Two Takes on Silicon Valley's Gold Rush

Almost a century and a half ago, the same behaviors you note were displayed outside San Francisco (''The dark side of Silicon Valley,'' News: Analysis & Commentary, July 17). It was called the Gold Rush. With the advent of litigants and the disappearance of firearms, more pleasant conditions now exist. You no longer have people in black hats shooting good guys. You still have claim-jumpers and rapacious hangers-on (the local BMW salesmen), but the hectic pace and easy money appeals to tired Easterners and distraught Midwesterners who are examining their own dreary futures.

The Gold Rush left several benefits: Levi Strauss & Co. jeans, the transcontinental railroad, lower interest rates, and a whole lot of stories to be told by Mark Twain and others. It's too bad people think gambling takes place in Vegas, because the gambling now taking place in Silicon Valley makes Vegas look like chump city.

William Cormeny
San Luis Obispo, Calif.

As an engineer in Silicon Valley, I take exception to your story. The company where I work has a strict policy against using intellectual property of a rival or previous employer. We sign this and are counseled coming in the door.

Who exactly are the detractors? People lacking the drive and persistence necessary to achieve the high levels of success they envy. For most of us, success comes after several college degrees, 10 to 15 years of 50-hour-plus workweeks at many previous companies, willingness to adapt, and making correct life choices.

Aren't ''greed'' and ''excess'' words more descriptive of Washington, D.C., and Sacramento? Witness the 39.6% federal tax rate, 9.3% California tax rate, 8.4% California sales tax, and the 5% luxury tax on autos above $42,000. A well-paid Silicon Valley engineer buying a $65,000 auto would need to earn an extra $146,000.

To those envious detractors: Forgo your cheap PC, don't browse the Internet or trade stocks online, dump your high-tech mutual funds, and don't benefit from the 40% of the tax burden paid by the top 2% of wage earners. Then you can comment.

James Van Dyke
Sunnyvale, Calif.

''Tough Justice'': A Racist Waste of Money and Lives?

Regarding ''Tough justice is saving our inner cities'' (Economic Viewpoint, July 17): I can't believe Gary Becker had the nerve to put his offensive views on paper or that BUSINESS WEEK would publish them. Blacks are beneficiaries of tough justice? Give me a break! The drug war is arguably waged in a racist manner, with African-Americans bearing the brunt of zero-tolerance law enforcement. Violent crime continues to trend downward, yet the Land of the Free recently earned the dubious distinction of having the highest incarceration rate in the world.

Nonviolent drug offenses account for the majority of federal incarcerations. While only 11% of the nation's drug users are black, blacks account for 37% of those arrested for drug violations, over 42% of those in federal prisons for drug violations, and almost 60% of those in state prisons for drug felonies. Here in the District of Columbia, 50% of 18-to-35-year-old black men are under some form of court supervision or being sought on arrest warrants. Nationwide, roughly one in three (32%) black males aged 20 to 29 is under some type of correctional control. Minorities fuel the burgeoning for-profit prison system.

Few Americans seem to care that the drug war has created a prison-industrial complex that rivals the cold war's military-industrial complex in terms of influencing public policy. Support for the failed drug war would end overnight if whites were subjected to ''tough justice'' at the same rates as their African-American counterparts.

Robert Sharpe
Washington

Much of the police crackdown on inner-city crime involves a crackdown on people associated with illegal drugs in some way. If these people were not subjected to police actions because the drugs were legally regulated, and if drug use were treated similarly to alcohol and tobacco use, crime would drop dramatically, and the costs to society would plummet.

Instead, we have handed a monopoly to organized crime, ruined many lives, and drawn unflattering international attention to ourselves because of our astronomical incarceration rate. Rather than treat those who seek treatment to get off drugs and leave the rest alone, we dispense a brutal solution to their problems and in turn create greater problems for society.

Keith Brilhart
Decatur, Ill.

Some Employers Can't Afford the Minimum Wage

Recently, you ran ''Helping America's working poor'' (Editorials, July 17) regarding the necessity of raising the minimum wage. You cited the difficulty of living on the current minimum. There is another side to the issue--the small business that must hire high school kids and pay them a minimum in excess of the value they add.

My son and his wife run a small vegetable farm in western Massachusetts. They had to cut back on the number of workers they hired this year and have planted less acreage. They found that kids were not able to produce enough crops to pay their own wage. If the minimum goes up again, they will be forced to cut back further. This, of course, cuts into their own wage, which is below minimum if you consider the number of hours they must put in.

If there is to be another hike, there should also be some relief for farmers and other small-business people who are hiring raw, unskilled labor. There needs to be a training period during which they can legally pay less per hour. Can you think of another way to keep small businesses from going under?

Bob Bober
Framingham, Mass.

Your endorsement of a higher minimum wage on the grounds that tight labor markets negate any disemployment effect is shortsighted. True, a modest increase in the minimum wage is unlikely to create much unemployment now, but what about when the next recession comes? Any increase in the minimum wage will be permanent. When, as inevitably must happen, the economy turns down, it will be politically impossible to cut the minimum wage. This means that businesses employing low-wage workers will be forced to lay off many more workers than they would if they could temporarily lower wage rates below the minimum.

Bruce Bartlett
Senior Fellow
National Center for Policy Analysis
Great Falls, Va.

Needed: A How-To for Would-Be Bond Buyers

I enjoyed ''How to retire'' (Cover Story, July 17), but as soon as I saw the asset-allocation charts, I felt a resurgence of an old, nagging question. O.K., so I'm 46 and I should have 25% of my money in bonds. Great--I'll pop onto my online broker's Web site and buy a chunk of those. Then you come up against the great yawning chasm of: ''How do I buy some bonds?''

I'm not a broker, but I am reasonably market-savvy. I read BUSINESS WEEK every week, I have CNBC on all day long, I have a full-service broker and a cheapie no-frills online broker in the U.S. as well as in another country. I read Benjamin Graham for sensible stuff and buy value stocks for retirement but I also do nut-case option trades for an occasional thrill--and I was 90% cash when the Nasdaq tanked. But do I know how to buy a bond? No, sirree--haven't a clue.

Why is the bond market so opaque? If I can get quotes for individual stocks, mutual funds, and options, why not bonds? O.K., so I know that the 30-Year T-bill is yielding 6.45% or whatever and that there's inversion in the yield curve--that's no help if you want to invest.

Please do an in-depth article on ''Bonds for the Small Investor'' for us enthusiastic small guys who are constantly scratching for knowledge.

Peter Butler
Memphis

Miracle AIDS Drugs Are Failing Many Patients

Thank you for ''Rethinking the AIDS arsenal'' (Science & Technology, July 17). Diagnosed HIV-positive in 1986, I have survived with the help of just about every drug combination available. Each new drug has been effective for approximately six months, creating a wild roller-coaster ride. Like Tom Dionne, the drugs caused my cholesterol to skyrocket to more than 440, resulting in my current drug ''holiday.'' Believe me, it is far from a holiday. My current genotype tests reveal that my very smart virus has mutated around all the available drugs.

While new drugs have helped many people, they have created a false sense of security. There is increasing anecdotal evidence that current medications are failing. We must not become complacent. There is no cure. Hopefully, we will not have to relive the 1980s to refocus attention on this devastating disease.

Paul Szczesiul
San Francisco

Retailers Differ by Product, Not by Clicks or Bricks

Regarding ''Can Amazon make it?'' (Cover Story, July 10): There are many models of retail. Their success or failure has less to do with the Internet, bricks and mortar, or catalog than the value they create in the eyes of their customers. The Internet offers powerful new ways to create value, and many of them have to do with information.

More than anything else, Amazon grew because it offered a lot of convenient and credible information about a product (i.e., books) that is information-intensive and whose buyers are information-hungry, willing to invest time in product research, Internet-savvy, and who don't typically require immediate gratification.

Arguably, the buyers of CDs and videos have much the same profile. Purchasers of toys and garden-hose nozzles do not. Amazon will succeed in these categories, therefore, only to the extent that it can provide value in other ways, e.g., lower cost, more convenience, etc. That's doubtful, given the competition.

If Amazon fails, it won't be because of a flawed e-tail model. It will be because it applied a sound model to the wrong products based on the mistaken belief that retail models--old or new--are defined by venue. Creating value is derived from customer motivations, and those will vary by customer and product, but not ''e-'' or ''re-''.

Gary L. Moreau
Rochester, Mich.

''BancWest has no special 'vulnerability''' (Readers Report, July 24, 2000)

An error in ''BancWest has no special 'vulnerability,''' (Readers Report, July 24) led to a misstatement of the bank's annual net loan losses, putting them at 6%. The sentence should have read: ''Annual net loan losses never exceeded 0.46% of total loans despite recession and economic stagnation in Hawaii throughout the 1990s.''

Capital Wrapup (July 10, 2000)

Capital Wrapup (July 10) referred to Jerusalem as the capital of Israel. Israel considers Jerusalem its capital, and its government buildings are there. But the U.S. and other countries recognize Tel Aviv as the capital because part of Jerusalem is occupied territory.