The statist assault on health care, energy and free speech obscures signs of the building malaise in less obvious quarters of the economy. In a thoughtful article about the high-tech sector, Michael Malone writes
The high technology revolution that has transformed modern America (and
the world) has been driven by three factors. Innovations in applied
science – the bottom slice of bread; large companies – the top slice;
and – the meat in the middle – new company creation. [...] Right now . . .and as far as I can see in the future . . .it is that
middle that is missing. All of the prosperity I see returning to
Silicon Valley is, in fact, something of an illusion. [...]
The crucial center of the tech world – new and fast-moving companies –
the meat in the technology sandwich – is gone. Under the press of an
economic slowdown, government regulations that have handcuffed
entrepreneurs and venture capitalists – and perhaps most of all, an
Administration that increasingly seems actively hostile to entrepreneurship and small business – high tech is hollowing out. [...]
Over the last couple months, I’ve seen some spectacular new start-up
companies, some with finished products on the market. All of them are
starving from lack of capital –and their business plans, which would
have attracted tens of millions of dollars two years ago, earning only
shrugs and apologies from straitened venture capitalists and banks. My
guess is that several hundred new start-ups in Silicon Valley have
already been lost, with no sign anywhere on the horizon.
And it looks like a fair number of bright new would-be stars in the tech sector are agreeing with their feet in a reverse brain-drain.
[T]he generational difference between older Indians who have made it
in the Valley and the younger group in the room was striking. The
present reality is this. Large numbers of the Valley’s top young guns
(and some older bulls, as well) are seeing opportunities in other
countries and are returning home. It isn’t just the Indians. Ask any VC
who does business in China, and they’ll tell you about the tens of
thousands who have already returned to cities like Shanghai and
Beijing. The VC’s are following the talent. [...]
Only 7% of Chinese students, 9% of European students, and 25% of Indian
students believe that the best days of the U.S. economy lie ahead.
Conversely, 74% of Chinese students and 86% of Indian students believe
that the best days for their home country’s economy lie ahead. National
Science Foundation studies have shown that the “5 year stay rates” for
Chinese and Indians science and engineering PhD’s have historically
been around 92 % and 85% respectively (NSF tracks these 5 years at a
time, and the vast majority stay permanently). So something has clearly
changed.
This is probably what we could expect to happen as global economic and educational disparities level out with a developing world. But rather than an organic and leisurely pace of change, our political class seems hell bent on shoving our economy over a cliff. Their recklessness will have consequences.