Mike Elgan: How and Why Silicon Valley Should Buy Out the US Government

aNewDomain.net — Our Mike Elgan takes a deep dive look at what’s wrong with the United States government today. The problem is money. The answer — let Silicon Valley buy Washington. Here’s how Mike Elgan arrives at that idea and how much better off he says Americans and the world would be if Washington were forced to follow a pro-innovation, pro-education, no-NSA-spying agenda.

The U.S. government is dysfunctional. But tossing the bums out and replacing them with new bums won’t fix anything. The main problem is that money buys influence. While the well-financed special interests are always on their game — and their checks never bounce — the voting public is AWOL, too preoccupied by bread and circuses to educate themselves or, say, vote.

I’ll say it again. The U.S. government is dysfunctional. But tossing the bums out and replacing them with new bums won’t fix anything.

One stunning example recently in the news: A report published in the Journal of the American Medical Association found that 100 percent of the people involved in the approval of new food additives take money from the food additives industry in one form or another — either as employees, consultants or lawyers. The whole food additives system in the FDA is of the industry, by the industry and for the industry — the people and their interests have no place in the process at all.

A comparable set of mechanisms exists for the defense, medical, automobile, energy, education and other industries.

The money comes to decision makers in three main ways. First, campaign contributions by various industries and special interests make sure the “right people” get elected to Congress and the White House — people who are friendly toward the contributing companies and organizations. Once elected, politicians need to favor those organizations in every way they can.

The second way companies buy politicians is through the lobbying process. “We’d like to discuss some interesting policy ideas with you; why don’t you fly on our private jet to our private island in the Bahamas for two weeks so we can discuss it — and bring your staff and family.”

And the third way is guaranteed income after office. Any politicians who prove he or she is a “friend of the industry” is guaranteed a highly-lucrative position after retiring from politics. (That position is often a lobbyist position to recruit additional water-carriers.)

This imbalance between strong money on one side and a weak electorate on the other is the main reason why government is broken — why junk food is subsidized; why dangerous drugs are approved and radically over-prescribed; why the educational system is broken; why nobody went to jail for wrecking the economy in 2008; why a hammer costs $475 when the military buys it; and why the world’s only superpower can’t build a web site that works.

It also explains why the U.S. government screws Silicon Valley at every turn.

How the Government Harms Innovation

While national governments around the world are working hard to replicate the incredible engine of innovation that is Silicon Valley, the U.S. government is willing to suppress and hold back Silicon Valley and American innovation through misplaced priorities.

Here are five examples of how Washington’s dysfunctional system harms innovation.

1. Failing to fix the patent mess

There is almost universal agreement in this country that the American patent system strangles innovation. Economists, entrepreneurs, government — even the biggest Silicon Valley companies with the most patents — all agree that the system is antiquated, irrational and a huge barrier to innovation and progress.

One problem is that a great many innovative startups can’t get funding because the patent system leaves them exposed to lawsuits from patent trolls. Without funding, they wither and die and take their brilliant inventions with them.

Another is that software patents exist. If you want to invent a better mouse trap — say, one that’s smartphone-controlled like everything else these days — your invention is already dead in the water. No matter what methods, interfaces or technologies you use in the software on the mousetrap or in the app, they’ve probably already been patented by somebody with more lawyers than you who created a so-called “invention” based on a general description, such as “method for displaying any kind of button, switch on a computer screen or mobile display or any conceivable device that might show pretty lights,” etc. Sure, the likes of Apple or Google could litigate or buy their way out of this issue, but not the small inventor. Go back to flipping burgers, loser. You will not be the next Edison and the world will not get a better mouse trap, thanks to the federal government’s total failure on real patent reform.

2. The NSA fiasco

Edward Snowden revealed and continues to reveal the extent of the NSA’s surveillance capabilities, including a massive program to spy on foreigners active on U.S.-owned social networks and cloud services. As you can imagine, this has done wonders for Brand America in the global community, essentially driving cloud business abroad and providing the best reason ever for both businesses and consumers worldwide to avoid American technology products.

3. Pushing away job-creating, innovative entrepreneurs

Immigrants launch about half of the nation’s best startups. They come to the U.S., hire a bunch of Americans, employ American contractors and infrastructure providers, and more.

It’s a wonderful thing that Silicon Valley and other U.S.-tech hubs are able to attract some of the world’s best entrepreneurial and tech talent, right? But the government can’t have that. Our policy is: Let’s turn away many of them at the gates and send them abroad to create strong competitors for American businesses while saddling American companies with talent shortages.

Our national policy also forces the biggest employers of tech talent — Google, Microsoft and others — to set up R&D labs and engineering offices abroad, exporting American ideas and training so the foreign employees there can quit and create startups elsewhere, rather than in the U.S.

4. Failure to push fast Internet

The United States is a global laggard in terms of Internet connection speeds. But we’re No. 1 in the cost of Internet connections, according to reports from Xconomy and The Washington Post.

While speeds are higher and costs are lower in some countries due to healthy competition, most U.S. consumers and small businesses have a choice of only one or two providers.

Non-competition is so bad that Google is actually laying fiber in some cities, just to show how easy it would be to make the U.S. the most-competitive nation in the world. Google Fiber customers pay $70 per month for Internet speeds that are 50 times higher than before — fully 1Gbps. 50 times higher!

Goldman Sachs estimated last year that it would cost about $140 billion to lay Google Fiber-like connections to every home and business in America.

That’s an interesting number. It’s exactly the amount of money the Senate passed three years ago to help state budgets, help small businesses and stimulate the creation of “high-tech” jobs.

The wiring of the United States with universal 1Gbps would do far more than all the stimulus-approved projects during the entire recession. In Kansas City, which is the first to get Google Fiber connections, a startup boom is spontaneously taking place, turning it into a “startup Mecca.”

The installation of fiber should be considered today’s necessary equivalent to the formation of the Postal Service, universal telephone service and the creation of the national highway system. These are the kinds of grand infrastructure projects that helped make the U.S. an economic superpower.

5. Over-regulation

Even when Congress ineptly tries to fix one or more of these problems, they end up causing more harm by creating yet another mountain of red tape for innovators to climb.

Congress ostensibly tried to fix some of these problems with the JOBS Act. But the new law will turn startup fundraising practices into “minefields” for startups, according to Mitch Kapor. Meanwhile, the benefits to startups in the Act have been “neutered” by new regulations, according to investor Fred Wilson.

That’s just one example. The fact is that the rules and costs for forming a company, hiring employees, raising money, bringing products to market and all the rest could and should be vastly more favorable for startups and entrepreneurs. But even when the government pretends to make this happen, the government’s many other priorities always screw the deal.

The Solution: Buy the Government

So money rules Washington. But guess what? Silicon Valley has way more money than most of the industries that currently control the U.S. government.

Campaign contributions and lobbying efforts in Washington are measured in millions. The biggest contributors typically pony up dozens of millions of dollars to get the policy outcomes they want.

OpenSecrets.org maintains a running list of total campaign contributions by the top donors. Even when you add up all contributions by the biggest spenders from 1989 to 2012, no individual company exceeds $100 million.

That’s lunch money for Silicon Valley.

I think that all the companies that benefit from innovation, privacy, job creation and the Internet should band together and flood Washington D.C. with more money than they’ve ever seen.

Increase total campaign spending by an order of magnitude — with 90 percent of the money going to innovation-friendly politicians.

Pack the Congress and White House with politicians subservient to the following innovation agenda:

* Re-write the patent laws from scratch and make them compatible with the digital age

* Shut down the NSA, put those responsible for shredding the 4th Amendment and spying on allied leaders into Guantanamo and build a replacement agency that’s constrained by the Constitution.

* Embrace a Canada-like immigration system whereby if an immigrant is a professional with needed skills, they’re E-Z-passed into residency and citizenship.

* Build Google Fiber-like infrastructure to every home and building in America.

* Create a regulatory system that’s super-favorable to startups and technology companies.

* Completely restructure the educational system to boost science, math and engineering and add software development as a core and required part of the curriculum.

And — why not? — increase NASA’s budget by an order of magnitude while we’re at it.

Everybody wants to keep influence money out of politics. But that’s about as likely as getting stupidity out of television or getting Apple product placements out of movies. It ain’t gonna happen.

So let’s go in the other direction. Silicon Valley and the technology industry is swimming in cash.

The technology sector should outspend all the others, buy the government and force through a pro-innovation, pro-education agenda.

For aNewDomain.net, I’m Mike Elgan.

Photo credit of original Uncle Sam poster: Wikimedia Commons

Based in Santa Barbara, Mike Elgan is a veteran tech journalist and tech culture columnist. He writes most-visibly and frequently at Computerworld, Datamation, Cult of Mac, Houzz, PC World, InfoWorld, MacWorld, CIO Magazine, The San Francisco Chronicle and The CMO Site. Now Mike is a senior commentator with us at aNewDomain.net. Follow Mike’s stream on Google+ and on Twitter @MikeElgan. The best way to reach him is via Google+. Email Mike here at aNewDomain at MikeE@aNewDomain.net.