Ed Zschau

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Zschau turned out to be a first-rate campaigner, and he still maintains a campaign pace when he is in his district. One day last August, for example, he managed a lunchtime address to the Electronics Association of California in Santa Clara, a field hearing of a House subcommittee in Berkeley, and a meeting with constituents in Menlo Park.

The electronics executives greeted him as one of their own, and Zschau spoke to them out of shared experience, telling stories about his own company. "The thing about my venture capitalists was that, although their pockets might have been deep, their arms were real short," he quipped. " . . . I used to have this professor who said that you couldn't know what it was to be in business until you'd met a payroll. I say you don't know what it's like to be in small business until you've missed one." One diner confided to his tablemate that Zschau is "somebody who understands business and can't be snowed."

Then again, he is wise enough to admit the limits of his knowledge. "I don't know," he said to a questioner at a meeting that same evening. "You may be right. I hadn't thought of it that way. Perhaps I should." He applies the same rule to politics that he learned in business: Concentrate in areas in which you have strength. "You earn [influence]," he says, "by developing a reputation for being thoughtful and well informed on certain issues and for speaking only when you have something to say."

Most of what Zschau has said since entering the House this year relates to the federal government's role in influencing -- for better or for worse -- industry's ability to compete in international markets and at home.His premise is simple: America's strong suit is innovation, the creation of new technologies, products, services, and companies. Consequently, the best thing government can do is to promote an environment that encourages innovation. Instead of picking industrial winners and losers and targeting them for special help (as many have suggested), the government must "target the innovation process" itself. What he means by this is that innovation -- whether in high technology or in basic industries -- occurs when certain conditions exist; namely, when there are educated people working with a sound research base in a healthy economy providing incentives to risk-takers. The federal government, he says, should work to foster these conditions He believes, for example, that government has primary responsibility for the funding of basic (as opposed to applied) research at universities. He also believes that industry would perform more of its own research if antitrust laws did not dampen enthusiasm for joint research efforts. In addition, the federal government can use tax incentives to encourage private-sector assistance in funding education that benefits specific industries.

Tax policy can likewise affect the willingness of individuals and companies to take risks, he says. "Democrats complain that rich people shouldn't get tax breaks. But when you eliminate tax breaks, you dry up risk capital. There should be a preception that the tax system is fair, but when someone who has nothing creates something, we shouldn't say that's wrong. They've created wealth, jobs. We ought to be telling these people, 'Good going. Attaboy."

On the other hand, Zschau has long opposed across-the-board individual income tax cuts, including those of 1981, which he predicted would be a factor in increasing the federal deficit, thereby making it harder to bring interest rates down and hindering investment. "I continue to believe that," he asserts. On the spending side, he argues for "a social compact, in which all the special interests agree that reducing the deficit will benefit them more than their special program."

All of which may sound a little too neat and tidy, but"I don't purport to have the whole answer," Zschau admits. "My industrial-policy suggestions so far have focused on maintaining our technological leadership and -- an extension of that -- [making] our tired industries more competitive through the application of technology- But I don't purport to have solutions to any transitional problems that may arise... I'm not sure I understand, or anyone understands, how severe they are or what their causes are.

"... I have a fairly narrow range of experience. I've been in the high-tech industry, and I think that, by and large, the business attitudes in that industry are unique. People there are rugged individualists, very much dedicated to free enterprise, free trade, risk-taking. It's a breed of businessman that is a fine example of capitalism at work. I've gotten a very positive view of the social responsibilities of business and where jobs are created and what kinds of [management] attitudes work. Had I been employed in some monolith headquartered in New York City, I may have gotten a somewhat different view of the way business works. Mine was sort of a small-company, entrepreneurial perspective."

Zschau insists that, as usual, he has given little thought to his future. "That's been my approach all along... As time goes on, other opportunities arise, and I find myself in the shower in the morning, thinking more about the new thing than the old thing. When that begins to occur more frequently, I tell myself it's time to make a change. I'm no longer 100% intrigued by what I'm doing. It would be better for someone else to do that job, and I'll move along to something that's really sparked my interest."

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