The Silicon Valley Dream and What Went Wrong (Part III)

July 21, 2021 Updated: July 25, 2021


(This article is part three of a three-part series. Part I and II can be found here and here.)

Y2K and the Repercussions

Prior to the year 2000, the world experienced the Y2K scare. It had to do with the last two digits in a date. Often, dates were written in the format MM/DD/YY. This format left two digits for the year, which meant after 99 (1999), 00 (2000) would come. The scare was the idea that computer systems would think 00 means 1900 and not 2000.

A hysteria developed in the late 1990s, driven by media (does it sound familiar to any current crises?). Even President Bill Clinton used the Y2K scare to open exports of high-tech goods to China and other countries.

Clinton used the mass hysteria of, “We have to solve this problem, otherwise we will be doomed; airplanes will fall from the sky, the power grid will go down, and so forth.” He opened U.S. doors to outsourcing and exporting the microprocessor to all countries with far fewer restrictions.

As a result, IP (intellectual property) theft started and continued to intensify following this outsourcing of talent to outside the United States. In current times, this problem has only gotten worse.

Before Clinton, the United States was the undisputed leader and had a total monopoly on computers and essential components such as hard drives, displays, memories, networking, software, operating systems, and applications. This advantage was maintained by investing heavily in research and development (R&D) and imposing restrictions on exports to unfriendly foreign countries.

The “ClintoCrat Demagoguecrats” and their allies used Y2K to open the floodgates for software outsourcing and the exporting of the “brains” of computers, CPUs, GPUs, and all the CAD (computer-aided design) tools and equipment necessary for building chips and subsystems.

The results 20 years later are clear: Initially we were the leader, but now we’re 100 percent dependent on others to supply our growing needs for chips and software.

Outsourcing to China

Almost everything in Silicon Valley is outsourced today. I think that’s a very bad thing, because Silicon Valley doesn’t make silicon anymore, except maybe Intel, Nvidia, and AMD.

Everything else is made in China. Why? Because it is cheaper. China wanted everybody to go there so they could learn how things were made. Ten to 15 years ago, China faced a disastrous period of famine under communism. Now life is fantastic!

If you go to Shenzhen, Shanghai, or Beijing, kids who are oblivious to reality are super happy; they are rich and have startups. China has 10 times more engineering graduates per year than the United States, and these are all motivated, young, energetic kids and they allow AI (artificial intelligence) to rule. China is deploying AI into everything, for physics, to make an artificial sun, for facial recognition, and to track people when they jaywalk.

However, with all the outsourcing, the result is that Silicon Valley has to do insourcing. Everything made in China needs to be imported back into the United States, hence creating this huge financial deficit and dependence.

The vast majority of engineers are also insourced from India, China, Romania, Ukraine, and all over the world.

However, you won’t hear Apple, Google, Facebook, Twitter, or anybody else say anything negative about China. They know that once they open their mouths, repercussions will occur.

I think it’s a tragedy that these companies will let the best and most advanced economy and technology that once defined Silicon Valley be dispersed throughout the world.

Revelation on CCP’s Theft of IP

In 2001, I took a trip to Nanjing, China, to meet with the Nanjing Technical University director to discuss cooperation on 4.5G communication. It was supposed to be one of those exploratory meetings, but the story took a surprising turn that exposed a lot about the Chinese Communist Party’s (CCP) policy toward the West and IP.

The university head was also a very high-ranking member of the Nanjing Communist Party at that time. I was told that he was one of the top 50 highest-ranking officials in China.

For those who haven’t had business meetings in that part of the world, China, Japan, Korea, etc., there is a lot of drinking that goes on during these meetings. If someone pours you a drink, you must drink it, otherwise, it’s considered a grave insult. It must be a relic of the days when people poisoned each other’s drinks; it’s a show of trust to drink.

The meeting was in an official setting at a very exclusive local restaurant, and we both kept pouring and drinking while toasting each other.

Toward the end of the dinner, he was so drunk that when we stood up, he almost fell. But, sitting near him, I was able to catch him, saving his honor, while gaining his friendship, respect, and indebtedness. I guess my years of being a disc jockey and drinking a lot in my native country of Romania did pay off after all.

It was the right time to ask the burning question about the well-known fact that whatever IP the United States would share would be stolen by the CCP. I asked about our IP and how we could trust his team.

His answer was shocking and revealing; he replied in English something like: “George, no, no, no, it IS fair.” He continued, “You stole our gunpowder and silk, and now we’re taking it back!”

That was an eye-opening and shocking revelation to me, and I understood then that it’s the policy and the indoctrination they use to justify the means. Similar to “an eye for an eye,” it’s justification for systematic IP theft by using a story from around 1300 A.D.

George Haber is a serial entrepreneur, marketing guru, and strategist. He is an active angel investor and board member of several public and private companies, a frequently quoted speaker at national and international conferences, and one of the key people behind Microsoft Xbox. In 1996, his first Silicon Valley company was a pioneer in MPEG-1 and MPEG-2 technology and created the world’s first DVD software that allowed a DVD to be played on a computer.

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.