High-Tech Hoax

Bill Clinton is no friend of Silicon Valley.

During the presidential campaign and since taking office, Bill Clinton has implied that his plans for high-technology subsidies enjoy the unanimous support of Silicon Valley. T. J. Rodgers, president and CEO of Cypress Semiconductor and a longtime critic of industrial policy (see "The New Mr. Chips," July 1990), begs to differ. And he is not alone. Testifying before the House Subcommittee on Technology, Environment, and Aviation in March, Rodgers took aim at the assumptions underlying Clinton's program. This article is adapted from that testimony.

In my right hand I have a data-communications chip made by Cypress Semiconductor. We call it HotLink. It is capable of transporting information over a wire or through an optical fiber at the rate of 330 million bits per second. It would undoubtedly be part of any data-communications network created in the United States—and in high volumes.

In my left hand I have a 4,196-bit static random-access memory chip made by Cypress. It is capable of storing and retrieving data in three nanoseconds—about the time it takes light to travel one yard. The fastest SRAM of its type available from any company in the world, it is used in conventional supercomputers.

I also have here a Cypress module containing two powerful SPARC processors of the kind that are used, 500 modules at a time, in a massively parallel computer made by a company called Thinking Machines, in Cambridge, Massachusetts.

In other words, Cypress makes data-communications chips used in electronic superhighways, memory chips for supercomputers, and microprocessor modules for massively parallel computers. We would benefit greatly if billions of taxpayer dollars were showered on the various technology projects favored by the Clinton administration. It would be easy for me to support these projects. I could spend one minute talking about our products, a few more minutes discussing the wonders of the basic technologies, and a few more on the serious peril we face from other countries, especially the government-financed Japanese and Europeans. Finally, I could ask for a dole—to save American high technology.

But I am here to say that such subsidies will hurt my company and our industry. Why? Because they represent tax-and-spend economics—a brand of economics that is a known failure. I do not want handouts. The men and women of our company do not want handouts. And if Congress wants to help American high technology, handouts are the wrong way to go—especially if they are funded with huge tax increases on individuals and corporations.

The subject of today's hearing is the High Performance Computing Act of 1991. But it is impossible to separate high-performance computing from the broader Clinton technology program. And it is impossible to separate the Clinton technology program from the administration's broader economic program.

Let me begin by correcting a serious (albeit politically useful) misconception. The administration would have us believe that the business leaders of Silicon Valley stand unanimously behind its program. The image of John Sculley, CEO of Apple Computer, sitting beside the First Lady and applauding the State of the Union address has been beamed far and wide by White House political operatives. John Sculley and I are friends and neighbors. We live in the same small town in the hills above Stanford University and Silicon Valley. But on this issue we are thousands of miles apart.

Indeed, I am here today in strong opposition to the administration's economic program in general and the big-spending aspects of its technology agenda in particular. I am not alone. Over the last week, in preparation for this testimony, I have corresponded with directors, founders, and CEOs of 10 high-technology companies. Not one agreed that the right way to enhance America's technology leadership is to increase individual and corporate taxes to finance government mega-programs—even if those mega-programs would benefit their own companies. Here are their reactions:

? Scott McNealy, CEO of Sun Microsystems, America's largest manufacturer of workstations: "In the current economic climate, the proposed increase in the corporate tax rate does not encourage job growth, business investment, or global competitiveness. Rather, it penalizes profits and will result in further loss of jobs."

? Joe Zemke, CEO of Amdahl Corp., America's largest manufacturer of IBM plug-compatible mainframes: "Whether it is sugar subsidies or 'investments' in high-performance computing, the Clinton program represents the same logic: siphoning dollars from individuals and corporations and allocating them through a process that is terribly inefficient—a process that is responsive not to market requirements, but to bureaucratic empires and political payoffs. This use of tax money is disturbing at any time, but to increase expenditures as we face a historic deficit is unconscionable.

"As a high-technology executive who faces the rigors of the market every day, I view both the data highway and any subsidy of high-performance computers as the most recent examples of industries lining up to feed at the public trough. There may be a few select winners, but the majority, and the taxpayers, lose."

? Don Valentine, venture capitalist, founding director of Apple Computer, currently a director of five companies, including $600-million Cisco Systems: "Don't assume that the Pepsi-Cola Kid [John Sculley] speaks for Silicon Valley. We do not need pretenders who speak for us. We have visionaries who are rare, important, and doers.

"To Washington I say, please do not help us. The world of technology is complex, fast changing, unstructured, and thrives best when individuals are left alone to be different, creative, and disobedient. Go help the Russians. They are a Third-World technology state. Go help all the people who know how 'pork' works, and who want to be taken care of. But please do not help us: Anyone who thinks corporate taxes promote employment does not understand the problem."

? Wilf Corrigan, CEO of LSI Logic, America's largest gate-array manufacturer: "I am a strong supporter of industrial policy, but lowering taxes would be the best form of industrial policy we could have. We should balance the budget by cutting spending, and if that means we cannot put money into the high-technology infrastructure, that is OK. If wealthy individuals get taxed more, they will spend more time figuring out how to minimize taxes and less time creating wealth."

? Finis Conner, founder and CEO of Conner Peripherals, Silicon Valley's leading computer disk-drive maker: "President Clinton's proposed tax program will raise the U.S. corporate tax rate by 2 percentage points. We believe this strategy will accelerate the move of U.S. jobs offshore. There are plenty of countries that will welcome these jobs with open arms—and will offer tax incentives rather than tax increases. The development of all technologies and products involves risks and rewards. The government should not be in the business of speculating with taxpayers' money on which of those risks will be winners and which will be losers."

? Gil Amelio, CEO of National Semiconductor, a $1.6-billion chip company: "Our current tax code encourages and instigates class warfare. Today, the top 5 percent of all wage earners pay 44 percent of all income tax—and if Mr. Clinton has his way, this will increase further because he has campaigned on the basis of the 'politics of envy.' He wants to punish with high taxes Americans who have been successful—that is, the people we need to revitalize our economy!"

? Pierre Lamond, venture capitalist, founder of National Semiconductor: "Every dollar that is taxed away from individual investment or corporate R&D will weaken America's high-technology companies."

? L. J. Sevin, venture capitalist, former chairman of Convex, a supercomputer company, and chairman of Cyrix, a chip supplier: "The companies that the administration claims got a 'free ride' generated all the jobs and foreign exchange. And the so-called free ride probably earned the government a factor-of-10 return on the investment. Somehow, the administration's attitude seems to be that any money the government does not take in taxes is a gift to corporations."

? John Adler, CEO of Adaptec, a $300-million supplier of components and software to the personal-computer industry: "I was delighted with President Clinton's initial two-for-one deficit-reduction target. I am now deeply concerned about the trend of moving away from significant deficit reduction to significant increases in government spending. I am not in favor of increased government spending—even if it is called investment, and even if it is directed to high technology."

? Roger Emerick, CEO, Lam Research, a leading supplier of semiconductor-manufacturing equipment: "Large investments in R&D and in building a world-class manufacturing capability have allowed Lam Research to gain global market share and create 350 new jobs over the past 12 months. Raising Lam's corporate taxes without strong additional R&D and investment incentives will reduce our ability to create jobs in the future."

These comments represent only a selection of recent communications with senior executives in Silicon Valley. So as we evaluate the president's program, let's be clear: Silicon Valley does not stand as a monolithic group in support of these tax-and-spend economic policies. If anything, the opposite is closer to the truth.

There is a second dangerous misconception about the president's economic program. It too serves a useful political purpose. Indeed, it is a game as old as politics itself: divide and conquer, or, as Gil Amelio says, preaching "the politics of envy." Yes, the White House tells the American people, we plan to increase spending by hundreds of billions of dollars. But we plan to spend that on "you." Even better, "they"—the bad guys—will pay for it.

The bad guys, of course, are successful individuals and profitable corporations. Throughout the campaign last fall, and through the first two months of the administration, we have heard endless talk about companies which, in the words of Labor Secretary Robert Reich, got a "free ride" in the 1980s. Or, as the president himself put it in the report that followed his State of the Union address, the burden of the economic program will fall on "those who profited most from the uneven prosperity of the last decade."

Somehow, we never get to meet these bad guys. They are never in the room when tax increases are being discussed. Instead, political operatives offer caricatures—images of Wall Street manipulators defrauding investors of billions. Who would not want to tax such "excesses of the '80s"?

So please allow me to reintroduce myself: I am an excess of the '80s. Based on my ownership stake in Cypress, I am one of the people who, in the president's words, "profited most from the uneven prosperity of the last decade." I became a paper millionaire in the '80s—eight times over, in fact.

How did I profit? I started a company in Silicon Valley. I obtained stock in that company when it had one employee (me) and one used computer. I worked with that company for a decade—16 hours a day, six days a week—to help get it where it is today.

And where is it? During its 10-year history, Cypress has generated more than $1 billion in cumulative revenue; made over $160 million in profits, on which we paid $60 million in taxes; and created 1,500 jobs that paid cumulative salaries of nearly $500 million, on which our employees paid further taxes of $150 million. We have shipped cumulative exports worth $300 million. We have generated a market value of $500 million for our shareholders and employees—all of whom own stock in the company.

If that is an "excess of the '80s," let's have more! As an entrepreneur, I should not have to apologize for my success and that of my company. I am offended by the administration's divisive rhetoric. As we debate the virtues of raising taxes on individuals and corporations, let's not debate abstractions. Let's debate the realities of who pays taxes and the impact of raising taxes on those people and companies.

I don't want sympathy. But I do want to expose the shaky foundations of the logic behind the administration's program. I am a person of simple tastes; therefore, I still have most of the wealth associated with my Cypress shares. What have I done with that wealth? I invested it. In fact, I invested it in precisely the kinds of companies on which the administration wants to shower taxpayer subsidies—the world's most advanced competitors in fields such as semiconductors, biotechnology, software, networking, environmental sciences, and health care.

I hold investments in 99 companies through three venture-capital funds. Nineteen of those companies are innovators and leaders in high-speed data communications—real companies that are making real components of today's existing data superhighways. Other companies are innovators in the field of high-performance computing.

Every incremental dollar that Washington takes from me comes directly out of my investments in these companies. I cannot sell my house or car or cut my food bills. But I am going to be forced to invest less. After all, the cash to pay my higher taxes has to come from somewhere. In essence, the administration is arguing that by taking my money in the form of higher taxes and "investing" it in subsidies, it can make better investments—more jobs and wealth—than the venture-capital firms with which I invest—firms that are the envy of Japan and Europe. That logic defies common sense. Does anyone believe that Washington invests more effectively in high technology than the free market?

In February, President Clinton and Vice President Gore visited Silicon Graphics, one of the great new-generation computer companies in Silicon Valley. By all accounts, they were amazed by what they saw. They declared their eagerness to help produce "more successes like Silicon Graphics."

I own shares in Silicon Graphics. It exists because hundreds of institutions and individuals like me—excesses of the '80s—put their money into the company through venture capital. Washington cannot create more companies like Silicon Graphics. The way to create more Silicon Graphics is to allow knowledgeable investors, steering their money through world-class venture capitalists, to try to fund just the right companies with just the right technology at just the right time. Even these venture experts are not right all the time. But surely they are right more often than Washington.

The Clinton plan also raises taxes on Cypress as a corporation. Suppose, as a result of the plan, that Cypress's corporate taxes increase by $1 million next year. As CEO, I can only take that money directly out of R&D—the lifeblood of the organization. Again, let's be clear about the logic: A tax increase of $1 million means that Cypress will employ 10 fewer Ph.D. technologists than it would otherwise—technologists who would be working on high-performance chips for data superhighways and supercomputers.

The third misconception about the Clinton plan pertains directly to high-technology, high-performance computing and the politically named "electronic data superhighway." It is the proposition that government subsidies are the best way for good ideas to become realities in the market. The administration wants to make government a customer of first resort for high technology—to the tune of tens of billions of dollars.

We have been down this road before. In the 1960s, we had a government that threw money at social problems. It didn't work. In the late '80s, under President Bush, we had a government that threw money in many of the same directions that the Clinton program is now proposing. It didn't work; it brought us a meager 1-percent growth rate for four years. In the '90s, we have a government that wants to throw even more money at such targets. It won't work.

What does work? The ragtag, unmanaged, sometimes-painful melee of the free market. It's not pretty, it's not neat, but it has made the United States the world's technology powerhouse.

Consider my personal investments. Via the venture-capital firms with which I deal, I am invested in MasPar, a manufacturer of massively parallel computers. On the other hand, venture capitalist John Doerr of Kleiner Perkins Caufield & Byers, another firm with which I invest, believes that the supercomputing field is heading for a fall. His view: "The supercomputer industry is collapsing on itself. It is not a competitive way to solve problems. Why should we invest in dying markets?"

I hope MasPar succeeds. But there is certainly plenty of risk in the investment equation. The best place to sort out that risk is the free market, with dynamic, real-time decision making, not with government programs that often take as long to implement as it takes for major technologies to run their life cycles.

The administration is not alone in putting its faith in Washington over the free market. A few weeks ago, Rep. Edward Markey (D-Mass.), who chairs the House Subcommittee on Telecommunications and Finance, addressed an important computer-industry conference. First he complained that the industry did not lobby enough. I guess those computer executives were just spending too much time back home starting companies, creating products, entering new markets, generating wealth and opportunity. (Markey's comment prompted me to dust off and modify a Vietnam-era phrase: What if they gave a subsidy and nobody came?)

Markey went on to urge the executives to devote special attention to the data superhighway. His reasoning: "This is too important to be left to the invisible hand of the marketplace." I was amazed. The world has seen a socio-economic experiment based on the notion that important things require central planning. It ran from 1917 to 1989, and it failed. Which government-sponsored technology advances would Markey like to compare to the embarrassment of riches generated by the "invisible hand"?

Today, in industry after industry—semiconductor chips, computers, biotechnology—U.S. companies lead the world or are mounting remarkable comebacks against Japan and Europe. Why are we moving forward against our foreign rivals? Because we relied on competition—the invisible hand—while Japan and Europe relied on government targeting and subsidies.

Think about Japan. Just a few years ago, America was in a panic about the Japanese government's massive research program in high-definition television, or HDTV. Today, everyone agrees that Japan's effort was a multi-billion-dollar flop and that America has prevailed—thanks to the messy, uncoordinated innovations of many private companies. Five years ago, we lived in fear of the Japanese Fifth Generation Computer Project. "Tron" was going to walk, talk, and eat our lunch. Today, everyone agrees that it too was a flop and that U.S. computer manufacturers are continuing to extend their global lead.

Or think about Europe. Amazingly, we still have "experts" who want us to emulate Europe's alphabet soup of technology consortiums, such as JESSI, their equivalent of the U.S. chip consortium Sematech. JESSI showered billions on the European semiconductor industry. It also "rationalized" the industry by allocating certain market segments to particular companies. Siemens became the DRAM company of Europe-and has since gone out of that business. Philips became the SRAM company for Europe—and has since gone out of that business.

After inadvertently weakening its chip industry, Europe then established 14-percent import duties on foreign chips—the next logical step of desperate government policy. The import duty had precisely the effect one might expect: It raised the price of components to European computer makers and virtually wiped out that industry as well. Today, there is no European chip industry or computer industry to speak of—thanks to the role of government programs like JESSI. European taxpayers gave up part of their income to wipe out two critical industries. We can't afford to emulate such failed experiments.

Industrial-policy advocates like to describe a few high-profile cases as success stories. Let's consider two of them. The first is Airbus. It is true that European governments have unfairly subsidized their aircraft manufacturers and gained a large share of the world market. But at what cost? European governments have spent $26 billion on Airbus—to directly create 40,000 jobs. That works out to $650,000 per job. The National Venture Capital Association estimates that venture-funded startups generate employment at the rate of $45,800 per job. If Airbus represents industrial policy at its best, is it any wonder that Europe has experienced such chronic unemployment?

The second alleged "success story" is here at home. It has become fashionable to describe Sematech, the chip-industry manufacturing consortium, as a triumph of industrial policy. It is true that Washington spent or will spend $1 billion of taxpayer money on the Sematech boondoggle. (See "DRAM Scam," February 1992.) It is true that the U.S. semiconductor industry has experienced a resurgence. It is not true that one had much to do with the other.

The U.S. semiconductor industry resumed its leadership position because a new generation of chip companies forged in the '80s, a generation of which Cypress is just one example, created innovative new categories of chips, new business models for how to compete, and new levels of efficiency. In short, we out-innovated the Japanese. America also resumed its leadership in great part because the giant companies of our industry, companies such as Intel and Motorola, realized that they had to adapt or become also-rans. They adapted—and now lead the world.

In the mid-'80s, Intel was losing money and in crisis. In 1992, Intel had become the largest and most profitable chip company in the world. It was Intel's remarkable innovations in microprocessor architectures, along with top management's refusal to accept also-ran status and lots of hard work by thousands of men and women, that allowed it to capture the lead. I am afraid to imagine what would happen if I cornered Intel's CEO, Andy Grove, at a cocktail party and said, "I am glad Sematech saved your company and turned Intel from a loser into a winner. I guess you ought to thank Uncle Sam."

Sematech has made little contribution to America's comeback in chips—certainly no contribution worth $500 million of taxpayer money. Five years ago, when it was created, Sematech's membership included only 14 giants out of the hundreds of America semiconductor companies. In the last year, two of the member firms (the two most entrepreneurial companies, LSI Logic and Micron Technology) left the consortium. Two more companies are reported to be considering departures. The simple lesson: Relentless competition and fast-paced innovation—not taxpayer subsidies—saved the U.S. chip industry.

Surely this is no surprise. Life in Silicon Valley is a daily sprint; government moves at a crawl. Do any of us really believe that Washington can play a decisive, positive role in fields as complex as semiconductors, high-performance computers, or electronic data super highways?

Think for a moment about the reality of life at Cypress and then extrapolate that to the chip industry and Silicon Valley as a whole. Our company has 150 product designers. We have over 70 technologists. We sell more than 1,500 products. We are working right now on 50 different new products—from high-speed computer memories to data-communications chips. With my technical training and my managerial background, it takes me 16 hours a day to stay on top of this organization.

Cypress is but one $250-million company in a $50-billion semiconductor industry. If you take the details I just described and multiply them by 200, you have a sense of the complexity of the chip industry. If you take that level of complexity and multiply it by another factor of 10 or more, you have the complexity of Silicon Valley. How can the government possibly hope to cope with the details of Silicon Valley? How could the government even know who the players were in any week, let alone pick winners and losers?

The administration's multi-billion-dollar technology plan is classic tax-and-spend economics with a new coat of paint and new jargon. Bridge-and-tunnel pork-barrel programs have been replaced by high-technology pork-barrel programs. But it is pork just the same.

To be fair, the administration is beginning to move the government toward a high-technology vision, a development that I view as favorable. I certainly share its enthusiasm for an America in which computers and communications carry data and video into companies and schools, and eventually into the home. But why does the administration want to spend tens of billions of dollars of taxpayer money to fund technology programs that the free market would pay for without one cent of expense to the taxpayer?

For example, the administration proposes big spending increases on a range of projects to speed creation of the "data superhighway." The technology plan outlined by the administration offers few substantive details about these projects. But the details it does offer make one point clear: Everything in the program is already funded by venture capitalists and in development by innovative private companies, many of which I personally support.

Multiple, competing data highways are being built day by day, company by company, across the United States. Entrepreneurs are racing to develop new networking systems, new software interfaces, new value-added services. Gil Amelio, whose comments I cited earlier, was a senior executive at Rockwell before he joined National Semiconductor. He reports that his division at Rockwell created the hardware to lay 23 million miles of fiber-optic cable.

MCI, AT&T, and Sprint already have three independent, coast-to-coast, fiber-based long-haul networks. The real issue is extending those networks into the home. There is a role for government in this, but it is not to spend billions of taxpayer dollars on a field that the private sector is willing to fund. The role for government is to untangle the morass of bureaucracy and regulations that prevents private companies from hooking up the "last mile" of fiber to the home.

The regional Bell operating companies would gladly hook fiber optics from the long-haul network to the home. But they are prevented from doing so by regulations that make the huge capital investments uneconomical. Cable operators are already hooked into 60 percent of American homes. They too could make the connection with existing long-haul data superhighways, but they are prevented by regulations that declare them a "natural monopoly" and restrict them to the television and movie business. Finally, the long-haul superhighway could be hooked to the home through wireless circuits. But the Federal Communications Commission has yet to allocate the necessary frequencies.

Washington does not need to "help" by spending billions of dollars on data superhighways. These highways will reach the home for free if government becomes less unhelpful—if its gets its regulatory house in order and then gets out of the way. Even the Berkeley Roundtable on the International Economy, the liberal think tank that contributed Laura Tyson to head the Council of Economic Advisers, agrees that one centralized data superhighway—in its words, "the all-singing, all-dancing, all-integrated broadband network"—is not how computers and communications will come to the home. What we need from Washington are common-sense rules and a sense of government's limits.

The same logic applies to high-performance computing. The prevailing image of supercomputing in Washington is still tied to the Cold War: giant machines, funded by the defense establishment, deployed to design nuclear warheads or track thousands of incoming missiles. But the Cold War is over. And the era of high-performance computing, at least as it has been conventionally defined, may be drawing to a close. We have seen the limits of gigantic "number crunchers" of the kind developed by Seymour Cray. We are seeing the arrival of smaller machines, massively parallel machines, machines with new architectures designed for ease of software development rather than raw number-crunching capability.

In short, the high-performance computing industry is entering a period of profound change. This is precisely the time when venture capitalists are most effective at setting new directions and funding new players. Heavy-handed intervention from Washington is guaranteed to retard change rather than to encourage it. Venture capitalist L. J. Sevin, the former chairman of supercomputer maker Convex, puts it this way: "The supercomputer market is changing dramatically because the nature of the technology is changing. The only thing government can do is get in the way of the change—with disastrous results."

Washington should stay away from the intricacies of high-tech competition, whether the issue is data superhighways, high-performance computing, or advanced manufacturing. It should focus instead on the infrastructure of competition—those factors of production that help all companies equally. President Kennedy said it best: "A rising tide lifts all boats."

Members of the Clinton administration love to give speeches about infrastructure: deteriorating roads, falling bridges, aging railroads, even data superhighways. But the real threat to our country's economic future is the condition of our financial infrastructure—the scarce supply of reasonably priced capital that successful companies need to build their manufacturing muscle and to create new jobs. If Washington adopted policies designed to lower (and keep low) the cost of capital, it would make a genuine contribution to America's entrepreneurial advances in the '90s.

After years of the most reckless fiscal behavior in American history, the federal government must get serious about reducing wasteful spending. The Clinton administration has boasted about its proposed spending cuts and its reduction in the White House staff. But it has not begun to approach the dramatic cuts we need. You can pick up a newspaper any day of the week and read about the painful efforts of giant companies—General Motors, IBM, Sears—to slash their costs, streamline their overhead, reduce their payrolls. Boeing, a world-class company by any standard, recently announced plans to dismiss 20 percent of its workers. My company, in a decision that was very painful for me, recently dismissed 20 percent of our workers to become more efficient—and we started out as one of the leanest and most efficient chip companies in the United States.

How then, in light of these sacrifices, can the administration trumpet its plans to eliminate 100,000 federal jobs over the next four years—less than 5 percent of a total work force of more than 2 million? Does the administration expect us to believe that if a company as great as Boeing can figure out how to survive with 20 percent fewer people, the Department of Agriculture cannot live with an immediate reduction in personnel of 25 percent?

The opportunities for cuts go beyond personnel. We could spend hours listing wasteful and unnecessary programs—programs that may have made sense 30 or 40 years ago, when they were created, but that make no sense today. We could begin with two of my personal favorites: the federal wool-uniform subsidy, created during World War II and later expanded to include mohair sheep; and the Interior Department's strategic helium reserve (created during World War I), which is keeping America well stocked for the next blimp war at $120 million per year. Why are we asking for more money from America's hard-pressed people and companies when follies like these exist?

Balancing the budget will also mean cutting entitlement programs, politically even riskier that eliminating the benefits of narrow interest groups. I believe there is only one way to impose real spending discipline: Congress must pass a balanced-budget amendment and approve the line-item veto. No industrial policy or national investment strategy or trade negotiation, no matter how brilliant, would have the same energizing effect on American entrepreneurship as a return to fiscal sanity through dramatic spending reductions.

I wish I could propose a razzle-dazzle plan, complete with spectacular computer graphics, to capture the imagination of Washington and put America back on track. But those of us who are out competing every day understand that there are real limits to Washington's potential contributions to our success—and countless opportunities for mischief and missteps.

America has plenty of work to do on the economic problems we have created for ourselves—problems that trace their roots to fiscal recklessness. Ultimately, though, the economic battles of the '90s will be won in America's factories, labs, and offices—not in the halls of Congress or the corridors of the Commerce Department. That's good news. America's entrepreneurial companies have the guts, brains, and drive to beat the best the world has to offer. All we need from Washington is the confidence to let us fight it out.

THE REACTION

T. J. Rodgers was swamped with supportive letters after his congressional testimony and a subsequent piece in The Wall Street Journal. These are excerpts, reprinted with permission of the letter writers, from responses that Rodgers received in March and April.

I have been following your "counterpoint" on the Clinton plan (testimony and The Wall Street Journal article) with interest (and support)….

The Clinton plan sets out to penalize those who achieve by disproportionately raising their tax burden. It has never been clear to me how, in a world where markets and jobs are available to those societies which are most diligent, a tax strategy that penalizes those who take risks, work hard, innovate, and achieve makes a country more competitive. The Clinton plan seems to roll back the clock to the very socio-political and economic theories that have been so clearly counterproductive and discredited around the world…

E. A. Sack
President
Zilog
Campbell, California

Thanks for sending me a copy of your Washington testimony. I thought it was great.

J. C. Lewis
Chairman of the Board
Amdahl Corporation
Sunnyvale, California

Your editorial in today's Journal was, literally and figuratively, right on the money. I'm quite sure that most high-tech CEOs agree with your position, but most of them lack the guts to say so. Pity.

Frederick Van Veen
Vice President
Teradyne
Boston, Massachusetts

I read the article you wrote for The Wall Street Journal and was quite impressed. I agree with you 100%…

James N. Miller
President and CEO
MiniStor Peripherals Corp.
San Jose, California

Thank you for standing up to those boneheads! Your testimony…gives me some small hope that sanity survives somewhere in The Valley….

Watching snippets of the State of the Union address on February 17 and seeing sycophants like John Sculley sucking up to the Clintons almost made me ill. Until I heard of your testimony, I feared that once-proud Silicon Valley, the home of creative, driven individualists, had become just another collection of indentured toadies. The pack of economic illiterates and political hacks comprising this administration literally makes me fear for the continued success of entrepreneurs. Americans are becoming ingrained with the notion of letting government run their lives, and that's scary. The same crowd that can't run an efficient postal service wants to take over medical care and decide which technologies survive and which fail…

I don't know if you've ever read Atlas Shrugged, but the idea of productive people going on strike against the socialists is becoming more appealing to me as time goes by. I don't know when this nonsense will be turned around, but your efforts are certainly appreciated by those of us with a libertarian outlook.

Jim Switz
Sales and Marketing Manager
Trantor Systems Ltd.
Fremont, California

Thanks for your courage in standing up to two protectionist presidents. You stood almost alone, and you refused to back down. And you were right.

Craig Franklin
Vice President of Marketing
Green Hills Software
Santa Barbara, California

I read with great interest your recent column in The Wall Street Journal…and agree wholeheartedly with your assessment and perspective on this country's problems. The long list of tax credits and subsidies for the lower income brackets and the welfare recipients creates a disincentive to those of us that work hard to further our careers and professional success.

Walter G. Kortschak
General Partner
Summit Partners
Palo Alto, California

I have been reading with interest about those of you in the Silicon Valley who have not been won over by President Clinton's economic program.

Most of us in the restaurant industry are not very pleased with his programs either. I am spending more and more time trying to stop the onslaught of socialism, or whatever it is we are facing….Keep up the good work!

Robert T. Larive
President
Fior D'Italia
San Francisco, California

I write to compliment you on the editorial-page piece in today's Wall Street Journal. For a variety of reasons, foremost being the shallowness of the electorate, today's Washington suffers from more than a normal ratio of demagogues to statesmen….

I intend to carry copies of your article to leave with lawmakers and staff. It's never too late to change an attitude or an opinion; let's hope your work will do so.

Terry L. Claassen
President
Corn Refiners Association
Washington, D.C.

Right on! Your editorial…addressed a number of points that should be constantly driven home to the voting and hopefully thinking public in this country.

Robert Weyhe
Dry Creek Property and Investment Co.
San Jose, California

Your message is a critically important one that somehow the larger business community must get the clowns in Washington to understand. We are a small company at the opposite end of the technological spectrum from Cypress (we design and market high-end home furnishings). But higher tax rates present exactly the same tradeoff for us—more taxes mean slower growth and fewer new jobs. The only way out of our current mess is lower taxes, lower spending, and free-market growth. Period.

Donald H. Gleason
President
Summer Hill Ltd.
Redwood City, California

I must applaud you for your comments….

The caricatures of Milken and Boesky are brought up by the politicians and the media as a way of pandering to the baser emotions of the general public. This cultivation of spite is seen everywhere. Celebrities are held up as heroes and claim that they were oppressed in the eighties while signing mega-million dollar deals, congressmen bounce checks, molest coworkers and then tell us how rotten we are in the private sector. A successful business person is never shown as heroic, they are not even portrayed as decent people….

I think there are many of us who agree with you.

Anthony Bernardi
Vice President
Global Marketing
McLean, Virginia

It is nice to see someone have the courage to speak the truth to the Clinton administration. I hope more people like yourself have the courage to come forward in the near future.

Charles Splaine
Splaine & Associates
Los Gatos, California

T. J. Rodgers is president and CEO of Cypress Semiconductor in San Jose, California.