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Net Loss

Internet Prophets, Private Profits, and the Costs to Community

Nathan Newman

Publication Year: 2002

How has the Internet been changing our lives, and how did these changes come about? Nathan Newman seeks the answers to these questions by studying the emergence of the Internet economy in Silicon Valley and the transformation of power relations it has brought about in our new information age. Net Loss is his effort to understand why technological innovation and growth have been accompanied by increasing economic inequality and a sense of political powerlessness among large sectors of the population. Newman first tells the story of the federal government’s crucial role in the early development of the Internet, with the promotion of open computer standards and collaborative business practices that became the driving force of the Silicon Valley model. He then examines the complex dynamic of the process whereby regional economies have been changing as business alliances built around industries like the Internet replace the broader public investments that fueled regional growth in the past. A radical restructuring of once regionally focused industries like banking, electric utilities, and telephone companies is under way, with changes in federal regulation helping to undermine regional planning and the power of local community actors. The rise of global Internet commerce itself contributes to weakening the tax base of local governments, even as these governments increasingly use networked technology to market themselves and their citizens to global business, usually at the expense of all but their most elite residents. More optimistically, Newman sees an emerging countertrend of global use of the Internet by grassroots organizations, such as those in the antiglobalization movements, that may help to transcend this local powerlessness.

Published by: Penn State University Press

Front Cover

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pp. i-iii

Copyright Page

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p. iv


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p. v

Analytical Table of Contents

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pp. vii-xi

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pp. xiii-xv

You hold in your hands an ancient document—at least by Internet standards. It is a relatively minor rewrite of a 1998 manuscript published as my doctoral dissertation, whose research in turn was begun back in 1993. The vagaries of life and traditional publishing timelines means that parts of what you are reading date back almost a decade. Which is a good thing.

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List of Acronyms

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pp. xvii-xxi

A book dealing with both technology and government inevitably is infested by the acronyms that dominate both fields of endeavor, so the following is a partial list of acronyms used in this book. In general, it contains those that are most important and are repeated in the text. Acronyms without fuller names in their definition reflect the habit in the

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1. Introduction

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pp. 1-39

The post-information age will remove the limitations of geography. Digital living will include less and less dependence upon being in a specific place at a specific time, and the transmission of place itself will start to become possible. —Nicholas Negroponte, director of MIT’s Media Lab, in Being Digital ¹ National economies are swiftly breaking down into regional and sectoral parts—subnational economies...

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2. How the Federal Government Created the Internet, and How the Internet Is Threatened by the Government’s Withdrawal

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pp. 41-81

In a remarkable turn of societal imagination, many conservatives have begun picturing the computer age as the rejuvenation of small-scale entrepreneurial capitalism against the institutions of the nation-state. Alvin Toffler has talked about ‘‘demassification’’; George Gilder has cited the ‘‘quantum revolution’’; former House Speaker Newt Gingrich has promoted decentralization of government to local regions.

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3. Federal Spending and the Regionalization of Technology Development

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pp. 83-125

What created the Internet, and why is Northern California at the center of its development? Nothing to do with the government, at least according to Wired, the fashionable technomonthly that promotes the Net as the embodiment of a new paradigm in human development, unshackled by government, scarcity, or even geography. Since its inception, its covers have...

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4. Business Cooperation and the Business Politics of Regions in the Information Age

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pp. 127-177

In early 1992, Silicon Valley faced an economic crisis where job growth since the mid-1980s had been lagging behind the national average. Fed by both defense cutbacks and a sense of foreign and domestic competition against their hightech products, business leaders in the region created a new organization called Joint Venture: Silicon Valley,...

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5. Banks, Electricity, and Phones: Technology, Regional Decline, and the Marketization of Fixed Capital

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pp. 179-248

When Joint Venture was launched to revitalize the Silicon Valley economy, the founders turned to Bank of America to supply an initial $250,000 to get the effort off the ground, a crucial investment that was a catalyst for the effort. Similarly, one of the largest ongoing supporters of Smart Valley was Pacific Gas and Electric (PG&E),...

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6. Local Government Up for Bid: Internet Taxes, Economic Development, and Public Information

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pp. 249-297

For today’s progressives, there is no challenge more compelling than the need to replace a governance model developed for the Industrial Age—an era characterized by large, centralized institutions, public and private, that once guaranteed citizens a decent standard of living and personal security in exchange for their allegiance. . . .By dramatically lowering the costs of information and ...

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7. Conclusion: The Death of Community Economics, or Think Locally, Act Globally

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pp. 299-324

When in the 1990s, Newt Gingrich and other conservatives promoted political decentralization and New Democrats framed much the same politics in terms of ‘‘reinventing government,’’ it was hardly surprising that this bipartisan consensus helped drive market competition in telecommunications and the transfer of government responsibilities to local government in...


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pp. 325-351


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pp. 353-379


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pp. 381-399

Back Cover

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E-ISBN-13: 9780271052748
E-ISBN-10: 0271052740
Print-ISBN-13: 9780271022055
Print-ISBN-10: 0271022051

Page Count: 416
Publication Year: 2002

OCLC Number: 74671491
MUSE Marc Record: Download for Net Loss

Research Areas


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Subject Headings

  • Internet -- Government policy -- United States.
  • Industrial promotion -- United States -- Regional disparities -- Case studies.
  • Internet industry -- Government policy -- United States.
  • United States -- Economic conditions -- 1981-2001 -- Regional disparities.
  • Globalization -- Economic aspects -- United States.
  • Computer industry -- Developing countries.
  • International division of labor.
  • Computer industry -- California -- Santa Clara Valley (Santa Clara County).
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