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Fired Up: Intel Chairman Barrett says America is Throwing its Future "Down the Drain"

Posted by: Spencer Ante on September 22, 2008

Intel chairman Craig R. Barrett is a frustrated man. Barrett, who visited the BusinessWeek office today, sat down with a group of editors and aired his views on the financial crisis, the future of innovation and the U.S. political situation. His startling conclusion about America’s current predicament: “It’s our future and we’re throwing it down the drain.”

An engineer and professor by training, Barrett is a typically cool character. But in a 30-minute conversation, the silver-haired technology veteran vented his anger and frustration over Washington’s inability to solve America’s long-term problems. He is particularly upset that Washington failed to write a check for the $1.2 billion in increased funding for basic research and science and technology education authorized by the America Competes Act, which President Bush signed into law in August of 2007.

Wasting no time, Barrett took a seat at a round-table and launched into an attack on Congress, criticizing politicians for not passing a free trade agreement with Colombia. “Our greatest friend in Latin America is being screwed by Congress,” he said. “[President] Uribe is our best friend and greatest ally. It’s inconceivable. I go there every year. It’s hard to be proud of your country when we are behaving this way.”

Here are excerpts from the conversation edited by me, BW editor Spencer Ante.

Given all the problems in the financial world, do you expect Intel to continue with its investment plans? On July 15, on the second quarter earnings announcement, the company said it planned to outlay $5.2 billion, plus or minus $200 million, on capital spending.

It’s always seems to me a matter of priorities. Unfortunately our government has made the choice. Focus on today’s problems and forget about tomorrow’s problems. You can’t save your way out of a recession. Expect to see continued research and development investment streams. If you stop the investment streams you are cutting your throat.

We have been giving our expert opinion to Washington. We have worked hard on getting passed the Compete America Act. But last year there was no appropriation for Compete America. And we are starting to hear noises about no appropriations for Compete this year. The government is effectively thumbing their nose at out expert opinion.

I’m not against bailing out Wall Street, because they are bailing out individuals. But when you look at the agricultural subsidies and the bailouts and the earmarks it’s hard to believe the government can’t come up with $1 billion to fund innovation. We as a country have chosen not to compete.

I’m glad to hear that Intel won’t be cutting back on R&D. What impact do you think the financial crisis will have on the tech industry?

One of the positives of this slowdown is we are much more geographically diversified than in the past. 75% to 80% of our business comes from outside the U.S. We are a bit more shielded. A big part of the world is still investing in infrastructure, China, Russia and India. Those regions are seeing good growth rates.

If Wall Street slows down, that will have an impact. It’s going to hurt the industry as a whole but we are more shielded.

How do you feel about the job that the President and Congress are doing in Washington?

We are abdicating our leadership in finance and accounting to the Europeans. We’re not competing on K-12 education. We’re not competing on basic research. We have no immigration policy. High corporate tax rates dictate a lower rate of investment.

60% of graduate students in engineering are from overseas. We pay for their education but then we send them home. There, they either compete with us or take a job away. We’ve killed investment banking, and now we are killing engineering.

Why is it so hard for America to do long-range planning now?

The political system has gone to a two-year return-on-investment cycle. Every problem we have takes longer than two years to solve. No one is willing to invest their political capital.

When you reach that point you have lost statesmanship and leadership. Politicians are not following Moore’s Law (the observation made in 1965 by Intel co-founder Gordon Moore that the number of transistors per square inch on integrated circuits had doubled every 12-18 months since the integrated circuit was invented). They are following whatever the hot topic of the day is.

How we do this to ourselves is just incredible. We let these guys get away with murder. It’s our future and we’re throwing it down the drain.

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Reader Comments

Puking Hector

September 23, 2008 01:57 AM

Next time, ask Dr. Barrett about his great investment strategy at Intel - and how he blew $25 Billion (yes- 25 BILLION !!) of shareholders money on buying worthless crap companies like Dialogic, Chips & Technologies, Level One, Ziatech, Xircom, DataKinetics Ltd. , Picazo Communications, IPivot , New Focus , and Sparkolor Corp, LightLogic, Stanford Telecommunications Inc ...

Barrett was a DRUNKEN SAILOR spending BILLIONS OF DOLLARS - belonging to Intel shareholders - on piss pot companies that went to ZERO value in a heart beat after Barrett overpaid for them then ran them into the ground.

James H. Murphy

September 23, 2008 03:09 AM

As the Ancient Greeks observed when the gods seek to destroy mortals they start by giving them what they want. If investment banking and engineering are being killed it is because they have, for the most part, gotten from government most of what they wanted. Bankers wanted the Glass-Steagall Act of 1933 repealed. They got it only to discover they did not have the self discipline to operate without it.

Craig Barrett and others determined that they should not have to pay so much for American engineers so they used their lobbying money to get the National Science Foundation and others to write reports predicting a coming shortage of engineers. Then they used those predictions, along with some money passed out by jailed lobbyist Jack Abramoff and others, to get the Congress to invent the H-1B to allow foreign engineers to displace American engineers. Then they got Congress to expand the program to 195,000 a year for a few years before it reverted to 85,000 a year. That expansion was pure lobby money. Sen. Robert Bennett (R-Utah) remarked, "Once it's clear (the visa bill) is going to get through, everybody signs up so nobody can be in the position of being accused of being against high tech. There were, in fact, a whole lot of folks against it, but because they are tapping the high-tech community for campaign contributions, they don't want to admit that in public." Rep. Tom Davis (R-Va.), said, "This is not a popular bill with the public. It's popular with the CEOs...This is a very important issue for the high-tech executives who give the money."

Barrett likes his cheap labor. After all with an excess of engineers he can lay the off at will without serious concern about being able to get more when and if he needs them. Why plan ahead. Getting engineers for Intel is government’s responsibility. That is what lobbyist money is all about.

But there is a fly in the ointment. The H-1B has been around long enough to accumulate lots of engineers who have lost jobs to foreigners. H-1B workers may be hired even when a qualified U.S. worker wants the job, and a U.S. worker can be displaced from the job in favor of the foreign worker. It is hard for a Congressman to believe in shortage with an engineer in his town hall meeting complaining he can not find a job. Barrett et al then came up with the “best and brightest” argument. That seemed to be working until Dr. Norm Matloff shoot in down in flames with industry’s own data.

If America wants engineers end the H-1B and green cards for foreign engineers and let supply and demand fix any shortage. This would make Mr. Barrett pay up or do without as he sees fit.

Mulan Meng

September 23, 2008 02:52 PM

My family has moved nations 3 times in the past 50 years from 2 European nations to the US and Canada. When economies falter and governments do exactly what Craig Barrett is trying to warn you about, global citizens vote with their feet. I never thought I would agree with Mr Barrett but he is exactly right. It is not the time to get defensive because someone bashed the US. Put your nationalistic sensitivities back in your pocket and wake up. Foreign students used to want the H1B visa to stay in the US now they are going home to vibrant double digit growth economies and taking their expertise with them. We don't have enough engineers in the US. Maths and Science education at K-12 feeds the pipeline. Go to any graduate engineering class and see how many Americans there are - see for yourself the pipeline is weak.
I wonder how many of our legislators have ever been outside the US to see the true state of affairs.
@ James Murphy - I think you forgot the cost for a company to pay for the H1B process... not exactly a path to cheap labor. Since we graduate more lawyers than we do engineers maybe it was the law profession behind your "conspiracy theory". Intel and any other global company has no problem hiring engineers overseas so why bother trying to drive down labor costs in the US with H1B. pathetic, weak argument
@ Puking Hector - The so called failure of acquisitions is totally off topic go vent somewhere else.

rand dawson

September 23, 2008 07:27 PM

"Killed investment banking"?

You mean by intentional lack of oversight and regulation? Or just the mega-tax-cuts since 2000? Should we have deregulated even more...? Is that what you mean?

Help me here....Im just a poor, retired dude wanting to know how we -- and not bonus-laden CEOs and self-centered corporate America -- killed investment banking?

rand dawson -- Oregon

Chips and Whine

September 23, 2008 08:36 PM

Barrett needs a new act. It's the same old story: the taxpayers need to fund our basic research because we don't want to. He blasts the Congress for being gutless because of the two-year election cycle, but not his fellow Corporate Americans, who allow themselves to be slaves to the quarterly earnings cycle. Whine, whine, whine. If every large high-tech corporation in the US chipped into a non-profit that would fund basic research, they'd have $1.2B easily. Heck, the Wintel (Whine-tel) duopoly could fund such a non-profit themselves. If growing the intellectual feedstock is so vital to the industry's future, they should consider it investment instead of charity. But it's more that just money, it's about changing our cultural attitudes towards science. Where was Barrett these past 7+ years over our anti-science President and his Repub enablers? Where is Barrett when the scientific process comes under another assault in Red State America? Where is Barrett at a time when Americans may very well elect a VP who champions teaching Creationism in science classrooms?


September 23, 2008 09:55 PM

Cost for the H1B process??? A few grand...

But because of the legal loopholes in the guestworker visa laws, companies pay 30% less for H1Bs and 50% less for L1s, and they make up all their costs in the first couple months.

If we didn't have enough engineers, then all our graduates would have jobs, instead of a third of them having to get jobs outside their field. Because employers prefer to hire cheap labor.


September 24, 2008 11:09 AM

Complaining of underfunding the America Competes Act and mistreatment of Columbia as examples of our future going down the drain is like complaining about paint flakes on the Titanic -- how about trillions of public debt increasing by annual trillions, devastated banking system, colossal shifts in constitutional power balances, ballooning military spending for an endless war footing, etc?


September 24, 2008 08:17 PM

The Correct Headline:

Fired Up: Intel Chairman Barrett says the 1965 Hart-Celler Act and H-1B Visa Program is Throwing the American White Collar Worker "Down the Drain"

The H-1B Visa is only used by Corporate America to replace White Collar American workers with cheap foreign labor from India and China. Corporate American loves cheap labor. At the same time this is happening Corporate America is also replacing Blue Collar Workers with Cheap Foreign labor from Mexico, Columbia, and the rest of Latin America.

In 1965 the Hart-Celler Immigration Act was passed which strictly curtailed the number of people allowed to immigrate to the U.S. from Ireland, England, Germany, France, Italy, Australia, etc. but greatly expanded the number of people allowed to immigrate to the U.S. from Third World Countries such as China, India, Nigeria, Haiti, etc. After this law was passed the demographics of the U.S. were changed overnight and living standards of the Middle Classed have decreased ever since. In fact, U.S. wages in Real Dollars have been stagnant since 1970. Corporate America loves this. In 1968 America was 88% white and in 2042 America is project to be 48% white. We're halfway through the process and the consequences to our labor market have been pretty horrendous. By 2042 America will become a low-wage, Balkanized, high-crime nation if these anti-American culture immigration policies aren't stopped.

Regarding eduction in the U.S. When U.S. education is compared to other countries it's typically all our students versus only other nations elite students such as when they compare us to China or India. But, when you take out minorities and just compare white U.S. kids to the students in other countries the U.S. looks great. But, we continue to pour billions of dollars into inner-city schools thinking this will work. It won't and it never will except in Fairy Tales. U.S. schools are exceptional instituions that are being ruined by liberal schemes that keep on underfunding them and sending money to inner-city schools. It's a joke.

Please write to your elected official and tell them to repeal the 1965 Hart-Celler Immigration Act and tell them to end the H-1B Visa and L-1 Visa programs.


September 25, 2008 05:22 PM

cheap labor?! based on immigration laws Intel cannot pay a foreign engineer less than the prevailing wage for the particular education and skill level. Get your facts right. Majority of graduate students in physics, engineering, and sciences are from foreign countries, it is not because american students are discriminated against, it is because our education/cultural system does not value science/engineering as our Chinese and Indian counterparts do.

willie dee

September 28, 2008 08:35 PM

Ceo Barrett is right on one thing....Pres Uribe of Colombia has been our friend and deserves our support. He is a counter-weight to Morales of Bolivia and Chavez of Venz

K Lee

October 10, 2008 09:27 PM

I moved from USA to Canada because the environment was far more friendlier to immigrants. I have a Ph.D. in geology from a university in the US, but I didn't want for my wife (who happens to be from Argentina with a Masters in Speech Therapy) to sit around in the house doing nothing while I struggled for permanent residence.

I am planning to start a research company and would encourage others to give up the long waits for the US immigration system to fix itself, and instead follow their dreams somewhere else.
The taxes are slightly high here but health care is free!

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BusinessWeek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, Douglas MacMillan, and Spencer Ante dig behind the headlines to analyze what’s really happening throughout the world of technology. One of the first mainstream media tech blogs, Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.



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