Saturday, September 17, 2005

Silicon Valley: We Need Welfare!

Silicon Valley Losing Its Edge - Yahoo! News

I spent years in the semiconductor industry; it's a harsh business. The management credo is: mandatory overtime until the layoffs start. Its business cycle is short and steep; during the up cycle it's raining cash, and the down cycle is a bloodbath.

That being said, it pays well if you can avoid the axe. Well, let's say "historically" it has paid well. As the industry ages, it's taking the same unethical route that all American manufacturing is taking. Offshoring, outrageous upper management pay, and dramatic cuts in benefits are par for the course. (Semiconductor companies, save for IBM and Motorola, traditionally avoided pensions; so there won't be any mass bankruptcy filings to screw the workers in that fashion.)

So forgive me if I question the value of this analyst report on how to "save" Silicon Valley.
"Silicon Valley is going to lose its competitive advantage if it can't improve public education and traffic flow, contain the cost of housing, and reduce the effect of sales tax on manufacturing, says a report scheduled for release Sept. 21 by the Silicon Valley Leadership Group."

I won't necessarily disagree with this statement, taken as a whole. But 80% of the report is fluff to cover its true intention.

It's doesn't take much further reading of the article to find that true intention:
"The group, formerly known as the Silicon Valley Manufacturing Group, has made exempting manufacturers from the state's 6% sales tax on capital equipment purchased for manufacturing one of its key goals ...the exemption would save manufacturers in the state an estimated $2.9 billion ..."

This is the goal, this is the reason an analyst wrote the report, and this is what a Republican gropenator will sign.

While having a Republican governor helps, a Democrat would be just as likely to sign it; and it's this kind of policy that attains the neocon goal of a smaller middle class and concentration of wealth.

First of all, every company extorts every state for corporate welfare. Every company says it's taking its ball and going home, and every state caves. So this report came into being, whatever the stated agenda of the analyst, to further the goals of wealthy corporate entities.

This unabashed blackmailing screws the taxpayers of an entire state, so in and of itself it's reprehensible behavior. But it doesn't stop there. Let's look at the other "ideas" in the report:
"To remain competitive, the area must invest more in its highway and education infrastructure, while encouraging manufacturing ..."

And the loss of $3 billion in taxes will increase or decrease the odds of this happening? The govenator will declare those other proposals dead on arrival, so the tax cut will be the only result of this "study."

There have been plenty of other studies showing that smart corporations really have no desire to carry out their threats of leaving states if they don't pay the ransom. For example, Arizona has been victimized by both Intel and Motorola: do you really think either company would pack up and leave multi-billion dollar wafer fabs behind? Chip manufacturing requires huge amounts of water, and these fabs are smack dab in the middle of a desert. It's not the ideal geography that lured them here, and a little frosting from the state treasury won't make them stay. (Christ, the only reason Arizona is such a hot destination in the first place is low wages, thanks to the "right to be fired" laws.)

That leaves the threat of never expanding in your state again if you refuse to hand over your wallet. Well, here's a shocker, they don't intend on expanding manufacturing in your state anyway.

Corporations may be heartless, but they aren't stupid. They have long-term plans; if they were going to build in your state, they will build in your state without the welfare. The sad truth is, however, that there are indentured servants in overseas locations who have no choice but to work for food in the latest American factory. Your little treasury giveaway isn't going to make up for low pay, no labor laws, accepted environmental destruction, and (more) corrupt political systems.

So here's my suggestion to Californians. Tell Silicon Valley to go fuck itself.

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