Economics

The Secret Origins of Silicon Valley

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From an interesting business history article in the San Francisco Chronicle:

"There is this myth that Silicon Valley was all orchards when the chip companies arrived, but it's not true. It had been building, building for a long time," said Christophe Lécuyer, a Stanford-trained historian who turned his dissertation into a book, "Making Silicon Valley."

Lécuyer, now an economic analyst with the University of California system, said the region's technological awakening began almost a century ago when, not long after the great quake of 1906, the Bay Area—and particularly the Peninsula—began innovating with the then-hot technology of radio.

"The San Francisco Bay Area was a natural place for interest in radio because it was a seagoing region," said Timothy Sturgeon, an industrial researcher at the Massachusetts Institute of Technology who described this radio period in a paper, "How Silicon Valley Came to Be."

Lécuyer and Sturgeon argue that, roughly 30 years before Hewlett and Packard started work in their garage, and almost 50 years before the Traitorous Eight created Fairchild, the basic culture of Silicon Valley was forming around radio: engineers who hung out in hobby clubs, brainstormed and borrowed equipment, spun new companies out of old ones, and established a meritocracy ruled by those who made electronic products cheaper, faster and better.

Not that all the energy was coming from the grassroots:

[T]he future Silicon Valley would find a powerful customer with deep pockets—the U.S. military.

Sturgeon said U.S. naval officials, impressed by Federal Telegraph's technology, gave the Palo Alto firm huge contracts during World War I—the first but not the last time war would fuel the region's tech firms.

In another hint of the future, Sturgeon writes that around 1910, Peter Jensen and Edwin Pridham quit Federal Telegraph "to start a research and development firm in a garage in Napa" to improve loudspeakers. In 1917, they formed Magnavox, which built public address systems for destroyers and battleships in World War I.

Advertisement: This is as good a time as any to plug my 2001 book Rebels on the Air: An Alternative History of Radio in America, which among other things looks at the complicated relationship between the military and the hobby radio community in the years around World War I. You can also turn there to read more about the early broadcaster Charles "Doc" Herrold, who has a bit role in the Chronicle piece. That's Rebels on the Air: an excellent stocking stuffer, if you have unusually large feet.

[Via Slashdot.]

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  1. Holy crap Jesse. I’m amazed that Rebels is still in print. Good luck with that.

  2. Robert Reich talks about something similar in regards to Massachusetts.

    Once a region’s economy becomes a center of technological innovation, it tends to remain a hotbed of such innovation, even if the new technologies have nothing to do with the old.

  3. Some truth there and the larger point is the hi-tech business angle, but the reality is that Santa Clara Valley, like Orange County in the south, was largely rural farm and orchard country until well past the end of the big war. Like all of California, the end of the war saw growth, but the truly explosive growth came in the 1970’s and was directly connected to the computer chip industry.

  4. Holy crap Jesse. I’m amazed that Rebels is still in printhasn’t been remaindered yet.

    fixed

  5. joe:

    …it tends to remain a hotbed of such innovation, even if the new technologies have nothing to do with the old.

    Yeah cuz the culture of innovation and technology gets adapted by the folks so that, in this case, the same energies that were focused on radio became focused on the computer revolution. A free, capitalistic, environment encourages it all.

    I read Rebels on the Air. I really enjoyed it. It’s quite interesting.

  6. Embarrassing confession – I thought this was going to be an article about Pamela Anderson’s cleavage….

  7. Rick,

    That’s exactly right – the culture of innovation. It’s a culture.

    Now, the fact that these hotbeds of innovation have remained in places in Massachusetts, London, the urban areas of California, NYC, Tokyo-Yokohama, and other decidedly non-libertarian districts might suggest something about the relationship between said culture and public policy. Or, at a minimum, refute certain ideas people have about that relationship.

    The Peole’s Republic of Cambridge is a hell of a lot more dynamic than Idaho. Always has been. Always will be.

  8. Warren & SIV:

    WTF, guys? Is today “Be A Dick To Jesse Walker Day”?

  9. Nazi Germany was a lot more dynamic than the USSR.

    Just saying.

  10. Now, the fact that these hotbeds of innovation have remained in places in Massachusetts, London, the urban areas of California, NYC, Tokyo-Yokohama, and other decidedly non-libertarian districts might suggest something about the relationship between said culture and public policy.

    Indeed.

    A meritocratic culture composed mostly of highly educated, heads down, solutions oriented introverts generates wildly high surpluses between the wealth that the producers generate and what they are willing to take as compensation.

    Parasitic governments are drawn to such conditions like moths to a flame. Not only is there a great amount of wealth available to tax, but the people who produce the wealth are mostly uninterested in politics and government so long as it stays out of their way.

  11. “Governments are drawn…?”

    WTF? Do you think governments come down in space ships? Those “highly educated, heads down, solutions oriented introverts” created those governments, because governments like that are what they wanted. They vote with their feet for places with that sort of government, costantly.

  12. Those “highly educated, heads down, solutions oriented introverts” created those governments, because governments like that are what they wanted.

    Even in places such as Silicon Valley, the technical producers are not close to the majority. The businesses and communities that arise around them in order to support their production are the ones who end up electing governments. The technical workers are mostly uninterested in the politics around them and comfortably go with the flow so long as it costs them only money and not the ability to do their work.

    They vote with their feet for places with that sort of government, costantly.

    Considering that the nation in the world that draws the most highly educated to it is, by most metrics, the nation with the lowest tax and government burden on production, it appears that any tendency to vote with their feet is the opposite of that you suggest.

    Local governments with strong public policies are tolerated by high tech cultures, not sought after.

  13. Even in places such as Silicon Valley, the technical producers are not close to the majority.

    No, but they do exert outsized influence on the form of government. Surely, you’ll acknowledge that Massachusetts’ industrialists in the 1800s had power over the government beyond their numbers.

    Considering that the nation in the world that draws the most highly educated to it is, by most metrics, the nation with the lowest tax and government burden on production, it appears that any tendency to vote with their feet is the opposite of that you suggest.

    And do they immigrate to Selma and Fargo? Urm, no, they immigrate to the more prosperous, dynamic places – the blue cities.

  14. And then there’s internal migration.

    The high-tech workers from the heartland, involved in the innovation economy, move to Boston and San Jose, while those working in more mature industries, who can find work anywhere, more from those places to the sun belt.

  15. And do they immigrate to Selma and Fargo? Urm, no, they immigrate to the more prosperous, dynamic places – the blue cities.

    …which happen to be situated around the best technical universities, which happen to be universities, which happen to be dynamic, which happen to be full of nontechnical people willing to direct the greater wealth available to government due to advanced technological production toward public ends…

  16. …which happen to be situated around the best technical universities, which happen to be universities, which happen to be dynamic, which happen to be full of nontechnical people willing to direct the greater wealth available to government due to advanced technological production toward public ends…

    …and, to go back to my original point, none of this is undermined to even the slightest degree by the presence of liberal, non-libertarian governments, despite the constant assurances from libertarians that such governments and their policies choke off that dynamism.

  17. But the governments you are talking about are local and state governments, which simply have much less effect on high tech production and trade than the federal government.

    California’s highest income tax rate is 10%. The federal government’s highest rate is 40%. The state has no say over trade barriers or tariffs. The state has no say over antitrust. In short, the things that local and state governments do are mostly not noticed by high tech producers, so they don’t particularly mind being around active governments so long as those governments don’t interfere with high tech production.

    Maybe we’re saying roughly the same thing, but I see expensive government as an effect of high productivity rather than a cause.

  18. joe, I’m not following your assertions that places like Silicon Valley are not libertarian. First of Silicon Valley is liberal, which means it is very libertarian socially. Second, there may be a lot of regulation in other industries, but the hi-tech areas of business are lightly regulated, so the business environment is libertarian, too.

    The most un-libertarian aspect of Silicon Valley life is relatively heavy land-use regulation, which has contributed greatly to high real estate prices. Even that doesn’t affect tech workers much. They can still afford real estate. It’s people who work in the businesses who provide services for the techies who have a harder time with the housing prices.

  19. Mike Laursen,

    I rarely see the business environment in California described as “libertarian” by libertarians.

  20. joe, as I pointed out, there’s a difference between the “business environment in California” and the business environment for high-tech in California.

  21. joe:

    The Peole’s Republic of Cambridge is a hell of a lot more dynamic than Idaho. Always has been. Always will be.

    That innovative dynamism is in a huge part due to the proximity os a private world-class technical institution, MIT.

  22. joe:

    Now, the fact that these hotbeds of innovation have remained in places in Massachusetts, London, the urban areas of California, NYC, Tokyo-Yokohama, and other decidedly non-libertarian districts might… at a minimum, refute certain ideas people have about that relationship.

    Is it any wonder that the personal computer revolution of the late 70’s and early 80’s took off and flourished in the more economically free U.S. rather than most places in the world? And it’s also no wonder that, even sans the radio revolution that Jesse tells us about, it took off in the relatively smaller government venue of Silicon Valley rather than say the big government, NYC.

    As far as these hotbeds of innovation continuing in “decidedly non-libertarian districts”, note that Tokyo and Japan were more economically libertarian than most of Asia, with the exception Hong Kong, which is a very dynamic place as well. Of course, the advent of other Asian nations discovering free enterprise, we have had the rise of those Asian tigers and a spectacular increase in the resident folks’ standard of living.

    And it’s important not to confuse cause and effect. Big urban areas tend to have bigger governments. In the case of the Silicon Valley, with the population attraction into the area caused by the computer revolution, bigger government followed. But it doesn’t follow that the bigger government caused the continuing innovation.

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