather this storm—in spite of government intervention. Lowering the industrial tax rate and expanding tax breaks for small businesses (and not just in the renewable energy sector) would accelerate the recovery. But I have faith that we’ll prevail regardless. The only thing stronger than the hand of government is the strength and resolve of the American people. 

 

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