This report by Working Partnerships USA chronicles the decline of Silicon Valley.
- Silicon Valley provided 156,700 fewer jobs in Jan. 2007 than in January 2001: a 15.4% drop.
- Real median household income fell from $85,978 in 2001 to $74,293 in 2005
- Foreclosures are up; the housing bubble put more Californians into risky mortgages than elsewhere
Yes, the dot-com crash was responsible for a lot of this in the same way that Katrina decimated New Orleans. However (and this is my own take and not the report's), Bush administration policies made it worse. More after the break...
How did the Bush administration make things worse? By...
- Opposing stem cell research at a critical time for science and the region's economy
- Settling the Microsoft anti-trust suit the Clinton administration won, essentially killing the PC software industry (other than video games, security, and some pro music and graphic arts products that have been around since before 2000, there are no other PC software vendors anymore)
- Refusing to intervene when Texas-based Enron and the like caused brownouts, driving business away (software companies don't need a lot of infrastructure, but electricity is pretty important)
- Making it more difficult for foreign businessmen and students to come to the United States, driving smart people back to India and China and keeping intellectuals, entrepreneurs and students from even visiting in the first place
- Ignoring spiraling health care costs, which made it much more desirable for start-ups to locate their engineers overseas than in the United States
- Imposing poorly thought-out accounting rules on start-up companies, drying up the IPO market for many years, and driving venture capitalists toward less innovative companies who were more likely to be acquired than to go public
As a result, one in ten Americans who lived in Silicon Valley in 2000 have moved away since then. Many of them moved out of high-tech careers. It is nearly impossible to go back into engineering after a few years away, so we have lost many American-born engineers and now depend more than ever on offshoring.
Ten years ago, Silicon Valley led the world in semiconductors, PC software, networking hardware, multimedia, and biomedical research. Now it has big established Internet companies (far fewer with far fewer employees than before) and some biomedical companies up against competition in countries where there is much more funding and farsightedness. There is far less diversity in technology, less risk taking, and the tech industry has a greater percentage of employees working for huge companies like Google than the small start-ups that gave us the innovation of the boom years.