Political Clout, Not A Bailout

Of course, there are those who argue that the technology sector, with its billionaire CEOs and 1990s legacy of conspicuous consumption, doesn't need a bailout, that the tumultuous events of the past two years were just an arrogant bunch of thirtysomethings getting their comeuppance. But if you look at some of the other industries that are receiving government help, technology stacks up pretty well when it comes to justifying a handout.

Take agriculture, and that granddaddy of all pork barrel spending measures, the 2002 Farm Bill. This bill includes price guarantees and subsidies for corn, sorghum, wheat, barley, oat, honey, pea, rice, sugar, cotton, apple, peanut and dairy farmers, among others. Economists estimate that all this will cost U.S. taxpayers at least $180 billion dollars over the next 10 years, and some think the cost ultimately could be double that amount.

This for a sector that directly employs about 3.3 million people, out of a total U.S. workforce of more than 130 million, and comprised only 1.3 percent of total U.S. real GDP in the first quarter of 2002, according to government data.

Next look at the steel industry. Steel workers and executives were handed a late Christmas present in March when the Bush administration (contrary to all its protestations about free trade) imposed tariffs on most steel imports. Economists working on behalf of the Consuming Industries Trade Action Coalition have calculated that these tariffs will cost consumers about $440,000 for each steel job saved, and result in eight workers in other U.S. industries losing their jobs for each steel job saved.

This for an industry wallowing in a glut of global overcapacity (sound familiar?), that accounts for a minimal percentage of real GDP, and directly employs only about 180,000 people.

Now compare the technology industry. U.S. Labor Department figures show that the industry directly employs more than 2 million people in computer and data-processing services alone. And between 1990 and 1998, the production and utilization of information technology boosted U.S. real GDP growth an average of 1.4 percentage points per year above what it otherwise would have been, according to the International Monetary Fund. This was one big reason why the United States enjoyed a "golden age" of economic growth in the 1990s.

But agriculture and steel have one thing that technology doesn't, and that is big political clout. Rural farm states, for example, are a key source of support for the GOP, and the steel industry is concentrated in heavily Democratic states such as Pennsylvania and West Virginia, which will be crucial battlegrounds in the 2004 election.

This is a curious situation for the technology sector because the industry has its greatest economic concentration in California--the grand prize in any national election--along with growing technology centers in other key states such as Massachusetts, Texas, Virginia and North Carolina.

Now don't get me wrong. As a professional economist, I am not arguing that the technology industry should actually receive a government bailout. The failure of weak players is a healthy part of the growth and evolution of any industry or economic sector.

But given its considerable economic clout, technology should be playing a more central role in the political process. Industry advocacy groups, for example, can work to present a stronger, more united, and more aggressive front in Washington.

Solution providers, in their thousands, also have a role to play, building up political support for technology from the grass-roots level. Write your senators, call your congressmen; let them know what you are thinking and what concerns your business. It's the thought that counts, as they say, and this way the next time a crisis erupts, technology will be more in the thoughts of our political leaders.