[Congressional Record Volume 141, Number 54 (Thursday, March 23, 1995)]
[Extensions of Remarks]
[Pages E673-E674]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                          CUT THE TECHNO-PORK

                                 ______


                        HON. FORTNEY PETE STARK

                             of california

                    in the house of representatives

                        Thursday, March 23, 1995
  Mr. STARK. Mr. Speaker, Mr. T.J. Rodgers, the CEO of Cypress 
Semiconductor located in San Jose, CA, wrote the following memo for the 
Red Herring magazine, January 1995 issue.
  He makes some excellent points: Government megascience programs all 
too often become the grossest of pork projects. Keep it small, keep it 
simple, keep it seed money for merit-based research is his message. It 
is a message worth heeding.
  The article follows:

                                         Cypress Semiconductor

                                                  January 9, 1994.
     To: The Congress of the United States of America.
     From: T.J. Rodgers, CEO of Cypress Semiconductor.
     Re: Cut the Techno-Pork!
       My advice to the new Congress on technology policy is to 
     kill government science megaprograms, get out of the 
     technology-subsidy business, and double science and 
     technology funding for universities through thousands of 
     small grants. These priorities are particularly important for 
     Republicans who find big-science wonders hard to resist.
       With the possible exception of the Manhattan Project, 
     government science megaprograms have a terrible record of 
     return on the taxpayers' investment. Remember synfuels? This 
     scheme to create gasoline from coal followed the classic, 
     eight-step scenario for wasteful government megaprograms:
       (1) Scare the hell out of them. (What happens when the oil 
     cartel shuts off the gasoline?)
       (2) Declare that the program is so big, only the government 
     can pull it off. (Translation: No other sucker could be 
     convinced to invest in this loser.)
       (3) Get expert advice. (Translation: Listen to oil industry 
     lobbyists who are paid to know that what is good for the oil 
     industry is good for America.)
       (4) Create a consensus. (Translation: Spread the pork out 
     to enough states to get the bill passed.)
       (5) Execute. (Translation: Use government funds to hire a 
     large P.R. staff.)
       (6) Fail.
       (7) Lose $88 billion.
       (8) Blame the Republicans for underfunding the project.
       Remember the superconducting supercollider (SSC)? I debated 
     a particle physicist from the University of Texas-Arlington 
     on National Public Radio on its merits. He claimed that $12 
     billion was a cheap price to discover the sixth and elusive 
     ``top quark'' subatomic particle. I argued that the genius of 
     the physics community would find a cheaper way to float the 
     top quark in electric and magnetic fields long enough to take 
     its picture. A few weeks later, Congress canceled the SSC. A 
     few weeks after that, the top quark had its first snapshot 
     taken at Chicago's Fermi labs. Then, a Texas entrepreneur 
     proclaimed the $4 billion 10-mile hole in the ground created 
     for the SSC an ideal spot for growing mushrooms.
       Boeing and Lockheed have just teamed up to work on Space 
     Shuttle II. What did Space Shuttle I accomplish to justify 
     the next multibillion dollar investment? Certainly, it 
     launched many satellites, but they could 
      [[Page E674]] have been launched more cheaply with 
     disposable rockets. Indeed, if the American taxpayer had not 
     been forced to subsidize those shuttle satellite launches 
     (wiping out any possible competition that would have had to 
     pay full cost), there might now be a viable private American 
     corporation capable of launching satellites--a boon to the 
     entrepreneurs waiting in line for years for a satellite 
     launch.
       NASA has run out of useful work for the shuttle, let alone 
     its successor. So we are bombarded by reports of German and 
     Russian astronauts using the Canadian robot arm to perform 
     ecology experiments. The large P.R. efforts that form in step 
     5 of all government megascience endeavors have learned that 
     spreading the pork (step 4) now must be both an international 
     and a politically correct endeavor.
       Some shuttle experiments--at a cost of about $500 million 
     each--are simply ludicrous. Who cares or will ever care if 
     spiders spin their webs differently in zero gravity? And 
     technology con men are having a field day. One University of 
     Houston professor convinced NASA to spend $2.5 billion on 
     five shuttle flights to make space-grown gallium arsenide 
     (GaAs) semiconductor wafers, the starting material for GaAs 
     computer chips. The flight produced five wafers at a cost of 
     about $100 million each. The promise is that in the near-
     perfect vacuum of space, the shuttle will produce GaAs 
     semiconductor wafers nearly perfect in crystal structure. 
     Eventually, the space-grown wafer cost is projected to drop 
     to $10,000 per wafer.
       I am a member of the board of directors of the largest GaAs 
     chip maker in the United States. Here are the facts:
       (1) Current terrestrial GaAs wafers cost $500.
       (2) The hypothesized improvement in the crystal structure 
     of space-grown wafers is irrelevant, since the GaAs chip 
     manufacturing process destroys and rebuilds the crystal as 
     part of the process.
       (3) All GaAs companies would go out of business if their 
     wafers cost $10,000 each.
       The basic problem with megaprogram funding is that particle 
     physicists, space scientists, and big-company technology 
     experts can have their way with a lay Congress that barely 
     comprehends the complex technologies it is funding. And even 
     that minimal comprehension comes only when huge sums are 
     expended on ever-increasing congressional staffs.
       After eliminating the big-science megaprograms, Congress 
     should attack the technology subsidies that Secretary of 
     Labor Rober Reich reasonably calls ``corporate welfare''. The 
     corporate subsidy most often touted as a success by the 
     Clinton administration (yes, they speak on both sides of the 
     issue) is Sematech, the Austin-based semiconductor research 
     facility that has been given $1 billion in two five-year 
     grants so far. A reasonably well-run organization, Sematech 
     recently announced it would not seek a third $500-million 
     grant. (Of course, the original Sematech promise was that it 
     would not come back to Congress the second time.) The Clinton 
     administration believes Sematech should be replicated in 
     other industries. But its record is not one that warrants 
     replication:
       Sematech has as members only 12 of America's 200 
     semiconductor companies.
       Two of Sematech's original 14 members quit because even 
     with their dues halved by government subsidy they could not 
     justify the investment.
       The big companies that control Sematech's board designed 
     the consortium's dues structure to prevent small, 
     entrepreneurial companies from joining. A $20-million chip 
     company that may someday be the next Intel must pay 5 percent 
     of revenue, while Intel itself pays only 0.15 percent of its 
     revenue--a 33-to-1 ratio, which is the primary reason so few 
     companies joined Sematech originally. Of course, Intel, which 
     makes over $1 billion a quarter in pre-tax profits, needs the 
     subsidy a lot less than the small companies that were 
     excluded. But the political system provides the opposite 
     results: Only big companies can muster the lobbying resources 
     to convince Congress to subsidize them. And why would they 
     share the pork with the upstarts?
       Sematech used its government subsidy to attack directly the 
     other 100-plus American chip companies that were not Sematech 
     members. After the checks were signed and the TV lights 
     turned off, Sematech began granting funds to companies that 
     make the critical equipment for the production of computer 
     chips--in return for contracts to hold back the most advanced 
     equipment from all but Sematech members for up to one year. 
     (The deals, which Sematech denied repeatedly, were discovered 
     during a law-suit.) It is no wonder that Sematech insisted on 
     and received antitrust immunity as part of its funding 
     legislation.
       If Sematech's silicon-chip subsidy represents the Clinton/
     Gore model for government subsidies, it's up to the new 
     Republican Congress to stop its replication. Let's not copy a 
     system that allows well-heeled corporations to use their 
     lobbying clout to entrench themselves with taxpayer 
     subsidies, to the detriment of new companies with new ideals.
       The flow of bright, well-educated technologists into 
     industry is much more important to American high-tech 
     businesses than are subsidies to prop up ailing giants. And 
     by cutting out science megaprograms and corporate technology 
     subsidies, the new Congress can both cut the federal budget 
     and free up funds to increase university research funding.
       Many Silicon Valley venture capitalists--no friends of big 
     government--believe that the defunct DARPA (Defense Advanced 
     Research Projects Agency) was one of the most effective 
     government technology programs. They credit it with funding 
     such winning pre-venture capital investments as the UNIX 
     computer operating system work done by Sun Microsystems 
     founder Bill Joy.
       DARPA funded my doctoral studies on transistor physics at 
     Stanford. The high-performance chips I worked on may or may 
     not have improved national defense, but I became one of the 
     hundreds of DARPA-funded Ph.D.s who flooded into Silicon 
     Valley from Stanford and Berkeley. What caused an unlikely 
     agency like DARPA to provide decent return on government 
     investment?
       DARPA conducted classified military research, which kept 
     Congress on a need-to-know basis. Thus DARPA projects avoided 
     having to spread the pork or to hire a P.R. staff to maintain 
     viability.
       DARPA contracts were awarded by competent technical experts 
     on a merit basis without much political consideration. DARPA 
     also had a ``customer,'' the Pentagon, that had at least a 
     long-run interest in the usefulness of what it funded.
       DARPA tended to fund the large number of small programs, 
     rather than wasteful megaprojects. The agency was on the 
     right side of the economic tradeoff that demands the 
     sacrifice of 1,000 chances to fund the next Bill Joy/Sun 
     Microsystems in order to fund one superconducting 
     supercollider.
       Unfortunately, today's ARPA, the non-defense version of the 
     old DARPA, is drifting back into politics. Members of 
     Congress fantasize about ``dual use'' (military and 
     commercial) technology, with the hope of picking losers and 
     winners, the latter preferably in their districts. There are 
     debates about where the ``retraining'' funds should be spent 
     when military programs are shut down.
       Some of this is inevitable--ARPA's mission is hazier and 
     more politicized that DARPA's. But the agency's best chance 
     for success is if Congress leaves it alone, allowing it to 
     set technical priorities and give out thousands of small 
     grants to universities based only on a peer-review 
     meritocracy.
       The new Congress has an opportunity to shrink the federal 
     government and simultaneously help America's technology 
     industries. It involves getting politics out of the 
     laboratory and supporting education on a non-partisan, merit 
     basis.
     

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