against their government and proclaim independence. >> this weekend booktv and american history tv look at the history of literary life of florida's state capital, tallahassee. today at noon eastern on c-span2 and sunday at 2:00 on c-span3. you are watching booktv on c-span2, 48 hours of nonfiction authors and books. this weekend jonathan allen and amy partis discuss their book h r c:state secrets and the rebirth of hillary clinton followed by washington d.c. party of market's release. on our afterwards program george nash and eddie sleighs discuss the ideology of herbert hoover. ..

>> good evening, and welcome to tos meeting of the commonwealth club of california, the place where you're in the know. you can find the commonwealth club on the internet at commonwealthclub.org. i'm andrew leonard from salon.com, your moderator for this evening's program. to my left is erik brynjolfsson and andrew mcafee who are researchers at the mit sloan school of management. erik is the directer of the mit center for digital business and andrew is the principal research

scientist. the two men made a name for themselves a couple of years ago with their self-published book, "race against the machine," which kind of coalesced some emerging nervousness about the fact that automation is really beginning to replace jobs at higher and higher levels. they followed this up with a bigger book, "the second machine age: work, progress and prosperity in a time of brilliant technologies." and it's really, i think everybody in this room will understand how timely this is. in the san francisco and greater bay area, there's a lot of tension about both how the tech economy is changing everybody's lives and, you know, where we're headed from there. and "the second machine age" directly tackles both the promise of technology and some

potential challenges it poses. so i think both would like to start before questions with giving a brief kind of summary of their views, and that's, you know, what's "the second machine age" all about? >> well, why don't i start and say that "the second machine age" really got started from some confusion that both andy and i had about what was going on in the world. on one hand innovation has never been faster, but on the other hand to people have gotten more and more pessimistic about their futures and their children's futures and reflects two different groups of people, two different tribes that andy and i interact with regularly. on the one hand, there are technologists who are observing and creating just wondrous new things; self-driving cars and machines you can talk to and other amazing technologies. and they all are infectiously optimistic about the potential

these technologies to transform the world. but we also spend a lot of time interacting with economists, and there's a reason tear called the dismal science. i just came from a meeting in philadelphia, the american economic association meeting, and i was on a panel there with three other economists, and they were pointing out some pretty dismal statistics. as you may know, median income, the income of the person at the 50th percentile in america is lower now than it was in the 1990s. and employment, of course, has been struggling as well. the employment to population ratio has plummeted. and while some of the numbers are better recently, that host he reflects -- mostly reelects people dropping out of the work force, not new jobs being created. and we were puzzled. how can these two groups with very different perspectives, was one right and one wrong? how could these facts be simultaneously apparent? and, in fact, if you look deeper, it is true that there

are some really impressive numbers that match up with the optimism of the technologists. overall wealth in the u.s. economy just hit a record high, $77 trillion. we're at record levels of productivity. g.d.p is at record levels, all those numbers are growing quite steeply. but the other statistics about median income and unemployment are also exactly accurate. and ultimately, as we were working on this book, we came to the conclusion that it's possible for both these things to be happening simultaneously. it reflects the fact that technology does grow the economic pie, it does create more wealth. however, a dirty secret of mucks, and that is that there's -- of economics, and that is that there's simply no economic law that says everyone's going to benefit evenly from these technological

advantages. it's possible for some people to be made worse off in absolute terms. now, in the first machine act it was people like buggy whip manufacturers that were hurt by the introduction of the automobile. but today it could be a much larger group of people, tens of millions of people even potentially a majority of people that are having a harder time making a living than they did before. and understanding the nature of these causes and consequences and the central role of technology in driving both the bounty and the spreading out of outcomes is what we wrote in this book about and trying to understand the implications and what it means for individuals, for corporations and for society is what we're hoping to refocus the conversation on. >> erik and i have spent our whole careers working at the intersection of technology and economics and doing research there. and as erik says, we wrote this book because we got confused about both the economics and the technology. erik has just described the

economic paradox that was going on. let me talk a little bit about the technology confusion that's going on. it's basically that technology has started, digital technologies have started doing things that they're not supposed to be able to do. t the book's genesis for me started this the fall of 2010 -- in the fall of 2010 when i was, over breakfast, owned up my computer and started browsing "the new york times" web site and came across a story about the fact that google had been driving -- well, not google l, no one had been driving cars. the company had developed these autonomous be cars that had at that point already driven thousands of miles on american roads in traffic with no mishaps. and i spit out my coffee at this point because they really weren't supposed to be able to do that. there's a wonderful book written just six years earlier, 2004, that erik and i read, we talked about. the book made a really convincing, strong argument for why computers were really never

going to be able to drive cars. and it was basically because the sensing, the pattern matching, the processing, all the stuff that you've got to do to do that well is really pretty easy for us and our brains, prohibitively difficult for computers. and erik and i read that book in 2004. e nodded our -- we nodded our heads at each other. six years later, they're already driving cars. you see similar weirdness happening this a bunch of really difficult problems that have bedeviled physicists and robotics. everyone point to a door in this room. we're going to do a quiz that's really, really easy. this is a smart crowd. [laughter] here's an even weirder question. point to where you are in this room. some folks go like this and some -- they're both correct answers. we'll accept both of them. my point is, you have just solved one of the thorniest challenges in robotics. it's called s.l.a.m.,

simultaneous location and mapping. what does this room look like, where are the doors, and where am i in this room? we are all really good at that. that problem has basically prohibited progress in row pottics. you -- robot withics. you put a robot in the room and ask him where he or she is and where the door is, and you just watch the shenanigans take place. there was a review of the literature that said, look, we've made no progress in s.l.a.m. nor will we. last year a colleague of ours at mit, a guy named john leonard, solved the s.l.a.m. problem for a room this soft by waving a microsoft kinect around in it. so erik and i saw enough examples like that, and we said, what is going on here? and led us to go out and talk to a lot of the nerds both on the economics side and the technology side and eventually

red to this book -- led to this book. >> well, i think the first question that one would want answered then is how and why this happened. we've been hearing promises -- >> yes. >> finish especially here when working just north of where these things get made of things that are going to change the world. artificial intelligence is going to solve all our problems. and these promises are regularly not delivered on. >> yep. >> and now in the last three or four years manager seems to have -- something seems to have changed. >> with uh-huh. >> what? >> will let me give you a three-part answer to that. our answer takes up about a third of the book -- >> but but you're only going toe a few minutes. >> right. [laughter] the first part is the relentless improvement and computing power that most of us know of as moore's law, and it is really easy to underestimate what happens when this doubling, when

this exponential improvement has been going on long enough. sometimes a difference in degree really is a difference in kind, and we think we're at that point when the smartphone that most of us, probably all of us are carrying around in our pocket tonight is literally the supercomputer of a generation ago. you just have enough horsepower to do some extraordinarily difficult things. part two of the answer is we're probably all tired of the phrase, but big data. this ocean of digital information that we are swimming in. it's nod not orders of magnitude bigger than it was, it's thousands, millions, billions of times greater than it was five or ten years ago. the reason that's tremendously important is that data is the life blood of science, and if you want to get smarter about a real world problem, you need scads of data. we've got scads of data. and then finally, the third part of the answer is that real innovation, coming up with

something new, is not this process of a lone eureka, it's recombining building blocks that are already out there. the google driverless car is a great example. it's an internal combustion engine plus a gps system plus a bunch of processing power. google invented none of these things, they just recombined the building blocks that were already there, and ask our world has so many more building blocks than it did even a short time ago that it's giving to this wave that we're seeing. a short answer to your question, andrew, exponential, digital -- fault -- [inaudible] a chapter is devoted to it. [laughter] >> i have one question up here so far which i think touches a little bit on that. it's what do the stagnation and end-of-innovation folks not recognize when they're faced with that? he cites tyler cohen who has

coined this term the great stagnation in which his argument is that growth has kind of reached this plateau. and you're painting a quite different picture. >> well, tyler's a super smart guy, and we've discussed this with him, and we owe him a department because he really inspired us to work on that first book with, "race against the machine," when we read his book because he was arguing that we had run out of innovation, and there was just no more good things or few good things left to invent. hanging around we just thought, well, that can't possibly be true -- >> is this guy looking at the same economy we're looking at, was the question weed asked. >> but on the other hand, he had some very compelling data about the stagnation of median income, and that's forced us to think hard about how this could be happening. and that's where we came up with this recognition that just because median income is stagnating, that doesn't mean innovation is stagnating.

in fact, paradoxically if innovation speeds up, that can be -- lead to a lot of people falling behind if they're not keeping up with their skills or if the organizations are not keeping up. and this dramatic reorganization of the economy can simultaneously be a symptom of great innovation and wealth creation but also lead to stagnating median income. and it rates to a fundamentally different world view, which is innovations, we don't think of them as low happening fruit. that's the -- low hanging fruit. that's the metaphor that he used. we've plucked most of the low hanging fruit, and as you do that, it gets harder and harder to get new innovations. as andy just explained, innovations don't get used up that way. each innovation creates building blocks for another whether it's the google self-driving car, or

an example is i had an undergraduate student, and he wrote this little app in a few weeks. and a few months later there were 1.3 million users using it. he didn't do any, like, brilliant breakthroughs, but the reason that his app was able to scale so rapidly was because he built it on top of facebook. and facebook was built on top of the worldwide web. and the web is built on the internet which is built on the network and electricity, you could go on and on. but each of those innovations didn't make it harder for somebody else to make a subsequent innovation, they made it easier. so the low hanging fruit metaphor, i think, is exactly the wrong one for the nature of innovation, and we're lucky it is because that means we are getting more building blocks for additional innovations and more potential for additional growth. >> i'm just riffling through a bunch of questions that kind of look past this toward the second part of your book. and before we break into the specifics, i think maybe we need

to grapple with that more generally, which is that this pie is growing -- >> uh-huh. >> -- but it doesn't appear to be distributed equally. and, you know, if we can get to the root causes of that. then a lot of people want to know what to do about it. >> sure. well, why don't i touch on that one as well. i think a good example of what's going on is something, and a conversation i overheard about the same time andy was spitting his coffee out after reading about the google self-driving car, i was getting on a plane, and the person in front of me was talking on his cell phone a little bit too loudly, so i couldn't help overhear. he said, oh, no, i don't use h&r block, i use turbo tax. it's faster, easier, cheaper and more accurate. he was right, actually. turbo tax does your taxes accurately, and the way it does that is it took a process that used to be done by humans, and it codified it. and then it digitized it.

once it digitized it, you could make a copy of that. you could make ten copies. you could make 100 million copies of it, and that's what they did. each of those copies is identical to the original. it's a perfect copy. and it can be reproduced at virtually zero cost and transmitted anywhere in the world through the internet almost instantaneously. so this is a good that's free, perfect and instant. now, those are three characteristics we haven't had for most goods and services in the past, and they lead to some very unusual economics. in particular, they lead to winner-take-all markets or winner-take-most markets. while each neighborhood or town might have a tax preparer, a human tax preparer that could service them, with a tax preparation program you don't want to have, you know, the thousandth best or even the second best program, you just want to buy the best one that's available. so those markets tend to

concentrate to one or maybe handful of programs or of winners in those markets. and as a consequence, the revenues for that industry end up being much, much more concentrated. and what's more, it doesn't require a whole lot of people to make copies of turbo tax. once the basic algorithms have been written. so you end up with some different economics. you get some winners, and you get some losers. there's two groups of winners. one is a small group of winners, the people who create that, the developers of turbo tax, the folks at intuit. there's another very large group which we shouldn't forget which is consumers. people now have access to amazingly cheap, accurate software in this category that they didn't have before, and they can solve that problem more efficiently than they could before. but there's also some people who are made absolutely worse off. there are people who invest a lot of time and effort in learning how to be, to do that profession, to do that skill.

some of them went to college to do that. and now in an economy where you're competing against a $39 piece of software, you know, a human tax preparer doesn't add as much value, and it's not a coincidence that there are 17% fewer tax preparers than there were years ago and the wages are under pressure. what i just described for turbo tax is a microcosm of what's happening in lots and lots of other industries. we're seeing it in, obviously, software and music and media, in manufacturing, in retailing, in finance. and and as software takes more and more of the word and as digitization becomes the core of more and more industries, we're going to see those same kind of economics affect society. >> and, andrew, i love that example of erik's because it illustrates the two main economic consequences that we spend the middle third of our book. that example hits them both. the first one is the good news. it's bounty, it's more, better

stuff. and as erik says, there are two different flavors of the bounty here. one is the rewards to the innovators, the people who came up with turbo tax. the other one and to, again, repeat erik, the bigger category is all of us who have access to higher quality, cheaper tax preparation. we think it's critically important not to lose sight of the fact that that is really good news. the bad news is the spread. whenever i talk about the book, i've invented an incredible dorky dance move because i keep on going like this. [laughter] instead of having an economy where this manies and our wealth are pretty tightly clustered, thanks to phenomenon like this we're going like this where the middle is being hollowed out. we've got a small group of people who know how to harness digital power. their wealth goes way, way up. middle is getting hollowed out, and the bottom is holding steady or gradually slipping behind.

that's the spread, that's the challenge that we face from the second machine age. and our goal should be to keep the bounty going while minimizing the negative effects of the spread. >> well, what about the standard kind of economic theory that we hear that's, you know, automation may be occurring in some sectors, but that's going to release increased product it overall, and other sectors will pick up the slack and we'll get job growth to make up for that? why is that, which seems to have held true since at least the beginning of the industrial revolution, why is that broken now? >> for 200 years people like us have been saying that the age of technological unemployment is nigh. it started during the industrial revolution. john maynard keynes who's kind of an intellectual hero of both of us said in 1930, said get ready, the tech era of unemployment is at hand.

so knowing that history and the historical pattern should calm us down a lot. is this time finally different? is the era finally here? the only honest answer is we don't know, it's too early to tell, but the day are not encouraging, and i think there are good reasons to think this time really is difficult. for all of human history if you wanted a report written, you had to involve a person in that work. not anymore. we've got software that can write good, clean prose. if you wanted to listen to a person understand what they want and find an understand and spit that back to them in human speech, you had to involve a human being many that work. not anymore. we can go on and on, diagnose a disease, drive a vehicle, answer a telephone. any of these things we've always needed people for them, we don't anymore. so the digital encroachment into human territory is broad, deep, fast and, i think, irreversible. to me, that feels like this time is different. >> and it's not just the technology that's different, the economic statistics suggests

that something different is going on. i mean, as exactly you pointed out, andrew, technology has always been destroying jobs, and it's always been creating jobs. and there's been this creative destruction, this flow, this turnover that's gone from one industry to another industry. and for most of the past couple hundred years, those have been since the first machine age, the industrial revolution, those have been roughly in balance. and if you look at the trends, say, in productivity, employment, median income, they all kind of rose roughly in sync. but starting about 15, 20 years, they started diverging. productivity has continued to grow, profits overall, gdp has continued to grow. but median income has stagnated, so it's not keeping up the way it did before, and employment has really stagnated as well. so there's something new going on both in terms of the technology and in terms of the economic statistics. and we think the nature of the second machine age is at the

core of that difference. >> we don't think those two things are unrelated at all. >> well, then what's going to happen to the working class? we have a direct question here, what are your views on organized labor? technological advances seem to weaken the power of the working class. is the working class doomed economically? >> well, we don't think they're doomed, but we do agree the bargaining power has been weakened, and that reflects these underlying, fundamental economics that if a ceo or a company can make due with robots or software machinery, then it's a lot harder for a working man or woman to bargain and say, hey, give us our share of the revenues of the company. give us higher wages or else we're going to go on strike because if terry gow at foxcon can say, hey, great, we're going to replace you with robots, he's

the guy who produces our iphones over there, he says that he's going to hire a million robots. that's a pretty severe threat, and it turns out an increasingly realistic one. >> so the bargaining power of a worker goes down. right now in america there are two really credible alternatives. there are workers in other countries thanks to globalization, and there's a digital alternative which is already pretty good and only getting better. erik's story about the robots for foxcon shows that these alternatives are appearing even in the lowest wage parts. world. but to try to get back to the question, it's way too early and way too defeatist to say that the working class in america is doomed. we just don't want to walk away and say there's nothing to be done here, move on. the last third of our book is about the kinds of interventions that we think make sense in this era of pretty astonishing technological progress. be. >> well, you can jump in that,

or i can give you a couple of -- i mean, what knowledge skills and/or dispositions do young people need to succeed in the new machine economy? what can we do to increase the educational and skill level to lead to more jobs when job -- well, actually, this is a much more specific question, so why don't we just start with -- >> let me tell you a little bit about that. so what the data say is that routine information processing tasks have been especially hard hit over the past ten years. it's a little jargony, but it basically means following instructions, like that tax preparer we were talking about or a travel agency. you carry out information processing tasks, and it turns out that a big chunk of the american economy is devoted to exactly those tasks. but careful research by my colleague, david otter or and others at mit, has found that if you look at the skill content of all the occupations in the

united states, the more routine information processing is involved in thats task, the more demand has declined for them, the more the wages are under pressure. so if you are looking for a job to stay away from, it'd be routine information processing. >> in other words, a job that requires the three r that we all still get -- rs that we all still get taught so much of in primary education. >> yeah. if you look at the way a lot of schools are structured, they're actually very much set up to get people to sit quietly in rows and learn how to follow be instructions carefully. and that was, i think, a valuable skill in henry ford's 20th century era where people had to work in assembly lines and follow instructions is and each do something very consistently. but going forward, you know, those are exactly the kinds of skills, if you will, tasks that robots are good at, that machines are good at. what ma cheeps are not particularly good at is creativity, inventing new things, entrepreneurial insights or interpersonal relations,

relating to other people. and we probably need to spend more time or we do need to spend more time reinventing education to focus on that set of skills, creativity, interpersonal relations, relating to other people, motivating people, caring for other people. rather than the skills that will dominate in the second machine age of following instructions. >> there's a -- i have one question pushing back a little bit on the emphasis on education. >> uh-huh. >> how does increasing the educational and skill level of workers lead to more jobs when job creation is driven by aggregate demand within the domestic economy? >> so there are two good questions down in there. the first is about -- even if we can get the educational system right, would that be futile? absolutely not. when erik and i talk to business leaders, the most common complaint that we hear is i cannot find people with the skills i need. all up and down the laderer, for

my front line employees up to the people at the very top of the company, i can't find folk with the skills that i need indicates to us that our educational system is turning out people that are mismatched with the job market. so right now if we could wave a magic wand and fix education, we'd do a huge amount to help the unemployment and wage crisis. the second part of your question, though, is about this aggregate demand which economists love to talk about. the way to think about it is captured in a wonderful story, a really good story about henry ford ii and walter luther who was the head of the autoworkers' union touring a really modernized factory. so they're looking through it, and ford is in a playful mood, and he jabs walter with his elbow and says, hey, walter, how are you going to get those robots to pay union dues? and luther without missing a beat says, hey, henry, how are you going to get them to buy cars? [laughter] in other words, this large, stable, prosperous american

middle class that we created in the postwar decade, this was a phenomenal engine of demand. they bought a lot of stuff. if we continue to polarize it, the middle gets hollowed out more. does that demand dip? that's the definition of a recession. a recession, unfortunately, like we all know is a nasty downward spiral of downward demand. we don't want that to happen. >> but the core of that question has a world with view that i want to push back a little bit which is that it's either/or. if we're having a recession, then there can't be any structural matters. >> yeah. >> in fact, it's both. so paul krugman and larry summers aren't in the room here as far as i can tell -- >> many if they were, we'd be hearing about it by now. [laughter] >> but there aren't any bigger advocates for trying to boost aggregate demand and stimulate the economy than we are, but that's a business cycle issue right now. and what we're talking about is a more fundamental, long-term structural issue. and for that matter, they're not unrelated. as andrew was just saying, these structural issues can lead to

the fundamental drop in demand that we're seeing, and so you need to address both of them. >> so you can run an economy with a very small group of the elite up at the top and a whole mass of fairly miserable people down at the bottom. it's feasible, it's just a lousy society, it's a smaller economy, it's not where we want to go at all. and it'll almost certainly have political implications. >> absolutely. >> those tend to be unquiet places as well. >> just to circle back a little bit to your constitution of henry ford and the robots, you did anticipate two questions here. one is whether given what we're seeing from long-term robot, android development should these workers be required to pay partial amount in social security taxes? >> wait, you mean the androids? [laughter] >> okay. >> and relatedly are, henry ford knew he needed the lower classes to consume his products and increase wages. do you think modern tech barons and those who control our

systems see things similarly? >> so let's dive in deeper on that question. there's been some great work done by joe stiglitz and others that looked at what happened during the great depression, an even worse downturn than the terrible one we were suffering through. and it turns out that as agriculture was mechanized and tractors were introduced, there were millions, tens of millions of fewer farm workers needed than before. so absolutely, that kind of decline, structural change in employment lend to a drop in aggregate demand, a downturn, and that's because those workers couldn't instantly find new work with. many of them had to physically, geographically move. we all heard about the oak keys going to -- okies going to california and elsewhere, and they had to, obviously, be with reskilled. and that could take years, even a decade or more. one of our concerns is that as people become reskilled and find new industries and people

discover new things for them to do and entrepreneurs help discover new things -- we can talk more about that a little later -- by then the technology will evolve again so there's this constant catchup required that could lead to some really ongoing problems with not just structural employment, but aggregate demand. >> your question asked about the viewpoint of the tech barons these days. erik and i have talked to a lot of them that i can report they are aware of the situation, of the fact that technology is racing ahead and it's leaving a lot of people e behind. one of the most prominent technology executives in the world today told us just last week that he thinks this is the single most pressing issue that he and his industry and all of us are going to confront in our lifetimes. i find that good news. they're not turning a blind eye to what's going on at all. enter well, let's --

>> well, let's go broad and then get more specific. we have a good question. which policies would you prescribe to mitigate inequality and increase employment without limiting growth? >> you asked about tax policy a second ago. we have a chapter on pretty short-term recommendations that you'd get out of an econ 101 textbook. we then have kind of a farther out chapter. let's say that the robots really are taking over and that this digital encroachment is going to continue to be broad, deep, and irreversible. then what? what kind of an economy do we want to create? and there are a couple parts to the answer. i want to focus on tax policy here because one of the questions was about tax. economists have a fairly straightforward answer to what to do about this question of what if the pie is big, but it's not being distributed in any kind of fair way? their answer is let's give people money. it's just very, very straightforward. it goes by a bunch of names like a guaranteed income or a basic

income plan. it sounds like i'm a frothing-at-the-mouth socialist when i say that. it might not be too big a problem in northern california, but you can't have that conversation in a lot of america because it sounds like you're so firmly on the far-out left fringe. it turns out that idea was a cornerstone of nixon's first term as a president. it's been advocated by other famous socialists like milton friedman and frederick high yak. the -- frederick hayek. the weird, bipartisan history to this idea, and if this really does continue to play out along these trajectory ares, might need to revisit that. that's not our preferred solution though. there's a wrinkle on that advocated by milton friedman that we like a lot better which is a negative income tax, which is let's encourage work, let's make sure people are still, wog, and for every dollar they earn instead of paying 20 cents in taxes, why don't we give them 20 cents, and that will encourage them to keep working.

these are some pretty heavy ideas. we think in the more far-out future let's shift the conversation around what we're taxing and how and if we need to, shift it in this direction. >> we're at the halfway point. >> still with us? [laughter] >> this is the commonwealth club of california program, and we are talking with erik brynjolfsson and andrew mcafee about their book, "the second pa chien age: work, progress and prosperity in a time of brilliant technologies." i'm your moderator, andrew leonard from salon.com. you can hear commonwealth club programs on the radio and also see video of the program online on our youtube channel. just jumping off what you just said, a couple of questions here are asking what you think of to basic guaranteed income as a response to this issue. which seems to be the opposite of a negative tax, or is that --

>> no, no, they're very closely related. let me just build on what ann dry was saying. -- andrew was saying. we think you can do a lot to reallocate the way income is divided, but the thing that andy and i focus on is more like an expanded earned income tax credit, and let me just explain the distinction. both of them are ways of getting income into the hands of more people, people who haven't benefited as much from the technology. but we've been very convinced, first, a quote we came across from voltaire who actually said that work solves three great evils; boredom, vice and need. and the point is it's not just about the need, it's also about a sense of meaning and other values. and to be a little pit more -- a little bit more scientific, bob putnam, the great sociologist at harvard has provided some very convincing evidence that when work leaves a community, it doesn't just take money out, but it also leaves a whole host of

social evils like increased drug use, teen pregnancy, the dissolution of the family and increased crime rates. and so it's really damaging when people don't have a way to earn their livelihood. even if you replace the money, that's not sufficient. and the earned income tax credit or other ways of encouraging work we think will help with that problem by making it more economical for businesses to hire people and for people to continue to have gainful employment and for people to have sort of a way to contribute to society without just having a handout in some way that politically, despite what andy said about it having support from many different perspectives, is probably going to be a higher hurdle to get past. >> erik and i became convinced of voltaire's three great evils need is the easiest one to solve. especially in this abundant world that we're creating, thanks in part to technological

progress. the other two, the boredom and the vice, these are terribly different can challenges. bob putnam has talked with us a bunch about this. he's done really careful work. charles murray is another guy with a very different political background but also looking at communities and what happens when work goes away. the stories they tell and the data they share, they're absolutely chilling. like erik says, divorce rates go way up. children lived in single-parent homes go way up. incarcerates go way up -- incarceration rates go way up. voting goes way down. they just become these really, really troubled communities, and almost all of the work we've with looked at says the cause is very clear, it's when work goes away, these bad things follow. so we're terribly interested in solutions like a negative income tax and earned income tax expansion that preserve work for people. it seems really important to do. >> it's too bad the president is otherwise occupied right now,

his state t of the union -- >> watch it on video. >> someone needs to get him a copy of this book, i think. [laughter] >> well, this is one question, what would you include in president's state of the union and republican responses, and you've given us a list of hinges already. what -- of things already. what do you think of the political will to act upon that? what we've witnessed for the last, oh, definitely the last six years is a lot of dysfunction in moving forward, in addressing any of these kind of pressing issues. by your description, these issues are going to become more pressing. >> uh-huh. well, it starts with the right diagnosis and understanding the issues, because i think there are a lot of people who are angry, and they have a right to be angry. we see some of them here in san francisco, the tea party, we see the occupy wall street, and they're all pointing fingers at different bad actors, but i think if they don't understand the underlying, powerful trends in the economy, they're going to come with the wrong prescriptions. but i think, ultimately, these

don't need to be left to right or republican or democratic or other political kinds of arguments. the policies and the ideas that we put forward in the book we think should and could have widespread support from lots of different groups. i mean, there are things that most people agree government has a role in from education and infrastructure. andy pointed out some of the tax policies. let me point you to another category that we think has broad support which is that we can encourage innovation in building new products and service through entrepreneurship. now, that's not because we think that everyone's going to be a entrepreneur, everyone who loses their job should then become an entrepreneur. it's because entrepreneurs in our society are the people who are in charge of inventing the new industries and services that employ people. if you go back and look at the first machine age, the industrial revolution, as people moved out of agriculture, at one

point 90% of americans were in agriculture. now it's 2%. those people didn't simply become unemployed. what happened to them? there were people like henry ford and jeev -- steve jobs and bill gates and others that invented entire new industries, that redeployed those people, found new things for those people to do. we these to speed that process up. despite a lot of entrepreneurship you with hear about in northern california and elsewhere, the data suggests there's actually been less business creation in the past decade than in the 't -- '90s or '80s. and government has a role in setting the table to speed that up and, for that matter, to gum it up and slow it down, and we need to make sure that we're making advances on all oaz fronts; education, tax policy and let me add entrepreneurship. >> so let me give you some optimism. you asked about what we would advise the president in his state of the union address. we have a chapter e devoted towards short-term recommendations in our book, and

five really important areas in that chapter are education, entrepreneurship, infrastructure, immigration and basic research. no matter what econ 101 textbook you grab off the shelf written by a conservative or a more liberal economist, they will say government has a clear role to play in those five areas. very little controversy about that. the on the to mitt romney i can give you -- optimism i can give you, and this is not a time of great optimism about getting things done in washington, but the optimism i can give you, we're very close to a comprehensive immigration reform bill. it came pretty close in 2013, might well happen. that would be a great boost. there's pretty broad agreement on entrepreneurship and the importance of increasing it, and there's a little bit of optimism about education. the two sides disagree on what to do, but we all agree that it's important. you add that up, i mean, are we batting .400 there? you know, ted williams got to the hall of fame doing that once. >> but to be fair, i mean, there

is a real problem in washington, and one of the reasons we wrote the book is to change the conversation. because the technologists are doing an amazing job at advancing that, but any realistic assessment is that our politicians, if or that matter our business leaders aren't necessarily keeping up with what the technology is demanding. >> and that really sets up the size of the challenge. because our ability to come up with policy responses to these kinds of problems is nowhere near as fast as the testimonying is accelerating. you spend the first third of your bookmaking a pretty -- i think at one point you quote an earlier book about the rise of western civilization. the industrial revolution made mockery of everything that came before, but you write the second that cheep age is going to make -- machine age is going to make mockery of everything that came before. if we're only at the cusp of

this, it's going to go faster, your playbook of solutions is something that we have a hard time getting through in times when change is slow. >> i know. and that's why we think it's so urgent to have this conversation and to change it. you know, one time we were bemoaning some of the slowness of the response in washington. a friend of mine said, you know, the thing you have to remember, erik, is that washington doesn't lead on these issues. ultimately, washington are followers. it's -- they will respond when the people demand it. and so it's only once that all of us start understanding these issues and demanding change that people this congress and the white house are going to want to respond to it. so, you know, for better or worse it starts with us changing the conversation, with understanding these issues, and then we can expect some action in washington. >> and, andrew, you've got our central challenge exactly right. it's not a technological challenge. the technologists are doing astonishing work. they're going to continue to do amazing work. technology's going to race

ahead. that's the one prediction about the future i make with 100% confidence. the central challenge is that our other institutions, the other elements of our society just aren't changing as quickly. our organizations, our educational system, our political process, a lot of the other important parts of society aren't currently geared up to change as quickly as technology does. we've got to address it. we've got to speed up the clock speed of our other institutions. >> and let me just emphasize that as these things get more and more misaligned and mismatched, we have problems. but the answer is not to try to dampen down technology or to slow down technology. the answer is to speed up our response to it. but if we don't do that, you can see there's going to be more and more pressure, more and more neo-luddites who want to stop the technology, and we think that'd be a terrible outcome. >> amen. >> the theme of the second machine, why are we writing

questions on paper and collecting them versus an app? [laughter] you don't have to answer that, but -- >> why didn't you write it that way? >> we have a group of questions wondering where this ends. do quantum computers get consciousness? are there areas that humans will be able to hold off the ma cheep? -- machine? >> we're just about time. [laughter] >> one person says computers can't intuit something, so that should be safe. [laughter] >> well, i think that's with -- isn't that what they said before moneyball came to baseball, that they couldn't intuit what a good hitter was? i think we've learned, andy and i, to never say never. we with sometimes would play a game as we were writing the book, we'd point to some job or task or occupancy and say there's an example of something machines can't do, and lo and behold we would run into someone

who was working on exactly that project. so it is making very rapid advances. there are certainly areas where they're happening more quickly and more slowly, i mentioned creative and interpersonal relations. picking up a dime is something that most robots can't do and don't have a lot of success doing. >> there's this great video by a bunch of researchers from berkeley of the towel-folding robot, have you seen this? you have to watch it sped up because if you watch it in realtime, like watching paint dry. the robot looks at the towel for a really long -- takes minutes to fold the towel. but, again, wait a while. >> yeah. i had a chance to review the new lego mindstorm set, robotics set with my son. he built a snake that lunged at your hand like a cobra. [laughter] >> well, exactly. he's the generation that's going to develop these next waves. >> andrew, the area of far-out, technological trajectory and

progress that erik and i spend our time going -- about the most is this idea of the singularity, is this idea of our digital stuff actually becoming intelligent or fully conscious, it's an idea that's been popularized by an incredible smart, prolific guy. and erik and i go back and forth on it a lot. i personally don't see that on the trajectory that we're on right now. but i want to echo erik's mantra, never say never. >> well, and let me talk about a trajectory we both can foresee which is one that keynes can foresaw which is ultimately solving what he called our economic problem, the problem of extreme poverty in the world. in fact, it's not -- you don't have to be that wild-eyed to just extrapolate some of the trends that we're already on, and you'd see that extreme poverty could be eliminated within 20 years worldwide. think of that. poverty, that's something we've always had with us, and people have struggled with for not

centuries, but millennia. and our generation we may be within sight of finally dealing with extreme poverty. and that's because these technologies are creating so much bounty and so much wealth. the issue is going to be distribution and managing the kiss resumption associated with that -- disruption associated with that. but in terms of material progress, we're doing quite impressively. >> erik and i were both at tet earlier this year, but and i don't to brag, but bono was my warm-up act. [laughter] he gave this knockout presentation about the real potential, the likely trajectory to wipe out extreme poverty in sub-saharan africa and by extension everywhere else. to echo erik, that is not independent from technological progress at all. >> no. >> there's been beautiful research done that shows what happens in the poorest parts of the world when people get primitive mobile phones for the first time. their economic lives go on a completely different and better trajectory. it's critically important --

>> well, and starting with that, you know, 3d printers and a whole other set of technologies that seem to be science fiction a few years ago are becoming reality now. >> do you think these technologies will be applicable to other pressing problems we have here? would they help us deal with our energy issues, reduce global carbon dioxide emissions? if we have moore's law and all this innovation -- >> rightment. >> do you see -- >> well, as andy and i were talking about before hand, you know, there's a whole set of problems out there, and we can only write one book at a time, so we're not going to take on all of those at once, but i do think as our technological capabilities grew greater and we have more power to change the world, we can address some of those fundamental needs. in the case of global warming in particular, i'm somewhat

optimistic that this can be a big help. there's a research scientist at berkeley, john komamy, who has looked at the energy consumption of computers, and that is computing even faster than mere's law is. that give withs me hope as these technologies become more pervasive. >> and let me take erik's optimism up a level, because i think it's exactly right. we put a quote in the book and some ideas from an economist named julian simon who never gets enough credit for his thinking. he was the anti- [inaudible] in the time when the world was so gloom and doom, julian simon said you guys don't understand what goes on here. what we humans are extraordinarily good at is solving our problems. over and over again these things come up that seem so dire, and we find solutions to them. the reason that we should be even more on optimistic these ds and i mean this seriously, in the next few years -- not within our lifetimes, in the next few

years -- we are going to for the first time ever interconnect the world's population, the world's huges. we're going to bring billions of people fully fledged into the community of people who can access the world's knowledge, talk with each other, access huge amounts of computing power to put their ideas into practicement this is the best news going. i'm very confident that we're, humanity can meet humanity's challenges. >> it's not just all those people will be able to access the world's knowledge, it's that they'll be able to contribute to the world's knowledge. and talk about innovation, this is innovation on steroids, i guess, in the good sense. [laughter] >> well, we can say in the city of barry bonds, right in you all know what we're talking about. [laughter] >> what you just said about, you know, the issue of global poverty and, you know, the impact of some of these technologies in africa and asia relates to a question. how much of this problem with growing income inequality in the

developed world is u.s. centric and west centric? and will it go away once the rest of the world catches up? >> well, that's a great question. of it's very important. first, let me look at other developed countries, and then i'll look at developing countries briefly. if you look at the oecd country, those are the rich, developed countries, the pattern is very similar in those other countries. in 18 of the 22 other cups where we had data -- countries where we had data, inequality has been growing. it's been growing in sweden, in germany, in france, in japan. one of the exceptions was greece, but they have a whole other set of issues going on over there. [laughter] >> greece is not the model. [laughter] >> so they made, they started at different levels of inequality, but there's some pervasive, worldwide trend going on. it's not just politics, it's not just local conditions, it's something more fundamental than that. but then you want to look at it more broadly, look at what's happening in china and other

countries, and there i think the story is even more striking because we were, we were looking at some of the issues in terms of, say, manufacturing employment, and people often think of globalization and technology as being the two great forces affecting the economy. and the idea of manufacturing moving from united states to china. it turns out that, in fact, manufacturing employment in china is shrinking. there are 20 million fewer people working in manufacturing today than there were in the 1990s. it's shrinking in the united states. it's shrinking in all the places worldwide, so it's not a matter of jobs moving from one country to another, it's jobs moving from both china and the united states to robots, to automation. the phrase that andy and i use to describe this is that offshoring is just a weigh station on the road to automation.

and as technology accelerates, it'll become even more important in the next decade than it was in the past decade. >> so just like -- >> so in many ways i think that countries like china that have been historically relying on low-wage labor to compete are even more in the bull's eye of this automation tsunami than the american factory workers. >> just like bounty is a global phenomenon, unfortunately, spread appears to be a global phenomenon as well. >> and your china example connects to a question that just arrived. you know, if you visit shanghai or beijing right now without a gas mask, you're going to have some difficulties. >> yep. >> there's the question of whether even very quick technological innovation can keep up with the human impact on the planet as seven billion people raise their, you know,

prosperity levels. this question says specifically, you know, do you expect technology to solve the problems associated with a fast-growing population and the dwindling of natural resources? can testimonying keep up with humans -- can technology keep up with humans in the long run? just a little bit of a twist on the race of the machines. >> yes, absolutely. with the big exception be, with the very big exception of global warming. most of our environmental indicators are going in the right direction instead of the wrong direction. again, technology is a huge part of the reason why, and i'm super optimistic that overall we're going to, again, with the exception, we're going to learn with technology to live more lightly on the planet. >> but it is a race, and it's going to be tight. but fortunately, as countries have become more developed, the air in london is cleaner now than it was 400 years ago or 200 years ago, and it hasn't reached that turning point in beijing or shapg high, but i think people are starting to demand it there

as well. >> this is where a democracy and a middle class come in really handy, because they demand these things of the countries they live in. >> well, that -- which brings us, you know, right here to san francisco where the democracy is beginning to become irritated at the technology. >> uh-huh, yeah. >> that's nice phrasing, isn't it? [laughter] >> it's been one of the kind of unique stories of the last 20 years. one of the birthplaces for so much of the modern digital age is now having almost an immune reaction to it. >> be right. >> i don't know if the same thing is happening back east, but -- >> it's too cold back east concern. [laughter] for any of that to be going on. >> and this is why we talk to our tech no-utopian friends who say, look, don't worry, technology's going to take care of all ease things. look, you have to grapple with the fact that not everybody is

sharing in this bounty currently, and if you just ignore that, people are going to get angry, justifiably angry, and the reaction of many of them is going to be, hey, we've got to stop this technology, we've got to throw rocks at the google buses or 200 years ago it was smashing the looms in england. and as we said earlier, we don't think that's at all the right solution. that's destroying many of the benefits that we could be having. but if you ignore the problem, that's a reaction that many people will have, and we have to change the conversation to focus on more realistic solutions that are more inclusive. >> the companies themselves address this directly? what do you think about the idea that a means of closing the spread is for companies to pay for the data that they are allowed to mine and monetize? should facebook, google, twitter, our banks, "the new york times" pay their users for

using and interacting with their tools? >> well, andy, you recently debated on exactly this point. >> i had a chance to debate jirof on this, and he has a lot of rhetoric behind the motivations for his ideas. for example, he wants to charge my brother to upload pictures of his daughters to facebook and/or he wants to charge me to rook at pictures of my nieces. these are terrible ideas. i applaud his motivation. his solutions make no economic sense whatsoever. but the start of your question was about what can the technologists do to address the challenges, the spread that they're actually creating. it's a wonderful question. we had an interesting interaction with a robottist a while back who was working on the grand challenge which is these days to build human nowed robots kind of as a substitute for humans. she said, look, if you give me a different challenge, if you tell me to build robots that will work people instead of being a

substitute for them, i'll do that instead. i just like working on really tough problems, you guys specify what you want the problem to be. we have these wonderful on line competitions and contests and tournaments that motivate huge amounts of effort. ..

what can people do themselves to best position themselves for this future? >> i would give three pieces of advice. first look at those skills machines are not good at. creativity, interpersonal relations, motivating people, caring for other humans and those are areas that will continue to be in demand. the second piece of advice is don't be too locked into even those. be flexible because the nature of technology is constantly evolving and we have continued to be surprised about the advances that are happening so it is unlikely if anyone career or skills that will be familiar with you will be able to post bonds that for decades or 30 years or more. you have to adjust and the third

piece of advice is do what you love and do something you are excited about not just because it is more fulfilling to yourself but to be a little cold hearted and economic about it, in those winner-take-all markets there will be rewards to being the very best in something and there will not be a lot of reward to being average or above-average and there are few people who can really be the best anything unless they really love the end enjoy doing it and spend some time on it so those three pieces of advice are the best guidance for a child or anybody going forward in the second machine age. >> like you say this is probably the most common question we get asked, very often about college-age kids are kids heading into college. two pieces of advice, the first is for the kids, hit the dam books. the most disquieting research is a gradual slide in the amount of hard work going on on college

campuses these days and a concurrent slide in what people are actually learning, when they should be in classes. these things have a lot of sources. there appears to have been a slide in the amount of learning taking place. so hit the books and spend time on both sides of campus. by all means hang out with the drama deep sand renaissance geeks, that is awesome but walked to the other side of the campus and hang out with the applied math geeks or computer science geeks' as well. have your brain worked out in college, the best possible preparation for the world we are heading into. >> very quickly, yes or no. are we going to figure this out? >> yes. all depends on how we react. there is no inevitable future either positive or negative and

one of the reasons we are glad you came to this room and let hoping to change this conversation is we will figure out if we make the effort but we won't if we step back and coax. >> that is a better answer. [applause] >> our thanks to eric wilson and -- this to erik brynjolfsson and andrew mcafee, author of "the second machine age," we also want to thank our audiences here and on radio, television and the internet. i am andrew leonard and out a meeting of the commonwealth of california, the place where you are in the know, is adjourned.

[inaudible conversations] [inaudible conversations] >> booktv is on facebook. like us to interact with booktv guests and viewers, watch video and get up-to-date information on events. facebook.com/booktv. >> bankruptcy is a relatively modern invention, it comes out of the nineteenth century as we now know it. there is something that looked like it in british common-law but it comes out of the nineteenth century in the u.s. because in our substitution it says the federal government has

the ability to create a bankruptcy code. you can't prove this because so many founding fathers were heavily in debt. when thomas jefferson died they were taking him to a collection to pay off his debts that he just could not get out from under. he was a very good writer and not so good at running a plantation. that actually ends of showing up in the national characteristics. the bankruptcy code is so much more generous than anyone else in the world that people don't believe it. people are surprised to hear that harsh, mean america doesn't care about the downtrodden is incredibly lenient if you get into financial trouble. i went to memphis which is the bank of the capital of the world's as a journalist for this book to go look at -- the bank of capital of the world, memphis is the bank of to capital of the middle east--the midwest. memphis has something like 1% of the population declaring bankruptcy.

a really high number. if that were normal and all of you would know, everyone you know what declared bankruptcy and some point in your lives. that is not the case. i went to memphis to look at this and you would think i'm expecting screaming mothers hurling themselves at the feet of judges and the was nothing like that. was like traffic court. you can't believe how much nothing happens. the judge says sign this and you go away. this sounds europeans. what i tried to explain in 2005 when we had draconian bankruptcy reform what the new reform looks like my colleagues at the economist said obviously have to reform that. that is draconian new reform, not the lax old system. >> what is a unique challenge in defining war in cyberspace, what war is, what military action is. from a policy perspective we are trying to work our way through those issues.

the tenets that are applicable here are the fact that whatever we do in the cyberarena of international law will pertain, if we find ourselves getting to the point where we believe cyber is taking us down an armed conflict scenarios that the rules and the law of armed conflict will pertain as much in this domain as in any other. i don't think cyber is inherently different in that regard. i think those sets of procedures and policies and law as a nation have stood as in good stead and represented point of the parter. >> this weekend on c-span senate armed services take up intelligence and military nominations. this morning at 10:00 eastern and on booktv, amy bonds and jonathan alan look at hillary clinton as political career since the 2008 primary defeat at 8:59 c-span2 and on c-span3,

from march of 1964, poet and novelist robert warren interviews martin luther king jr.. tonight at 7:00 and 11:00. >> here's a look at some books being published this week. a history professor at columbia university present and early history of the jewish people in the story of the jews:finding the word, 1,000 b.c. to 1492 a.d.. and a sliver of life three americans imprisoned in iran, three american citizens recount their experience being captured and imprisoned after crossing the kurdistan border into iran on a hiking expedition. middle east expert for fox news argues that the arabs spring has only created more civil unrest in the region in the lost sprinkle in u.s. policy in the middle east and the catastrophes to avoid. in conspiracy theories and other dangerous ideas legal scholar on

political and social issues. in not school:the hipster elite end their war on you fox news host greg gut feel presents his thoughts on a myriad of issues from the government to the media. look for these titles in bookstores this coming we can watch for the authors in the near future on booktv and on booktv.org. >> next on booktv peter singer provides a topic of internet security and cyberwarfare. this is about an hour. [applause] >> thank you. i want to thank the team at stevens for helping to host this and to john in particular for organizing and for the really kind introduction. i am old enough to remember the very first time i ever saw end used a computer.

my dad took me to a science center in north carolina at the age of 7 where i learned how to programs is amazing device to design a smiley face out of a series of letter m.s and it printed out on one of those old school printers with the perforated paper on this side of it. that was my first experience with computers. since then, the centrality of computers to my life, all our lives is almost impossible to fathom. for example we live in 0 world where every year, over 40 trillion e-mails are sent. the first when page was made in 1991. there is now more than 30 trillion individual web pages out there. moreover the internet is no longer about compiling and sharing information.

it is also emerging to have an impact on the world beyond the online domain through the online internet of things. cisco estimates over the next five years there will be morrison 40 billion internet enabled devices coming online. everything from refrigerators to cars to thermostats, google does pay a couple billion dollars for smart thermostat business to smart power grids all linking together. what that means is domains that range from communication to ecommerce to critical infrastructure to conflict. 90% of u.s. military communications run over the civilian don't and operated internet. all of these domains are increasingly cyberdependent. we truly do live in the digital age. but with this relatively short history of computers and the networks they're linked into. we have reached a turning point or at least a defining point

just as our dependence on this world is growing the risk side is too. you can see this and a lot of different ways. one would be the astounding numbers. for example everything will second who, nine new pieces of malware designed to cause computer harm are discovered every second. let me repeat that, nine every second, to 97% of fortune 5 funded companies know that they have been hacked. the other 3% have been too but are now willing to admit to themselves. the military side. over 100 different nations have created some kind of cybermilitary command designed to fight and win wars in this space and beyond. they very first few whole of 2014 took a survey of americans about what they feared most and found they feared cyberattacks more than iranian nuclear weapons, north korean nuclear weapons, the rise of china,

authoritarian russia or climate change. what this means is these fears that coalesced into a booming industry, one of the fastest-growing industries in the private sector, across the world and also on the government side, one of the fastest growing bureaucracies whether talking about the national level, state level global level constantly seeing growth in cybersecurity bureaucracy is so they also mean for all the hope and promise of the digital age we also are living through an era of what i would call cyber end security. at this point i tried to do something counterintuitive that maybe will help us make that point. i would like to challenge what i introduce before, how do you write on a seemingly technical topic and make it accessible and interesting? the same when giving a speech. what kind of visuals can you do when talking about a space of zeros and 1s, software. i have put together what i

believe is a fun little collection that helps make a point. it is my choices for the best and worst examples of cyberwork are. it is going to play for you and the point -- and won't speak directly. will play behind me. one is to visually drive home that story of cyberin security that is out there. another is the fact there have been studies that found people a 60% more likely to retain what you are saying in a speech if they are looking at something at the same time. it doesn't have to link what the person is saying. is one of those weird way certain brain works. we need to recognize the cuban side of this and all the strange little foibles we bring into this so hopefully the technology will work with us in the we haven't been hacked in the interim and all right, here we go. let's pull back on all of this.

why a book about cybersecurity and cyberwar and why now? it is best encapsulated by two quote. the first from president obama who declared cybersecurity risks posed, quote, the most serious economic and national security challenges of the 21st century. second quote from the former cia director who said, quote, rarely has something been so important and so talked-about with less and less clarity and less apparent understanding. that cross between something that is incredibly important but less and less understanding again you can see in all sorts of different ways and all sorts of different fields. 70% of business executives, not 70% of c t os, 70% of executives in general have made some kind of cybersecurity decision for their company despite the fact

that no business management program teaches that as part of your normal responsibilities. the same gap happens at these schools we teach our journalists, lawyers, diplomats, even folks in the military. the book is also filled with all sorts of strange, funny, but in a certain way kind of sad anecdotes that carry this home particularly in senior leadership. the former secretary of homeland security, the civilian agency in charge of cybersecurity talked to us about how she hadn't used e-mail, hadn't used social media for over a decade not because she didn't think it was secure but because she didn't think it was useful. the supreme court justice talked about how they hadn't yet gotten

around to e-mail. in the upcoming year they will decide cases that relate to everything from that neutrality to the constitutionality of some of the nsa activities but in their own world they haven't gotten around. this problem is not just an american problem. we saw the same thing in meetings with officials from china, great britain, france, you a eat, the lead civilian official, the equivalent of cybersecurities are in australia had never heard of tour, a critical technology in this space. if you hadn't either, by the book. if you have this gap among people with great responsibility, the results is cybersecurity is an issue is that is as crucial that a personal level to areas that you care about from your bank account to your personal privacy to it is shaping the future of

world politics, and in turn issues in world politics are connecting to the personal level when you look at issues of privacy but it has been treated as a domain only for what i jokingly call the it crowd, the i t folks. the challenge is that the technical community understands the workings of the hardware and software but it doesn't deal well with the wet weather, the human side, all the ways that it ripples out beyond so often looks at these issues through a specific lens and fails to appreciate the ripple effect in other worlds. so the dangers of the stove pipes, whatever role we play in life, again, whether in a professional role, business or organization or as citizens, what we think about political topics, how to protect ourselves

and our families online, we all make decisions. cybersecurity decisions that shape the future of the online world and also the real world but we often do so without proper tools. basic terms and essential concepts that define both what is possible, but even more so, what is proper, what is right and wrong, they are being missed or even worse, distorted. past myths and future hype obscure what actually happened with where we are right now in reality with where we are headed next. you have some threats that are overblown and overreacted to and other real threats that are ignored. for example i am someone who loves history and did absolutely pains me when i hear, this has been done by everything from senators to white house officials to generals to

prominent news columnists say things like cyberweapons are just like that wm d and this is just like the cold war. this is a cybercold war. you have seen that terminology of a time. if you know your history and your cyber side you quickly realize the parallel is not the one they think they are making. if there's any parallel to the cold war period is the early days when we didn't will understand the technology itself but even more so the political dynamics that it was driving. in that period of history when we took the real world versions of dr. strange love seriously that is a better parallel to today. what are the manifestations that come out of this? one is we too often lumped together unlike things simply because they involve zeros and 1s, they involve the internet. the lead u.s. general in command

of the military's cybercommand and simultaneously wearing the hat as director of the nsa which we would not see happen in other fields but somehow we think it is okay here. he testified to congress, quote, everyday america's armed forces face millions of cyberattacks. but to get those numbers he was combining everything from unmotivated probes that never tried to enter networks to attempts to carry out pranks to attempts to carry out political protests to attempts to carry out economic espionage, diplomatic espionage, national security espionage, all together. bent none of those millions of attacks were what his audience in that congressional briefing room and in the water body of politics thought when he said it, attempt at digital pearl harbor or cyber9/11.

digital pearl harbor and cyber9/11 have not only been used to make government speeches but been reported in the media over a half-million times so essentials what happens when people are talking about cyberattacks is they are bundling together all these various things simply because they involve the internet and its related technology. the parallel would be a lot like saying a group of teenagers with firecrackers, political protesters in the street with the smoke bomb, a terrorist with a roadside bomb, james bond with his walter tdk pistol and a russian cruise missile. these are all one and the same because they involve the technology, the chemistry of gun powder, right? of course not. we would never do that but somehow it is acceptable in this space. or take the organizations.

i.t. senior u.s. military officials argue with me that anonymous and al qaeda were the same thing. wherever you stand on anonymous and i figured out i am more empathetic towards them than pretty much anyone in the d.c. security establishment but the bottom line is wherever you stand on them, they differ from al qaeda in everything from their organization, their personnel, their profile, their means, there end, pretty much the only thing they share is they're both on stage actors that begin with the letter a. to put them together is nonsensical whether you support them are trying to netcom -- come up with a strategy against them. these gaps in understanding, disconnect of policy, reality and ecology mean we are not only seeing growing tension as one of the things that is feeding into and poisoning the u.s./china relationship but also means we are being taken advantage of at

the individual level by that the mail you receive from your mom saying i am stuck in iceland, can you send me your bank account information and you go oh goodness, did know she was in iceland but i better help her. we laugh about that but this kids even the most senior people. a group of diplomats at the g 20 conference, the most important international conference of the year received what is known as a spear fishing e-mail. gave them an exciting offer. it said if you click this link you will be able to seen nude photos of the former french first lady. great offer. many of them click the link and instead of getting new photos downloaded spy where from an espionage agency into their computers. we are being taken advantage of that the organizational level, the business level, the university level. alternatively not doing enough

to protect ourselves, or hiring hucksters who promise 100% security through some kind of silver bullet solution. frankly we are being taken advantage of that the national political level which is i think behind a number of issues that played out with the ed snowden nsa revelations. this could even happen to a president. reported the obama expressed his quote back frustration that the complexity of the technology was overwhelming policymakers. our inability to have a proper discussion about all this not only can created distortion of threats but even more so misapplication of resources. the best illustration is another number. 31,300. that is the number of academic journals and magazines and press articles that have focused on the phenomenon of

cyberterrorism. zero. that is the number of people who have been hurt or killed by a real incident of cyberterrorism. i just the cyberterrorism is a lot like discovery channel's shark week where we obsess about the danger of sharks even though you are 15,000 times more likely to be heard on your time that. jaws was fictional, people have been hurt by sharks. let me be 100% clear. i am not saying terrorists don't use the internet. several chapters in the book about how they use the internet which is like much of the way the rest of us use the internet. i am also not saying that there is not the possibility and even more so the likelihood of cyberterrorism in the future with real-world impact as for example the first cyberweapon revealed but that very same

story shows how is not the way it is too often depicted, whether it is the diehard scenario if we break into this plant and all the power in the u.s. will go down or it is the way of former u.s. military official talked about how a couple, this was his description, a couple teenagers sitting in their parents' basement wearing flip-flops sipping red bull could carry out a wm d style attack. no. there is danger here, but it also requires to carry out something at that high operational level a y, dep set of expertise. not just the top cyberexpertise in the world but everything from intelligence analysis and collection to expertise in fields that range from engineering to nuclear physics. it is not something the couple teens sipping red bull, red bull gives you wings but not that.

my point here is to put it a different way, you want to sum it up, al qaeda would like to but it can't. china could but it doesn't want to. for both of them, yet. what i am trying to say is at a larger level, strategy, whether it is national political strategy, business strategy or your individual strategy is always about choices, priorities and so we need to weigh the centrality of what we talk about, what we obsess about, what we focus on versus what is real and arguably greater threats out there. for example, squirrels have taken down power grids more times than the zero times that hackers have doesn't mean it won't happen. ..

>> equally if you're talking about how the military uses it. military definitely plays in this realm, and let's focus on the reality of computer network operations versus, again, the hollywoodized scenarios. but we've also learned from regular terrorism, it's not merely about the direct impact of something, it's about the

ripple effects and even more so your own reactions and response can determine the true story of how it plays out. one that deeply worries me is how this critical value to the internet itself, trust, is being damaged. being hollowed out. it's being damaged by the massive campaigns of cyber crime that's out there, but it's also being damaged by other actions in response to threats. so, for example, a fear over traditional terrorism led to a or metadata collection program that has been a hammer blow not only to america's national standing and our relationship with our allies, it's also been a hammer blow to american technology companies. by one report by forester, they estimated over $180 billion worth of revenue will be lost because of this. or to the impact on the growing attempts by certain authoritarian governments around

the world with, most particularly russia and china, to push for a more state-controlled internet governance model. and what does this mean for the future. what i'm getting at here is that this value of trust that has allowed the internet to be, to run successfully but to become, i would argue, the greatest force for political, social, economic change not just in my lifetime, but maybe in all of history, it's being threatened. the internet that i grew to know and love, that you all grew with up, may not be the one that my sons inherit. and that scares me. now, this gap in the fields, these disconnects also mean that sometimes we act on bad assumptions or don't make connections across domains in ways that truly matter. so take, for example, the discourse over offense and defense and international security circles versus cybersecurity circles.

a notion has talkin' hold that cyber -- taken hold that cyber offense is inherently privileged against the defense. and, in fact, a u.s. military report said it's not just at an advantage, but it will be so, quote, for the foreseeable future. for as long as we can look out in the future, cyber offense will dominate against cyber defense. so goes the argument. and this, in turn, has led the u.s. military to spend -- again, dependent on the measure -- two and a half to four times as much on cyber offense research and development as cyber defense research and development. but there's three problems with this. the first is, as i referenced before, cyber offense is not as easy as it's too often depicted. you need more than that a can of red bull particularly to do an actual campaign, not just one attack. and the defense in turn is not lying there helpless. there's a series of things that they can do, and this also

carries out in stages. it's not so simple as is too often portrayed in bumper sticker discussions. second, if you go to military history, pretty much every time a military assumed the offense to would dominate because of some new technology, they would get a wake-up call. we're actually at the hundred-year anniversary of maybe the biggest of these in all of history. if you look back at the european armies in 1914, every single one of them thought because of the new technologies of the day the offense was dominant. and, in fact, they feared being stuck on the defense so much that they urged their governments that if there's any point of crisis, we've got to be the first to go because we don't want to be stuck on the defense. and that was one of the forces that helped spark world war i. and they turned out to be wrong. actually, the offense wasn't so dominant. the third issue is you can think about it in terms of a metaphor, and it illustrates the

difference between applying some kind of cold war with, binary political framework deterrent structure to a more complex cyber world. if you are standing if a glass house -- in a glass house and you're worried about more than a hundred different everything from gangs of teenagers to military attack or the like, the best way to secure yourself is not to say you know what i really need to buy? a stone sharpening kit. that will solve my problems. so what can we do? the last third of the book is all the what can we do kind of questions, everything from what can we do at the global level to the national level to the business organization level down to what can we do at an individual level to secure ourselves and help secure the internet. so i'm not going to try and summarize a hundred pages. what i'll try and do is identify what i think are key themes that

carry through all of this. the first is knowledge matters. it is absolutely vital that we demystify this realm if we ever want to get anything done effective in securing it. we have to move past a situation which we're if right now where, for example, the president of the united states received a briefing on cyber issues and then asked for it repeated back, quote, this time in english. that's not to knock president obama. that same thing would happen at pretty much every major corporation, every university, this most households. -- in most households. we have to move past thinking that this is solely for the "it" crowd or as another white house official put it we me -- to me, it's the domain for the nerds. no, it's all of us. the second hits on that us aspect. people matter. cybersecurity is what they call a wicked problem area because of

all the trade-offs and complexities, and that is in large part not because of the technical side, but because of the people side. now, the people side makes it really useful from a writer's perspective because you can tell cool stories, you know, everything from the role of porn and the history of the internet and cybersecurity to the episode where pakistan accidentally kidnapped all the world's cute cat videos for a day. great stories, but what it also means is if you're trying to set up responses at a global level, at a business level, etc., you have to recognize that the people be behind the machines are inherently part of every threat and every response. this leads to the third; incentives matter. if you want to understand why something is or isn't happening this cybersecurity -- in cybersecurity, look to the motivations, look to the relative costs, look to the

tensions that play in the issue. there is a reason why finance companies are doing better not only at their own cybersecurity, but also in sharing information with others about it than, for example, power companies. it's because they're incentivized to understand both the costs and the consequences in a very different way. this also points to the role that government can and should be playing in this space. in some situations there's a trusted information provider, a researcher, a resource. and in other situations, like is done in a wide variety of marketplaces, it has to help change some of the incentive structures out there. fourth point, history matters. there is a history to how we got here with the internet, and understanding that is key. especially when you hear, you know, silly ideas that have been expressed in, you know, again, some serious places like, well, we need a new, more secure

internet. let's just build that instead. my joke in the book is the idea of rebooting the internet makes as much sense as rebooting beverly hills 90210. it's a bad idea, it never should have happened, and we'll act like it didn't happen. the point is not that we need to know our internet history and how it shapes the world beyond, but also that we can learn from other histories beyond. so, for example, the we're wrestling with what do we do with individual criminal groups and quasi-state-linked groups in a domain of commerce, communication and conflict? we can actually look back for inspiration, for example, at the age of sale and how they dealt with privateers back then. or, for example, if we're thinking about what government action is needed, let's look at the instances of the most successfulful government agencies out there -- successful

government agencies out there. we look at the case of the centers for disease control, the cdc, which starts with literally -- the members of it taking a $10 collection, $10 in total in donations. and that agency goes on to do everything from eradicate malaria inside the united states, at the global level the smallpox campaign to it serves as a crucial back channel to the soviets during the cold war. this leads to the fifth and final point. ben franklin had his saying that, quote, an ounce of prevention is worth a pound of of cure. the cdc did studies that found that franklin's idea actually does hold true when you test it out in public health. prevention is really the best place to put your resources into it. and it goes a long way. it's the same thing many cybersecurity -- in cybersecurity. despite all the of the attempts

to complexify this space, to turn the fear factor up, you know, spinal tap volume style to frame it as something where you need a man on cyber horseback to come in and save you whether it's a man in uniform or a man in a cybersecurity company. the reality is that very basic steps of cyber hygiene would go an incredibly long way. for example, one study found that the simple measures, the top ten and top twenty controls would stop up to 94% of all cyber attacks. now, people respond to that and say, well, i'm really special. i'm in the 6%. the first is statistically we can't all be in the 6%. the second is talk to your i.t. department. if they didn't have to spend so much time running down the low level stuff, they could focus in on the high end stuff. finally, the reality is many of

the toughest challenges, the most advanced threats still use very basic steps to get in that would be stopped by cyber hygiene. for example, the most important outside foreign spy agency penetration of classified u.s. military networks happened when a u.s. soldier found a memory stick on the ground in a parking lot and thought it was a good idea to pick up the memory stick, take it inside to the base and plug it into his computer to see what was on it. that's not just cyber hygiene, that's basic hygiene. that's the five-second rule. [laughter] in this idea of hygiene, though, is important not just because of the lessons and the idea of prevention going a long way, but also the ethic that we need to build about our collective responsibility. again, at the global level, the national level, the organizational level down to the individual level. we teach our kids the basics of

hygiene, things like cover your mouth when you cough. we teach it not just to protect themselves, but also to give them an ethic of they're responsible for protecting everyone else they come into contact with during the day. that's the same kind of ethic that we need to be building in cyberspace, and that's the only way we'll get to a greater sense of actual cybersecurity. so to bring this story full circle, at the beginning of the talk i explained how, you know, i was first introduced to computers as a young kid. now, if you had said to my 7-year-old self one day in -- oe day this machine will allow bad guys to steal money from people, steal their identity, maybe be a weapon of mass disruption, i would have begged and pleaded with my dad not to turn on that big power button.

don't do it. today we wouldn't have it any other way because this same machine and the world it's created has given all of us what back then we would have thought of as super powers. the idea that you could run down the answer to by question that you might have -- to any question that you might have, the idea that you could communicate, you could talk, you could see with someone a world away, that you could even become friends with someone that you've literally never met before. those would have been viewed as super powers back then. today we take them for granted. and so my point is that the same as it was back then is the way it is now and where i think it should be in the future. we have to accept and manage the risks of the online world and the real world because of all that can be achieved in it. and to steal a line from the

title of the book, that's really what everyone needs to know. thank you. [applause] so i think we've got some time for questions or comments. i believe the protocol is to ask folks to come up over here to the mic? nope. go ahead and just stand up, introduce -- raise your hand, i'll call on you. introduce yourself and -- [inaudible] any questions or comments at all? right there. >> hi -- [inaudible] my question is what about what is called the internet of things, which means that you have to watch out for somebody hijacking my refrigerator or something like that? [laughter] and how does that tie into your idea of hygiene? >> so a couple things here.

one, it's one of those key trends much like a mobile or changing nationality makeup of internet users that's truly going to reshape the internet itself and how we use it independently. and it offers incredible possibilities and ways that will benefit the world. so, you know, i'll illustrate it with the classic example is right now if you bought a new car, it automatically will communicate to the manufacturer when some part needs to be replaced, and some will even go ahead and make that appointment for you at the dealership. the next stage of this is a lot like the history of the internet itself. when you take this kind of semi-closed network and take it across. so your car communicates to your therm sat that you're ten minutes away, and your thermostat which has been on the most efficient setting because

it's connected to the smart power grid will shift to where you like it. the problem, what you're getting at is that we're already seeing risks woven into this. we've already seen carhacking where your car is literally filled with hundreds of commuters, and we've already seen people causes computers to do things other than what the driver wants to. it truly, if we're looking at this from the cyber war side, this is where we move from thinking about this and the ways, you know, there's a lot of stuff that's been called cyber war that's not, you know, disruption and the like. it's the combination of what i mentioned before, few weapons like stuxnet -- new weapons like stucks knelt but also new targets that give with it a much greater impact. so thousand you're able to design a weapon that its intent is not just to steal information or jam it, but actually to co-op the system and cause it to do

something physically different. so stuxnet, for example, caused the iranian nuclear research centrifuges not just merely to damage what they were working on, but also to spin out of control and even taj themselves -- damage themselves, etc. so now you're talking about this in the world of the civilian side. to link to the prior book that john mentioned that i did, this is where drones and robotics connects back to cyber and a whole new phase of war. because when you don't have the human inside the weapon system where they're either remotely operating it or it's autonomous or semiautonomous or what not, you move from battles being about destruction, destroy enemy tank, to what i call battles of persuasion. co-op the tank. if you can get access, which a cyber attack is about gaining access, then you can cause that tank, that drone, what not, to do something other than what its

owner wants to. and this is manager, you know, we've never seen before in war. you've never been able to take the arrow in mid flight and make it go a different direction, or the bullet to fly back at the firer. or you can't get into tom cruise's brain in "top gun" and say, you know, tom -- or, maverick, recode all russian migs as american planes and vice versa. the point, though, is what can we do about it, and this hits that idea of "we." there are some things that we can do in terms of individual consumers and the settings and what those devices are allowed to access or not, but it also connects back to the responsibility of manufacturers and the responsibility of government. and one of the things we have to do, we have got a room full of a lot of engineers here, is make

security much more intuitive, much more user/human-friendly. and also understand, you know, from examples like there's a big difference in we use the example of states and driver's licenses and organ donor. is it an opt-in or opt-out? and with the setting reinforces a good behavior or not. we need the same when it comes to the kind of security woven into the products that are designed. and the turk government's going to have to start to require that versus where we're stuck right now is governments doing a great job of trying to create optional standards. but that's different than actually enforcement. it's, you know, to use the example of the titanic, it's saying even should have this number of lifeboats versus saying if you don't, this is the

fine that you will pay. we're going to feed that next step. we're going to need that next step. yeah, right there. finish. >> yeah. my name's -- [inaudible] the director of the program that john mentioned, and i'm a historian as well. so history matters, and we need to think about these problems as individuals, institutions and technologies, that resonates with me. i want to ask you a question about considering the internet, the life of internet as a historical phenomenon. twenty years ago or so john perry barlow who wrote songs from the grateful dead said, you know, this is a space completely different than the real space. and now it seems that conventional wisdom has come full be circle, as your talk shows. and so my question is do you think this experiment of the internet, is it a triumph? is this something that's really liberated enough? or is it a tragedy? is this something that we had

great hopes for that turns out to be maybe less than that? >> great question. you know, we could write several books just on that. it's a two-level issue. so the first is in this idea, so barlow, he famously wrote the, you know, the declaration of independence for the internet that essentially said, you know, things of the old world, governments, you have no role in this space. he was both right and wrong. and on one hand, this is a space that is incredibly challenge -- that has incredibly challenged governments because it seemingly has no borders, a space that's empowered a wide range of actors, you know, every -- collectives of people that want to share cute cat videos and collect as a people that want to

engage in cyber attacks to punish those that violate internet flee.com, and they -- freedom, and they want to do it anonymously. we've seen it empowering small states, giving them ways to reach out in manners that they couldn't before. so, you know, recent iranian-linked attempts at cyber attacks. i mean, we could go on and on. it's empowered this in a way that the traditional sovereign would be uncomfortable with. except when they say government has no role or interest here and to no power here. so the first is governments definitely have an interest. one, just because governments are responsible to the needs of their citizens, and we are in such of a cyber-dependent world that they have to care about what's going on in this and how it impacts on them. oh, by the way, the government's own operations depend on it. so you could say you've got no role here except, oh, by the way, u.s. military, you depend on it for 98% of your communication.

second is the notion that governments have no power here, and the story of many of the hactivist groups shows both them able to do things in a way that was never dreamed before possible, but also showing the government can still go after them. wikileaks is a good illustration of this where, you know, on one hand it's bringing transparency to various episodes that clearly governments didn't want to happen. on the other hand, you know, the founder's stuck in an embassy right now because if he leaves, he'll be prosecuted. so there's a back and forth to this. so to argue -- the same if we're talking about the threats. yes, nonstate actors can carry out some forms of cyber attacks, but it's the states are still the the big dogs. so that's the first part of it. the second was your question about, you know, ultimately is this a triumph or a tragedy. you know, look, i just think it's a revolutionary technology. and the reality throughout

history is that new -- when i say revolutionary, a game changer, a disruption. the world is fundamentally different before and after, and so much so that the the people beforehand would have a hard time imagining the world after. and every single time there's been one of those kind of technologies, it's been used for both good and bad. the first tool, you know, some human at some point picked up a stone, and did they use it to build or to bash someone in the head? or probably the best parallel for the internet would be the printing press. the printing press on one hand, you know, led to mass literacy, new models of citizenship, democracy. the "sports illustrated" swim suit model edition. at the same time, it led to the reformation which if you're a protestant, you think is a great thing. if you're the pope, not so much. the you're looking at -- if

you're looking at, you know, casualty flows, approximately a third of europe is killed in the wars that follow. so the internet has been, again, to me it's been one of the most, if not the most important tool for political, economic be, social change in the world, but that change is, you know, it's enabled a lot of good and a lot of bad things. so i don't know if we're going to be able to put a, you know, a pure tragedy or triumph model. i'm more on the triumph side. i think it's created more positive things, but i acknowledge there's some bad stuff that's been inside of it. and my argument would be as with every single other game-changing technology. and the reason is the humans behind it, we're filled with both that good and bad intent, and we organize in good and bad ways, etc. way over there. >> yeah. [inaudible] also the director of the

cybersecurity -- [inaudible] >> you project out a little bit? >> yeah. antonio finish double that i'm also the director of the -- [inaudible] cybersecurity. following up on the previous question, a couple of years ago in 2011 there was -- [inaudible] in new york about books about the internet. exactly about the tragedy, the triumph. and interestingly, there are people -- [inaudible] like ever better, like things are going to be getting ever better, things are going to be getting easier. [inaudible] a lot of people are saying, so would the tragedy with books and, you know, forget about the internet. and -- [inaudible] seems disruptive, we get used to it and we go on. i was wondering -- [inaudible] in these three partitions. >> that's so unfair that i have to be in whatever bucket that you just created.

[laughter] i think your -- that's an interesting way to categorize it. you know, again, like with all trying to divide it into, you know, three, it's going to have some inadequacies. i would probably put myself, i guess, in the third category except not in terms of -- i just said in terms of we've seen these patterns before, but also the key of the revolutionary technology is there's ways that are different. maybe better expressed by mark twain who reportedly said history doesn't repeat itself, but it does rhyme. i feel like that here. the challenge and maybe what motivates me is that what will determine those kind of first two categories of is it going to be much better or, no, it's going to be much worse, you

know, the first two categories basically seem like optimist or pessimist. for me it's you are less likely to get the best out of it, to develop the best responses if you are stuck in a, the strange brew that we have right now of fear and ignorance mixed together. that's not the best way to the govern. that's not the way to develop, to run our business. that's not the best way to handle your own personal life. and this, there's no issue that has become more important in recent years that's less understood than cybersecurity and cyber war. and so that's, for me, there was this aching need for a primer in it that tried to hit that sweet spot between, you know, look, there's been a lot written, but it's been either highly technical, or at the other side,