McNealy jousts with government

SAN JOSE, California--Californian technology will continue to thrive, said Sun chief executive Scott McNealy, but only if the government shapes up its act.

The energy and excitement of the tech industry must be nurtured--not overregulated--if the boom is to continue, McNealy told the audience at the Bay Area Council Outlook Conference in San Jose today.

Despite his anti-government tone, McNealy conceded the government has a role to play, calling for Washington to better insulate the private sector from external events such as the impending Y2K bug. Sun also garners a substantial portion of its annual revenue from government contracts.

Unsurprisingly,

McNealy took a strong stand against computer export controls. "They [government regulatory agencies] consider computers to be weapons of mass destruction," he said. "The only way [that's true] is if you drop them off airplanes in volume on top of people's heads."

He also asserted that government should allow for stronger encryption technology so companies can protect themselves from criminals.

The U.S. government is doing a good job resolving its Y2K bug issues, but should be concerned about how foreign countries are dealing with the crisis, McNealy said. "The big problem is Asian companies. They're three years behind where we are."

America's concern stems from the fact that U.S. companies rely on Asian supplies to build their products, McNealy said, and the problem is compounded by the fact that Asian companies don't have the money to fix the problem. "If Asia shuts down, we will have an interesting impact, especially here in the Valley," he observed.

Domestically, Congress ought to create laws limiting Y2K lawsuits. "Every death, sickness, delay, every defect will be blamed on Y2K on January 1 if we don't get the legal scenario set up. We will be digging out of the legal morass of Y2K forever," he predicted.

Some positive regulation has emerged, including laws limiting taxes on the Internet. But laws dealing with privacy and security are lacking, McNealy said.

If a person steals mail from a mailbox, it's a felony, he noted. "What happens if you read my encrypted email?" he asked rhetorically. "That should be like armed robbery. Who do I call when they deface the front page of my Web page? We need rules."

Turning to education, McNealy called for substantial reform, specifically in tenure.

Giving job guarantees to professors undermines the incentive to teach effectively, McNealy said. "When was the last time an Ivy league school went out of business? Take the Fortune 500 list from 40 years ago and see how many [companies] are still there.

"What makes us think [universities] are being operated more effectively?" he asked. "Schools ought to have the same turnover businesses do."

McNealy was the last speaker of the one-day conference, which included California governor Gray Davis, Lockheed Martin's chief executive Vance Coffman, and Federal Reserve Bank of San Francisco president and chief executive Robert Parry.