Governor Feeling Little Political Fallout From the Dot-Com Bust

As a psychotherapist in Silicon Valley, Samuel Rolano can testify to the human toll of the recession and the dot-com bust. He sees the symptoms daily: anxiety, depression, economic insecurity.

“I can’t imagine anyone who’s not been affected,” said the 43-year-old.

Indeed, signs of the slump are everywhere, from the vacant glass office parks south of San Francisco to the sagging attendance at San Jose’s flashy Tech Museum. Everyone, it seems, can relate some measure of personal woe, be it layoffs, lost business or a shriveled stock portfolio.

Few, however, blame Gov. Gray Davis--or any politician, for that matter.

“Finger-pointing is ludicrous,” said David Benson, a Menlo Park business consultant whose employer has shed six of its 40 staffers over the last year. “You can’t blame any one person or any one party.”

Nearing the midpoint of this election year, California faces a record budget deficit and fallout from the worst economic downturn in a decade. Davis, unpopular even with many fellow Democrats, risks further upset by proposing an unpalatable mix of tax increases and budget cuts to close the projected $23.6-billion gap.

Meantime, he struggles against persistent--if unsubstantiated--accusations of trading favors in return for campaign cash. Some of those allegations involve Oracle Corp., one of Silicon Valley’s own.

And yet here where the recession has hit hardest, where commutes are hellish and home prices--even now--are outlandish and still climbing, few of those interviewed in recent weeks blame Davis for the bad times, in the same way that few credit government for the times that were good.

Instead, they believe it was high-tech’s entrepreneurs and investors who created the glory ride. Now that it is over, they suggest that the end was inevitable and maybe even deserved.

“As a friend of mine said, all of us were a little bit drunk,” said Martin Hellman, a Stanford University engineering professor.

At bottom, politics in Silicon Valley is about pragmatism; if Davis has done little to inspire, at least he has been a steady friend of high-tech. If people fault his handling of the energy crisis, which many do, they appreciate his tolerant stance on issues such as abortion and gay rights, which matches their own live-and-let-live attitudes.

If the Oracle scandal speaks to an unsavory relationship between money and politics, it is hardly a surprise.

“Big business is always looking to contribute to political campaigns in return for favors. It’s built into our political system,” said Chris Fitting, 36, a paralegal toting a bag of Subway sandwiches back to work. “Oracle and Davis, Enron and Bush. It’s all political business as usual.”

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Partisan Inclination

For years Silicon Valley was a bastion of liberal Republicanism, finally yielding to Democrats under the care and courtship of President Clinton. Given that partisan inclination, many now lean toward Davis if only because he is not as conservative as Bill Simon Jr., the Republican candidate for governor.

Joe Svitek, a 56-year-old geologist, had just polished off a hamburger at Taxi’s, a retro diner on Palo Alto’s bustling University Avenue, when asked his opinion of Davis. He took a long time before responding, “OK-ish, I guess. OK-ish enough, unless someone really inspiring came along.”

Or as psychotherapist Rolano put it, in an often-stated variant of the lesser-evil theme, “Do I think he’s wonderful? No. But I certainly think he’s better than Bill Simon.”

For all the veneration of the Internet and gaudy New Economy hype, it is easy to forget that high-tech is a relatively young industry, with an even shorter history of political activism.

Until about a decade ago the prevailing sentiment toward government was one of apathy tinged with contempt. “Do our job, keep our heads down. We don’t lobby. We’re hip,” was how Paul Saffo, a Silicon Valley analyst and director of the Institute for the Future, described the mind-set.

That began to change as the world grew more socially and economically connected--thanks in good part to the tools of technology--and as the valley’s population grew larger and more dense, making the importance of matters like education and quality of life acute. In 1992, Clinton became the first presidential candidate to actively woo Silicon Valley, as part of his strategic makeover into a different kind of Democrat.

Four years later, the high-tech industry raised $40 million to defeat Proposition 211, an attorney-sponsored effort to ease the filing of securities lawsuits. The effort was a turning point.

Afterward, the industry beefed up its lobbying in Sacramento and Washington and continued its generous campaign contributions.

In 2000, presidential hopefuls Al Gore and George W. Bush led a parade of candidates through Silicon Valley as high-tech soared to No. 8 among national political donors. Four years earlier, the industry had ranked 33rd, according to the Center for Responsive Politics, which tracks political giving.

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‘Split Personality’

The $32 million the high-tech industry gave in 2000 was roughly divided between the two major parties, a pattern that reflects the Valley’s “split personality,” said Larry Gerston, who teaches political science at San Jose State.

“The typical voter is a person who is basically liberal on social questions, moderate on taxation issues and libertarian when it comes to the intrusiveness of government in their lives,” said Gerston. “On the one hand, they want things for the public good. On the other, they don’t want government interference.”

The impetus is often less philosophical than practical. Education is about training the work force of the future. Free trade means overseas markets. Environmentalism is a way of preserving the outdoorsy lifestyle that has lured so many creative minds to the valley’s gentling rolling landscape.

Lately, the hot issues have been accounting reform--Washington’s response to the Enron scandal--and efforts to force companies to list stock options as a bottom-line expense. The latter, in particular, is viewed as a major threat to Silicon Valley’s high risk-high reward culture.

“What people most value is the ability for ideas to flourish in a free, unrestrained environment,” said Donnie Fowler, a Democratic operative with TechNet, the industry’s bipartisan political action group. At the same time, he acknowledged, “They don’t want government to turn its back either, because tech can’t survive in a vacuum.”

Few, however, are looking to Washington or Sacramento to rescue them from recession. Like many, Kurt Thywisson spoke of economic cycles with a near-evangelical faith that eventually, assuredly, things will turn around.

“This is capitalism at its finest,” said the 33-year-old entrepreneur, who started his Santa Cruz software company just in time for the bottom to fall out of the new technology market. “Capitalist values are what make Silicon Valley thrive.”

It is an odd sort of downturn plaguing the region. There is undeniable hardship. The tech crash cost hundreds of thousands of people their jobs, pushing Santa Clara County’s unemployment rate to 7.4% in April, compared with 1.3% just 18 months ago. Office vacancies have soared, venture capital has dried up and scores of once-promising companies no longer exist.

And yet much of the distress is relative. Eric Orr, 40, who was laid off last spring from his back office job at a Sunnyvale electronics firm, is planning to leave Silicon Valley--”I don’t see any future here”--perhaps for Sacramento. But first he is taking a London vacation with some of the money he squirreled away during headier times.

Plenty of others pulled money out before the tech bubble burst; real estate agents report multiple offers on $4-million homes, and fixer-uppers going for $800,000 or more. There is no shortage of BMWs plying the still-crowded roads, and discriminating shoppers can pick up a $30 bottle of hand lotion at one of the day spas near Stanford, then nip around the corner for a $7 bowl of egg-lemon soup.

The average regional wage of $70,000 is twice the national figure, and even with the setbacks of the last year, Silicon Valley has 300,000 more jobs than it did in the early 1990s.

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Prevailing by Default

“We’re bearing the brunt [of the recession] just as we had a disproportionate share of the goodies,” said Stephen Levy, who has surveyed the local scene for years as head of the Center for the Continuing Study of the California Economy, based in Palo Alto. “But we’re not in bad shape in the sense that we’ve got a bunch of industries that have fantastic long-term futures.”

Simon’s challenge in the race for governor is convincing an inherently skeptical audience that he can hasten that turnaround, lending a hand without reaching too far into people’s personal lives. Failing that, Davis could prevail simply by default.

Duf Sundheim, a Palo Alto attorney and chairman of the Lincoln Club of Northern California, said members of the moderate Republican group left a post-primary meeting with Simon convinced that he “is not nearly as conservative as Davis and others make him out to be.”

The problem, Sundheim said, is persuading those who can’t sit down face to face with the GOP nominee. “There are millions and millions of California voters,” Sundheim said. “The test is whether [Simon] is going to be able to get out to the average voter who he is.”