Picture the scene. It’s late 1992. The U.S. is still recovering from a severe recession and financial crisis. But there’s trouble on Main Street. One of the nation’s most venerable industries is in shambles. Upstarts from Silicon Valley created a new technology that is rapidly destroying the main frame computer business, one of the great success stories of postwar America. And now low cost competitors from Asia are rapidly destroying the competitiveness of the U. S. chip manufacturers.
As a new administration is preparing to bring historical change to Washington, hordes of blue suited, white shirted IBMers descend on Washington to demand a bailout for their critically important industry. Joining the chorus are congressional leaders from New York State, fearful that high paying jobs are about to be lost. The nation is galvanized as Congress passes and the new President signs the Computer Industry Relief Act of 1993.
Well of course we know that this never happened. Instead, Lou Gerstner and his team transformed IBM (IBM) from a hardware manufacturer to one of the world’s leading IT services providers. Intel remade the chip industry, replacing dumb chips with very smart ones, creating an explosive personal computing industry. Sure some of the old mainframe and mini-computer companies are no longer around and those that are look nothing like the ones their previous selves. But the industry that emerged is far larger, more profitable and provides many more jobs that the mainframe manufacturers ever dreamed of.
The federal government is going to provide some form of support for the auto industry. There are too many jobs at stake and frankly the patient (the U. S. Economy) is too weak to risk any more systemic shocks. In yesterday’s New York Times, Thomas Friedman has written a great tell-it-like-it-is article outlining a realistic plan for a federally funded bailout that will assure that the necessary steps are taken to assure real change in the auto industry, by demanding both financially viability of the surviving companies and aggressive steps to raise fuel economy and reduce the greenhouse impact of the future fleet.
As Freidman pointed out Wednesday morning on MSNBC, the U. S. Venture Capital Industry and Silicon Valley entrepreneurs are already making significant private investment in developing new technology vehicles, targeted to be far more efficient than anything being proposed by Detroit. Yes, let’s preserve American jobs, but as we do so, let’s invent a new transportation industry that will eclipse what’s left of the old car companies and in the process that will position America for energy independence and assure a better environment for our grandchildren.