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Copyright 2000 by the Cato Institute.All rights reserved.

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Cato Institute1000 Massachusetts Avenue, N.W.Washington, D.C. 20001www.cato.org


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The media and political pundits wantSilicon Valley to become moreengaged in the politics of Washing-

ton, D.C. We CEOs are constantly told tostop sitting on the political sidelines; recog-nize the value of industry-government part-

nerships; and become donors, lobbyists,and recipients of subsidies.

We could make no bigger mistake thanto normalize relations with Congress andthe White House. The political scene inWashington is antithetical to the core valuesthat drive our success in the international

marketplace and risks converting entrepre-neurs into statist businessmen. The collec-tivist notion that drives policymaking inWashington is the irrevocable enemy ofhigh-technology capitalism and the wealthcreation process. Silicon Valley CEOs

should withdraw from Technet, the high-tech lobbying association; oppose corporatewelfare programs; and stand together tovigorously defend companies likeMicrosoft, Intel, and other high-tech firmswhen they are under assault by the govern-ment.

1

T. J. Rodgers is president and CEO of Cypress Semiconductor. This is an edited version of

his remarks at the Annual Cato InstituteForbes ASAP Conference on Technology andSociety, "Washington, D. C., versus Silicon Valley," November 19, 1998.


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Introduction

Silicon Valley went political for the firsttime in 1996 to stop Proposition 211, theCalifornia ballot initiative that would havesubjected Silicon Valley companies to ablizzard of shareholder lawsuits. Of course,real shareholders almost never bring share-

holder lawsuits. Rather, those suits arebrought by securities litigation specialistssuch as Bill Lerach, the market share leaderin suing high-tech companies. Lerach wasthe author of Proposition 211.

During my 28 years in Silicon Valley, Isaw Intels chairman emeritus, GordonMoore, only about once a year. Our conver-sations were almost exclusively about thechip business. During one extraordinarythree-month period in 1995, however, I metfour times, not only with Moore but with alarge group of other Silicon Valley CEOs, to

talk politics: how to defeat Proposition 211.That Silicon Valley leaders would conveneand contribute $30 million to a politicalactivity was unprecedented. We did itbecause Proposition 211 threatened the coreof how we do business. For example, one ofthe provisions of Proposition 211 wouldhave made it illegal for companies to indem-nify their boards of directors against law-suits. How could any Silicon Valley compa-ny assemble a board of directors if the direc-tors personal property were subject to the

vagaries of class action lawsuits?We defeated Proposition 211 by a three-to-one margin, but our activism on the issuetriggered the ongoing media reports on thepolitical greening of Silicon Valley. Themedia badly want us in the action: SiliconValley should stop sitting on the sidelines,stop being political isolationist technonerds,recognize the value of government-industrypartnerships, become part of the process,and help lead the country.

I believe we could make no bigger mistake.Silicon Valley is what it is because of the values

that drive our success. The politics-as-usual thatwe ignore is antithetical toand highlydestructive ofour core values. I will build theframework for that conclusion, starting with thebasic American freedoms that allow for theexistence of Silicon Valley:

Freedom and free markets (that is, capi-talism) are built into the Constitutionand the Bill of Rights.

Freedom creates prosperity. Silicon Valley is an island of freedom

and free markets, more in line with 1776America and its laissez faire governmentthan with 1999 America and its interven-tionist government.

Many CEOs practice, not free-marketcapitalism, but collectivism in one of its

forms. Collectivism is the irrevocable enemy of

capitalism. The collectivism that big government

espouses undermines capitalism andtherefore the fundamental wealth-pro-ducing process of Silicon Valley.

A normalized relationship betweenWashington and Silicon Valley, throughorganizations such as Technet, offersonly disadvantages to Silicon Valley.

Freedom in America

The basic premise of freedom is this: Iown myself. Therefore, I do what I want andgo where I wantsubject, of course, to theresponsibility of respecting the freedom ofothers.

Our freedoms beyond self-ownership areenumerated in the Bill of Rights, constitu-tional amendments one through ten. (I rec-ommend the Cato Institutes pocket-sizededition of the Declaration of Independence

the Constitution, and the Bill of Rights.)The First Amendment calls for freedomof religion, speech, press, and assembly. Theform of those rights is particularly impor-tant: Congress shall make no law prohibit-ing the freedom of. . . . I call this form aprotective right, because it tells us whatthe government cannot do to us, not whatthe government promises to do for us. I con-trast it to the so-called right to a decentwage, for example, which I refer to as anentitlement right, one that is not part ofour basic freedomsand that should not be.

Furthermore, the Bill of Rights finisheswith the Tenth Amendment, which imposesa limit on government: The powers not del-egated to the United States by theConstitution . . . are reserved to the statesrespectively, or to the people. In otherwords, the government is specifically for-bidden to meddle in areas where no powersare expressly granted.

The Bill of Rights takes the form of pro-

2

The politics-as-usual that weignore is anti-

thetical toandhighly destruc-

tive ofour core

values.


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tective rights to protect us from government,because our Founders did not trust unfettereddemocracy. John Adams, our first vice presi-dent and second president, had this to say:

We may appeal to every page of histo-ry we have hitherto turned over, forproofs irrefragable, that the people,when they have been unchecked, have

been as unjust, tyrannical, brutal, bar-barous, and cruel, as any king or sen-ate possessed of uncontrollable power.The majority has eternally, and with-out one exception, usurped over therights of the minority.

A contemporary example of what JohnAdams warned of was CaliforniasProposition 10, an initiative to tax smokers50 cents on each pack of cigarettes and ear-mark the money to help children througha new, ill-defined, statewide bureaucracy.

Even if we dislike smoking and believe inhelping children, we should never supportany government action that confiscates theproperty of a minority group at the whim ofa 50.1 percent majority. High-tech leadersMicrosoft and Intel are currently learningthat they, too, can be victims of governmentwitch-hunts, just as the tobacco companieshave been.

The Constitution also allows individualsto own their own thoughtsthat is, theirintellectual propertythanks to our patent

system. With the right to own real and intel-lectual property comes the right to freelytrade property with others. Thats the basicmechanism of capitalism: free trade betweenconsenting adults.

But consider the so-called living-wagemeasure adopted by the city of San Jose.One advocate of the new $10.75 per hourmandated wage said that we should find itin our hearts to pass the measure.Unfortunately, he had to reach into someoneelses pocket to pay for his own compassion.Thats what is wrong with minimum wage

laws: they strip away the basic right of con-senting parties to freely trade their goodsand services in the noncoercive marketplace.Minimum wage laws are not about compas-sion; they are about the exercise of power bythe state.

Capitalists often defend free markets byresorting to economic rather than moralterms. The president of the San JoseChamber of Commerce argued against the

new living-wage law because it will causeeconomic harm. That is surely true, andmost of the harm will be to the poor, manyof whom will face the prospect of beingfired from their jobs under the new lawbecause they cannot provide the value towarrant their new nonmarket salary. Again,minimum wage laws are wrong becausethey immorally strip away our freedom to

trade our labor services freely.Minimum wage laws are one example of

entitlement rights. Other examples include agovernment guarantee to health care, childcare, or a job. Although we all want a worldwith good wages, universal health care, andlow unemployment, we must realize thatthose goals are not rights at all in the senseof our constitutional rights. They are nothingmore than a government demand that

Americans surrender their property andwages to achieve government-mandatedobjectives. If we believe in the protective

rights outlined in the Constitution, we can-not consistently believe in any entitlementright that negates those basic rights.

America, The First FreeNation

America was founded on principles soradical and breathtaking that they shocked theworldand the world has stayed shocked.Our Constitution defines a government built

from the bottom up (the people own the gov-ernment that is created to serve them) ratherthan from the top down (the king, dictator,tribe leader, or politburo owns people andtheir property). Americas government wasclearly distinguished from the systems ofenlightened despotism that were at the time(and in some circles still are) all the rage. AsKing James I of England (then James VI ofScotland) wrote, The King is above the law,as both the author and giver of strength there-to and as to dispute what God may do isblasphemy . . . so it is sedition in subjects to

dispute what a king may do in the height ofhis power. People came to this country toescape the world of the absolutist monarchsand establish a new nation conceived in lib-erty, and dedicated to the proposition that allmen are created equal. In our bottom-up sys-tem, the first 10 amendments are protectiverights, covering most daily activitiesspeak-ing, praying, owning things, defending onesselfover which government control is

3

We should neversupport anygovernmentaction that con-

fiscates theproperty of aminority groupat the whim of a50.1 percentmajority.


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explicitly forbidden. The mindset was trulyrevolutionary: We are the people; we ownthe governmentand it will not be allowedto interfere with us in the following ways.

I wonder what the Founding Fatherswould say about the federal governmentscurrent micromanagement of our daily lives,such as in the case of the meat-packing plantin Cincinnati, Ohio, that was penalized one

week by the Food and Drug Administrationfor unsanitary plant conditions and by theOccupational Safety and Health Administra-tion the following week for unsafe workingconditions caused by floors frequently wetfrom washing.

In addition to providing the personal andeconomic freedoms outlined in the Bill ofRights, our original Constitution did notallow a federal tax to be imposed on individ-uals; no revenue stream was to be created tofeed a potential monster. Americans paid nofederal taxes until 1913, when we mistaken-

ly passed the Sixteenth Amendment to allowthe federal income tax. The passing of thatamendment planted the seeds of the duplici-ty that is common in tax legislation today.The Sixteenth Amendment was passed witha promise that there would be a top-brackettax of only 7 percent levied on only the rich-est 1 percent of Americans. The promiselasted three years. By 1918 the averageAmerican was taxed, and the top-bracketrate reached 77 percent. Because no onewould ever really pay a 77 percent income

tax, we instituted some destructive systems:complex tax laws to aid in tax dodging, con-gressional micromanagement of the econo-my using tax breaks, and the practice of giv-ing political contributions in return for taxbreaks and subsidies.

The corporation has always been animportant part of our economic freedom,even in colonial times. Corporations enablepeople to work together with joint limitedliability. That means that if the company wework for becomes liable to another companyor individual, our personal property cannot

be confiscated, only that of our company.One reason Proposition 211 was so abhor-rent to Silicon Valley was that it would havemade it illegal for the directors of a compa-ny to have the same individual liability pro-tection enjoyed by all other companyemployees. Without corporations, individu-als would not organize to perform tasksgreater than they could achieve alone.Americans did not invent corporations, but

we embraced them. By 1800 there weremore corporations in America than in all ofthe great countries of Europe combined.

Freedom Creates Prosperity

Novelist and philosopher Ayn Rand onceasked the rhetorical question: Where did

the extra come from? She was referring tothe wealth created by capitalism. She notedthat after the development of capitalism,wealth creation reached the rate of 300 per-cent per century, whereas before capitalismthe world had achieved a rate of only 3 per-cent per century. My most accurate estimateof wealth creation since 1776 is 458 percentper century (Figure 1).

Rand was rightsomething big did hap-pen around 1776 and the common manbecame much more prosperous, much faster,than ever before in history. The real growth

rate per capita for the past 200 years hasexceeded 400 percent per century.

A contemporary look at the relationshipbetween freedom and prosperity is producedyearly by Canadas Fraser Institute, whoseEconomic Freedom Index ranks countriesaccording to complex measures that include

the size of government as a percentageof the economy,

government investment relative to theprivate sector,

the use of price controls, the top marginal tax rate, the right of citizens to own foreign currency, the right of citizens to hold foreign bank

accounts, the protection of property rights, the freedom to trade with foreigners, taxes on international trade, private versus public bank ownership, the use of interest rate controls, and the use of conscripts as military personnel.

It is interesting to note that the military

draft is considered in an economic context,separate from its impact on human rightsHowever, if you think back to the basic rightsof owning yourself and of trading your ser-vices to others at a mutually agreed-on price,there is a big difference between forcing peo-ple to join the military under the threat of jailand obtaining a voluntary agreement withpeople to serve in the military for compensa-tion. I doubt that the Vietnam War would

4

The corporationhas always

been an impor-tant part of our

economic free-dom, even incolonial times.


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have happened if Americans had had to pay

for it at free-market prices.The factors in the Fraser index are weight-ed and condensed into a single scale thatranges from 0 to 10, the best score. All of theworlds prosperous, large economiestheUnited States, the United Kingdom, Canada,Japan, Germany, and Francehave freedomindices in the top 20 percent of the index.Conversely, Frasers bottom 20 percent ispopulated exclusively by economic trainwrecks (Table 1).

A comparison of the five quintiles of theFraser Economic Freedom Index shows that

countries in the top 20 percent of the indexhave a per capita income more than fivetimes that of countries in the bottom 20 per-cent (Figure 2).

In addition to earning a higher yearlyincome, people in freer countries see theirincome growing at a faster rate than do peo-ple in countries with less freedom. In theleast-free countries, per capita income isactually shrinking (Figure 3). The adage that

the rich get richer and the poor get poorer is

a fact. The rich get richer, not because ofsome unfair advantage, but because theyhave freedom and free enterprise. Again, weshould remember our priorities. We are freebecause that is morally rightand we areprosperous because we are free.

Silicon Valley:Basic American Values at

Work

The free market in Silicon Valley is not

well ordered or even predictable. People arefree to quit, to start up their own companies,and they often do. Yet, more often than not,start-ups end in failure. Three of four do notmake it. That tolerance for failure is animportant factor that distinguishes theSilicon Valley economy. When a start-upcompany fails in Silicon Valley, no onewails about the unfairness of foreign compe-tition or the need for government interven-

5

$100

$1,000

$10,000

$100,000

0 176 376 576 776 976 1176 1376 1576 1776 1996

30,000 B.C., less than $1.00

3% per century

458% per century

Figure 1

Per Capita Gross Domestic Product

Sources: Ayn Rand, Philosophy: Who Needs It(Indianapolis: Bobbs-MerrilL, 1982), p. 80; U.S. Bureau of the Census,Historical Statistics of the United States: Colonial Times to 1970 (Washington: Government Printing Office, 1975);

Budget of the U.S. Government 2000, Historical Tables (Washington: Government Printing Office, 1999), pp. 2122;

and author's calculations.

Year


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Rank Country Weighted Index

Top Quintile

1 Hong Kong 9.62 Singapore 9.4

3 New Zealand 9.24 United States 9.1

5 United Kingdom 9.06 Canada 8.87 Argentina 8.7

8 Netherlands 8.69 Panama 8.6

10 Australia 8.611 Luxembourg 8.612 Ireland 8.6

13 Switzerland 8.514 Japan 8.3

15 Denmark 8.316 Norway 8.3

17 Belgium 8.218 El Salvador 8.219 Finland 8.2

20 Germany 8.221 France 8.122 Sweden 8.0

23 Bahrain 8.024 Oman 7.9

Bottom Quintile

95 Pakistan 5.096 Niger 5.0

97 Mali 5.0

98 Senegal 5.099 Chad 4.8

100 Burundi 4.8101 Nepal 4.8

102 Benin 4.7103 Syria 4.7104 Nigeria 4.6

105 Congo, Rep. 4.5106 Bangladesh 4.4

107 Togo 4.4108 Ukraine 4.2109 Central African Rep. 4.2

110 Algeria 4.2111 Madagascar 4.2

112 Romania 4.2113 Malawi 4.1114 Sierra Leone 4.1

115 Albania 4.1116 Rwanda 3.5

117 Congo, Dem. 3.2118 Guin.-Bissau 3.1119 Myanmar 2.5

6

Table 1

Economic Freedom Index, 1997

Source: James D. Gwartney and Robert L. Lawson,Economic Freedom of the World: 19981999

Interim Report(Vancouver: Fraser Institute, 1997).


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tion. We simply say something like, Didyou hear that Schlock Tech cratered? Andthen we get on with making sure we do not

suffer the same fate. Failure is OK in SiliconValley because we truly believe that peopleare the key asset of any company and thatthe newly defeated will be quickly reem-ployed to try again.

When one of our competitors had a largelayoff, Cypress hired an airplane to fly overits headquarters, hauling a banner with ourname and Web address. Although the rightto fail is a key attribute of a truly capitalisticeconomy, it is alien to the security-seekingold economy. When Chrysler got into trou-ble, it successfully pleaded for a government

bailout to save jobs. In 1998, when the steelindustry faced competition from abroad, itturned to Congress and the administrationfor protection. When Intel got into suchdeep trouble in 1985 and 1986 that it laid offone-third of its workforce, it never asked fora bailout, and there was no surge in unem-ployment. The rest of Silicon Valley simplyhired the windfall of exceptional talent.

When a Silicon Valley company can no

longer afford to support its employees andshareholders, it is natural and right that theprocess Joseph Schumpeter described as

creative destruction be allowed to moveemployees from low-productivity jobs in atroubled company to higher-productivity

jobs elsewhere. It is not only wrong tocoerce people into supporting a failing com-pany; it is also economically disastrous forour government to save old, low-productivi-ty jobs just because a company has devel-oped a skillful lobbying department.

The basic right of individuals to owntheir ideas takes on particular importance inSilicon Valley. Most ventures are fundedexpressly for their intellectual property.

Cypresss original intellectual property con-sisted of a way to make transistors fasterthan our competitors could as well as a busi-ness plan to bring that technical capability tothe market. Our 15-page business planandthe six founders to pull it offsold to a con-sortium of six venture firms for $3.5 million.Today, Cypresss market capitalization hasgrown to approximately $1 billiona typi-cal, even modest, story of wealth creation in

7

$14,829

$12,369

$6,385

$3,057$2,541

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

1 2 3 4 5

Figure 2

GDP per Capita versus Economic Freedom

Source: James D. Gwartney and Robert L. Lawson,Economic Freedom of the World: 1997 Annual Report(Vancouver: Fraser

Institute, 1997), p. 34.

1995 Economic Freedom Quintile


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Silicon Valley.Silicon Valley is an economic meritocracy

where people know that salary is not the pathto prosperity. They know that owning a pieceof the actionand then making the actionworth a lot of moneyis the only way toprosper. Here, the greatest wealth goes tothose who create the greatest value. Intelbecame rich because it sells 80 million com-puter chips a year for about $200 each, agreat value because each of those computerchips has about 50,000 times the power of a1950s vintage mainframe computer that costs$5 million.

Silicon Valley knows that the adage

money makes money is false. We know thatpeople make money, and money makesmoney only when it is invested in the rightpeople. Thus Silicon Valley considers peo-ple an asset, not a liabilitythe way govern-ment views them. So when we see an immi-grant we see, not a potential welfare case,but someone with an intellect, someone withthe potential to help one of our companies.The chairman of our board of directors and

four of Cypresss 10 executive vice presi-dents are immigrants.

Silicon Valley is a successful and dynam-ic example of the prosperous basicAmerican values, outlined earlier, at work:private property, intellectual property own-ership, free trade, and free markets. Just asAmericans are more prosperous than peoplein other countries because our economy isfreer, the people of Silicon Valley are betteroff than the average American because theSilicon Valley economy is even freer fromand less dependent on government.

I view Silicon Valley as a place of freeminds and free markets, to use the trade-

marked phrase of the Reason Foundation.Capitalism is not just an economic systemhere; it is a way of life. I always remember abumper sticker that read Capitalism: Whatpeople do when theyre left alone.

Free-market capitalism has made thewhole of Silicon Valley rich, not only itsCEOs. The 4.2 million factory workersemployed by the high-tech industry earnalmost twice the yearly wage of workers in

2.9

1.8

1.1

0.1

-1.9

-3

-2

-1

0

1

2

3

4

1 2 3 4 5

Source: James D. Gwartney and Robert L. Lawson,Economic Freedom of the World: 1997 Annual Report(Vancouver:Fraser Institute, 1997), p. 34.

Figure 3

Growth of Real GDP per Capita 198596

1995 Economic Freedom Quintile

8


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other industries. And our markets haveenabled us to become strategically importantto America, as we have invented or com-mercialized revolutionary innovations suchas the silicon chip, the computer, geneticengineering, and the Internet.

I do not want more government inSilicon Valley. Government can do only twothings here: take our money, limiting our

economic resources; or pass laws, limitingour other freedoms. Even in Washington,alluring subsidies come at a high cost to ourindustry. Washingtons money is never free.

Many CEOs AreNot Capitalists

The question then arises: Why doesSilicon Valley seem to be going political?Why do we see some of our CEOs activelyembrace Washington and the rhetoric of

industrial politics? The counterintuitiveanswer is that many businessmen are not cap-italists, as I have defined that term. Indeed, inmany corporations, there are better capitalistsin the stockroom than in the boardroom.

I used to naively assume that a CEO, by thenature of his or her job, was a free-market capi-talist. That view became problematic when Inoted that some CEOs did very noncapitalisticthings, such as lobby for corporate welfare. Iwondered: Was there some sort of new capital-ism, embodying concepts such as government-

industry partnerships, which transcended mytraditionalist version? The Cato Institute essayThe Paradox of the Statist Businessman, byTheodore J. Forstmann, addresses the apparentcontradiction.

Forstmann points out that just as thebasic values of many ministers have beenundermined by the TV evangelist JimmySwaggart, so are the values of capitalistCEOs undermined by what Forstmann callsthe statist CEOs, those CEOs who competeusing the power of the state.

The prototype capitalist CEO lives right

here in Silicon Valley. He or she is an entre-preneur with a position earned on merit, oftenthe head of a start-up company that has creat-ed wealth not only for the CEO but alsobroadly for employees and shareholders.

Lets contrast a hypothetical SiliconValley capitalist businesswoman with ahypothetical statist businessman. To visual-ize the statist businessman, think about thebehemoth company you dislike mostthe

one that is arrogant, treats its customerspoorly, has lost market share, is alwaysdownsizing, and fights a protracted battlewith hostile, unionized employees. Its CEOis almost undoubtedly a statist businessman.

While the entrepreneur earned or createdher position, the statist businessmanachieved his position by climbing the corpo-rate ladder, much the same way a politician

climbs the political ladderby curryingfavor with the right people, by not steppingon the wrong toes, and by building a powerbase. And like the politician who has clawedhis way to the top, holding power is the sta-tist businessmans top priority, even abovethe interests of his company. Meanwhile, theentrepreneurial businesswoman has no timefor corporate power struggles. She has toconcentrate on the tumultuous world ofSilicon Valley, where a new start-up or well-staffed big company might take a devastat-ing toll on the competition in only a few

quarters.The statist businessman draws a huge

salary and bonus, as negotiated by hisagents. His perkscorporate jets, limos,lavish expense-account dinnersare thereward for climbing the ladder. The corpo-rate jet is a Silicon Valley joke. Gil Ameliosshort tenures as CEO of NationalSemiconductor and then Apple Computerwere punctuated by derisive reports on howhe insisted that each company pay for hisprivate airplane. Once, as I flew in a middle

seat in coach class into Beaufort, SouthCarolina, to speak to a Fortune 500 confer-ence, I counted 52 corporate jets that flew inpeople for golfand a little conferencing.

By contrast, the entrepreneurial CEOkeeps her salary and bonus very modest byFortune 500 standards. That is not to saySilicon Valley entrepreneurs cannot get rich;Intels founders have earned hundreds ofmillions of dollars in capital gains. It is easyto make $100 million in Silicon Valley. Allyou have to do is own 1 percent of yourcompany and then spend 20 years making

that company worth $100 billion. Intels cur-rent $160 billion market capitalization wascreated from nothing. Intels employees andshareholders benefited with more than $99of capital gain for every $1 collected by itsfounders.

The statist businessman wins by using thestate to gain competitive advantage. His largeand effective lobbying organization is skilledat reducing taxes on his company, increasing

9

The prototypecapitalist CEOlives right herein Silicon Valley.

He or she is anentrepreneurwith a positionearned on merit,often the head ofa start-up com-pany that hascreated wealthnot only for the

CEO but alsobroadly foremployees andshareholders.


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the taxes and regulations on competingimport products, creating quotas to block theimports he cannot tax away, and lobbying forporkthose government-industry partner-ships that allow him to continue in businessesthat would not otherwise be economically

justified. Archer Daniels MidlandCorporations chairman, Dwayne Andreas, isone of the most effective statist CEOs,

dubbed the prince of political influence bythe Wall Street Journal. About half of ADMsagricultural products are subsidized or pro-tected by the federal government. The com-pany rakes in $400 million a year from thegovernment, gives lavishly to both majorpolitical parties, and advertises heavily onSunday morning TV political talk shows.ADM gets my vote for the most unreasonablesubsidy: a tax break on each gallon of corn-ethanol that exceeds the production cost ofthe gallon of gasoline it replaces.

While the statist CEO has a well-staffed

Washington office and a government actionagenda, most Silicon Valley companies donot have any presence in Washington at all.Even large Silicon Valley companies, suchas Intel, have only a modest presence inWashington. And even then, Intels six full-time lobbyists do only defensive worktoprotect the company from inappropriate,top-down government mandatesratherthan lobby for corporate welfare.Unfortunately, that situation is changing.Silicon Valley is building a Washington

presence and getting in the game.The differences between the capitalistentrepreneur and the statist businessmancould not be greater: It is the differencebetween free-market capitalism and the col-lectivism inherent when government distortsfree-market activity. The statist businessmanis no friend of Silicon Valley. He could notbe more different from Silicon Valley lead-ers, even though his title may be CEO.

Collectivism, Enemy of

CapitalismThere are many forms of collectivism,

some mislabeled capitalism. The formerSoviet Union is a straightforward example,where collectivism took the form of social-ism, an unmitigated economic disaster.Collectivism in North Korea is leading to thesystematic starvation of the citizens. Considerthe Japanese keiretsus and Korean chaebols.

They are labeled crony capitalism by themedia but are really nothing more than muta-tions of collectivism.

The freedom of Americans to invest theirmoney in a diverse, international money mar-ket free of capital controls gives Americansfinancial freedom and contributes to our highscore on the Fraser Economic FreedomIndex. The Japanese money market is not

free. Japanese people cannot choose among500 different mutual funds. Free-market com-petition for Japanese investment by Americanfinancial institutions is banned by the croniesthat run crony capitalism. In the UnitedStates, it is the venture capitalists who pickwinners and losers. In Japan, it is the centralgovernment. In the past seven years, theJapanese stock market has lost more than halfits value. Over the same time period, the DowJones has tripled.

With limited investment choices, Japaneseworkers put their money into post office

accounts, which currently pay 0.25 percentinterestyes, you heard me correctly. Ofcourse, any American financial institutionwould be overjoyed to give the Japanese peo-ple 2.5 percent interest, 10 times the goingrate, but that is not allowed. Having used thegovernment to block free-market choice forsavings, the keiretsus then exploit their gov-ernment-industry partnerships to use thecheap money as they want, usually as below-market loans to subsidize manufacturingcompanies.

Although the men who run thekeiretsus

are much more competent than those whoran the Soviet Politburo, no elite powerstructure can make decisions in the dynamicworld economy as well as the free market-place can. The keiretsus seemed unstoppablein the 1980s, when they effectively attackedour semiconductor industry. But the strategyof the Japanese keiretsus and Korean chae-bolsto use nearly free money to gain mar-ket share without regard to profitabilityhas no more economic integrity than a Ponzischeme. It just takes longer to collapse.

Meanwhile, in Silicon Valley, Americaninvestors, represented by their tough andaggressive mutual fund managers, demand-ed fair returns on their money, forcing ourcompanies into a pay-as-you-go mode.With 6 percent money, our industry had atough time competing against Japanesecompetitors with 0.25 percent money, butthe free-market capitalism of Silicon Valleyprevailed over Japans collectivist misallo-

10

No elite powerstructure can

make decisionsin the dynamic

world economyas well as the

free marketplacecan.


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cation of resources. After a brief period ofmarket-share leadership, the Japanese semi-conductor industry has collapsed far intosecond place with a 32.5 percent marketshare, compared with Americas 49.2 per-cent, according to Dataquest, the semicon-ductor research organization.

Clyde Prestowitz declared the demise ofthe American semiconductor industry in his

naive book Trading Places, a work thatbecame the mantra for every collectivist inWashington who wanted more control ofSilicon Valley. The Japanese semiconductorscare produced Silicon Valleys only non-capitalist aberration, the successful lobbyingeffort to gain $1 billion in corporate welfareto support Sematech, a semiconductorindustry consortium. Fortunately, our lead-ers woke up quickly and dumped the sub-sidy while hundreds of millions of dollarswere still available. The current charter ofour Semiconductor Industry Association

calls for free and open markets, and theSIA board of directors is on record as sayingthat it will not lobby for government subsi-

dies. What Washington lobbying group doyou know that stands for free and open mar-kets with no subsidies?

In 1997 I testified before Congress in sup-port of the elimination of the Department ofCommerce, a primary delivery vehicle for cor-porate pork. By circulating a statementdenouncing corporate welfare only 48 hoursbefore my departure, I was able to get signa-

tures of 79 Silicon Valley CEOs, who agreed tosign a declaration of independence from corpo-rate pork, even if it meant that their companieslost government funding. Do you think I couldconvince Archer Daniels Midlands chairmanto sign that document? I even tested one of myicons, Jack Welch, the CEO of GeneralElectric, a big recipient of corporate welfare.Jack said no in a letter written in bafflegab byone of his government relations people.

What Jack and others do not seem tounderstand is that the price of corporate porkis less freedom and higher taxes. Currently,

our state, local, and federal governmentscontrol about 35 percent of our gross domes-tic productthat is, 35 percent of the com-

11

0%

10%

20%

30%

40%

50%

60%

1900

1904

1908

1912

1916

1920

1924

1928

1932

1936

1940

1944

1948

1952

1956

1960

1964

1968

1972

1976

1980

1984

1988

1992

1996

World War I

29%

World War II

49%

Present

35%

Sources: U.S. Bureau of the Census, Historical Statistics of the United States: Colonial Times to 1970 (Washington: Government Printing Office, 1975),Series F 1-5, Y 522532;Budget of the U.S. Government 2000, Historical Tables (Washington: Government Printing Office, 1999), pp. 2122 ; and U.S.

Bureau of the Census, Statistical Abstract of the United States (Washington: Government Printing Office, various editions) .

Figure 4

Total Government Outlays as a Percentage of GDP


14/20

bined output of every American (Figure 4).Before the federal income tax was enact-

ed in 1913, only 10 percent of Americasthen-small GDP was required to run thegovernment. During periods of war, theamount spiked up, but it later returned closeto previous levels. There are two noticeableperiods of American economic socialization:in the 1933s, when President Franklin

Roosevelt took a second 10 percent ofAmericas output for the Great Depression,and in the postWorld War II period, whenAmerica and other democracies began aprocess of economic socialization. PresidentRonald Reagan mitigated that trend in the1980s, but he did not reverse it.

Although you may think that 35 percentof GDP is an excessive cost for government,most of the socialized democracies ofEurope spend close to 50 percentand havestagnant economies to show for it.

To fund all of this government, we now

have a federal tax of 39.6 percent levied onSilicon Valley CEOs and a 36 percent taxlevied on their companies. The standardargument for higher taxes is that they fund agreater good, such as curing cancer. Ofcourse, it is not at all clear that cancer couldnot be cured more quickly and cheaply withprivate funds, or that the greater goodespoused is always as noble as fighting can-cer. My favorite line item in the fiscal year1998 omnibus budgetpork-barrel legisla-tion of cosmic proportionis $500,000 for

horse manure management. I am not joking.It is really in there. While you laugh, let meadd that there is another $500,000 line itemfor pig manure management. Two congress-men, two states, two campaign promiseskeptit is the American government way.

Let me attack the tax-for-greater-goodargument as it applies to us in Silicon Valley.Consider the effect when the Clinton-Goreadministration raised the tax on SiliconValley companies from 35 percent to 36 per-cent. Vice President Gore basks in the tech-nology image that a few Silicon Valley lead-

ers have given him. But that extra 1 percenttax Gore levied on Silicon Valley takes awaybillions of dollars from Silicon Valleymorethan $400 million a year from Intel alone.From Washington we hear the preposterousclaim that high-tech V.P. Gore can do betterby investing the $400 million than couldIntels CEO Barrett. I state the obvious:Every American would be better off if CraigBarrett invested the $400 million.

An equally absurd situation arises whenthe government taxes Silicon Valley CEOsat a rate of 39.6 percent. By raising the taxon top-bracket individuals from 36 percentto 39.6 percent, the Clinton-Gore adminis-tration will have extracted in the neighbor-hood of $1 million in extra taxes from theaverage Silicon Valley CEO by the time thatadministration ends in January 2001. In my

case, I have paid those extra taxes by sellingoff some of my investments, most of whichare in electronics, biotech, and Internet-relat-ed companies right here in the valley. Manyof those companies are funded by venturecapitalists with whom I work. I often evalu-ate companies, people, and business plansfor venture capitalists. Sometimes I even

join the boards of start-up companies to helpthem succeed. Who would best invest thelast $1 million that I earned and gave to thegovernment, Gore or I?

Silicon Valley is an island of capitalism in

a sea of collectivism. We are surrounded bybig governments, big unions, big media, andbig, statist corporations. We are an island ofmeritocracy in a sea of power struggles. InSilicon Valley, the phrase what you know ismore important than whom you know is afact of life, not an unrealized ideal.

Do Not Normalize SiliconValleys Relationship with

Washington

By the very way it works, Washingtonundermines the free minds and free marketsthat are the cornerstone of Silicon Valleyssuccess. Republicans claim that their partystands for free markets, but they haveproven over the past five years to be as bigspenders as are the Democrats. TheDemocrats claim that their party stands forindividual freedom, but they have alwaysbeen the party of the free lunch, the partywilling to tax and spend because they arro-gantly believe they have a better idea of

what to do with your money than you do.The metric that differentiates SiliconValley from Washington does not fall alongconventional political lines: Republican ver-sus Democrat, conservative versus liberal,right versus left. It falls between freedom andcontrol. It is a metric that separates individualfreedom to speak from tap-ready telephones;local reinvestment of profit from taxes that goto Washington; encryption to protect privacy

12

Silicon Valley isan island of cap-

italism in a seaof collectivism.

We are sur-rounded by biggovernments,

big unions, bigmedia, and big,statist corpora-

tions.


15/20

from government eavesdropping; success inthe marketplace from government subsidies;and a free, untaxed Internet from a regulated,overtaxed Internet.

Once you understand that the left-right orliberal-conservative dichotomy fails to char-acterize the difference between SiliconValley and Washington, you will begin tosee that the Washington politicians who

argue vehemently about their supposedlyprofound differences are really cut from thesame cloth. Democrats raised taxes in 1993.Republicans have done virtually nothing tocut those taxes.

The political parties are not even deliver-ing on their half promises of freedom. TheRepublicans are not delivering on economicfreedom, and the Democrats are not deliver-ing on individual freedom. Newt Gingrich,the self-proclaimed champion of small gov-ernment, managed the passage of a bill topurchase hundreds of millions of dollars

worth of C-130 cargo aircraft that thePentagon stated publicly it did not want. ThePentagon has complained that it receivesunneeded C-130s every year, which it quick-ly passes along to Reserve units. Quite bycoincidence, those C-130s are made inGeorgia, Gingrichs home state. And TedKennedy, the champion of personal freedomwho protects individuals from big corpora-tions, authored a health care bill that, for nodiscernible reason whatsoever, allows theAmerican government to confiscate your

assetsyes, to violate the Constitution andtake away your propertyif you obtain for-eign citizenship.

Who goes to Washington? Those whohave chosen governingthat is, rulingfora profession. Washington is in the businessof restricting freedom and, therefore, in thebusiness of undermining the foundation ofSilicon Valley. On the economic side, whatdoes Washington really offer Silicon Valley?Consider the pork-barrel process by whichWashington works: It extracts 20 percent ofthe yearly output of Americans in federal

taxes, consumes much of it to run agrotesquely inefficient organization, and thenallows us to fight to recover in the form ofgrants and subsidies the rest of what we firstearned. Silicon Valley is not very good at thepork-barrel game. Statist companies haverefined their lobbying skills for decades. Wecannot and do not want to win at their game.Famous bank robber Willie Sutton, whenasked why he robbed banks, said, Because

thats where the money is. Today, SiliconValley is where the money is. Anyone whobelieves that money will flow uphill fromWashington to Silicon Valley is naive.

Simon Cameron, three-time U.S. senatorfrom Pennsylvania from 1847 to 1877, said,An honest politician is one who, when he isbought, stays bought. In 1996 SiliconValley invested in Bill Clintons campaign

because we thought he would be good forhigh tech. One of the few political issues ofinterest to Silicon Valley is shareholder liti-gation reform, an effort to protect our busi-nesses from continuous barrages by theshareholder lawsuit industry. More than halfof the member companies of the AmericanElectronics Association have been sued forshareholder fraud by a small group of lawfirms specializing in that lucrative endeavor.We must believe that either half of AEAmember companies are crooked or that agroup of lawyers is running amok. In 1995

Silicon Valley lobbied for the SecuritiesLitigation Reform Act, an act that puts ahigher burden of proof on plaintiffs in share-holder lawsuits before they are allowed toinitiate the extraordinarily expensive discov-ery phase of litigation.

The 1995 SLRA was carefully crafted bythe Senate to balance the opposing objec-tives of limiting frivolous lawsuits and pre-serving for those truly defrauded the right tosue. Even though Clinton wooed SiliconValley by telling us he supported litigation

reform, he had also taken political contribu-tions from plaintiff lawyers. He chose themover us and vetoed our litigation reform bill.Fortunately for us, the SLRA was so wellcrafted that a Democratic Congress overrodeClintons veto. Shortly after that fiasco,Clinton returned to Silicon Valley for somemore public relations and to raise money ata prominent CEOs house at a $50,000-per-plate dinner. One dinner topic was litigationreform. Clinton then accepted several hun-dred thousand dollars to perform a back flip.He turned on the securities lawyers and

denounced Proposition 211, which wouldhave effectively overridden the newly enact-ed SLRA in California.

Politicians know that playing both sidesof an issue often brings in money from bothsides. Clinton repeated the performance in1998 when he flew to Silicon Valley for onefundraiser and then flew to San Diego thenext day for another fundraiser hosted bySilicon Valleys legal nemesis, Bill Lerach.

13

Who goes toWashington?Those who havechosen govern-

ingthat is, rul-ingfor a pro-fession.Washington is inthe business ofrestricting free-dom and, there-fore, in the busi-ness of under-

mining the foun-dation of SiliconValley.


16/20

Providing political funding to theClinton administration may give SiliconValley a temporary advantage on someissues, but in the long haul, this adminis-tration undermines our basic values.Republican Bob Dole was the patron saintof ADMs billions of dollars in taxpayersubsidies. Dole flew on ADMs planenumerous times at submarket rates and

purchased a Florida condominium fromADM, also at a submarket price.

Pork-barrel politics is not only wrong;it is also highly inefficient. Often thegrants that come back to Silicon Valley arepoliticized into worthlessness. For exam-ple, several years ago, Electronic Newspublished a report about making galliumarsenidea semiconductor several timesfaster than siliconaboard the space shut-tle. Despite my own graduate-level train-ing in transistor physics, and the fact that Iwas a member of the board of directors of

Vitesse Semiconductor, the largest com-mercial manufacturer of gallium arsenidechips, I could see no economic benefitwhatsoever in the space chips. Neither didLou Tomasetta, Vitesses CEO, who calledthe space chips a solution looking for aproblem. In this case, an industry-govern-ment partnership launched several $150million shuttle flights without consultingwith the industry partners, who wouldhave predicted correctly that the chips inspace program was useless. That is a clas-

sic and apparently contagious example ofcollectivist science. When I visitedZelenograd, Russias version of SiliconValley, near Moscow, I found that thePolitburo had funded the same project.Stacked neatly in the corner of a museumwere space-grown crystals, not only of gal-lium arsenide, but also of indium anti-monide and lithium niobate.

On the personal side of freedom,Washington is in the control business butfaces an obstacle described by Ayn Randin Atlas Shrugged: Theres no way to rule

an innocent man. The only power govern-ment has is to crack down on criminals.When there arent enough criminals, onemakes them: one declares so many thingscrimes that it becomes impossible for mento live without breaking laws. One exam-ple is the law that makes it a federaloffense to carry your prescription drugsapart from their original container acrossstate linesin a pill box on an airplane,

for example.

The War against Microsoft

Nothing is more dangerous to the ethic ofsuccess and innovation in Silicon Valley thanthe antitrust laws. Antiquated, dating back tothe so-called trustbusting era at the beginning

of the 20th century, the laws in effect make itillegal for a company to be conspicuouslysuccessful. The ambiguity of the laws grantsthe Department of Justice huge powers todefine on an ad hoc basis what is legal andillegal, thus giving it control over companiesoperations. Often the government uses anoth-er oxymoronic device, the consent decree,to enforce its will on businesses seeking toavoid protracted litigation against a foe withunlimited resources.

Illogic comes from illogical lawsConsider the 1945 antitrust case of UnitedStates v. Alcoa Aluminum. Federal JudgeLearned Hand was both judge and jury inthat case, as is typical in antitrust cases. Hebroke Alcoa apart with a judgment that con-tained this rationalization:

It was not inevitable that [Alcoa]should always anticipate increases inthe demand for ingot and be preparedto supply them . . . before othersentered the field. It insists that it neverexcluded competitors; but we can

think of no more effective exclusionthan progressively to embrace eachnew opportunity as it opened.

Thats right, Alcoa was convicted andbroken apart for committing the crime ofbuilding an efficient company that gainedand expanded its market share!

Some high-tech companies are now con-spicuously successful. And, true to formWashingtons attack on Intel and Microsoftalready has begun. The dreadful vagaries ofthe antitrust laws are most evident in the

ongoing Microsoft trial. A single judge lis-tens to the complaints of a few resentfulcompetitors, reads a colorful memo from aMicrosoft executive talking about chokingthe air out of some competitor, and thenhas the power to break apart the companyfounded and built by others over a decadeperhaps destroying billions of dollars ofmarket capitalization in the process. In timea verdict against Microsoft would read as

14

Antiquated, dat-ing back to theso-called trust-busting era at

the beginning ofthe 20th century,the laws in effect

make it illegalfor a company tobe conspicuous-

ly successful.


17/20

poorly as does the Alcoa verdict now. Ifconvicted, Microsoft would be guilty of thiscrime: continuously adding features to itssoftware, while bringing the price per func-tion of its software to an all-time record low,to the benefit of its millions of customers.

The Department of Justice once offeredMicrosoft a way out: agree to offer browsersoftware from its competitor, Netscape. I

respect Bill Gates for rejecting what mighthave been a relatively painless escapeabribe, reallyand for litigating the issue onprinciple. Unfortunately, Gates has beenforced to build up a huge Washington lobby-ing office to avoid further political attack. Butthat was a defensive measure. The mystery is,Why would we ever voluntarily involve our-selves in the Washington morass?

Why Technet Is a Bad Idea

Technet is a new Silicon Valley lobbyingorganization. Its Web site shows a cartoon ofa Silicon Valley nerd shaking hands with aWashington bureaucrat. Technet could bethe unofficial embassy that normalizes ourrelationship with Washington. That wouldbe a very big mistake.

When I asked my assistant, who runs thatorganization, she gave me a list of its direc-tors, which included two venture capitalistswho funded Cypress in 1983, two invest-ment bankers who brought Cypress public

in 1986, a former member of Cypresssboard of directors, four CEOs of respectedSilicon Valley chip companies, four CEOsof important Cypress customers, and thecurrent chairman of Cypresss board ofdirectors. At that point, I thought my criti-cism of Technet might best be done withdiplomacy, but, unfortunately, I lack thediplomacy gene.

Technet was an extension of the anti-Proposition 211 initiative. After the victoryover 211, there were leftover contributionsin the kitty, and I was asked to leave in

Cypresss share to fund other politicalendeavors, such as contributing to politi-cians who support Silicon Valley. I opposedTechnet before its founding. My refusal let-ter read as follows:

I am really speaking out against thatpork-barrel system. Why else would Ilobby against Sematech, a subsidy formy own industry? I also lobbied against

the Department of Commercetoabolish itspecifically because it is oneprimary vehicle of corporate welfare.Given that mindset, you can understandhow I would never support a politicianlike Anna Eshoo [a Silicon ValleyDemocratic congresswoman]. She mayagree with us on one or two technologyissues to save her political butt, but she

is a liberal-socialist who voted toincrease taxes on all American corpora-tions. She is the enemy, standingagainst everything I stand for. It is onlyan accident of political expediency thatcauses her ever to be on the same sideof a given issue. Just as I wouldnt givemoney to PBS television, to be used tobatter free markets and corporations, Idont give money to politicians to buytheir vote on any given issue.

At least Technet is honest in its support

of the pay-to-play Washington system. Hereis an excerpt from a typical Technet e-mail:

I would like to call your attention totwo congressmen who have recentlyvisited Silicon Valley and who haveplayed a key role in our . . . success.Rep. Billy Tauzin . . . and Rep. MikeOxley. . . . Well be following up withphone calls and e-mails to ask for yourfinancial support for these two friends.We hope you will consider making a

$1,000 donation to each of them.It seems that Technet agrees with Will

Rogers observation that America has thebest Congress that money can buy.

In fairness to Technet, I should mentionthat its two current initiatives are K-12 edu-cation reform (emphasizing vouchers, notmore spending) and the Unified NationalStandards Act. The latter is yet another lawdesigned to eliminate frivolous shareholderlawsuits, one necessitated by the fact thatsecurities lawyers now sue companies in

both state and federal courts, under two setsof rules, making securities lawsuits evenmore painful and expensive.

Since Technet is not about to close upshop in response to my criticism, I hope itwill at least follow this advice:

Never lobby for pork-barrel measures. Never move headquarters to Washing-

ton (the demise of other lobbying orga-

15

Just as I would-nt give moneyto PBS televi-sion, to be used

to batter freemarkets and cor-porations, I dontgive money topoliticians tobuy their vote onany given issue.


18/20

nizations). Never lobby for a narrow issue such as

beating Microsoft at the expense of afundamental issue such as governmentcontrol over free markets.

John Doerr, Venture

CapitalistJohn Doerr was a leader in the victory

over Proposition 211 and is currently aTechnet leader. The media have singled himout as the icon for the political greening ofSilicon Valley. John has supported the cur-rent administration, and there is talk in thevalley about Gore and Doerr in 2004. Inaddition, John is a general partner at Kleiner,Perkins, Caufield & Byers, one of the firmsthat funded Cypress. He served on Cypresssboard of directors for 10 years. And he is a

friend of mine.Once, in a magazine interview, I stated

that John would be better off if he stayedhome and did his job as a venture capitalist.John read my remarks and reasonably mis-interpreted them as criticism. He shot back,in another magazine article, that I was acowboy entrepreneur who needed to thinkbeyond the confines of Silicon Valley. Afterthat, I called John to explain to him in detailwhat I meant by my statement. First, I gothim to agree with my premise that the

biggest success he could have at Technetwould be to get the Unified NationalStandards litigation law passed quickly andefficiently. (Today, he would probably addimproving K-12 education as a big goal.)Once we had established the definition ofsuccess for John at Technet, I reminded himof the success he had already achieved as aventure capitalist. What I said to him was alighter-weight version of the following state-ment:

John, in addition to starting Cypress,

you and your firm also started eightother chip companiesincluding bigwinners like LSI Logic, VLSITechnology, and Xilinxcompanieswith $4.7 billion a year in revenue and16,400 employees. By funding suchcompanies as America Online andNetscape, you commercialized theInternet and then enriched it by fundingcompanies like Amazon.com that put

the bookstore online. In addition to that,I am aware of a dozen or more newcompanies Kleiner-Perkins has fundedthat will literally define the future of theInternet. You and your partners alsolaunched the biotech industry by fund-ing not only Genentech, but 20 morebiotech and health care companies thatfix vision with lasers, perform genetic

engineering, create skin tissue to repairburns, make ultralow-dosage X-raymachines, and produce equipment foruse in spinal surgery. One of your com-panies could literally cure cancer.

And you and your partners, alongwith the network of Silicon Valleyventure capitalists, have funded thoseamazing companies that have revolu-tionized our countryfor less moneythan it takes to build a single warship.

John, who is more valuable to us?John Doerr, the lobbyist who can get the

Unified National Standards Act enacted,or John Doerr, the venture capitalist whohas helped change the world?

John, we cant afford to send you toWashington.

How could John respond to that? He said,Well, when you put it like that. . . .

John Doerr is a great example of theenhanced value of an individual in a capital-ist society. The example also dramaticallyillustrates the efficiency of free-market

investments, compared with the investmentsof collectivist organizations. With themoney to buy one warship, the SovietPolitburo probably would have bought onemore warship, later to be mothballedJapanese and Korean collectivists probablywould have added another unneeded semi-conductor memory plant to exacerbate thecurrent chip glut, which is so severe it hasdevastated the Japanese and Koreaneconomies.

In Silicon Valley, with the same money,John and the network of venture capitalists

built an economic battleship that generateswealth from the private property of ideastraded in a free market.

Washington builds battleships, battle-ship laws, and battleship bureaucraciesFor that reason we should not normalizeour relationship with it. To do so would beto turn our backs on capitalism and free-dom. When we see the government attack-ing our successes, such as Microsoft and

16

We should notnormalize our

relationship withWashington. To

do so would beto turn our

backs on capital-ism and free-

dom.


19/20

Intel, we should stand together to counterthat attack on free markets. And when wesee the government seizing the assets oftobacco companies, we should not be quiet

just because we may not like tobacco. Theobscene spectacle of federal and stateattorneys general lining up like plaintiffsattorneys to confiscate the assets of a com-pany will surely be repeated. Washington

called the much-publicized Y2K problem achip problem. I will not waste your timeon the technological absurdity of that posi-tion.

The point is that if we sit back while thegovernment illegally seizes the assets ofthe tobacco companies, we may find thesame carpetbagging attorneys suing to gainSilicon Valleys assets early in 2000.

Silicon Valley is an island of capitalismand freedom admired around the world. Wemust remember that free minds and freemarkets are the moral foundation that has

made our success possible. We must neverallow those freedoms to be diminished forany reason.

Free minds and

free markets are

the moral foun-

dation that has

made our suc-cess possible.

We must never

allow those free-

doms to be

diminished for

any reason.

17


20/20

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