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Welcome to the thriving Hotel California – Barry Wood
I remember being in San Jose in 1984 as the computer tech revolution took hold. The streets outside the twenty-something parties I attended featured several smart sports cars and their owners were my age. By comparison with me, they were in a stratospheric income bracket. All were either computer programmers or software developers at the epi-centre of the digital revolution, some with expensive drug habits to match. This story speaks of how that innovation upheaval has continued to drive the economy of northern California, with several of the world’s leading corporations headquartered there, adopting cutting edge worker-centered philosophies that promote creativity. I too, like the author Barry Wood, later visited Yosemite National Park and was blown away by the grandeur and beauty in stark comparison to my extended immersion in a very foreign Silicon Valley urban lifestyle. The benefits of competitive capitalism to a local economy could not be better illustrated. One wonders what the reaction of our policy-setting ruling politicians would be to this piece. Any takers? Blade? I miss the days when our current minister of Higher Education, Science and Technology would engage parliamentary reporters in vigorous, pub-side ideological debates. Let’s hope nothing’s changed. Welcome to the Hotel California… – Chris Bateman
Northern California remains a promised land
By Barry Wood*
CUPERTINO, CA: From the press room at Apple’s (February 26th) shareholders meeting it is easy to see why Silicon Valley is the global centre of technological innovation. Addressing 1,000 contented stock holders, Apple CEO Tim Cook said 2019 was “phenomenal” with revenue of $268 billion, Apple’s best year ever. Nearly half that revenue came from the iPhone but services like Apple+TV, Apple pay, and wearables are coming up fast. “I couldn’t be more optimistic about the future,” said Cook, boasting that Apple has created over two million US jobs despite doing most of its manufacturing overseas.
Apple, declares acclaimed investor Warren Buffett, is the world’s most successful company. And Warren could have added, Apple is the world’s richest company with a market capitalization, even with the recent correction, exceeding $1trn.
Emerging from the meeting, a visitor from America’s east coast is smitten with the beauty of Apple’s corporate headquarters, a sleek circle of curved glass trimmed in white, evidence that the company’s passion for excellence extends beyond products. Apple Park was the capstone project of visionary CEO Steve Jobs. The three-year-old, four-story structure is one mile in circumference with a fruit orchard at the centre. It accommodates 12,000 employees.
Silicon Valley successes go far beyond Apple. Several globally dominant companies are here, including Google, Facebook, Tesla, Netflix, Cisco, Intel, and Adobe. Amazon and Microsoft are also present and nearby San Francisco hosts Twitter, Square, Airbnb, Uber, Lyft, Salesforce and more.
While short-sighted politicians would break up America’s tech leaders, innovators and the best and brightest of the world’s engineers and programmers continue to flock to the valley. Palo Alto economist Stephen Levy says tech companies have enormous plans to expand in San Jose and nearby. Google has bought up land adjoining the train station, ready to construct buildings for 25,000 tech workers.
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Levy heads the Center for the Continuing Study of the California Economy. He disputes the standard notion that high costs and housing shortages are forcing companies out of the Bay Area. To the contrary, says Levy, 91,000 jobs were created in the region last year and the jobless rate is a 50-year low of 2.2%. Incomes were up nearly 7% last year, the fastest growth in the nation. Per capita income in the Silicon Valley exceeds $130,000 a year.
“The problem,” says Levy, “is that housing costs are rising even faster.” With rents averaging $3,000 per month, a middle-class lifestyle, says Levy, requires a household income of $200,000 annually. It’s hard to buy a condo in Cupertino for under $1m.
Tesla, the electric car company headed by South African born Elon Musk, is headquartered in Palo Alto and has its sole US manufacturing plant in nearby in Fremont. Tesla is a hybrid–a tech and industrial company – employing 10,000 workers in Fremont. Not only is Tesla Fremont’s biggest employer, it has triggered a construction boom and proven that manufacturing can still be done in the valley.
Levy emphasises that while more people are leaving California than coming in, the opposite is true in the valley. With the Bay Area’s population currently 7.5 million, Levy believes it could rise by two million before saturation is reached.
One day after Apple’s annual meeting I find myself in Yosemite National Park, one of the planet’s great natural wonders. Hiking in its forest the Silicon Valley feels a universe away despite it being a mere four hours or 160 miles distant. The transition from high tech to natural beauty is jarring. While the brain was wrestling with data and concepts now it is absorbing sights and sounds of the physical world. With each advancing stride on the trail to the world’s oldest tallest trees at Mariposa Grove I am engulfed in the majesty of this forest. The whooshing sound above isn’t vehicle traffic but wind blowing through tree tops.
John Muir, the 19th century naturalist who brought President Theodore Roosevelt to Yosemite, said “the clearest way into the universe is through a forest wilderness.” He and Roosevelt concluded that “wilderness saves the human spirit.”
Whether it is Yosemite, Lake Tahoe, San Francisco Bay or the wine country, northern California has more than tech as an asset. Despite wildfires, drought, earthquakes, income inequality, homelessness, horrendous traffic and a paucity of affordable housing northern California remains the promised land.
- Barry D. Wood writes about the global economy from Washington. He began journalism at the Financial Mail in 1974, was the Voice of America correspondent in Prague for three years, and has been returning to southern Africa regularly since 2010.
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