by Jennie S. Bev
In September I attended a presentation by a group of distinguished movers and shakers in the region and by Silicon Valley Joint Venture Network’s President and CEO Russell Hancock. In the midst of a bleak economy, those who reside in this region were eager to learn everything they could about the present and the future: What the present outlook is, how long the re-cession may last, what the current trends are and what kind of prosperity and security may come again to that region and to the United States in general.
As a citizen of the world and a local business player, I attended this presentation to find out how Silicon Valley’s innovative business climate might rally the best traits of capitalism to help the world and whether it might contribute to overturning the current grim economic outlook.
Silicon Valley Joint Venture Network was established in 1992 as a neutral forum to bring together leaders from business, labor, government, universities and non-profits to think outside the box and build creative solutions for the overall well-being of the region.
One of their important contributions is the annual Silicon Valley Index. It tells the real story about this region based on indicators which measure the economy and health of the community. The Index analyzes strengths and challenges that can influence local leaders’ decision-making. Such indicators are valuable bellwethers which reflect fundamentals of long-term regional economic health, reflect the interests and concerns of the community, are statistically measurable on a frequent basis and measure outcomes rather than inputs.
Silicon Valley is a central intellectual hub in the United States, one which possesses influential soft power worldwide, and is considered as the world’s center for innovation. This region’s attractiveness has been played down as no more than a high-tech hub where today’s household names —Hewlett Packard, Intel, Apple, Google, Sun Microsystems and eBay are based. In truth, this region is much more than that. It has long been the birthplace of innovation-based capitalism.
Silicon Valley’s distinguished character is unlike any other on the planet. It is not just a “psychological geographical location” which cannot be found on any official map. It is made up of 1,500 square miles, 40 cities and four counties with 2.6 million people. The region boasts 1.3 million workers, 42 percent of its residents are foreign born, 40 percent hold college degrees and 25 percent of the labor force work in highly skilled occupations. The average income is 60 percent higher than most U.S. regions, it produces 6 percent of U.S. GNP, 11 percent of U.S. patents, and its productivity rate is 50 percent higher than the U.S. average. Even though Silicon Valley is only a small part of the state of California geographically, its economic output is greater than that of the whole state of New York.
As in any technology region, boom-and-bust cycles and economic bubbles are natural and expected. Each bust brings with it the opportunity to experience another bubble. The key is to be prepared for whatever the future brings and make the most of the bubble.
To ride high in the wake of Silicon Valley’s future booms is probably the best thing other countries —Indonesia included— can expect to do, which explains why Indonesia should catch up technology-wise. Their new products will become run-of-the-mill commodities which may in turn give birth to another creative outburst. This could provide continual opportunities to outsourcing firms, like those based in Chennai and Shanghai.
Grady Means and David Schneider coined the term “metacapitalism” in 2000 to refer to worldwide competition characterized by brand-owning firms which focus on product innovation while establishing alliances with other firms to function as suppliers.
Metacapitalism trends go hand in hand with high levels of outsourcing, except for design and research and development departments which are likely to be kept in house. And such a trend allows small companies to take part in this highly equalized playground as the flattened world has empowered smaller players.
An increase in the number of jobs in the area is expected, but an incremental rather than a prodigious increase. And with a credit thaw coming, this center of innovative capitalism is becoming the center of world metacapitalism again. It is not just wishful thinking: Silicon Valley has morphed itself many times during the last half century. Believe.
The Jakarta Post, November 18, 2008
The United States is heading into what is believed to resemble the ultimate economic nightmare: The Great Depression. Still, there is a joke circulating about George W. Bush's "limited" intelligence in which he was believed to have said, "Well, depression is good, otherwise it would not have been called 'great.'"
Yeah, right, but this does not sound so funny today, especially to one who has invested in U.S. properties and other financial products: a regular hardworking American middle-class suburban resident like me who trusted the U.S. financial regulations and policies.
It might be the macro picture of the current state of the U.S. economy that the whole world is watching anxiously as it has started to cause ripple effects throughout this blue planet, but the lesser-publicized side is the extent of the social casualties that have been occurring ever since the property market started to plummet in 2006.
For instance, families have moved out from decent residential areas due to their subprime-mortgage properties being foreclosed or short sold and children have had to re-enter public schools in not-so-desirable school districts, where many inexpensive apartment buildings are located. Consumer credit scores have been ruined and this has been creating ripple effects, no matter how small, in retail and credit-based purchases, such as automobiles and other expensive items.
Joseph Stiglitz, the Nobel laureate in economics, George Soros, the legendary financier and millions of ordinary Americans might have different perspectives on this issue, but we all have one singular concern: we need to boost confidence back into the marketplace both in Wall Street and Main Street and strive to lobby for financial policies that would bring a better future for all, particularly the common people.
Because, after all, despite all those negative points and not being the unipolar source of power any longer, America still lingers in the minds of most world citizens as the geopolitical center. In short, if good ol' America falls, the whole world might start tumbling down.
Stiglitz warned us early that George W. Bush is likely to beat Herbert Hoover, the president who was believed to have caused The Great Depression, as the "worst president ever" when it comes to the economy. And it is very likely, which has all started to come into the light of day, that Bush's legacy will be more insidious and longer-lasting.
This Nobel laureate pinpointed four facts in the December 2007 issue of Vanity Fair: the vaporizing surplus, the bankruptcy boom, the US$3 trillion war in Iraq, and the contempt of the world in which he has been successful in weakening collaboration among nations by undermining multilateralism and replacing it with an American-dominated system.
Soros in The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What It Means argues that the prevailing paradigm that financial markets tend to find equilibrium is a fallacy, and that this has partly contributed to the current collapse. He proposes a relationship-based paradigm in which thinking and reality go hand-in-hand by critically examining misconceptions and misinterpretations.
Many Americans are feeling the pinch as their taxes have been loaned over to bailout companies whose bad practices have ruined my and many others' future financial well-being.
Yup, those federal loans of $900 billion* to bail out AIG, Freddie Mac, Fannie Mae and others, as of the writing of this article which is Sept. 18, 2008, come from taxpayers who are now in a pretty bad shape themselves. But apparently the world and the world economy, are now closely interdependent. A consumer is also a lender and vice versa. [*The approved figure was $750 billion.]
While my mortgages are not subprime, my property investments have been devalued by 50 percent due to the foreclosed and short sold properties surrounding mine. It means for every property owned, I have been a paying monthly mortgage payment for a mortgage that is now 100 percent over the current value of the property. Capital gains and equity no longer exist. If and when the property market will go up again to offset my losses is a big question mark.
Now it is a matter of being a long-term marathon runner without knowing where I am heading and whether the destination is worth traveling to. But of course there is still a way to maintain my intelligent optimistic composure: be a contrarian and buy those undervalued properties surrounding me in the hope of gaining big later.
Let's see how those presidential candidates come up with workable solutions that would result in prosperity and peace of mind in common people, while maintaining a strong Wall Street. In the meantime, perhaps Sarah Palin can find out from me what constitutes the so-called "Bush Doctrine."
Just make sure "the McCain Economic Doctrine" is something she would be able to recall in a TV interview later. It's time to be cautious but also to learn to become a contrarian in terms of financial prowess. In the end, survival of the fittest matters.
The Jakarta Post, September 23, 2008