The Secret to Building the Next Silicon Valley

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political leaders Trying to replicate the high-tech magic of Silicon Valley since the invention of the microchip. The then President of France, Charles de Gaulle, visited Palo Alto in 1960 in his convertible limousine. Russian Federation President Dmitry Medvedev dressed in business casual to meet and tweet with the Valley social media tycoon in 2010. Hundreds of eager delegations, foreign and domestic, visited in between. “Silicon Valley,” inventor and entrepreneur Robert Metcalf once remarked, “is the only place on earth not trying to figure out how to be Silicon Valley.”

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Even in America, leaders have long tried to build another Silicon Valley. Yet billions of dollars of tax breaks and “silicon something” marketing campaigns later, no location matches the original’s track record for firm building and venture capital investment – ​​and these efforts often lead to multinational corporations comparing the sectors themselves. There is far more benefit. Wisconsin promised Taiwan electronics maker Foxconn more than $4 billion in tax breaks and subsidies in 2017, only to see a $10 billion factory plan and hundreds of million taxpayer dollars spent to prepare for Foxconn’s arrival. 13,000 jobs were lost after it was done. Amazon’s 2017 quest for a second headquarters saw 238 US cities falling on top of each other to entice one of the world’s richest corporations with a tax-and-subsidy package, leaving only Headquarters 2. Amazon’s go-to places were likely chosen anyway because of their pre-existing technology and talent. One of the winners, Northern Virginia, promised Amazon up to $773 million In state and local tax subsidies – a public price tag for brining high-tech towers that seems especially tough as Amazon pushes back post-pandemic plans to return to office indefinitely along with other tech giants Is.

While the US tech industry is much larger than it used to be, the list of top tech groups—Bay Area, Seattle, Boston, Austin—has remained largely unchanged since the days of 64K desktop computers and floppy disks. Even as the disruptions of the Covid-19 pandemic little done To change this remarkably stable And highly imbalanced Tech Geography.


Still, politicians are trying again. Bills that worked their way through Congress included: US Innovation and Competition Act (USICA), which includes a large increase in research spending, $10 billion in new grants and subsidies to develop “a regional innovation center, and $52 billion to expand domestic semiconductor production.” Build Back Better Act are now battling their way through the Senate, including more than $43 billion for tech-hit programs to boost local economies. These measures emphasize investing over a tax break, and overall invest far more in it. Location-Based Economic Strategies compared to the US in decades. They are promising. But they are only a beginning.

You don’t have to travel far into Silicon Valley to find a techno-libertarian who proclaims that the sector’s success is purely the result of the entrepreneurial hustle and bustle and the best thing the government can do is is to get out of the way. But that conclusion ignores history. In fact, public spending played a big role in developing high-tech economies in Silicon Valley, Seattle, Boston, and Austin. Understanding how this happened is essential to envisioning where the technology might develop next.

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during the world war II, the unprecedented mobilization of people and resources by the US government rebuilt America’s economic map. Depression-ravaged Midwestern assembly lines jolted back to life at the behest of the government, churning out jeeps and tanks instead of passenger cars. Scientists and technologists set aside ordinary research tasks to join the “army of the mind” in times of war. Many were involved in the top-secret push to develop atomic bombs, living in entirely new communities created by the military that were so distant they could go unnoticed: the New Mexico desert, eastern Washington. Arid Plains, Countryside Hollow Tennessee.

World War II was a test case of using government investment to fuel scientific progress and rebuild regional economies. The Cold War took this in a big way. Military spending was reduced at the end of the war amid a new nuclear arms race with the Soviet Union and the war in Korea, which peaked back in the early 1950s. Take a stroll through an American university campus today, pay attention to the number of science buildings built in the 1950s and 1960s, and you can see tangible results.

Initially, the areas at the top of the high-tech stack were on the East Coast; Boston was the largest tech economy in the country in the 1980s. The area that eventually ousted Boston from its high-tech throne was known, before the war, as the nation’s capital of prune production. The one thing that set the Silicon Valley of the future apart from its agricultural counterparts was Stanford University, which had some pretty cool engineering programs and some alumni swooping in at garage startups.

As Cold War spending increased in military installations in the Pacific West, the Valley’s economy changed. Correctly anticipating the huge amount of government spending on academic science, Stanford’s administrators reorganized the university to pursue programs such as physics and electrical engineering. Major East Coast electronics firms and defense contractors set up branch operations to be closer to the area’s military facilities and tap into Stanford-trained engineering talent. In 1955, Los Angeles-based Lockheed opened its Missile and Space Division a few miles down the road from Stanford’s campus. The defense giant remained Silicon Valley’s biggest employer into the 1980s, working so secretly that its engineers couldn’t reveal it at the family dinner table.

Unlike the big computer makers of the past, Valley built smaller ones. Its transistorized electronics and communications equipment proved essential to the development of missiles and rockets, and in later years, the personal computer and Internet industries. The billions of dollars in federal grants and contracts that flowed through 10-by-10-mile strips of California countryside became the foundation for Silicon Valley to come.

NASA and the Pentagon ordered silicon semiconductors and integrated circuits from startups such as Fairchild Semiconductor, becoming a base customer for a firm whose founders founded Intel, venture capital firm Kleiner Perkins, and other iconic Valley names. Like Apple cofounder Steve Wozniak, whose father was a Lockheed engineer, the offspring of Valley defense workers became familiar with and fascinated by advanced electronics. He tinkered in his basement, took summer jobs at Hewlett-Packard and Atari, and like Wozniak did with a fellow kid from the Valley, Steve Jobs started his own tech companies.

similar things happened Elsewhere that became and remain American tech capitals. Defense and space spending fueled Austin, expanded the Texas semiconductor industry, and enhanced the research reputation of the University of Texas. Seattle boomed because of the expansion of the Cold War military, its growing public research institutions, and defense contracts that began at Boeing (then the area’s largest employer). In the early 1970s, a teenager Bill Gates broke into the computer lab of the University of Washington hours later to write his first software program.

However, it was not just technical policy that made these sectors what they are. Social spending also mattered. In the prosperous post-war years, the GI Bill sent millions of ex-servicemen to college and helped them buy homes. States such as California expanded public higher education systems, making it easier to obtain a low-cost, top-flight university education. Schools and local infrastructure were well funded, especially in the growing suburbs that many tech people and companies called home.

Early Silicon Valley was filled with people from modest backgrounds who benefited greatly from this broad mix of public investment. The first generation of high-tech entrepreneurs were the sons of small-town Iowa campaigners and Texas farm boys whose engineering smarts gave them education, economic mobility, and a selection of tech jobs. Second, the baby boom generation just graduated from college, hooked on computers, free of student debt, and itching to build new things. Steve Jobs’ father never finished high school, but he got a job as a laser technician in Silicon Valley in the 1960s, which allowed him to buy a suburban home and send his son to a public school with his own computer lab. Paid enough to send him to high school.

The US government had a transformative effect on high-tech development when its leaders were willing to spend big money on research, advanced technology, and higher education – and keep it up for quite some time.

in recent decades, It’s changed. Political leaders adopted tax cuts, not spending, as a tool to grow the economy. In 1978, Californians voted for a property tax limit, which has since depleted local governments of resources, leaving schools underfunded and infrastructure crumbling. The proportion of the federal budget devoted to research and advanced technologies declined steadily, as did the state budget for higher education. Modern Silicon Valley grew wealthy amid this pull from the public sector, so it should come as no surprise that many tech leaders are dismissive (if not outraged) of the government, and most believe that public policy is their part. had little to do with entrepreneurial success.

Instead of investing in places and people, Silicon Valleys risked industry subsidies and tax breaks to entice tech firms to…


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