How Business Schools Destroyed Silicon Valley, are Destroying America, and May Help Destroy our Planet

“Oh we, like sheep, have gone astray, -ay”
“Every one to his own way.” — Handel’s Messiah

This holiday season, Americans can give thanks that our democracy seems to have survived, if only temporarily, and if only by the skin of its teeth. But where are we headed?

There is general agreement that our nation is in decline. China and most American pundits think so. So do the nearly 63 million citizens who voted for the Demagogue in 2016. Their slogan said, “Make America Great Again.” (emphasis added)

But why is this so? I’m a 77-year-old with a unique career. I got my doctorate in physics just before government support for basic science tanked under Richard Nixon in the early seventies. I went to law school and became a lawyer near (and later in) Silicon Valley, specializing in intellectual property (IP). While teaching in that field, I paid a lot of attention to science and technology in the US and where they were headed. And now, in retirement, I’ve spent years thinking about what I’ve seen and what it all means, and summarizing my conclusions in this blog. Here’s my special perspective.

The picture I’ve seen is nothing pretty, and there’s no way to sugar-coat it. When I was in physics grad school, from 1966 to 1971, the two greatest applied-physics laboratories were private: AT&T Bell Laboratories and IBM’s research facility in Armonk, New York. Together, they created the scientific and engineering infrastructure for all of Silicon Valley. Their alumni invented transistors, computer chips, computers and other products of the “digital revolution” and ran the companies that made them.

That revolution led the way to the biotech revolution, still ongoing. Somehow we mere mortals managed to decode, remember and manipulate a human genome containing three billion base pairs. How could we ever have done so without computers?

As individuals, most of us can’t even remember where we put our eyeglasses or car keys. But the scientific/engineering infrastructure that Bell Labs and IBM Armonk created from nothing made genomic science possible. (As a byproduct of research on microwave communication, Bell Labs also discovered the universal microwave background that led us to our theory of the Big Bang and our current understanding of cosmology.)

Today, both of these great labs are gone. They have sunk beneath the waves of profit mania that have overwhelmed American business.

You would think that we might have replaced them with government laboratories of equal power and excellence. But no. This graph tells the woeful tale. As a percentage of GDP, federal spending on basic research has kept relatively constant since 1976—at about 0.40%, or 1/250-th of GDP. But development—the bit of federal support that turns raw big ideas into real products and services—dropped by half.

That huge drop might not have mattered if private industry had picked up the slack. But it didn’t.

Here’s where the business schools came in. They taught, and still teach, that profit is what matters. Why spend high-risk money on the engineering applications of leading-edge science, when you can squeeze the last drop of quick profit out of simple ideas? Making leading-edge science work in the real world is risky!

You can’t put “great potential,” let alone “progress in technology” or “what might have been,” on a balance sheet. You certainly can’t tally the raw ideas of physicists that led to transistor radios, computers-on-a-chip, and cell phones, eventually realizing the impossible dream of my youth: cartoon character Dick Tracy’s “two-way wrist radio.”

Without intensive government and private support of real technology, we Americans would be nowhere near where we are today. Without intensive government support of basic genomic technology, we never would have had our mRNA Covid vaccines, which we can now modify for every new variant of the Covid genome much like programming a computer. Without intensive government and private support of electronics beyond vacuum tubes, today’s Silicon Valley might be a bucolic refuge for the Bay Area’s rich.

Government and private disinvestment in real technology has been going on for decades. But one result appeared on the business pages just this week: the practical collapse of Silicon Valley. Tens of thousands of so-called “tech” workers have been laid off from “me-too” would-be moneymakers. The fallen include crypto banks and exchanges, “me-too” social media companies, competing ride-share and food-delivery logistics companies, and probably more soon. Even the giants Google and Amazon are laying off workers.

All these firms have a dirty little secret. They call themselves “tech” firms. But they are nothing like the real tech companies of the sixties, seventies or even eighties. They are not built on engineering that makes practical use of bold, new discoveries in science. They are built on supposedly “better” ways of organizing businesses. They feed on simple—dare I write “simplistic”?—ideas to improve business efficiency and make money, like improving the logistics of package ordering and delivery (Amazon) or of drivers and passengers in for-hire transport (Uber and Lyft). They have much more in common with finance and financial speculation than with science or engineering of the fifties and sixties, or what used to be called “research and development.”

Most, if not all, of these firms are based on Internet software. But software is not “technology.” It’s a way of organizing business using long-existing products. It’s a business idea performed automatically by machines and often, as a consequence, divorced from all human feeling and consequences.

How well are most of these brilliant business ideas actually working today? To answer that question, just think of how many different ways there are to input a telephone number on today’s websites. The right way, of course, is what programmers call “format free.” As long you put all the digits in, with or without whatever else, the software ought to pick them out, format them as the rest of the software demands, and display them that way. That’s what software is for; as IBM’s old slogan used to say, “Machines should work; people should think.”

There’s probably a free open-source mini-program for format-free input available on line. But how many websites demand that you input all seven digits, with or without special punctuation, in a single, specific way (with or without telling you), and reject your input and chastise you if you don’t? How many insist you type in a phone number precisely in a format that you’ve never used before? And how annoying and inefficient is it as you go from website to website and have to do it differently, over and over again?

This might seem a trivial example. But it illustrates experiences that most of us have had. And similar experiences get multiplied a hundred or a thousand times, making online activity a consistent chore rather than a pleasure.

In the old days of pre-software electronics, there was a body called the IEEE, the “Institute of Electrical and Electronic Engineers.” It used to promulgate standards for electrical and electronic components. One of many was the “resistor color code” for colored stripes on resistors that reveal their ohmage even if they are damaged or burned. The IEEE still exists. But why hasn’t it or another body promulgated standards or best practices for software and website navigation, so you don’t have to learn, unlearn or re-learn minute and annoying variations in use with every new website you visit?

Psychologists tell us that learning lots of things that are nearly the same but differ in detail taxes the human brain. By that standard, the range of American websites is a psychological torture chamber. But it has worked well to enrich a lot of investors in Silicon Valley. Until now. (For detailed discussion of how Tesla’s in-car graphical user interface epitomizes this problem, despite the quality of the car’s mechanical engineering, click here.)

It gets worse. When today’s software does have method to its madness, that method usually involves squeezing someone else for cash. So-called “ride-share” firms squeeze their drivers by “managing” their schedules in real time, with little or no warning. Then they “compensate” squeezed workers by calling them “independent contractors,” not “employees,” and denying them medical and other insurance, paid vacations and paid family leave. Online food-delivery companies drain restaurants by taking up to 30% of their revenue, not profits, merely for arranging delivery of food. Search and social-media firms “monetize” users’ private data for advertising and customer research, sometimes without even letting them know or know how.

You can argue whether all this is fair, just, or good for society, and whether it ought to be prohibited or restricted by law or regulation. But there’s a much deeper question, which underlies Silicon Valley’s retrenchment, if not its downfall. Is this science? Is it technology or engineering? Or is it just the type of exploitation of workers and customers, coupled with financial/business manipulation and speculation, that periodically causes abrupt economic retrenchments called “crashes”? Is it just the Gilded Age written in software?

Then there are those monstrous telephone queues. You know, the ones that keep you waiting for minutes, sometimes even when they call you back? When you finally trick yourself past the useless AI and get to talk to a human being, it’s never the same person twice. So there’s no human relationship and no possibility of one. But even that doesn’t matter, because the person you finally get to talk to may be in a foreign country, may not know much (if anything) about the business, and has no authority but to read from a script and ask you if there’s anything else he or she can do after failing to solve your problem. And if this depresses you as an occasional user, think how badly it must affect the representatives who have to suffer this joyless, choiceless, friendless, powerless, anonymous job as a career.

I wrote a parody of automated telephone queues nearly twenty years ago. Since then, they’ve only gotten worse. But B-school grads seem to like them because they make executives even more powerful and even less accessible than before. Apparently it’s much easier and cheaper to give the illusion of customer service than to train employees and develop systems to give the real thing. Try to find someone on a phone queue who even has a passable idea of how the business works, and you’ll see what I mean.

No one, apparently, has even conceived the simple expedient of identifying you by your phone number and connecting you with the same person, or at least one of a small group, more than once. Then you might actually have a basis for some human connection and continuity in repeated calls. But no, today it’s all anonymous unknown customers speaking with anonymous unknown reps with virtually no responsibility or authority, ad infinitum, ad nauseum. What a way to foster “customer relationships!”

If by now you think I see Silicon Valley as getting its just comeuppance recently, you’re right. But the B-school types who foisted this corporate dystopia on all of us won’t hurt the most.

Most hurt will be the workers, especially those misnamed “independent contractors,” who will lose their miserable jobs. Second will be us customers, as the waits for information and service get longer, the answers get yet more garbled, and corporate dystopia goes into overdrive. If you haven’t yet noticed how hard the B-schools-graduates’ dysfunctional systems make it to get real information about a product or service, correct a billing or other error, change an order, do anything or answer any question not on the website—or generally seek human solace from the infernal machine—you haven’t been paying attention. (And I’m a guy who once wrote software.)

And therein lies the tale. For two generations, we Americans have been taught that government is incompetent and even evil, and that the private sector can do it all. We’ve also been taught, as dogma, that profit is the only worthwhile goal, and that “free trade and free markets make everybody better off.”

B-schools spread these seductive falsehoods like pharisees in the temple. And so for a generation we transferred much of our manufacturing, factories, technology and research to China, lifting almost a billion people out of extreme poverty, but leaving millions of American skilled workers without jobs, factories, and eventually communities, and seeking solace in opioids. Apparently the “everyone” in the mantra about free trade doesn’t include them.

Never mind that such broad propositions can never be called “science.” Either is far too broad and vague to qualify even as an hypothesis testable by experiment or observation. Yet both are taken for granted in our political and social indoctrination. The great economist Alan Greenspan, as Fed chief, honestly recanted a corollary, that free-markets self-regulate, after his reliance on that nonsense helped cause the Crash of 2008. Yet still we believe, excusing economics, as a “dismal science,” for promoting nonsense that we can watch as it fails every day.

So we have all the evidence and reasoning to understand why our decline is getting steeper. For forty years we have been going down the wrong path, vigorously pursuing private profit separately, each on his own, while our commonwealth floundered, and while our real science and technology began to lag in fierce global competition, especially with China.

Truly we are like the sheep in Handel’s Messiah, about which many of us will sing next month. And B-schools are the shepherds who, in their numbers and their glory, have let us go astray. More than that, in their quest for profit as the summum bonum, they have led us downhill.

Before closing, I’d like briefly to recall the Manhattan Project. We Americans worked on it and paid for it together, to be run in great secrecy, in the midst of a terrible war. It was completely under government leadership and control. Less than two years, eight months, elapsed from its mere demonstration that nuclear fission was possible, at the University of Chicago, on December 2, 1942, to the first successful nuclear test at Alamogordo on July 16, 1945. To complete the development task, at one point ten percent of the whole nation’s electrical power output helped spin centrifuges to enrich uranium.

No nation has ever led such a big technology-development project to such complete success in such a short time. Every other nation that has tried to develop nuclear weapons, even with our help or with our stolen secrets, took longer. Even now that the path, although not the details, is mapped on the Internet, smaller nations are still struggling to reach that goal (sometimes with our or Israel’s spooks’ interference).

I do not mean to laud nuclear weapons, let alone their use. But the Manhattan Project shows what we as a nation can do, and how quickly, under rational leadership when faced with an existential threat, if we work together and abandon the gospel of private profit.

In those days, the existential threat was Nazis getting the Bomb first. Today, it’s rapidly-accelerating global warming. That very real phenomenon threatens to maim, if not destroy, us and all of human civilization. As still the most advanced advanced nation, ours may be the first and worst hit. In that respect, global warming is like nothing that has happened on our Earth since the Chicxulub Meteor extinguished the dinosaurs 66 million years ago.

We’re known about global warming for a very long time. We’ve understood its theoretical foundation, the greenhouse effect, since 1896. Scientists saw that it was actually happening in the fifties. And we’ve known that it could be catastrophic since scientist James Hansen’s testimony before Congress in 1988.

That was 34 years ago. Now the theory and measurements of positive feedback tell us that it could become self-sustaining, even if we all stopped burning fossil fuels tomorrow. Recent events—catastrophic floods and droughts in Pakistan and Southern China, with crop failures in the latter—tell us it probably will.

In 1942, the risk of the Nazis getting a Bomb first was speculative. Even the possibility of anyone developing a nuclear weapon was speculative. But with that merely possible existential risk in mind, we undertook the greatest crash project in technology development in human history, and it succeeded.

Now we know that global warming is happening, is accelerating and could get much worse. Shouldn’t we stop straying like sheep, work together, and take on this existential threat?

Elon Musk the Scatterbrain can move to Texas for lower taxes and take on Twitter while Tesla and Space X still need good stewardship. But the rest of us can’t afford to act like him. We must get our act together and work together. We must stop making money by exploiting each other, and wasting money by writing duplicative and annoying “me, too” software, and start figuring out how to stave off a catastrophe we humans have caused. That will take a return to real science and engineering, not software.

It isn’t high taxes that are killing Silicon Valley. It was and is neglecting real science and technology in a general rush to find an easy path to making a quick buck. It would be a shame if our leaders let us continue down that path while climate change made much of our world uninhabitable, thereby drowning human civilization in unimaginable migration, war and suffering. Maybe the demise of Silicon Valley, or what remains of it today, can put us on a better path.


For brief descriptions of and links to recent posts, click here. For an inverse-chronological list with links to all posts after January 23, 2017, click here. For a subject-matter index to posts before that date, click here.

Permalink to this post