

End of Obama's silicon honeymoon - rahooligan
http://www.economist.com/node/17361426

======
nostrademons
"When a good manager meets a bad business, it's the business's reputation that
stays intact." -- Warren Buffett

I think a lot of Obama's difficulties stem from having to steer a massive
federal bureaucracy. There're lots of power centers in government besides the
president - the American system is designed that way, so that any given bad
president can't do too much damage. (Though that didn't seem to stop
Dubya...maybe it's easier to blow things up than it is to build them.) I'm
disappointed at Obama's inaction on net neutrality, but he's been distracted
by other major initiatives. And the health care bill is _huge_ for potential
entrepreneurs; one of the major disincentives to quitting your job is the lack
of health insurance.

~~~
hexis
"And the health care bill is huge for potential entrepreneurs; one of the
major disincentives to quitting your job is the lack of health insurance."

After all the debate last year, I still find claims like this so strange. As
far as I have ever been able to tell, the Health Care reform merely assesses a
tax on being uninsured. So, if you quit your job to start a company, you no
longer have the option to forgo insurance without now paying a penalty on your
taxes. How an additional penalty would either a) provide more/better health
care or b) spur entrepreneurship I have never been able to understand.

~~~
jordanb
One big change that's in effect now for young entrepreneurs is that they can
stay on their parent's health plan until 26. I'm not sure if this will
actually encourage any more young people to try their hand at entrepreneurship
because most consider themselves invincible and don't give a lot of thought to
health care, but it'll certainly help prevent the experience from becoming a
horror story.

~~~
anamax
> One big change that's in effect now for young entrepreneurs is that they can
> stay on their parent's health plan until 26.

Since young people's coverage is very inexpensive, that's not a huge benefit.
However, it is being paid for by other people.

Of course, there's no guarantee that such cost shifting will continue.

------
pg
I don't feel like people here are down on Obama at all. They're down on things
the government has done and not done, which is now (to some extent) Obama's
fault since he's (to some extent) in charge of it. But I don't hear any
grumbling about him personally.

~~~
devmonk
A number of people I've talked to that voted for him in the last election have
been saying that they're unhappy with the president and Democratically led
congress. There is a good chance that many on HN are unhappy also. They might
not be vocal about it, because just stating that unhappiness doesn't
accomplish much, and it really isn't an appropriate forum for politics. I
personally will be supporting fiscally conservative candidates in the future
that have supported small business and that I think would be good leaders. I
hope that the days of judging candidates by charisma are over, and instead we
look at track record. A track record of being a professor and community
organizer is inappropriate for the leader of the free world during a time when
support of business is imperative.

~~~
weaksauce
Shouldn't they be angry about the system that polarizes the two sides into
waring factions that cannot get anything done in a reasonable timeframe? Look
at right now, the right will not vote anything controversial in that may or
may not be good for the economy because they are too worried about conceding
to the left. The same thing happens when the right is in power. midterm
elections make the window of possible change so small that nothing really gets
done.

~~~
dantheman
The less congress does the better - every time congress starts to act they
increase the amount of uncertainty about the future which makes it hard to
predict what the appropriate investments are.

------
gamble
> Many of its 2,000 members, he adds, are unwilling to invest in new
> initiatives while there is so much uncertainty about future policy.

What is this 'uncertainty' Obama is supposed to be responsible for? I don't
think Obama has been particularly unclear about his intentions, and when he's
compromised it's almost always been toward more conservative positions. His
opponents have fallen in love with this term lately, but to me they feel like
weasel words used because complaining about a Democrat in the White House
sounds too, well, _partisan_.

~~~
jerf
What taxes are going to be raised to pay for the radical increase in spending?
What's the next industry to be demonized and have punitive penalties,
taxation, or nationalization applied to it? Is somebody else going to be
shaken down the way BP Oil was even when there was no legal authority to do it
[1]? What other radical changes to the economy are going to be proposed if the
recovery continues to be anemic, and how many dollars are going to be vacuumed
out of the private economy to accomplish these changes? How much more loan
disasters have been hidden, and how will the administration react, and how
many dollars will be vacuumed out of the private economy to implement the
reactions? How will the government react to the oncoming pension crises, and
how many dollars will be vacuumed out of the private economy to do it? By what
order of magnitude will the Obama health care bill's costs be
underestimated[2]?

It doesn't even matter whether these are true; I'm not really trying to argue
these points or I'd back them up better, I'm just answering your question.
(So, for instance, replying to me to argue about the legal authority for the
BP Oil escrow account would be missing the point.) It only matters that enough
people in business think they are true. It doesn't matter whether they are
_entirely_ correct, it only matters that the concerns are _correct enough_.
Somewhat loaded terms were chosen deliberately to give a more accurate
impression of how these people are thinking.

[1]:
[http://www.cbsnews.com/stories/2010/06/16/politics/main65881...](http://www.cbsnews.com/stories/2010/06/16/politics/main6588178.shtml)
, if you don't remember this

[2]: I don't even mean this as an attack _specifically_ on that bill;
observing that governments almost without exception underestimate costs is
merely _realism_ , not politics, and when you're talking about something the
size of the health care bill, being 50% off is a _big deal_.

~~~
sprout
>What taxes are going to be raised to pay for the radical increase in
spending?

That's an unanswerable question. In order to determine how much taxes will
have to be increased to pay for current expenditures, you would need to be
able to predict what the economy will be like in a year. If the
administration's economic initiatives were successful, there's a possibility
taxes will not have to be raised at all. So you're getting angry at Obama
because he can't predict what your company's revenues will be in a year, which
is totally unreasonable.

I think that applies more generally to most of the points you raised. The
Obama administration didn't make the world unpredictable, it has always been
that way. I don't even think another failure in the economy makes anything the
administration has done categorically bad decisions. I don't think we're in a
worse position now than a year ago, and I don't think the fall can be any
harder now than it could have been. (Because it could have been atrocious.)

In general I think it's reflective more of business leaders' politics, and
those on the left will say that times are hard, and those on the right will
say that Obama and the Democrats are making times hard, which again, is
totally unreasonable.

~~~
jerf
>>What taxes are going to be raised to pay for the radical increase in
spending?

> That's an unanswerable question.

Which is pretty much the point, in a nutshell. Businesses seek confidence on
what their costs are going to be, and the fact that such confidence has
_always_ been impossible doesn't really affect that. Which business in New
Orleans correctly planned for Hurricane Katrina?

~~~
dhume
_Businesses seek confidence on what their costs are going to be, and the fact
that such confidence has always been impossible doesn't really affect that._

This raises the question of what changed when Obama took office that caused
the complaints of uncertainty to start. Then again, at this point, I don't
expect the people I generally see complaining about uncertainty to acknowledge
that it has always been there (and that they were just giving Bush a free
pass).

~~~
waterlesscloud
That's an easy question to answer. Obama came in promising radical change, and
then followed through in some areas. This increased uncertainty in all areas,
since it was made clear that radical change was in fact in the works.

After this week's election, uncertainty should drop, since we will then know
that nothing much can get done for the next two years.

~~~
sprout
If the Republicans continue to stonewall, I'd expect the filibuster to be
abolished. The inaction is getting poisonous.

------
waxman
Three, concrete steps Obama should to take to redeem himself with the tech
crowd and revive the economy:

1) _Immigration reform._ If smart engineers from abroad want to study here or
work here we need to let them, and let them stay as long as they want.

2) _Better science and math education._ It might be a long slog to catch up
with some other countries, but we need to start. One suggestion: A national
"learn to program" initiative in low-income elementary schools.

3) _Focus financial industry reforms on making life easier for small
businesses (i.e. startups)._ We create the most jobs and account for the most
innovation, and yet the bulk of Obama's economic policy has helped big
incumbents. Easier access to credit, federal startup grants, and small
business tax reform would all go a long way.

~~~
old-gregg
I probably want to disagree on all 3 accounts. While they do sound good in
principle they are not, in my opinion, major hurdles for anyone, lets see:

1) It is borderline trivial to come to US on an H1b visa and has always been
so: as a former H1b holder I can hardly see how can government do anything
here except to be more efficient (more streamlined procedures).

2) What is government supposed to do here exactly? If science and math
graduates had comparable earning power prospects to law, finance and medical
grads we wouldn't be discussing it. Besides, on a university level US schools
are top notch.

3) Like what? I own a small business and haven't encountered any obstacles
caused by the government. Getting customers, press and funding are by far my
biggest headaches. And keeping in mind how notoriously inefficient governments
are I'd hate to see them decide which powerpoint gets my tax dollars and which
doesn't - leave that to VCs.

I'd ask Mr. Obama to invest into fundamental research, the kind of expensive,
risky and long-term stuff VCs don't invest into. They built Internet to fight
Russians and look how much mileage we've gotten out of it. Startups aren't
building "new internet", they're in the business of making products on top of
the existing one. Mr. President, give us some new shiny tech out of
NASA/CIA/whatever and we'll get busy building next generations of googles and
facebooks.

~~~
waxman
I completely agree with a the need for more fundamental research. What about
another generational project akin to the space race or the Manhattan project?
These efforts did an amazing job of mobilizing both students and professionals
around big, hairy goals, and the work that ensued sparked an untold number of
innovations and new technologies.

Also,

1) Only larger companies can sponsor H1b's, not startups. The so-called
"startup visa" would be a small step forward, but it sets a pretty high bar.

2) We rank towards the bottom of developed countries in math and science, and
by college it's too late; by then you either got a good education in these
areas, or you didn't.

3) I agree that government is super inefficient, and in some ways it may
appear incompatible with the near-opposite agility of the startup world. That
said, small businesses of all kinds need capital, and often credit, and the
short-term effects of banking reform was to tighten capital markets even more.

~~~
tptacek
Nonsense. We sponsor H1b's. I'd be surprised to hear that we were more than a
stddev larger than the mean 2-year-old YC startup.

------
omouse
_tech leaders have been outraged by Mr Obama’s willingness to demonise
employers for outsourcing work to foreign countries, which is especially
popular within the IT industry_

This is popular with _management_ not really with employees.

------
nkassis
They've forgotten a few things like the current administration stance on
copyrights. Things like ACTA. Also patent reforms aren't really being talked
about much by this administration.

------
metamemetics
> _their backers were betting that Mr Obama would push through an energy bill
> that would force America to embrace alternative sources of energy more
> aggressively._

Give him a break, getting healthcare reform passed already involved flame-
baiting half of congress to the extreme. There's a thing called filibustering
that massively slows down all legislature once anyone bill becomes flame-
baitable enough. There is no way any president could have halted the greatest
financial collapse since the great depression, passed education reform, passed
healthcare reform, AND also gotten to a new energy\immigration policy in 18
months, while filibustering exists, without assuming dictatorial power.

------
tgriesser
The president might need to be careful when dealing with the tech industry.
Sure, they may not have as much power as the "media" now, but with the
declining foothold of traditional news outlets and media sources it will be
interesting to see how this dynamic changes in coming years.

Also, when it comes to wasteful spending see:
[http://dailycaller.com/2010/10/20/fbi-computer-system-
years-...](http://dailycaller.com/2010/10/20/fbi-computer-system-years-late-
and-way-over-budget/) I mean come on. There needs to be some serious thought
as to how to somehow apply startup principals to government endeavors.

------
iko371
-Another source of friction is the reluctance in Washington to reduce hefty taxes on foreign earnings repatriated to America. As many American tech firms make a large share of their revenue and profit outside the country, they are particularly exercised by the government’s reluctance to lighten this burden.-

I agree with the Obama administration on this one. Corporations should not be
allowed to move their operations overseas. If there is not a skilled labor
force in this country from which to hire, corporations should call on our
schools and our government to create the kind of educational system and
incentives that will produce skilled Americans who can meet the demand.

-To make matters worse, tech leaders have been outraged by Mr Obama’s willingness to demonise employers for outsourcing work to foreign countries, which is especially popular within the IT industry, and by his grating sermons on the evils of corporate greed. “We’re praised for creating jobs, while being spanked at the same time,” complains Mark Heesen...-

Yes. You should spanked for your corporate greed. It is perfectly reasonable
to expect entrepreneurs to pay back into the system that allowed them to
create such success. Our current system reeks of thirty-odd years of
corporations creeping into government and manipulating the rules, and bending,
breaking or destroying regulations so as to maximize profit at the expense of
the American people. It is even more reasonable to expect that to undo the
damage, we will have to return to a system of tighter controls and the closing
of loopholes that allow companies to get away with paying at or near 0% in
taxes.

-Tech firms and venture capitalists welcome these initiatives, but are deeply frustrated by a lack of action in other areas. For instance, many cleantech start-ups and their backers were betting that Mr Obama would push through an energy bill that would force America to embrace alternative sources of energy more aggressively. But that came a cropper in the Senate.-

Right, because instead of strong-arming everything through the Senate, like
the Republicans did for six years under Bush, Obama wanted to play the "reach
across the aisle" game, to which nearly every single Republican spat back in
his face. As a result, in two years, all we got was a mangled health care
reform bill that, while a big step in the right direction, still allows huge
insurance companies and pharmaceuticals to continue capitalizing on human
suffering.

-In a speech in Silicon Valley, Mr Obama reiterated that he wants to create the conditions in America that would give rise to the next Google and the next Hewlett-Packard. But he will have to do much more to convince the tech industry that he really means it.-

Well, if the tech industry thinks that the path to doing that is to bringing
in skilled labor from other countries, outsourcing jobs, and paying at or near
0% in net taxes, then the industry is delusional and needs a reality check.
Discouraging immigration of skilled labor encourages the development of those
skills in this country. Taxes generate the revenue that the government can use
to create an educational system that trains people in those skills and
provides incentives for people to leave colleges and universities with degrees
in those field. Our current system is far too broken in this regard.
Educational spending is far too low, the result of thirty years of Republicans
blowing up the taxes on corporations and the richest 1%.

It seems to me that too many entrepreneurs have tunnel vision, asking "Why do
I have to pay all these taxes?" and "Why can't I bring in the skilled labor I
need from other countries?" The frame for these questions is self-centered. If
the entrepreneur expands his frame of reference beyond himself to ask, "Who's
paying to support society at this point in history?" and "Why can't I find the
skilled labor I need in this country?" then the solutions to these problems
become clear, and they require a progressive push even stronger than what
Obama's achieved thus far.

~~~
ryanwaggoner
_Discouraging immigration of skilled labor encourages the development of those
skills in this country._

In a vacuum, you might be right, but companies in the US increasingly compete
on a global scale, and since other countries are more friendly to immigration
of skilled professionals, we risk losing our global competitive edge. It's a
nice idea to think that artificial barriers will result in us ramping up
education, but that's a process that will take decades. You can't just start
teaching advanced computer science to high school seniors who can barely read
and struggle with basic math. So what's more likely is that the lack of
skilled professionals in this country will gradually reduce our pace of
innovation relative to other countries and cause a relative decline in our
wealth, causing us to fall further and further behind.

It's far faster and more efficient to let the hoards of skilled professionals
in other countries come here, especially since many of them are willing to
risk almost anything to move their families here and would stay forever if we
let them. Instead we severely restrict them and then we compound the problem
by letting people come here to go to school and then make them leave if they
can't find a job. It's the exact opposite of what we should be doing.

~~~
iko371
I feel you have misframed the issue as well.

-In a vacuum, you might be right, but companies in the US increasingly compete on a global scale, and since other countries are more friendly to immigration of skilled professionals, we risk losing our global competitive edge.-

That there is a "global economy" and that this is somehow a new thing is a
myth perpetuated by Milton Friedman's view of the "flat earth." What is a new
thing is the USA relaxing tariffs and trade restrictions so that American
companies can outsource work to other countries and not pay taxes on their
goods if they manufacture them abroad. Besides that, there has been a "global
economy" for many hundreds of years. It's at least as old as the British
empire. What the US has been doing over the last thirty years has not so much
been "opening markets", as it has been destroying our country's internal
regulations that protect American workers from competing with the workers of
foreign countries. In my opinion, such regulations were a good thing, and they
built the strongest economic power the world had ever seen.

In brief, we don't have to compete on global scale if we choose not to. Your
statement assumes that we do.

-It's a nice idea to think that artificial barriers will result in us ramping up education, but that's a process that will take decades.-

USA, 1945: "It's nice to think that if we eliminate artificial barriers to
education, we'll have a skilled workforce that will build America into an
industrial and economic superpower, but it would be easier to keep all the
money in the hands of a few wealthy people. It would take decades to
accomplish being an economic superpower, so it's really not worth the effort."
I'm glad this wasn't the prevailing attitude then. I'm sure the country I live
in would look a lot different.

-You can't just start teaching advanced computer science to high school seniors who can barely read and struggle with basic math.-

Again, reframing. The correct question is, "Why are so many American high
school seniors barely able to read and struggle with basic math?" There are
many facets to this problem, I'm sure, but I think a large chunk of the
problem is that for many American families, there is a culture of anti-
intellectualism. School, teachers and education are derided, and with this
derision comes an unspoken message that being educated is not that important.
And it's not just families. Our culture as a whole doesn't value education.
Even in the tech industry, we have superstars Bill Gates and Mark Zuckerberg
as the problem's biggest contributors -- they are both college drop outs, yet
they are both ridiculously rich and famous.

I think that we could undercut this whole sociocultural phenomenon by having
our government step in and do something really drastic, like waive the student
loans of anyone who gets a tech degree and holds a job in the industry for
some number of years. The more ridiculous the price of an education becomes,
the more American teenagers you're going to have who feel that the path of
least resistance to a good life doesn't lead through a university.

-So what's more likely is that the lack of skilled professionals in this country will gradually reduce our pace of innovation relative to other countries and cause a relative decline in our wealth, causing us to fall further and further behind.-

-It's far faster and more efficient to let the hoards of skilled professionals in other countries come here, especially since many of them are willing to risk almost anything to move their families here and would stay forever if we let them.-

The assumption made here is that we simply don't have enough skilled labor in
this country to meet our demand, and that the only way meet it is to import
that skilled labor. I disagree with you. I think we can easily create a social
and economic environment conducive to creating the demand we need. Is
importing it easier and cheaper? Yes. But it doesn't pay out in the long term.

Here's an example situation. Let's stay Startup X has one American engineer,
but it needs fifteen more of him. For the sake of argument, let's say his
skill set is utterly unique in the US. No one knows what he knows but him. So,
Startup X needs fourteen more of him, but they don't exist in this country
now. There do exist internationals with the skill set, and it would be really
cheap to get the internationals to come over, and Startup X would have all the
labor it needs within a matter of weeks. Cheap labor, lots of profit. The CEO
is seeing dollar signs. But, his partner points out something else. They've
got the one American engineer. The government just recently instituted a bunch
of economic incentives for students who get tech degrees. Under the same bill,
Startup X could also get money to pay the salaries of interns learning a
skilled technology trade. Bingo! Their one American engineer could train the
new engineers. Each of them might further innovate, have new ideas, form his
own startup one day, and they'd be American startups. Yeah, it'll take longer.
And, you might not be able to pay them the same as internationals. Since
they're American, they're likely to have higher standards for pay. Oh, but
right, I forgot. Using international labor is cheaper and faster, our country
be damned.

Again, this kind of tunnel vision is really damaging to our industry, because
all of the negative societal consequences of conservative economics come back
around to bite us in the ass. If we keep addressing our problems with the same
kind of thinking that caused the problems in the first place (lower taxes,
fewer trade restrictions, etc.), we'll be perpetuating a vicious and dangerous
downward spiral.

~~~
ryanwaggoner
_Here's an example situation. Let's stay Startup X has one American engineer,
but it needs fifteen more of him. For the sake of argument, let's say his
skill set is utterly unique in the US. No one knows what he knows but him. So,
Startup X needs fourteen more of him, but they don't exist in this country
now. There do exist internationals with the skill set, and it would be really
cheap to get the internationals to come over, and Startup X would have all the
labor it needs within a matter of weeks. Cheap labor, lots of profit. The CEO
is seeing dollar signs. But, his partner points out something else. They've
got the one American engineer. The government just recently instituted a bunch
of economic incentives for students who get tech degrees. Under the same bill,
Startup X could also get money to pay the salaries of interns learning a
skilled technology trade. Bingo! Their one American engineer could train the
new engineers. Each of them might further innovate, have new ideas, form his
own startup one day, and they'd be American startups. Yeah, it'll take longer.
And, you might not be able to pay them the same as internationals. Since
they're American, they're likely to have higher standards for pay. Oh, but
right, I forgot. Using international labor is cheaper and faster, our country
be damned._

Your example would be a lot more compelling if it took into account a few
factors:

1\. For a large percentage of those internationals, making it easier to come
here will mean that they will come here and _stay_ , which means that all
those potential benefits you say will accrue from the use of the hypothetical
interns will also accrue from the internationals, only faster. I don't really
understand this line in the sand you've drawn between "us" and "them", because
what we're talking about is letting "them" become one of "us". Where is the
harm in that, exactly?

2\. Training interns is hard, hard work, doesn't scale as well as you seem to
think, and often isn't feasible at all. Even if it is, it'll take forever, and
Startup X very likely won't be around by the time those interns are competent.

------
c2
The President controls the military, can veto bills that congress/the senate
passes, and appoints supreme court justices.

Anything else the media claims Obama is responsible for is a disingenuous
attempt to garner views by name dropping the President and is actually doing a
disservice to all it's readers by misrepresenting how the American political
system works.

------
bwooceli
I don't know which is more relevant for the HN audience - a) the discussion of
how to balance and deliver promises and priorities in the government or...

b) the fact that the comments section of The Econimist is apparently
completely vulnerable to spam bots.

On (a) I'm inclined to take a long view on this presidency and say that the
real rubber will meet the road after the midterms. As for (b) maybe the folks
over at TE would like to take advantage of the recent "Offer HN" meme.

------
FluidDjango
The author(s) of the piece may be right. Or not.

It's an unsigned/unattributed essay that is long on weasel words (as wikipedia
would put it, e.g., "Many of its 2,000 members..."), short on evidence (a few
quotes attributed to identified individuals) and devoid of quantification
("tech leaders have been outraged by..." what proportion? did some take a
poll?)

Economics tries to be a quantitative behavioral science. This piece,
however...

------
ScotterC
Thought this sentence was interesting: "An enigmatic politician with strong
convictions, Mr Obama in many ways resembled the driven young spirits that
venture capitalists love to take a punt on."

I bet in British-English it comes out right, but in reference to American
Football, 'taking a punt on' would mean passing on these driven young spirits
and not backing them. Ahh linguistics

------
raheemm
When the economy improves, the president's approval will start climbing as
well.

------
known
What problem Silicon Valley really was solving?

