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Can Seattle continue to charm the technology muse?

Original Article

As Hawaii is blessed with beautiful weather, Seattle enjoys an abundant efflorescence of technology innovation. We hear about it every day, but few understand where it came from. Bill Gates Jr. (the prominent attorney, not his still more prominent son), knows we didn’t exactly deserve the blessings of our Silicon Forest, but he is eager that we take care to cultivate their increase. Education turns out to be key.
A quarter century ago, a small industry of consultants was arising to tell regions like ours how to “grow” economically. Everyone knew that we relied too much on Boeing and should “diversify.” Perhaps we should deploy the standard tools of tax concessions and zoning waivers. One recommendation was to develop petro-chemical plants along Puget Sound. That didn’t happen, fortunately, and what did happen was wholly unanticipated by the planning pygmies.

Far beneath the notice of consultants, young Bill (“Trey”) Gates was in Lakeside School fooling around with computers. As an adult, he moved away, but then he moved back with his new company, Microsoft. As young Bill’s father has said, “The best economic development move of our times may have been the discussion his mother and I had with Bill to persuade him to move back to Seattle.”

Absolutely right. Public policies were no more responsible for luring Microsoft and other technology industries to Seattle than they were earlier in getting Bill Boeing to make his airplanes here. It flatters politicians to think that technology companies base their location decisions on relative levels of taxation and government subsidy, and such considerations do matter to many businesses. But the cheerful libertarians of technology believe either that the government is an irrelevance or that it should strive to become one.

So why, then, does Bill Gates Jr. spend so much time with an organization called the Technology Alliance trying to get citizens and their elected officials to think hard about the importance of technology to the region’s future? Is he just a carnival barker for Microsoft?

Hardly. Gates the Elder seems to brag about the successful spin-offs from Microsoft at least as much as about the triumphs of his prodigy offspring. Indeed, he sees Microsoft, the Fred Hutchinson Cancer Institute and the University of Washington as among the top incubators of new high tech entrepreneurs. In aerospace, it took the layoffs of the early 70’s to drive creative engineers into starting new enterprises, but in the advanced fields of computers and biotechnology, prosperity and opportunity appear to provide a similar impetus toward risk-taking. Job hopping in this environment, Gates says, is not a vice.

Of course, there has to be somewhere handy to hop. “In Seattle, not too long ago, it would have been hard to find seven high tech companies in the same field to hop between. Not any more.”

As bouncing talent and ideas reach a critical mass, the mind pool expands exponentially. In software alone, the number of companies in the region has grown from 990 five years ago to 1880 today. With Microsoft still the giant, the total capitalization of all public companies in computer fields now is double Boeing’s. The new wealth is chiefly in stock, but some of it does buy cars and houses, some finds its way into backing still more new companies and some winds up in support for varied civic causes. “Paul Allen,” says Gates, “is himself a kind of one man economic development commission.”

It’s hard to quantify high tech’s role adequately. The federal government’s problems defining inflation through the Consumer Price Index (CPI) are largely attributable to difficulties in measuring the productivity gains of technology. This either shows, as some argue, that technology is not changing the economy as profoundly as thought, or else that our statistical instruments are as outmoded as the Industrial Age that created them. Discovery Institute fellow George Gilder says it is the latter. In his latest Gilder Technology Report he notes that the number of PC’s being shipped now surpasses the number of TV’s shipped and that household penetration by PC’s is up from eight percent in 1984 to 42 percent now. Thanks to the Internet the PC is becoming the “dominant electronic media device.”

Seattle’s boom in high tech thus does not need government “help.” But for the long term, the region needs to ponder what it takes to make us attractive to entrepreneurs. Much of that has to do with how to keep the talent pool constantly refreshed.

Environmental amenities and improved transportation matter as much or more than taxes and regulations in this regard. But among all public priorities, Bill Gates Jr. puts education at the top. This leads him to seek support for higher education, training programs for junior colleges, and greater availability of technology tools in the K-12 public schools. Educational institutions provide the soft infrastructure necessary to the Information Age, just as roads and cheap energy were crucial to the Industrial Age.

Not everyone agrees on how government should advance education. For example, Tom Alberg, vice chair of the Technology Alliance and partner in Madrona Investment Group, argued last fall for passage of the charter school initiative as the best way to spark competition and excellence in public schools. It was not a cry that rallied either the business community or even the technology sector–including the rest of the Technology Alliance. Yet there now is an effort in such groups as the Washington Roundtable, a business group advocating public policy improvements, to design such reforms in a way that is acceptable to the education establishment.

We’ll see. It is very possible that the real breakthroughs in education will come when technology is not regarded just as a school subject or even a tool, but as a way of transforming the whole learning process.

Meanwhile, it would astonish the economic development experts of times past to see our situation today, when prospects for economic growth are so favorable, but government’s ability to assist such growth is so much in doubt.

Bruce Chapman

Cofounder and Chairman of the Board of Discovery Institute
Bruce Chapman has had a long career in American politics and public policy at the city, state, national, and international levels. Elected to the Seattle City Council and as Washington State's Secretary of State, he also served in several leadership posts in the Reagan administration, including ambassador. In 1991, he founded the public policy think tank Discovery Institute, where he currently serves as Chairman of the Board and director of the Chapman Center on Civic Leadership.