How the relationship between these three cities will progress will play a pivotal role in deciding how the new economy will progress to become an integral part of the world having made an unprecedented impact on the old world economy. History have it that not all great turning points in this world is sustainable and eventually integrates into main stream like in the case of the Nazi revolution lead by Adolf Hitler. The new economy have done well in undoing old maxims of the old economy and introduce new paradigms in propelling us forward but must now come out of the jungle of guerilla war fare and establish a lasting regime. Politicization of Silicon Valley
Old world economy has long seen the value and need in having friends in Washington and Silicon Valley is fast waking up to this idea. The recent anti trust case against Microsoft is a big case in point. Microsoft who has challenged many old world maxims and rose to become one of the largest capitalized company on Wall Street must now learn the painful lesson that being able to succeed on a number of key competencies does not immune one from failure. Microsoft has in that sense won battles on the technology and economic frontiers and lost the war of staying organically intact as one.
This might be a blessing in disguise for Microsoft. IBM who has fought anti-trust initiatives for decades to stay as one company to have it split up by an outsider in the shape of Lou Gestner who has understood economic reality in splitting up IBM to stay competitive. The Washington lobbying arena has not escaped the attention of Silicon Valley. It could be looked upon as paying for vaccination against being caught with a dreaded disease should untoward changes take place in the law drafting organ and political due process of turning these into laws. In order to gain maximum mileage out of their lobbying effort, Silicon Valley must come to a coherent strategy as an industry with consistent song to sing in Washington. Unlike industries like tobacco and petroleum who quite often lobby as an industry for the common good of all in the industry, little of such is happening in the new world economy. In fact, they sometimes run cross purpose to each other like in the recent case of Oracle lobbying against Microsoft. It is not un-common for competitors to be at each other's throat but the sheer lack of concerted lobbying by this young industry that has yet to find her own stable level in society could threaten the survivability of the industry as a whole if the key players do not act out often enough for the common good of the industry.
Siliconization of Washington
About everything is riding the "E" wave in some shape or form and E-Government is not going to be an exception. Governments have been one of the early adopters of computer usage and have now jumped on the "E" bandwagon in making E-Government a successful reality. We can see the fruits of these initiatives in the change in the manner we transact business with the government. Services such as internal revenue, custom and excise, and health, education and welfare and etc have begun to ride through the NET and become web enabled. Although the percentage of GDP/GNP vested with governments is a function of many factors, we have seen very little decrease in this measure as a possible means of measuring government efficiency. One could always argue that the "E" wave is built not upon efficiency alone but a basket of measures that includes the likes of effectiveness and efficacy.
On another dimension, governments have been leveraging the "E" wave as a growth vehicle for their economy. Save for the original Silicon Valley in California, many subsequent up shoots the world over have seen varying degrees of governmental intervention in ensuring that these up shoots gets a fair chance of standing on its own feet. This paternalism sometimes has a habit of becoming a permanent fixture. A possible case in point could be the Cyber Jaya project in Malaysia where the Malaysian government could have continued in intervening to ensure its success for too long. This is my personal view that might not be shared by all. Milton Freeman could be right in proposing that the best government should stay away from the economy and let the economy take care of itself. Governmental intervention tend to distort the otherwise good working balance when left on its own although John Maynard Keynes might rise from his grave to argue otherwise.
At the birth of the NET, governments the world over have been wrestling with the decision on the merits and pitfalls of making the NET available to the population at large in view of the difficulties in policing the contents. Except for a handful of regimes like North Korea, this decision is now a no brainier even with the censorship nightmare that the governments now face in the controlling contents on the NET. This is because the alternative of not having the NET is no longer a viable alternative as the NET is very much a part of not only the economic, political and social fabric of society, it is also a livelihood for a good many of us. Wall
Street Goes Silicon
Some 12 months ago, almost every CEO is putting together an "E" plan for their shareholder's and investment analysts. To be caught without one is like being caught with your pants and stock prices down because of a perceived lack of how the company is going to gear itself not only to ride the "E" wave but to survive in the new economic order. In this mad rush, many a CEO has put together an "E" plan and executed them to some extent and this could be part of the reason for the flood of funds being funneled into "E" stocks driving their prices sky high. When demand outstrip the supply of "E" stocks to such a great extend, new paradigm in stock valuation like using the "HIT RATE", "BURN RATE", "TECHNOLOGY POTENCY" took shape enabling "E" companies to be valued along these lines instead of the traditional measures like price/earning ratio and etc. A feeding frenzy ensued and many "E" stocks with no profits and at times no revenue are valued at sky high prices all in the name of "E"-Potency of these stocks. What is more worrying is that some of these companies do not even have a viable business model to support the projected revenue/profit stream needed to price these stocks. Alan Greenspan of the Federal Reserve Board has tried hard to stem this tide by increasing interest rate to no avail until recently. The market as a whole has woken up to the reality that "E"-Potency must face the crunch of the traditional stock valuation model and deliver the bacon on the table. This is where we separate the boys from the men and many "E" companies with no viable business model or earnings stream were sold down to bare bones.
While the likes of Bill Gates, Paul Allen, Jeff Bezos and John Chambers of Microsoft, Amazon.com and CISCO have made it big financially, on an altruistic note, some of the people who were instrumental in inventing some of the key technologies that propel the "E" wave have not been enriched financially in the process. Consider Ray Tomlinson that put the "@" in internet email who to this day remained as engineer in Bell Atlantic. Mark McCahill who invented Gopher which is the predecessor of the modern day "WEB" who continues to work in University of Minnesota while Marc Andersen of Netscape fame has taken the idea of the WEB to the commercial space and became rich in the process. What happened was Gopher was improved upon in CERN outside Geneva to become the "WEB" and refined at NCSA at University of Illinois to become the present day "WEB" and Marc Andersen did the final bit in bringing it into the market place. Although not everyone that contributed to the NET has been rewarded financially to the same extent, I am sure that many of these poorer cousins of NET inventors are as happy in knowing that they have made vital contributions to this world. Valley Street Washington.
How these three cities will develop their relationship will be key in shaping our future. On the surface, it would seems that both Washington and Wall Street are the incumbent and it is Silicon Valley that will have to edge itself into the equation but this might not be the case. While Silicon Valley has yet to become a permanent and stable fixture of this world, it has penetrated deep and irreversibly into key areas of both Washington and Wall Street. Silicon Valley is definite a force to watch out for even though it is not everything yet.
lkypeter@gmail.com Safe Harbor. Please note that information contained in these pages are of a personal nature and does not necessarily reflect that of any companies, organizations or individuals. In addition, some of these opinions are of a forward looking nature. Lastly the facts and opinions contained in these pages might not have been verified for correctness, so please use with caution. Happy Reading. Peter Lye (c) Peter Lye 2014