Silicon Valley's Political Myopia

Steve Scott is political editor for California Journal, a nonpartisan monthly magazine covering politics and government

If there is one thing about which California's politicians are not shy, it is raising money. The state's open-season campaign-finance laws, coupled with the expense of running for office, can turn even the most camera-wary Assembly member or low-profile statewide candidate into a practiced arm-twister. In many cases, the pitches for money are directed at corporate CEOs or their public-affairs officers, since California, unlike many other states, permits direct corporate contributions to political campaigns.

For fund-raising staffs, Silicon Valley should figure to be a version of Oz: a temple of high-tech affluence. It already has become an early port of call for money-seeking presidential hopefuls. Last week, Texas Gov. George W. Bush, the leading contender for the GOP nomination, collected $850,000. If California's high-tech executives are willing to give to these political migrants, they should jump at the chance to "invest" in their home-state pols, the ones who can cut them some tax breaks and ease them through California's regulatory maze.

But it hasn't worked out that way.

The Silicon Valley boom has been a bust for the state's political leadership.

None of the top 10 corporate or PAC donors in last year's elections were from high tech, and of the top 20 individual donors, only two--NetFlix CEO Reed Hastings and venture capitalist John Doerr--boast Silicon Valley pedigrees. Giants such as Sun Microsystems and Yahoo spent zilch on state political campaigns last year. The collective contributions made by three other high-tech companies--Apple, Netscape and Oracle--totaled $23,500, and that included individual contributions made by their CEOs.

Perhaps most telling were the donor lists for the major-party gubernatorial nominees, Democrat Gray Davis and Republican Dan Lungren. Among givers of $10,000 or more during the general-election campaign, only about a dozen or so individuals and companies on each side had Silicon Valley addresses, and some of these were insurance or finance companies. Most of what did go to the top of the ticket went in the "wrong" (i.e. losing) direction. The one high-tech giant that did bet right was Microsoft, which gave $10,000 to Davis, and it's based in Redmond, Wash.

There are exceptions to this trend. Local legislators like San Jose Republican Assemblyman Jim Cunneen and San Mateo Democrat Ted Lempert received contributions from some largely politically indifferent companies. More established companies like Intel, Advanced Micro Devices and Hewlett-Packard are more politically engaged, but their donations pale in comparison to the hundreds of thousands of dollars given to state and local races by the likes of the Irvine Co., Archer Daniels Midland or Chevron.

So where does California's high-tech political money flow?

East to Washington.

Most companies large enough to have public-affairs departments tend not to think of themselves as California companies but rather as global megaliths for which Silicon Valley is merely a street address. The issues that affect their bottom lines involve international trade, intellectual-property rights and federal tax policy.

True, the Legislature and the governor often dabble in these areas. But to an industry that doesn't dump massive quantities of toxics into water or pollute the air, state regulations are mostly viewed as a cost of doing business. TechNet, the high-tech consortium charged with coaxing Silicon Valley CEOs into collective action on public affairs, claims it's concerned with both federal and state issues. A visit to its Web site, however, reveals a lot of talk about Congress and relatively little about Sacramento.

There are issues with which the state is heavily involved, notably civil-liability law and education policy. But in these areas, most Silicon Valley bigwigs have another Sacramento workaround: the ballot initiative. The genesis of TechNet itself was an initiative campaign launched, in 1996, by Intuit co-founder Tom Proulx. Agitated about what he viewed as frivolous lawsuits aimed at high-tech "deep pockets," Proulx coauthored three measures, for the March 1996 primary ballot, aimed at curbing the state's trial bar. All were defeated, but Proulx et al. returned the favor in November by raising more than $40 million to defeat Proposition 211, a pro-lawyer counterinitiative.

The Proposition 211 campaign has been described as the Silicon Valley's "wake-up call" to the importance of active engagement in state politics and government. Since 1996, however, self-styled "mavericks" on private crusades have stood for high tech in the initiative process. The most visible is Ron K. Unz, who sponsored Proposition 227, which banned bilingual education, and is currently pushing his own version of campaign-finance reform. Political reform, of sorts, is also on the agenda of Alan Shugart, co-founder of hard-disk manufacturer Seagate, who has submitted signatures to give voters the option of "none of the above" on their ballots. Venture capitalist Timothy Draper is also playing initiative politics, bankrolling yet another effort to place the issue of taxpayer-financed school vouchers before voters next year.

Some who are urging greater high-tech involvement in state politics worry that these ballot-box shoguns and their vanity projects will give their efforts a bad name. But the rogues expose another, less tangible rationale for high-tech's relative detachment from Sacramento: Many high-tech executives simply consider state politics "beneath them."

In some cases, this attitude concerns politicians in general. Unz's and Shugart's efforts drip with dismissiveness toward anyone elected to public office, federal or state. But many of Silicon Valley's nouveau riche also regard themselves as young men and women "in a hurry." The often cumbersome legislative process is just too excruciatingly slow for people bent on making their second billion by 40. The only high-tech executive who has shown any interest in working through more traditional channels has been NetFlix's Hastings, who successfully lobbied the Legislature to approve an expansion of charter schools. But Hastings took a short cut: His leverage was strengthened by having spent $3.3 million on signature-gathering for a charter-schools initiative.

There is little doubt that an "eat or be eaten" mind-set works well in an industry in which technological obsolescence is measured in months. But one need look no farther than Silicon Valley itself to see the corrosive effect of high-tech's indifference toward state and local public policy. The average home price in San Mateo County is more than $400,000; in Santa Clara County, it's nearly that high. Most of the work force that drives the high-tech engine spends hour after hour commuting to and from another valley--the Central Valley--because that's where the workers can find affordable housing. Polluted air, overcrowded schools and a yawning disparity between haves and have-nots--all are waste products of high-tech's economic internationalism.

These economic and social side-effects won't be resolved with home-run initiatives bankrolled by a big check. Nor will they be addressed in Washington. Frustrating and contentious though it may be, Sacramento is the place where most of these issues are being turned upside down, vetted and transformed into public policy.

In the hands of the Legislature and the governor lay the power to rebuild a time-worn infrastructure, restructure state and local government financing, even restructure local government itself through the development of regional planning and zoning agencies. Although Davis and many of his Democratic allies in the Legislature have been singularly risk-averse so far, that would change in a heartbeat if they believed that these issues mattered to the people who matter to them: the people whose checks keep them in office.

It may seem strange to urge yet another collection of corporate bigwigs to climb into the fund-raising mud pit. But until the rules of the game change, money will continue to be the "mother's milk of politics." Silicon Valley's CEOs, moreover, have an unprecedented opportunity to add enlightened vision to the more pedestrian kindling that fuels the campaign financing arms race. High technology is a young industry, free of the partisan and ideological strictures burdening more traditional manufacturing and industrial interests. It is also an industry whose global perspective is a perfect fit for a state of many cultures.

Engaged in Sacramento politics through lobbying, legislative conferences and, yes, campaign contributions, high-tech's CEOs could bring their own "out of the box" thinking to the basic quality-of-life issues--education transportation and growth management--that affect not only Silicon Valley but California as a whole. This impact can be had for far less expense than the millions spent on wish-list initiatives or the hundreds of thousands ladled into the New Hampshire media accounts of presidential candidates.*

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