#180  

 January 1998



Welfare for Microsoft?

by Amy Ridenour

 

When people turn their minds to the plight of the poor and downtrodden, they rarely think of Bill Gates.

Yet when the Clinton Administration announced a new federal spending program, it was aid to high-tech businesses the president had in mind.

The Administration says its plans are modest: "Only" $28 million in taxpayer aid this year, but more next year.

Why the push to aid America's richest companies when inner city schools are failing, dangerous criminals are being set free for lack of prison space, commuters crawl to work because of crowded roads, and the percentage of the nation's income eaten up by government has reached its highest level since 1945?

It's because high tech companies are having a hard time finding enough computer professionals, and the Administration believes this is a program America's taxpayers should pay to fix.

Apparently President Clinton is insufficiently familiar with Adam Smith.

Smith's "invisible hand" theory holds that when there is a shortage of a commodity (in this case, computer professionals) the price for that commodity will go up, making it more profitable for people to provide that commodity (in this case, become computer professionals), thereby lessening the shortage of the commodity.

In other words, if there is a shortage of computer programmers, companies will, without money from taxpayers, raise programmers' wages.

The "invisible hand" works. According to the Department of Education's Condition of Education 1996 report, computer science graduates receive starting salaries far higher than majors in any other subject, a full 18% higher than the second most profitable major. This gap is increasing: since that report, pay for software architects rose by 20% in a single year. Companies are sweetening the pot still further by offering signing bonuses and luxurious perks, like cars.

The "invisible hand" works. The University of Utah, undergraduate home to half a dozen of the most prominent software industry CEOs, reports that after several years of lukewarm interest in computer science, this year more than twice as many students requested computer science majors as can be accepted. When Advanced Information Services Inc. started offering $400/week paid training in conjunction with Illinois State University leading to $30,000+ software engineer jobs, from just one classifed ad they received hundreds of applicants for 15 available slots.

The "invisible hand" works. There's a shortage of programmers today because a downturn in the field in the late 1980s (when AT&T, IBM and big aerospace companies laid off employees) threw thousands of programmers out of work. Students responded by pursuing other careers. In 1986, 50,000 students pursued bachelor's and graduate degrees in computer science, but in 1995 only 36,000 did so. The recent sharp upswing in demand for programmers began just two years ago, and students are responding.

The government already provides over $300 billion in aid to education. It already has over 60 job training programs, costing over $10 billion per year, although its own studies show that government job-training is ineffective.

So we don't need a new federal program. A tax to benefit technology companies is unnecessary, and one the American people should not be asked to pay.

 

Amy Ridenour is president of The National Center for Public Policy Research. Comments may be e-mailed to her at [email protected].




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