Democrats preach education to Silicon Valley

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By Scott Harris

(IDG) -- On a weekend when a state report showed unemployment in Silicon Valley soaring nearly a full percentage point in a single month, 20 Democratic lawmakers and dozens of loyalists gathered in San Francisco to discuss policy objectives with new-economy business leaders and to schmooze with potential donors.

The dominant theme emerging from the three-day retreat of the New Democratic Network was that vast improvements in American education -- from pre-K to Ph.D -- is vital to sustaining economic progress. Sentiment coalesced around a bill now being drafted by Connecticut Sen. Joseph Lieberman with help from Stanford University economist Paul Romer, a speaker at the conference, that would boost scholarships in the fields of science, mathematics and engineering, in the hope of stimulating innovation.

In an address Sunday morning, venture capitalist John Doerr offered a mildly self-mocking mea culpa for repeatedly boasting that the Silicon Valley was responsible for the largest legal creation of wealth in the history of the planet. His words, the Kleiner Perkins partner said, "did a disservice" by helping stoke the tech-stock mania. Offering his new spin, Doerr featured a slide noting "the largest legal creation (and evaporation) of wealth." Currently, Doerr insisted, many companies are undervalued: "In nine months we've gone from stupid high to stupid low."

With discussions ranging from bioethics and energy to Internet privacy and broadband policy, the event was the fifth such gathering of the NDN, a self-described "political venture capital fund" -- more commonly known as a political action committee -- that identifies, trains and supports Democratic talent. Founded in 1995 by Lieberman and Sen. John Breaux of Louisiana, the NDN is an outgrowth of the centrist Democratic Leadership Council, the group that helped propel Bill Clinton to the presidency.

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The caucus, which has 72 members in the House and 20 in the Senate, is known for identifying itself with new-economy ideology, staking out pro-business positions often different from those of more liberal Democrats. The lobbying group TechNet, co-founded by Doerr and composed of more than 250 high-tech executives, co-sponsored the conference.

Though shutdowns and layoffs had pushed Silicon Valley's unemployment rate to 4.2 percent in Santa Clara County and 5 percent in San Francisco - comparable to the national rate of 4.5 percent - panelists discussing the "State of the New Economy" expressed bullish long-term attitudes while stressing that government has an important role.

"Think about the land-grant universities," Romer reminded the lawmakers in arguing that the nation's investment in educating scientists and engineers in the 20th century lifted America to its economic prosperity. But from 1986 to 1996, Romer noted, the number of persons earning computer science degrees in America plummeted from 45,000 to 25,000, even as the tech boom took off. "The U.S. is falling behind."

America's high-tech companies have increasingly relied on immigrant engineers - with New Dems among the champions of the expanded visa programs for such workers. But Romer said the country might not always be able to count on that resource, because the global economy is starting to provide more opportunities in other countries, including their homelands. "It's a risky path to assume they'll continue to come here," Romer said.

Like fellow panelist Laura D'Andrea Tyson, former chief of Clinton's Council of Economic Advisers, Romer said the long-term economic prospects for the next 20 to 25 years are promising. But, he added, "Those trends of growth may fail to materialize if we don't act now."

Several lawmakers said they were impressed by Romer's presentation. Rep. Cal Dooley of California called it "a wake-up call for everybody in congress."

Both economists on Saturday shied from making bold predictions for the short term. Tyson cited recent reports with widely varying forecasts for the remainder of 2001. Tyson added, however, that the tax rebates Americans receive are "fortuitously timed" and could help stimulate a recovery.

In a wrap-up breakfast discussion Sunday morning, Kleiner Perkins' Doerr, a TechNet founder, said he believed that the country's tech recession will spread to a wider global recession that will last "to the middle of 2002, with a lot of pain between now and then."

Tech stock valuations, Doerr said, have gone from "a stupid high" nine months ago "to a stupid low" today. He joked that in business school today "b-to-b means back to banking and b-to-c means back to consulting."

The emphasis on education cropped up in other panels during the conference. Discussing "The Future of the Internet," Sun Microsystems Chief Researcher John Gage emphasized the role played by the federal government, particularly the Department of Defense, in funding the kind of university research that drove the Internet's development. Hewlett-Packard scientist Stan Williams said the National Science Foundation is "desperately underfunded."

The event coincided with a DLC gathering in Indianapolis that may have cut into the attendance. Sen. Mary Landrieu of Louisiana, the only senator to participate, along with 19 House members, chaired a panel devoted specifically to education reforms, such as school choice and greater accountability for teachers and administrators.

Participants also expressed dismay about the Bush administration's planned funding for basic research. "When you cut back on investment in basic R&D, that is a prescription for less productivity in the future," Rep. Cal Dooley of California said at a press conference.

The event was attended by some state lawmakers and three Democratic candidates in three new congressional districts created by the 2000 census ö two in Arizona and one in Nevada. NDN president Simon Rosenberg said that since the Senate and House are so closely split between parties, helping centrist Democrat incumbents and challengers make connections with the high-tech industry is a crucial to the Democratic Party's goal of winning control of Congress. The tech slump, Rosenberg says, has not dimmed the group's enthusiasm for promoting the high-tech agenda. "It may not be as sexy, but it's still real," Rosenberg said.

TechNet styles itself as bipartisan organization with distinct Democratic and Republican outreach operations. While the Republican Party has organization comparable to the NDN, TechNet has hosted annual visits by the centrist Main Street Republicans. Several TechNet members backed President Bush's candidacy and are now among his high-tech policy advisors.