Andy Grove: What Detroit Can Learn From Silicon Valley

In a Wall Street Journal opinion piece, former Intel CEO Andy Grove compares the current transformation of the automotive industry to the computer industry of the 80s and 90s. Had the government intervened then as it is doing now, America may never have gained a sustainable leadership position in personal computers, semiconductors, software, and ultimately, the Internet.

You know what? Grove is absolutely right.
You see, once upon a time computer makers built mainframes with their own proprietary hardware and software. The personal computer changed all that, and the industry transformed from "vertically integrated" to a "horizontal structure" with most computer makers incorporating hardware and software from third parties like Intel and Microsoft.

Those companies that failed to adapt - Data General, Digital Equipment, and Wang, for example - fell by the wayside, and new companies - like Dell and Compaq - came to power.

But if the government had acted to invest in and prop up the mainframe computer makers, then the new paradigm - which led to US domination of the PC industry and all that has sprung from it - might never have taken place. Companies like Apple, Cisco, Google, Intel, and Microsoft might never have achieved their lofty heights of business success.

Grove thinks the automotive industry is going through a similar transformation owing to a confluence of factors like rising oil prices, a worldwide recession, manufacturing globalization, and a shift in consumer demand for more energy-efficient models.

And, as new and potentially naïve investors in Detroit's automotive machine, if the federal government doesn't watch its step, it may unwittingly dampen America's ability to come out of this transformation on top.

My question for you is this: Is the famously paranoid Andy Grove being, well, paranoid, or is there cause for concern that the government may not have the knowledge or insight to make key, strategic decisions to enhance, instead of hinder, America's chances of becoming a global leader in a changing automotive industry? And if it's the latter, are there similar implications for government intervention into other industries?

You know where I stand, but that's just me.