Clinton aides lack expertise to pick winner - Bill Clinton's to allow his staff to make high technology investment decisions - Column

0 Comments | Insight on the News, May 10, 1993 | by Martin Anderson

How would you like it if the federal government decreed that your scheduled open heart surgery was to be performed by a high-ranking government official who had never operated before and was not even a doctor?

Well, the idea of allowing government bureaucrats to pick the future "winners" of high-technology investment may not be as dangerous, but it is just as foolish.

The central issue in the new industrial policy of the Clinton administration is: Who does the picking? People who can pick even a few winners are rare. For every new technology idea that receives financial backing there are hundreds, maybe thousands, that never get off the ground -- almost always for very good reasons.

Under our current system the picking is done by venture capitalists and entrepreneurs, a rare breed who combine the prudence of bankers, the risk-taking of gamblers and the willingness to invest large amounts of their own money and their own time.

Last year private investors poured billions into risky, unpredictable investments that would make most Americans blanch. These men and women are brilliant, bold and expert. Theirs is a small, exotic world. It is no place for dabblers or dilettantes.

President Clinton has promised to back his high-tech industrial policy plan -- which includes joint ventures between government and business and investing in a national computer network -- with $17 billion of the taxpayers' money over the next four years. This means that men such as Ron Brown, the commerce secretary, and Robert Reich, the labor secretary, and their staffs will, by default, become the pickers.

In their fields of expertise, these people are winners. Brown is a very capable politician and Reich is a Harvard University intellectual and writer But in the world of high-tech venture capital they are losers, incompetents, men who know no more nor less about high technology than do you or I.

Losers cannot pick winners in this game. The notion of any government bureaucrat picking winners in the race to develop new high technology is laughable. They may entertain Walter Mitty-type dreams of being high-tech mavens, but it is unconscionable for them to play with our money.

Can you imagine what would happen if Clinton's pickers-to-be left the government and founded a private venture capital firm? How much of their own money do you think they would care to invest? Do you think they could raise 5 cents from the rest of us?

What makes the whole $17 billion scheme even more outrageous is that most high-technology entrepreneurs don't need or want the government's help. True, some businessmen -- such as John Scully of Apple Computers, a former Pepsico executive, have strongly endorsed the industrial policy idea, shamelessly angling for their piece of federal pork. But most of the real high-tech entrepreneurs, the ones who actually invent and build the marvels of new technology showering down on us, would prefer to be left alone.

For example, in testimony before Congress on March 25, T.J. Rodgers, the president of the Cypress Semiconductor Corp. in California, put it this way: "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.... The men and women of our company do not want handouts."

The record of government in industrial policy ventures is one of unremitting failure. The latest pick to go belly-up was the brainchild of Michael Dukakis when he was governor of Massachusetts. Called the Massachusetts Microelectronics Center, the computer chip-making plant built in 1988 was Dukakis's choice to be one of the next generation's technology winners, and he lavished the Massachusetts taxpayers' money on it.

On Feb. 14, the Boston Globe announced that the plant had been mothballed, describing the project as "a $50 million-plus monument to high-priced good intentions gone bad."

They say the only difference between men and boys is the price of their toys. The only difference between the Dukakis disaster and President Clinton's new industry policy is $16.95 billion.