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.