Newsweek

Here’s How Trump Is Killing Silicon Valley

Like 1970s Detroit, Silicon Valley seems to be handling success rather badly. And Trump is making it worse.
Scenes of daily work and life at Facebook , Inc. USA Headquarters in Menlo Park, California. View of employees at work in a typical unfinished looking workspace.
FE02_Detroit01 Source: Kim Kulish/Corbis/Getty Images

If you want an ominous warning about the impact of the Trump era on Silicon Valley, look at a former American behemoth of innovation: Detroit.

By 1908, when Henry Ford started building the Model T in a factory there, the automobile was the most important new technology in the world. The industry coalesced in and around that city as inventors and investors rushed to the region. Out of a torrent of startups—Cadillac Automobile Co., Dodge Brothers, Durant Motors, Mercury Cyclecar Co.—a few global monoliths emerged and consolidated. For the next four decades, Ford, General Motors, Chrysler and the city’s car-making ecosystem dominated every aspect of the global auto industry—and, for that matter, the U.S. economy. Charles Wilson, who was the president of GM before becoming President Dwight D. Eisenhower’s secretary of defense, coined the phrase “What’s good for General Motors is good for the country.”

The end of the 1960s turned out to be Detroit’s apex. In the early 1970s, dubious U.S. economic and foreign policy led to disaster when the Middle East OPEC nations initiated an oil embargo. Gas became scarce and expensive, and Detroit was caught focusing on the wrong products—ostentatious gas-guzzlers—at the wrong time, giving Japanese makers of small cars an opening in the U.S. market. Pulitzer Prize–winning auto historian Joseph White wrote about two fateful mistakes that made things worse. First, “Detroit underestimated the competition,” he said. The likes of Toyota and Honda had become much more adept than industry executives realized. Second, the U.S. companies “handled failure better than success.” Detroit’s decades of triumph set up the hubris, waste and bad practices that came to haunt it.

From there, it was a short trip to loss of market leadership, layoffs, plant closings and a city that fell into a desperate decline.

Think that could never happen to Silicon Valley? Like 1970s Detroit, Silicon Valley seems to be handling

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