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Tech Industry

What's the tech policy agenda for 2004?

For an answer, look to Bruce Mehlman, who directs a little-known advocacy group that's a Who's Who of the most powerful CEOs in the tech industry.

Technology firms have realized, a bit belatedly, that a backlash against overseas outsourcing could cost them plenty.

Because high-technology companies compete globally and embrace free trade, they've become concerned about what might happen if "offshoring" becomes a hot topic during an election year and politicians fall over one another in a bipartisan rush toward protectionism.

One of the lobbyists fighting on behalf of free trade is Bruce Mehlman, who runs the Computer Systems Policy Project and was until recently an assistant secretary for technology policy at the U.S. Department of Commerce.

If the company finds that a global sourcing model is needed, which causes pain for 5 percent of employees, it may help the other 95 percent.
Previously, Mehlman was a lobbyist for Cisco Systems and general counsel to the House Republican Conference.

CSPP occupies an unusual place in the political firmament. Instead of being a typical trade association, it's closer to an exclusive club of chief executives. The roster of current members includes Intel CEO Craig Barrett, Hewlett-Packard CEO Carly Fiorina, Motorola CEO Ed Zander, Unisys CEO Larry Weinbach, EMC Chief Executive Joseph Tucci, Dell CEO Michael Dell, IBM CEO Sam Palmisano and NCR Chief Executive Mark Hurd. And the group is no creature of the dot-com boom: CSPP was founded in 1989.

CNET News.com recently spoke with Mehlman about offshoring, lobbying and the state of the U.S. economy.

Q: Offshore outsourcing is nothing new. But this year, the expected Democratic Party presidential candidate is denouncing "Benedict Arnold" CEOs, and it's become a hot political issue. What changed?
A: Well, like the movie "Groundhog Day," the debate over the relative merits of free trade is one that seems to repeat itself every couple of years. Offshore outsourcing in today's context is simply referring to global competition and trade in IT services. In many ways, it represents a change. We had not seen services--let alone high-tech services--as tradable jobs before. But if past performance is any guide, trade will benefit the nation and will require policymakers and corporate leaders to do a better job in helping the individuals who have a harder time adjusting.

That's what the industry often says. One of TechNet's objectives is education reform. But what does that mean in practice? It's easy to talk about education, but can you give specifics?
Fed Chairman Alan Greenspan gave a speech on Feb. 20 that I thought was outstanding. His conclusion is that the trade in global competition, even in areas of white-collar service work, can be tremendously beneficial to our nation--provided that we continue to help those who have difficult adjustments, and we continue improving the skills and the ability to constantly learn about the American work force. You are right; it has been a refrain of the business community and of leaders in both parties for the last 20 years, if not 50 years, and to the extent that there is progress, it is often hard to see in narrow time frames.

If it's been a refrain for 20 years or 50 years, and we're still told that the U.S. educational system for primary and secondary students is abysmal, is a more radical solution necessary?
First and foremost, what my guys understand is what businesses need to be competitive in the global economy. Historically, we have put most of our energy into making recommendations consistent with what we know best. For education, there is broad enthusiasm for "No Child Left Behind" and the principles of measurement and accountability.

Have any of your members endorsed school vouchers?
I am not aware of where my member companies have historically stood on that issue. But in the three months that I have been at the CSPP, we have not discussed vouchers.

On political topics like Internet taxes, encryption and stock option expensing, the business interests of companies have been aligned with their employees' interests. With outsourcing, are things different?
I do not think that is right. The interests of employees are to continue working for companies that are competitive and successful. No one wants to lose their job.

Certainly, the issue has been characterized more by fear mongering and demagoguery than by facts and sober discussion.
Other than the health problem with a loved one, I cannot think of anything more difficult or frightening. If a company is not competitive, all its employees ultimately lose their jobs. If the company finds that a global sourcing model is needed, which causes pain for 5 percent of employees, it may help the other 95 percent.

Are you saying it's better that, say, 20 percent of employees get laid off than the entire company going under?
It is never good when anybody loses his or her job, but if you gave someone a choice between 100 percent or 20 percent, it's better to see the greatest number of jobs preserved and maintained.

CSPP released a report in January that embraced free trade. Are you worried about an antioutsourcing backlash in Congress?
Certainly, the issue has been characterized more by fear-mongering and demagoguery than by facts and sober discussion. Our goal in writing and releasing the report was to try to offer some facts, some history and some non-partisan policy recommendations. To substitute policy for passion and facts for fear.

Congress is considering a bill to block mandatory expensing of stock options. What's your take on it?
CSPP tries to focus on a few issues at a time and has not taken a formal position on any stock option legislation, but many of my member companies are highly engaged in the battle. I think, personally, it is an issue that does relate to our global competitiveness, jobs and growth, since stock options have always been a critical engine for the entrepreneurship that characterizes our technology industry.

There was a lot of talk last year in Congress about intellectual-property legislation and online piracy, but not as much this year. Do you see any proposals going forward in 2004?
We have to let the year play out. Intellectual property has always been and will always be absolutely critical to the technology community, so I am certain that we will continue to see great interest in all kinds of legislation from positive efforts to enforce intellectual property rights globally to very good proposals such as the administration's effort at Patent Office reform and funding.

Donald Boudreaux, chairman of George Mason University's economics department, says the outlook for free trade is more dismal than at any other time in his life. It's clear that free trade is important for your members. It's also clear that Democrats are more hostile to outsourcing than Republicans. Does that mean that your members will publicly support George Bush over John Kerry?
Every trade bill that has passed in the last decade, probably longer, has done so with a bipartisan coalition. From the technology community's perspective, we could not have passed the legislation that has been passed to date without the support of Democrats. At the presidential level, we will wait and see what each candidate stands for and where they want to take the country.

One way to be effective in politics is to reward your friends and punish your enemies. If you don't punish Democrats when they vote against the interests of Silicon Valley, can you be effective?
There are a variety of groups that make decisions about whom to donate to and whom to reward and whom to punish. CSPP is not really one of them. You ask an entirely fair and appropriate question of whether the industry rewards its friends and punishes its enemies--and if not, how it can expect to keep its friends helping and force its enemies to think twice--but that is not what CSPP does. Our goal is to work with our allies and convert those who have yet to see the light.

Some people who run outsourcing consultancies say that as Indian programmers become more experienced and more effective, they start demanding a higher salary. The wage difference starts to narrow. Do you think that we're seeing a lot of hue and cry over outsourcing--but that we'll look back 10 years from now and wonder what all the fuss was about?
I do not think that we will ever look back and ask what the fuss was about, because when people lose their jobs--let alone people who play by all the rules, who got a good education, who had maintained marketable skills--it is serious. It is to be expected that there will be a hue and a cry. I certainly hope that 10 years from now, we will look back on 10 years of robust economic growth and continue with job creation and will also look back at enlightened steps policy makers have taken over this decade.

You're a registered lobbyist. Whom have you been meeting with recently? Name names, if you can.
I would rather not discuss whom I visit, where and when. I am happy to tell you that I meet with people both on the Hill and in the administration. I will meet with anyone who wants to meet with me, and that tends to drive far more of my meetings than my tactical decisions of where I want to go.

Back a few years ago, during the height of the tech boom, was it easier to set up meetings with politicians?
I lobbied for Cisco back in 1999, before going inside the administration. I have found that the doors remain open. The conversation is less likely to start with the comment, "I own your stock," though.

You're working with a broad outsourcing-related coalition that includes the U.S. Chamber of Commerce. Is your goal more legislative- or public relations-related?
My goal in working with them is to ensure that there is not redundancy of effort and energy and resources, to try to share good ideas and good information, and to make sure that the great demand among policymakers for facts and ideas are met by the business community at large.

Do you think that outsourcing could wind up being a racial, polarizing question, as the election approaches?
It has been disappointing to hear some folks singling out an ethnicity or nationality and scapegoating them or suggesting that their efforts to improve their well being are somehow bad for the United States or inappropriate or dangerous. You know, election years bring out a lot of passion. But I would hope that politicians are not exploiting those kinds of passions but rather are trying to work together in a society that has long benefited from new entrants who, from Albert Einstein to Andy Grove, have helped create jobs, companies and wealth in America.