xfinity's winter watchlist. watch now with xfinity on demand- your home for the best entertainment this holiday season. >> from our studios in new york city, this is "charlie rose." charlie: bruce riedel is here. he served in the cia for 30 years and was also national security advisor to four presidents. his new book is called "jfk's forgotten crisis." the financial times calls it a minor gem of elegant history writing. i'm pleased to have him back at this table. welcome. i assume you love the idea of an elegant gem of historical writing.

you said to me, this is the most fun i've had. what was it about the experience that resonated with you? bruce: the kennedy administration. we call it camelot. it really was something special. john f. kennedy was a particularly gifted decision-maker as residents. -- president. we're talking a lot about character of a president because we are in our presidential campaign season. this is a man who demonstrated unusual character in the white house. charlie: what you mean by character? bruce: he faced some of the hardest decisions any president in american history has faced. the book is about one of those, india,nese invasion of which comes simultaneously with the soviet adventure in cuba and the cuban missile crisis. he handled two huge global crises simultaneously. in both, he showed unusual depth of thinking about the problem

and thinking it through, not necessarily doing the easy thing or the thing his advisers told him to do, but in the end, coming up with two important victories. charlie: for example, he had people urging him to bomb cuba. bruce: virtually his whole cabinet wanted him to go to war in cuba with the russians. his brother and the president were the only two who looked at this problem and said that is crazy. if we do that, we are initiating a nuclear apocalypse. in fact, we now know 50 plus years after the cuban missile crisis, that it was even more dangerous than they thought it was at the time. at the time, the cia thought there were maybe 6000 soviet soldiers on the island. there were 50,000. they thought the only nuclear weapons were for the intermediate range missiles.

there were tactical nuclear weapons on the island. the russian commander in cuba had already been given authority to use tactical nuclear weapons the minute the american invasion began. charlie: it would have rained on miami or further north. bruce: it would have been a nuclear apocalypse. kennedy's right to get a lot of credit for that. what i argue in the book that is if you realize at the same time he is also dealing with an invasion by communist china of democratic india, an invasion which the chinese scored victory after victory, and were on the brink of breaking through and dismembering india, and he dealt with that crisis at exactly the same time. he also helped to bring that crisis to a head. that's a good outcome.

charlie: explain the crisis. bruce: china and india have the longest disputed border in the world. it remains the longest disputed border in the world. they also have an argument over tibet. china regards tibet as part of historic china. india regards tibet as part of its cultural sphere, at least, and has supported the idea of autonomy for tibet for a long time. in 1962, mao tse tung decided he -- mao zedong decided he had had enough and was going to teach the indians a lesson. charlie: was there motivating reason other than he just decided? had they done something he thought went beyond the pale? bruce: several things. the indians had what they called a forward policy. they kept pushing their patrols more and more forward, quite provocatively. a very stupid thing to do when you recognize that the balance of power on the battlefield was overwhelmingly in chinese favor. but prime minister nehru was responding to pressure from his

constituency and the media that said we have to stand up to the chinese. secondly, the united states was secretly supporting the tibetan independence movement. we were doing it from a base in what was then east pakistan, today, bangladesh. from the chinese perspective, they saw these airplanes flying over tibet, dropping supplies and trained people to the tibetans, coming from the south. they assumed we were in a plot with the indians. how much the indians knew about what was going on and what we were doing is hard to say in retrospect. certainly from the chinese perspective it looked like the indians were pushing all their buttons and they decided enough was enough. they would invade india and teach them a lesson, and take the territory that they wanted the most permanently, which is what they ended up doing.

from the president's standpoint, first of all, we don't want to see a democratic country defeated by a communist country. this was the height of the cold war. charlie: the notion of nehru with a nonalliance policy, and then hello, washington. bruce: he has to come crawling to the united states. kennedy handled it with finesse. he did not make nehru grovel or beg for assistance. he waited for him to ask or, and then he was quick to give it. we begin in airlift of supplies to india immediately after they asked for it. within days there was a steady flow of jet transports coming into india and delivering supplies, and then smaller american aircraft taking those supplies right up to the front lines.

the other thing that kennedy did was he made sure that pakistan stayed neutral in the war. charlie: that's a great story. tell the story of the dinner at mount vernon with the head of pakistan. bruce: early on in his presidency, the first summer of his presidency, he invited the pakistani military dictator to the united states. jackie kennedy wanted to do something special. she did not want to have just another state dinner at the white house. she had just been with the president to versailles and to vienna. she was looking for the equivalent of versailles. we don't have versailles. what we do have is mount vernon. the first presidents mansion, overlooking the potomac river. she persuaded the ladies association that runs mount vernon to let them use it for a dinner. it was a spectacular occasion. everybody who mattered in the

kennedy administration was there. bobby kennedy, the whole cabinet, but there was also business to be done. the pakistanis had cut off our use of the airbase in east pakistan that we're using to send supplies to the tibetans. it was a subtle way of indicating they were not happy with what the united states was doing. we were now about to woo the indians and not pay enough attention to the pakistanis. as the dinner begins, everyone is circulating around the , president took the field marshal for a little walk in the garden. we don't know exactly what they said to each other, but he put on the kennedy charm and convinced him to reopen the airport and allow us to continue using it. that is a fact that is very hard to find and it took a lot of research and talking to people who knew about the cia operation to find out that it was at that

dinner at mount vernon that the president used his personal charm in order to advance a covert operation with the cia. charlie: what's interesting here is the role of diplomacy. the u.s. ambassador to india was kennedy's friend, john kenneth galbraith. he played a major role. only at thes not height of the crisis, is kennedy's number one advisor on what to do, he effectively became nehru's number one advisor on what to do. that is extraordinary. that is a diplomat who is going well beyond what he is given by the united states and becoming his closest confidant at the height of the crisis. when it looks like the chinese are going to probably carve up 1/5 of india, nehru wrote a

letter to the president. the second letter he wrote asked kennedy to intervene in the war directly, to go beyond just providing supplies, but to send 350 american combat aircraft to india to begin fighting the chinese air force and begin bombing raids into tibet. the next day, the chinese unilaterally stopped. kennedy never had to answer that letter. it's one of the great what if's. charlie: why did china stop? bruce: hard to say. the chinese government today still does not open up its archive to researchers. mao tse tung was a very peculiar dictator. he did not confide in anyone else.

he saw that the united states was firmly coming in on the side of the indians and he did not want a direct confrontation with the united states. number two, he probably felt i've made my point, i've humiliated the indians. nehru died about a year later, a broken man. as you said earlier, here is the leader who led india to independence. he spent literally years in british jails, and here at the height of his career, he has to come to the united states and to london and to ask for help. charlie: tell me more about what you feel about kennedy. vietnam and other things with part of his challenge. bruce: it's another great what if. would he have gone into vietnam? i don't think so. part of the reason for that is john kenneth galbraith.

in addition to being his ambassador to india, kennedy made him kind of an unofficial back channel advisor on vietnam. galbraith went to vietnam several times. his reports back to the president work, this is a catastrophe that's only going to get worse. don't plunge into this. would he have listened to that advice? what strikes me the most about john kennedy as president is the learning curve. he comes into office, a disaster at the bay of pigs. within weeks. disastrous meeting with khrushchev in vienna. within six months, you have the berlin wall going up. within two years, he started to figure out how to get it right, in the critical moment, the follow-up 1962, he doesn't listen to his advisers, does not rush into conflict.

he was very, very smooth, not only in cuba but also in the himalayas. to me, that is a learning curve, a significant learning curve. ♪

charlie: so take everything you said about kennedy and put it together with how you think president obama is performing in

the crisis he faces. bruce: i think president obama has a learning curve, too, but i down, profoundly barack obama does not want to , get america into another quagmire in the middle east. a lot of people say he has no serious strategy. i don't agree with that. he has a serious strategy. it is to stay the hell out. it's a difficult strategy to articulate to the american people, but he does. charlie: he has said that. bruce: he has. you look at has body language when he talks about the whole thing. one of the things i think was fascinating about barack obama is he is not very good at hiding his emotions. his body language gives him away all the time. when he talks about the war against islamic state, the war in syria, you can see this is an issue he is very reluctant to get america to deeply dragged into. charlie: do you think it is because of analysis, because

that's what he promised to do when he was campaigning, i will get us out of afghanistan and iraq? he did one, some say two. terrible circumstances have led to the rise of isis. and on the other hand, he has changed his course. bruce: which i think was the right thing to do. getting out 100% from afghanistan would have left a mess, just like getting out 100% in iraq. i think it goes beyond his campaign promises. charlie: you think it is what he learned? looking at this problem has convinced him that this is a subset of the problem to the united states with american combat boots on the ground. charlie: you think he is right? bruce: i think it could be a

quagmire for the united states, and i think he is smart to try to limit the degree from american ground forces. charlie: by using drones in airstrikes in bringing in a coalition. bruce: and trying to find a partner who is willing to do more. i think what he could do better is the getting rid of assad part. we are not going to build a coalition of syrians until they believe we are serious about getting rid of assad. charlie: how do we do that, especially when his best friend is the russians? bruce: the russians have complicated this problem and honestly. the notion of a no-fly zone over syria -- how are you going to do that? are you going to shoot down russian jets? charlie: you think that is the reason he put the air force in their? -- there? bruce: i think that's one of the reasons. the bigger reason is to preserve russia's strategic stake in styria. -- syria. syria is russia's last ally in the middle east. charlie: to preserve its

strategic stake and increase and enhance its reputation as a player of relevance. bruce: right. as a player, you can depend on that. the argument he wants to make is, you can depend on me, with the americans, it's not so clear you can depend on them. i think we can do more in the covert action realm, not only building a sunni alternative but also causing troubles for the assad regime. i don't want to get real specific, because that's not particularly helpful. charlie: why is it not helpful? bruce: i don't want to suggest we use one tactic or another. i think the assad regime has a lot of weaknesses. it has lost the support of a great deal of the syrian public and a great deal of the syrian military. we should be playing on those

cracks in the regime. if there are other generals who are thinking about, what is my future? we will never know what a different approach in 2012 could have been, but i don't think it's too late still for effective efforts to divide the aside regime and see if you can break it apart. -- assad regime and see if you can break it apart. charlie: this is a fascinating story to me. putin's gambit on the syrian war? bruce: putin is a kgb officer. he has not changed because he is no longer in the kgb. he wants to project power and his own personality. that is what this is all about. syria is russia's last ally in the arab world. all the others, they are all gone. he wants to preserve some russian influence in an area of

the world which russians have regarded as strategically important to themselves since catherine the great. charlie: and also because it was a listening post. bruce: they don't want to be out of the game. putin said himself, the dissolution of the soviet union was the greatest political disaster in history. he's not trying to re-create the soviet union, but he's trying to make russia a great power again. the question to me, is he making the same mistake in syria as his former boss did in afghanistan back in the 1980's? if barack obama fears it is a quagmire, puti isn going in on -- putin's actually going in on

the weaker side. the majority of syrians are sunnis. charlie: does this present an opportunity for some kind of rapprochement for the united states and russia? bruce: putin wants to be at the table, and for syria, that means whatever cease-fire conference that tries to come up with a proposal and a way out, he wants to be seen as equal to obama at that kind of a deal. meaning russia is back at the big tables of diplomacy and high-stakes politics. i think obama is reluctant to give him that. if he's going to give him that, he wants something from putin, and that something is to deliver the assad regime. charlie: i have two questions for you because of your experience in the region. how do you get rid of assad, and

is the united states on the only course they have available, to try to work with the russians and find a way to transition him out? bruce: there are two ways. one is a coup from within his own regime, and i think that is a possibility. i think there are others in the region who would help us to do that, and are we prepared to spend a lot of money to make that happen? charlie: what is a lot of money? bruce: billions, billions. it's not our of money -- the other alternative of course is to persuade the russians that as part of an agreement, we may have to go to mr. assad and say we have a lovely retirement package for you. and give him basically an ultimatum.

you've got to do this, or else we are pulling out our support. the problem we face with isis is that isis is now embedded in four civil wars in the middle east. iraq and syria, yemen, and libya. it has fused with those civil wars. charlie: embedded with numbers of people are just a small cadre? bruce: it has become part of those civil wars. it is part of the problem. it's no longer just a terrorist issue. it's become part of the failure of the arab state system in the wake of the failure of the arab spring. that is what is permitting it to operate, the chaos that came out of the arab spring. the same is true for al qaeda. that is what makes this so hard to do. that's where i'm quite sympathetic to the president's problem. if it is true, as i think it is, that isis is embedded in the

iraq and syrian civil wars, the classic counterterrorism strategies of decapitating the leadership and gradually squeezing the territory they hold, it's not likely to really resolve the problem. charlie: what are the rules of engagement here? do they go and get his permission for taking out a high-ranking leader? bruce: the truth is, this is a pretty closely regarded secret in the white house. my understanding is that a drone operation, if at all possible, is approved in the white house before it is carried out. if they see on imagery from the drone, mr. x is not where they thought he was, but they've now found him and he's getting ready to move somewhere else, you may not be able to call the president.

the director of central intelligence is going to be called and he will make the decision. his strong preference will be to make sure that the president is in the loop either before or as quickly as possible. charlie: and to minimize collateral damage. bruce: yes. charlie: how long do you think the struggle against isis will go? bruce: i see this as a long-term problem. i would not say just isis, i would say al qaedaism. we've been at war with al qaeda since 1998. we've had moments when we were close, i think, to achieving a significant strategic victory. we are not near that anymore. the problem was the failure of the arab spring in the fusion of al qaedaism in the islamic state with the civil wars and the breakdown of governance in the arab world, will last for years to come.

charlie: what will happen to saudi arabia? bruce: saudi arabia is in trouble. oil prices at $35 per barrel are well below what the kingdom needs to sustain its welfare state. any economic moves to get away from being a welfare state are going to be very unpopular. the saudis are going to ask, don't we have some role in making decisions about the country? secondly, the kingdom is in the midst of the transfer of power, the succession of power from one generation to at least the next generation, and maybe to the generation beyond that. saudi arabia has been ruled for the last 100 years by either the founder of the modern kingdom or his sons. it's been a very stable system for a long time, but sooner or later they're going to run out of sons, and they have literally reached that point. that means the legitimacy of the

next king is not based on the legitimacy of the last five, all of whom could say i'm the son of the founder, now we are going to the grandson. that is a big deal. to be having that economic problem and the succession issue as well as living in a region that is filled with problems and chaos. that is an awful lot to try to manage at one time. charlie: in terms of wahhabism, is making different from king abdullah? bruce: king abdullah was a reformer. giving women the right to vote in municipal elections. municipal elections are not a big deal. by giving women the right to vote, even for in consequential positions, is a big deal. charlie: and not only that, to run. bruce: to run. and some of them actually won. forh means saudi men voted

saudi women. that's a big deal. that is up dollars work -- king h's work. the king could have turned it off, but he didn't. you don't know why he decided to do that. but by the standards of abdullah -- the crown prince is a skilled counterterrorist professional. he is also something of a reactionary, like his father was before him. he only has daughters, so presumably he is a little more interested in gender. he is not a reformer like king abdullah. charlie: people sit at this table and say that within the next 10 years we will be closer to iran than we are to saudi arabia. -- a lot of saudi's

think that as well. they can look at the geopolitics and say there is a more natural relationship between the united states and iran that was interrupted by the shah's downfall, but inevitably the u.s. will go back to being friends with the iranians. be verywe need to careful how we do this. reallyy the iranians but we be our friends, also have to keep a close eye on the saudi's. my impression is everybody i ever met in the cia is close to the saudi's. bruce: saudi arabia is very very important to the u.s. intelligence services. like a lot of arab are fundamentally

policed state at the end of the day. security services are the most important people. it is no accident that the crown prince was minister of the interior, and that he runs the secret police in the country. it is not an accident that he has now been elevated. he has demonstrated he is really good at it. i have called him the prince of counterterrorism. he is one of the best counterterrorist in the world. he survived three or four's assassination attempts by al qaeda. it is not likely that the head of the secret police will be across a reformer and once he becomes king decides, let's change the fundamentals of the system. charlie: for everything i've ever believed in. called "jfk's forgotten crisis." thank you. bruce: thank you. charlie: back in a moment, stay with us. ♪

is here.sam palmisano he is the former chair and ceo of ibm. he spent his iconic career at that company. he has led the center for global enterprise afterwards. it is a nonprofit research institution devoted to the study of modern corporations, globalization, economic trends,

and their impact on society. his new book explores those areas from a range of unique perspectives. i am pleased to have him back at this table. welcome. sam palmisano: great to be here. here you are, having been a very successful executive at ibm. it comes time to leave. what did you decide. how did you come from that moment to this moment? sam palmisano: it started with the first thing, anyone about to retire, regardless of stature, you need to find something that keeps yourself going intellectually. when you are running ibm or a large company, your brain is going all the time. and then there is a void. you need to fill it. business need and a societal need, the world is changing so fast during my tenure. i sincerely believe future

leaders, whoness were not being completely prepared. it does not mean there is not a lot of great professional schools available for programs available, but there was so much change in the global world and and the economies, technology world between now -- the cloud, platform-based business models. when i was retiring four years ago, these were ideas and concepts. i believed they would have a massive impact on corporate structure. charlie: how did somebody with all the brains at ibm missed it? sam palmisano: there are two reasons. one was the business model of ibm. the financial model. and the fact that if you think about the profitability of small things versus big things, it is a lot less.

one is the financial business model continues to push you in the direction of increasing profits. this was going to be something that would reduce profits if they got big. the other thing that i thought was more important than that -- everybody understands that. which we pressure really misunderstood on our part, we did not see it as a platform. we saw it as a technology and device. could be aought pcs computing platform that could replace midsize and large computers. we did not see it that way. we felt like to do the things required complex computing, you needed what we were offering. however, what happened was there were many applications people used that were good enough. the client/server platform was not going to run a bank or an airline, but it could do a lot of things we used to do on large computers, like office work, presentations. all those things could be done

in this technology base. we have missed that shift. you see that happening today. these disruptors today, even though they might not have the same robustness of technology as or theonal solutions, previous technical solution provided, it is good enough for what it does. it is good enough to get a cab service. good enough to book a room. is it going to move $1 trillion worth of currency?\ no, it won't. but there are all these other areas technology can be deployed -- applied. charlie: talk for a moment about the power in the iphone 6. sam palmisano: when i started moreng ibm -- there is power in that mainframe.

there is more in that device. there's more storage. apollo 13 did not have nearly what is in that device. it's not even close. that is what has happened. the combination of microprocessors, and combination of storage, and battery life. you need batteries to power. those technology factors. charlie: coming back to the same point, microsoft almost missed the internet. bill gates woke up and tried to turn the ship around. why is it that big companies -- is it simply that there is body somewhere in a garage, that will create something that will disrupt you? sam palmisano: this is what we talk about a lot in the book. what is it, what are these trends? charlie: why don't the big companies see them?

they could hire the ability to have the capacity to see what everything is. sam palmisano: bill is brilliant. we competed for years, we were partners. he is brilliant. there are no people smarter than bill gates, obviously. but what happens to you, you are running a big public company. you see the trends. you see them emerging. you have this business model where they were extremely successful. pc and the software called productivity suite, where processing technologies like microsoft outlook and powerpoint. i was the productivity suite. that was tremendously successful. sued by thethey got government. a very large share of positioning. you watch this emerging technology, and you look at this, and you cannot imagine

phone is goingat to do what we did on a pc? or that pc will do what we did on the mainframe? it doesn't necessarily do what we did on mainframes, but he does lots of things that you like. you don't use a pc anymore or a laptop, you a phone or an ipad, because it solves your problem as an individual. that is what happens. here is the business impact. new stuff grows like crazy, and the old stuff flows. that is what happens. microsoft was never at any risk of going out of business. it was always extremely profitable. steve drove up earnings and cash. charlie: a ton of cash on hand. sam palmisano: yes. ibm never had a financial problem, it had a growth

trouble. it is because these things shift and that is what causes that. a lot of that, a lot of these trends, are what we are seeing today in technology and globalization. that is how these things connect. i think the world today, which is different than perhaps when and maybe pc, microsoft was slow to catch up to the internet. that was built statement. i would not want to comment on a competitor. s statement.bill' now, you have technology on steroids. today, in aaster slow economic environment. you have a compounding set of factors. technology absolutely on steroids. platform business models, mobile technology, the data analysis, cognitive computing on steroids as far as acceleration is

concerned. and a macroeconomic environment that is on a good day, moderate. most days, slow or flat. if you combine those two factors, it is putting tremendous stress on business leaders. it leads to all kinds of debates. charlie: it's also true all companies are now technology companies. sam palmisano: yes, at their core. if you think about -- forget thoseairbnb or uber, or that form business models. what it is is you are able to connect through the technology, can't to consumers -- connect to consumers in a completely different way. you are able to analyze their needs completely differently. that is what drives the ship. you are stilluber getting a ride. but it's a higher level of service and a valuable economic price point, then it is to take

a traditional taxi. so it is basically the same service being provided, but because of technology -- could they have done this if somebody had not invented gps? of course not. if there was not a gps tracker in the phone that new where you were, could they do it? of course not. all of those things had happened. charlie: where does the sharing economy to? -- go? sam palmisano: it's an interesting concept. today you might say it is a small portion of the world economy, as sharing economy. inan eight based comments is -- commerce is in -- what it represents is an alternative. there is a model that is emerging. if you are a company, you cannot discounted.

it. now, youappening always have to ask yourself, could that impact me? and the technology example, which was the internet, is now called out computing. impactloud computing ibm, dell, all these big application providers that were basically on a different model , where you are blocking hardware or software versus sharing. this ishese shifts, basically back to my business. when we talk about in the book, you need to have an understanding of the shift.it does not mean that you have to make a major investment to become a platform business, but it does mean you

need to understand the implications. it think about digitization, will touch all things. the payment system -- already is. many things you do in your personal life. cash, all those things will be touched by it. as a leader in this environment, you have to understand. you also have to understand what is happening in the global economy. what is happening in the global economy is significant right now. it is more than a reaction to 2008. that was seven years ago, and we still talk about 08. what is happening in the global economy is these emerging countries that were able to grow like crazy, because they decided coups and get into society.

they had access to low-cost labor, or people, or natural resources. that is what the play was. you can see, as i was retiring, you can see this shifting. they move from a low-cost point to an innovation consumer-based economy. china, consumption and innovation base. what is going on with the premiere. he's moving on a path of innovation and trying to improve consumption. it's about 35% of the economy, he is trying to drive it up to 50%. innovation.you need you need to create intellectual property. there is tremendous change occurring. rule of law, all those things. there is tremendous change. i just left china. i have been going to china since 1989, when i worked at ibm

japan. i lived in tokyo. changing,son china is very serious about climate change and pollution because of external pressure or their own people? i will argue, contrary to what we read here, it is their own population driving the change, and the government has to respond. i was in southeast china. every day in the newspaper, it was called a red alert day. it used to be typhoons. charlie: and they are doing even more -- creating an economic plan, secondly, they are recognizing there is a problem with pollution, and they have got to do things. they need to look for alternative energy sources. thirdly, they are prepared to take on corruption. some people look at the corruption issue and think it is

a way to eliminate political opponents, but you can understand, people with cynicism would look at it that way. but at the same time, you can eliminate a problem. if the public does not believe if there, they will not tolerate it. sam palmisano: and you have a system that was based on the quality of fairness. you might want to call it socialism or communism, but that is the premise of the system that is fair for all. the fact that there is now this the disparity in china of entrepreneurs, that is ok. what that they got there through corruption, that is not ok. this idea that people in china don't like individuals who have i have a lot of chinese friends who are very successful. that is not the case. charlie: i've never thought american people hated people for

getting rich. they hate the idea that there may be unfairness or people took advantage of each other. sam palmisano: that's right. it is no different. nobody wants to deal with a rigged game. that's a little bit of what is going on. the government's reaction is china is a little different, but the economic shift, you articulated well. to maintain a bond with society, they have to convince the society that is a fair game, everybody has the chance to prosper. the number of kids coming out of school, they need the economy to grow around 6% or 7% to create enough jobs for those kids. they worry about this a lot. they have all these wonderful universities. they need to have an economic model that grows in the mid -single digit range.

6% to 7%, that where they are right now. charlie: what should we be at? the u.s. economic growth weight battery. somewhereano: think between 3%-4%. i do think there are inhibitors in the u.s. economy today that are not the new normal. michael spence has been on your show. i'm more where he is, then perhaps other people in the current administration. basically if you reallocate capital flows, and lessen the , this iss to growth the economy that should get above 3%. charlie: what do you mean by inhibitors? sam palmisano: overregulation, cost burdens. you cannot take everybody's cost up and then complain they don't invest enough. you can't -- if you are a company, and because of health

care and other benefits being imposed upon you that are not necessarily market-driven, you cannot tell those people, go hire more people, because you have to offset the cost burden i wa that was imposed upon you. at the same time, capital flows -- they have been biased to financial services. low interest rates. that has helped guys like myself. it has not helped the middle class or u.s. society, because money is basically free. there's is all this speculation or trading or valuation in financial instruments. this created a lot of wealth for a small portion of the population. if you flow back to the industrial base, you have to address things like tax incentives, carried interest, all these things.

all my friends and financial services are going to hate me for saying these things. you can't have an incentive system that is biased to leverage. charlie: a couple things. your mouth to my ear, there is a why didreality, microsoft end up with the operating system? sam palmisano: or ibm? and my of bill's genius stupidity. [laughter] god bless him. we had a joint development relationship. we were going to do windows, corporate enterprise, they were going to do consumer. os2 with enterprise. we were sharing the rulings. we merged research.

we had an economic relationship. a mistake on our part, i call it stupidity. i can say these things. we said to him, you can take consumer and we take his enterprise -- we take enterprise. the rest is history. [laughter] we could have executed that are, but the fact of the matter is, in addition to that decision, they really did execute. they were good. he's a really smart guy. charlie: they walked away with the consumer operating system. yes.almisano: that was the base. and then it was easy to move that into enterprise, which they did. charlie: the other point i want to ask, the world has really changed in the last 10 years, and i suspect the change will accelerate as you write in the book. what is accelerating? sam palmisano: the technology base will accelerate like crazy. there is a term today called platform business models.

basically what it is, if you uber, a platform, like and all of a sudden because you have a common platform and new arrangement with your workforce, you can scale to 50 countries in three or four years. scaling, itto ibm was probably 50 years to get to 50 countries. this platform business model is completely different. the other thing different is that valuations are different because of platform business. if you look at the intangible assets versus tangible assets and valuations, going back to there was a very tight correlation between the balance sheet, hard assets, and your market cap. the gapook at it today, is like 50% more on the soft assets than it used to be.

people say, it is a bubble. charlie: microsoft. when does it make a fortune? and they missed the mobile technology. and intel was a chip manufacturer. they miss it as well. together they missed it. i think the reason they missed it is because the same reason ibm missed pc. they could not concede that device we hold in our hand, could do the functions associated with what they can do in the traditional base. charlie: and then you have google founded on search engine. you have amazon, which was e-commerce, and then just uses that as a basis -- the $70 billion. sam palmisano: we do not see the

pc as a platform. at was a mistake. charlie: thank you. thank you for joining us. see you next time. ♪

♪ toshiba shares reaching a record low. ng is causing -- cutti thousands of jobs. scandal has caused the stock to lose half of its about you this year. senior u.s. executives have met potential buyers. mcdonald's japan has struggled after a string of food safety scares.