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Investor's Business Daily: On High Tech and Gov't | Cypress Semiconductor

Investor's Business Daily: On High Tech and Gov't

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May 24, 2012

Investor's Business Daily: On High Tech and Gov't

T.J. Rodgers

Cypress Semiconductor's Rodgers On High Tech and Gov't

September 9, 1999
By John Berlau
Investor's Business Daily

T.J. Rodgers doesn't mince words. The president and CEO of Cypress Semiconductor Corp., a global supplier of high-performance integrated circuits based in San Jose, Calif., Rodgers has called government aid to high-tech industries corporate welfare.

Q & A: T.J. Rodgers

    * Founder, president, and CEO, Cypress Semiconductor Corp.
    * Vice Chairman, Semiconductor Industry Association
    * M.A. (1973) Ph.D. (1975), Stanford University, B.A. Dartmouth

Rodgers recently helped organize a Declaration of Independence from corporate welfare that was signed by more than 50 Silicon Valley CFOs. The group supports a commission similar to that for base closures and promises to support a "fair and substantial" spending cut "even it if meant funding cuts to my own company."

IBD: The Asian model for high-technology, which meant things like industrial policy, was being touted for years. Now that Asia's having trouble, do you feel vindicated?

Rodgers: Yes. But I'm still worried that many people in Silicon Valley don't understand the basic philosophy and economic principles that made it the way it is, and they rush headlong to embrace things that undermine our basic values. (The high-tech industry's newly formed lobbying group TechNet is) destructive and anti-capitalist. It stands against capitalism, which is what made Silicon Valley. TechNet is a really wrongheaded move. It's going in the wrong direction and doing the wrong thing for the semiconductor industry.

IBD: What specifically is TechNet doing that disturbs you?

Rodgers: The basic assumption of TechNet is that we cooperate with the government, and that we establish relationships and get our share of our money. So it's pork-barrel politics.

We (Silicon Valley) are about free minds and free markets, to use a trademark of the Reason Foundation.

Washington's the exact opposite. It is an absorber of wealth, a destroyer of wealth. For us to start playing the pork-barrel game, where we try to lobby skillfully against other sectors to try to get back a proportionate amount of our money, to break even in the pork-barrel game, what a loser's game that is.

(If) we go to the government and start whining, pretty soon the government owns enough of us that they start mandating things that we need to do. Pretty soon we have another government-controlled industry.

IBD: So how do you prevent the destructive things that Washington can do to the high-tech sector?

Rodgers: I don't buy the argument that you ought to suck up to Washington and become a part of the process. That's a losing proposition.

Think about men like (Bill) Gates, and anybody who created great companies. They didn't (waste) their time flying to Washington and sucking up to Congressmen.

IBD: Is encryption an issue that Cypress is concerned with from the company's standpoint?

Rodgers: No. We don't sell encryption chips.

But encryption is about free speech, and the inability to encrypt something means that government is violating your free speech. It means that it wants to force you to allow it to eavesdrop.

Also, from an economic point of view, it's colossally stupid. Encryption happens to be available worldwide. This phobia the Justice Department has with encryption, all it does is hurt American computer companies and allow our foreign competitors to take markets we otherwise could have taken.

IBD: Anything on Attorney General Janet Reno's proposal to let the government break and enter and remove your encryption code without your knowledge?

Rodgers: Janet Reno is one of the most anti-freedom people that's ever been in her position. The fact that a person that has done the horrendous things she has done would also be against free speech and also against a lot of other freedoms doesn't surprise me on bit.

IBD: One of the things that TechNet's lobbying for is making the R&D tax credit permanent.

Rodgers: This is one that I had trouble with for a long time. It, in effect, is a reduction in taxes, and it's difficult to argue against that. And it's a reduction in taxes in return for investing presumably in something that would create jobs.

I've gotten more and more negative on it over the years, and it was only about a month ago that I said get rid of the R&D tax credit. It's corporate welfare.

My company make $4 million a year in the R&D tax credit. I'm quite willing to walk away from it. But as long as it's there and those are the rules, I'm going to take that money and put in our bottom line for our shareholders.

IBD: What's the lesson of (government's role in) the creation of Internet?

Rodgers: Every now and then the government stumbles into doing something right.

IBD: But should the government continue to fund technology in case it stumbles onto something right again?

Rodgers: No, no. Then we go to the return on investment. If you take the track record of the government and take all the stupid programs that they've done, all the defense boondoggles, all the good-old-boy programs that went back for no benefit, you take all of those dumb investments and add them up and look at the return on investment, it's negative. It's terrible.

Copyright (c) 1999 Investor's Business Daily