Posts tagged entrepreneurs
By Timothy Noah
Jon Corzine’s testimony before the House agriculture committee may mark the definitive end to the Democratic party’s love affair with Wall Street.
Once upon a time, Wall Street bankers were Republicans. Not terribly ideological, they preferred whenever possible a minimum of taxation, regulation, and government in general, but they didn’t make a fetish of it. As the GOP moved right starting in the mid-1960s the east coast Republican establishment began to crumble, and by the late 1980s it was mostly gone. These silk stocking conservatives had been driven out of the Republican party by a social agenda that frightened them, a budget deficit that threatened their livelihoods, and a base that increasingly viewed moderates as RINOs (“Republicans In Name Only”).
By the early 1990s Wall Street was ready to go Democratic. In his new book, Back To Work, former President Bill Clinton writes,
“For every person on Wall Street who resembles the character Michael Douglas played in the Wall Street movies, there are many others who give lots of money every year to increase educational and economic opportunities for poor kids and inner-city entrepreneurs.
“Most of these people are grateful for their success and know that because of current economic circumstances, they’re in the best position to contribute to solving our long-term debt problem and to making the investments necessary to restore our economic vitality. Many of them supported me when I raised their taxes in 1993, because I didn’t attack them for their success. I simply asked them, as the primary beneficiaries of the 1980s growth and tax cuts, to help us balance our budget and invest in our future by creating more jobs and higher incomes for other people.”
In crafting his first budget bill, Clinton was mindful of the bond market to such a degree that James Carville famously complained, “I used to think that if there was reincarnation, I wanted to come back as the President or the Pope or as a .400 basball hitter. But now I would like to come back as the bond market. You can intimidate everybody.”
The Wall Street-Democratic Party love affair came out of the shadows and into the sunlight when Robert Rubin, former co-chairman of Goldman Sachs, became Treasury secretary. The economy was booming, the budget deficit was disappearing, and all was right with the world. The romance deepened through most of the aughts, so much so that in 2010 Rich Lowry of National Review complained, “the Democratic majority was bought and paid for by Wall Street and corporate money.” In 2008 the finance sector actually gave more to the Democrats than to the Republicans, something that hadn’t happened since 1990.
It all started to come apart in the late aughts as Democrats realized that Rubin’s distaste for financial regulation (and that of his deputy and successor, Larry Summers, which was more pronounced) had contributed to the 2008 financial meltdown, in part because Rubin and Summers had outmaneuvered Brooksley Born, chairman of the Commodity Futures Trading Commission, when she wanted to regulate derivatives. Summers (who wasn’t from Wall Street but was a Rubin acolyte) became director of the National Economic Council during President Barack Obama’s first two years in office and the economy floundered. That deepened the alienation between Democrats and Wall Street.
Passage of the Dodd-Frank financial reform law drove the lovebirds further apart as Wall Street enlisted Republican goons first to weaken the bill (and succeeded in many instances) and then to neuter it by pressuring federal agencies to write regulations that created as little accountability as possible.
The city of Chattanooga, Tennessee, is dangling wads of cash in front of nerdy innovators everywhere.
A mix of local and national investors have partnered to launch the Gig City Gig Tank and are offering $300,000 of cold, hard, start-up cash and prizes to be split among entrepreneurs and students with the best ideas for how to create the fastest internet in the world.
The catch: To claim the prize, you have to go to Chattanooga.
When we think of American tech innovation, places like the Silicon Valley and Seattle tend to come to mind more readily than Chattanooga. But maybe we should give Tennessee’s fourth largest city a bit more credit. Last year, the city-owned Electric Power Board (EPB) brought the country’s first gigabit-per-second fiber optic network to more than 150,000 households and businesses in a 600-square-mile radius.
Jack Studer of Lamp Post Group, a “venture incubator” backing the Gig Tank, told Wired.com that his parents, who live on a farm 35 miles outside of Chattanooga, have access to the network. If you’re suddenly feeling very envious of a couple of farmers in rural Tennessee, you should be — according to The New York Times, the gigabit network allows for connections 200 times faster than the average broadband speed in America.
But there are some major kinks to be ironed out. Chief among them is the price tag — GigaOm reported earlier this year that Chattanoogans pay more than $300 per month for gigabit service. Not so good compared to the $27 per month some South Koreans are paying for the same speed.
The idea of the Gig Tank isn’t to fix this problem, necessarily, but to give students and tech entrepreneurs a chance to use the network, which is not yet affordable or available on a wide scale, to design high-speed apps and businesses.
If you are one of the lucky few selected in what has been dubbed the Geek Hunt — a moniker chosen to evoke techiness and the Southern pastime of hunting, said Studer — the world is your oyster, and your oyster is a faster series of tubes than Sen. Ted Stevens could have ever imagined. The thousands of dollars of start-up cash should come in handy too, especially in a time when venture capital isn’t exactly growing on trees. The Gig Tank will give each of 10 entrepreneur teams $15,000 to work with, and at the end of the program the team with the best idea will take home $100,000. Ten to 15 students will compete for a $50,000 prize, but won’t receive any start-up cash on the front end.
And there’s still money in it for you even if you’re not the next Mark Zuckerberg or Jack Dorsey. In a promotional video calling for applicants, the Gig Tank hails geeks as the pioneers of the 21st century — successors to sea-faring explorers, westward-bound settlers, and astronauts. “But geeks are a furtive kind and can be difficult to track,” the video says, “so to find them, we need your help.”
The Gig Tank is asking people on Facebook or Twitter to tag friends who might be good candidates. A $1,000 finder’s fee will be awarded to anyone whose nominee applies and is chosen. Applicants can also nominate themselves.
When Wired.com asked about this approach, Studer explained that “if you can’t figure out how to tag yourself online, you’re not nearly geeky enough” for the Gig Tank.
It will be interesting to see the ideas that surface in Chattanooga during the program, which will run from May to August of 2012, but the most intriguing storyline is the gigabit plot.
Technically the gigabit-per-second technology can be used anywhere that has a comprehensive fiber optic network in place, but Americans are years, and perhaps decades, away from having it at their fingertips for an affordable price.
President Obama vowed to prioritize digital innovation in his State of the Union address earlier this year, and said “we will make it possible for business to deploy the next generation of high-speed wireless coverage to 98 percent of all Americans” in the next five years.
We’ll see — maybe Chattanooga is the unlikely first piece of the puzzle, but for now the U.S. is lagging behind countries like South Korea, whose average broadband speed is already 200 times faster than America’s. And by the end of 2012, South Korea plans to make a gigabit-per-second network accessible from every household in the country at a price that’s one-tenth of what Chattanoogans are currently paying.
So here’s a pat on the back, Chattanooga — nice work so far — but you and the rest of America have a steep hill to climb to get back to the top of the world of Internet innovation.
Image: The Gig Tank