Conversation About the Iowa Caucuses; Conversation with Scott Malcomson; Conversation with Mike Allen - Part 2

CHARLIE-ROSE-SHOW-01 ...

ROSE-SHOW-01

Malcomson; Conversation with Mike Allen - Part 2>

Allen>

discussion with Scott Malcomson about the future of the internet and his

book " Splinternet". We conclude this evening with a footnote about one of

our frequent guests Mike Allen who appears weekly on Charlie Rose the week.

Mike announced today the he is leaving "Politico" and "Playbook" after the

end of the election to go in pursuit of another new venture. >

Technology; Security; Media >

It can complicate things. It can help somebody else win. It could slow the electoral vote to the U.S. House of Representatives if nobody gets 270 but this is a year that sets up really well more so than 92 for an independent candidate.

CHARLIE ROSE: And you think an independent candidate could win?

MATTHEW DOWD: I think an independent candidate has a very outside shot at winning but an independent candidate will certainly change the process.

CHARLIE ROSE: But if it goes to the House which is controlled by the Republicans and it`s the current House that gets the vote and vice president is selected by the Senate.

MATTHEW DOWD: Yup.

CHARLIE ROSE: But if it goes to the House, are those Republicans, do they have to by definition vote for a Republican?

MATTHEW DOWD: They have to vote for one, they have to vote, the constitution says you have to vote one of the three top finishers for president. So you have to choose between Donald Trump, let`s say, Hillary Clinton and let`s say Michael Bloomberg, right. They have to pick one of the three. At that point I really don`t know which way they`ll go because they actually have to think who would be the best president. And I think we`d have, I`m hoping it doesn`t get to that point. I think we have a serious constitutional crises at that point if it got thrown into the U.S. House.

CHARLIE ROSE: What`s the crisis? We`ve been there before and therefore ...

MATTHEW DOWD: I think the crisis becomes nobody reaches a majority of the vote. The popular vote .

CHARLIE ROSE: (inaudible) as you just said.

MATTHEW DOWD: I know but I think the constitutional crisis becomes a -- do we -- are we -- do we have a constitution and do we have a constitution that fits a current dynamics of the country and I think a lot of people are going to wonder if we do.

CHARLIE ROSE: And what might happen then?

MATTHEW DOWD: I`m hoping that the choice people make they`re goping to be popular and something turns out to be a dominant leader. I`m hoping. I don`t know what they do then because they`re so frustrated right now with the system.

CHARLIE ROSE: Is the dominant mood of the country exasperation?

MATTHEW DOWD: I think the dominant mood is a combination of frustration, exasperation, and anger. And I think it`s disenchantment with the way current politics is run. At some point this model is going to have to change. A current political model is going to have to change.

(CROSSTALK)

MATTHEW DOWD: He might be a catalyst if not this year certainly in 2017 and 2018.

CHARLIE ROSE: Matthew Dowd, thank you.

MATTHEW DOWD: Thanks, Charlie.

CHARLIE ROSE: We`ll be right back. Stay with us.

Scott Malcomson is here. He`s a media fellow at Carnegie Corporation. He`s new book is called "Splinternet" and he traces how the growth of the internet corresponded to American military and intelligence needs.

Earlier this month White House and intelligence officials met with tech industry leaders. On their agenda was the use of social media by terrorist groups. Encryption is another concern for law enforcement as companies resist giving the government back to access. I`m pleased to have Scott Malcolmson at this table for the first time. Welcome.

SCOTT MALCOMSON: Thank you. Thanks for having me.

CHARLIE ROSE: Trace for us how the internet began and how it was in a sense tied into the intelligence and military issues.

SCOTT MALCOMSON: Well, it`s a story that`s usually traced to the period after the Second World War and particularly into the 1960`s and the Cold War. What I do is I take it a little bit earlier because really computing itself came out of the war time experience of World War I really at that time. Thomas Edison had a line of an interview in the "New York Times" where he said killing men in war is a scientific proposition. And that was a realization that had done all the great powers .

CHARLIE ROSE: He meant by that what?

SCOTT MALCOMSON: Well he was thinking in particular of chemical war which was characteristic of the First World War when the Germans began chemical war and the British were included and had to react with their scientists very quickly. So the idea of mobilizing the scientific community with the military community in order to prevail came out of that experience.

In terms of computing, I mean the first big innovation of the First World War was in radio. There were two engineers again in Britain, Willie Knuckles and Frank Jordan who invented the one switch electrical switch that was capable of memory. All computers since then use this thing. This is called the (inaudible) which without which computers couldn`t remember.

And the American contribution, the big American contribution also began in World War I in terms of naval warfare because battleships were the major mega weapon of world war one. The power of the guns had increased steadily to the point where ships would have to fire at each other without being able to see each other. This created an extremely low hit rate for the ships.

So what the Americans worked on together with the British was if you try to create a virtual reality of war. So they could imagine successfully where the enemy ship was going. That required taking an enormous amount of information about each ship and perfect information in computing it very rapidly. The phrase computers was used for people who could do math and in the military context the people who made the tables with all that information were called computers. So when you had the first .

CHARLIE ROSE: People were called computers?

SCOTT MALCOMSON: They were called computers up until the Second World War, there were about nearly 150 people employed in the Second World War by the army as computers, simply to look at these numbers and calculate the numbers.

Where the machine comes into it is machines were eventually built by American engineers that were capable of taking those variables and improving the fire, what the military called fire control. That command and control system with the machine crunching numbers at the center started in World War I and that metaphor of using a computer in order to create a virtual environment need to prevail militarily through aiming your guns better is a metaphor that continued when there were no longer battleships, it became airplanes, then it became rockets, then it became missiles, and it became long range bombers and so on. Really up through the cold war. That`s kind of the first major stream of development and it goes on for decades.

CHARLIE ROSE: Many people have seen the movie, "The Imitation Game about Alan Turing, you know, and he understood to break the code he need a machine. Is that part of this history?

SCOTT MALCOMSON: It is. It`s not as central as the movie kind of suggested. In fact Turing was very involved in war time computer science including the United States .

CHARLIE ROSE: Right.

SCOTT MALCOMSON: . as well as in Britain. The work that was done in cryptography and in other fields, it was definitely -- is an important part of the history of digital computing and then history of the internet that came later. But the essence of it which is a very American thing is a command and control system with a number crunching computer that`s able to create a world so that you can hypothesize, so that you can make more accurate guesses.

In the 1960`s, what you had was a much more familiar story which is the sort of desire of the military industrial complex in the United States to develop systems that would be able to anticipate incoming bombers with potentially the nuclear weapons, and shoot them down, take countermeasures before they got close enough to bring their payload to the United States, that`s the sort of ultimate form of that command and control metaphor that started in 1916. And it was that work in the 60s, out of which came the internet as we know it, through ARPA, and later DARPA.

CHARLIE ROSE: But that developed this utopian vision of the internet.

SCOTT MALCOMSON: The utopian vision of the internet, I think really developed first in the geek world in the late 1950s out of MIT and then very much out of California in the 1960s.

CHARLIE ROSE: You hear a lot it from I mean, wherever it developed and this was certainly was not the development of it. You know, but I just saw a recent documentary about Steve Jobs. You hear a lot of it, Steve talking about the potential and the power, and can you believe, you know, and this mission to talk about the power of the computer.

SCOTT MALCOMSON: Well, he was fantastic. You know, and, you know, obviously .

(CROSSTALK)

SCOTT MALCOMSON: He loved narratives and he does a great -- I think it`s a great little bit in the book about his very, very early involvement with this thing called blue boxes. And essentially it was -- it`s a crazy story but there were these blind kids who could hear because they were blind, they had a heightened sense of hearing, who could hear these tones over the phones lines. And they eventually figured out with the code was of the telephone company for sending signals through tones to the phone lines.

They were then able to discover things and communicate, make free calls and stuff over the phone lines. There`s a great piece in 1971 by Ron Rosenbaum about this. Steve Wozniak`s mom sent him a copy of this article which he has blown away by and he tells Jobs about it. And they start building these little machines that could, you know, for non-blind people, little machines that could send the signals over the lines and communicate. And there`s a bit that Job was just talking, I think in the 80s about the very beginning -- illegal by the way these machines.

CHARLIE ROSE: I know, I know. That`s in his documentary, right?

SCOTT MALCOMSON: Right, right. And Jobs in this interview, he gave, he started talking about what a fantastic, powerful feeling it was to communicate over these phone lines and be able to, you know, talk to people and communicate information. At that point you`re like, OK, that`s Steve Jobs, that`s awesome. That`s that period of extreme awesomeness in the 80s and the early 90s. But then, he says, and the power you felt just in your little home you could affect thing all over the world and manipulate and control them.

I was like -- well that`s megalomania, you know, that is what that is. And then, he finished by saying, you know, "This was a real vindication about the power of ideas." And I think one of the big secrets of Silicon Valley in that period in the 70s and 80s was, it combined so much money, so much idealism, so much technical creativity and a complete ignorance of its own will to power. You know, that ultimately that kind of power was real power and it would go back to the real world.

It wasn`t just in the world fancy world it was Altos or Palo Altos. I don`t know too many people appreciated that. It might be that if they had, they wouldn`t have worked as hard as they did and it wouldn`t had been successful as it was. I mean, as Californian, I love that spirit. But I mean, it has its limits.

CHARLIE ROSE: Where came the merger between what was going on in the military and venture capital?

SCOTT MALCOMSON: It really began right before the Second World War. There was a guy named George Doriot, Frenchman, taught at Harvard Business School, he is generally thought to be the father of venture capital. He tried to get it going in the late 30s, didn`t really work. But during the war as the war is getting going, he was brought in by the president to essentially be in charge of research and development for the military.

He ended up spending a fantastic amount of money. Lots of moon shots, throwing a lot of money, and a lot of different projects. Some of them worked, a lot of them didn`t. After the war, he started the first non- family venture capital firm called the ARD which eventually made a very successful investment in digital equipment corporation which was a major early computer manufacturer.

Doriot`s example than basically migrated out to the West Coast, and the example being, you take money, you shoot it a lot of different technical projects. You have sympathy for an understanding of technologies. The result hopefully is that some of the projects really take off.

Most of the people who built that industry in California which in turn built Silicon Valley had military experience. One of them, General Anderson had directed the bombing campaign against Germany in World War II for example. Another one, Tommy Davis had been an OSS behind enemy lines in Burma. There were lots and lots of military connections in, around Stanford and the venture capital world.

CHARLIE ROSE: And then computer companies like Hewlett Packard got a big start there too.

SCOTT MALCOMSON: Yes, absolutely, absolutely. I mean, I think the main thing is that in an environment of total war, you suddenly have an investor, so to speak, who`s willing to spend a lot of money on very intense projects without respect to a lot of divisions that hamper creativity in non-war time. And, it is not that bothered if fantastic sums are wasted. That was what World War II, RND was like. And that`s, in many ways what Silicon Valley, RND became.

CHARLIE ROSE: Take us to where we are today. With that beginning and that history and where the United States says you, right, held the key, it holds the key to cyberspace now. But with the rise of China and other places, there is increased competition in cyberspace.

SCOTT MALCOMSON: I think -- I would start in the 80s and 90s when the internet had been built. It worked successfully, but nobody really cared. The research community is -- the army had gotten tired of it, went off to build its own systems and it exists as a kind of scientific project among universities.

CHARLIE ROSE: Where they could talk to each other.

SCOTT MALCOMSON: Where they could talk to each other. It was sort of a geek paradise.

CHARLIE ROSE: Right.

SCOTT MALCOMSON: The -- it remained that until it could be set free politically by the end of the cold war. Once that happened, it became possible to develop in a way that wasn`t threatening to the United States.

CHARLIE ROSE: And it comes with `89, `90s.

SCOTT MALCOMSON: Somewhere like, talking about `89, `90, exactly. And I think that period of American political, you know, hegemony which we thought was indefinite at that time or at least many people thought was indefinite at the time, made it possible for something as fundamentally threatening to the state as the internet to develop. Because there was no state, you know, it was controlled by United States. There was no other state that could come close to developing it the way that the US could.

What happened later and what`s happening now is that gradually, as the internet became economically and militarily and politically so important and so threatening, states if they could, the largest states, we asserted their authority and they`re trying to reassert it as much as they can now.

CHARLIE ROSE: And this is the central pieces of the book.

SCOTT MALCOMSON: Yes. Yes.

CHARLIE ROSE: Just wondering.

SCOTT MALCOMSON: And they want to take the authority away from the US.

CHARLIE ROSE: Exactly. So, I mean, what impetus did the Edward Snowden revelations add to this? What did Edward Snowden say to other countries?

SCOTT MALCOMSON: To other countries, I think he said, he legitimized their conviction that the internet was not the free cyber world.

CHARLIE ROSE: And that America`s technology superiority was a threat to them.

SCOTT MALCOMSON: Yes.

CHARLIE ROSE: Because America had the capacity, I`m asking these questions.

SCOTT MALCOMSON: Right.

SCOTT MALCOMSON: America had the capacity to spy on them in too much greater degree than they had to spy on America?

SCOTT MALCOMSON: I think they knew that beforehand. I think what Snowden did was that he made it apparent to public opinion. And it was no longer, it was no longer a gesture of paranoia to say that, you know, Americans are doing this, it used to be. Well, everybody now knows that the Americans are doing this.

The other very big effect it had was in Silicon Valley itself. I mean, there had been about a decade of, before Snowden, of relative agreement between the military intelligence agencies of the United States and with the major Silicon Valley companies that their relationships were ones that were stable, didn`t really have to be worried about, wouldn`t do a lot of damage to each other, they could be negotiated privately, basically. And what Snowden`s revelations did was, it told the whole Silicon Valley subculture that they were serving something that they hadn`t been aware that they were.

CHARLIE ROSE: They were part of something that they didn`t know?

SCOTT MALCOMSON: Yes. Yes, something political. Something it was contrary to their cyber dream.

CHARLIE ROSE: And some contrary to their political ideas.

SCOTT MALCOMSON: Yes, very much so.

CHARLIE ROSE: Because some of them, all of it`s varians (ph) do.

SCOTT MALCOMSON: Right, yes, absolutely. So, I mean Snowden had a huge effect. I don`t think it was perhaps the effect that he intended to have but, you know, political effects are never the ones you intend.

(CROSSTALK)

SCOTT MALCOMSON: Yes. Yeah.

CHARLIE ROSE: And then, and the whole recognition or confirmation of what America was capable of.

SCOTT MALCOMSON: But Snowden, I believe at heart is a geek. And geeks don`t want the internet divided. But the effect of these revelations or one major effect of it is that the internet is being divided because Russia and China and India and the Europeans feel justified in taking a much more active role in trying to shape the internet for their own communities and for the world.

CHARLIE ROSE: Tell us what they want to do and how t they plan to do it? Whether it`s Russia or China, I mean, a big aspect of this is sovereignty. I mean, there is in the culture of China, for example, and in the political dialogue, you know, it`s none of your business but we do. And we don`t want you coming in here and doing things with respect to a dialogue or transaction with our citizens. We want control of that. Correct?

SCOTT MALCOMSON: Yes, absolutely. I mean, that is exactly what they`re asserting. There was a time when I think the calculation in China and Russia and elsewhere was that the internet was so out of their control and absolutely imperative economically that they couldn`t do anything about it. But now they can. Companies are willing to play ball with these different governments. The governments see that they can have ever more control ...

CHARLIE ROSE: And they`ll willing trying to keep restraining companies in terms of what they could do and their power.

SCOTT MALCOMSON: Yes. Yeah. Well, and the trust grounds and others. And what you have now is that, particularly in China is that you have technology companies that can now rival American technology companies in terms of their innovative ability and their size, and their capital and so.

CHARLIE ROSE: And some say, the Chinese Government helps those companies. Not in terms of staying in control. While this is.

SCOTT MALCOMSON: Nobody`s entirely innocent -- I mean.

CHARLIE ROSE: No. No.

SCOTT MALCOMSON: After 80 yeas of American spending on the internet.

CHARLIE ROSE: No. No but.

(CROSSTALK)

CHARLIE ROSE: But NSA will argue, you tell me, you`re the expert here. NSA will argue, and the head of NSA, Michael Rogers will make the case I think, you know, that what China does that we don`t do is, we`re not acting in the interest of private companies, whereas aspects of the Chinese government will encourage and be in favor of corporate espionage or espionage for the benefit of Chinese corporations. The Chinese deny that, but that is a deeper though, concern among American companies and I think the American government.

SCOTT MALCOMSON: Well, I -- and Rogers, he`s much more better -- about ...

CHARLIE ROSE: He sees things you don`t see.

SCOTT MALCOMSON: ... Chinese government for corporate espionage. Yeah, he certainly does, he certainly does. I don`t, you know, I don`t think of .

CHARLIE ROSE: But I mean, you obviously know that there is a concern, about Chinese doing things to benefit private companies in China? I`m asking ...

(CROSSTALK)

SCOTT MALCOMSON: No, I think that`s absolutely true but I think the bigger concern now is, Chinese companies doing things to benefit the government of China. I mean they, you know, Alibaba is not a tiny little company or Tencent is not a tiny little company. There are two efforts right just this year in China to essentially use both of those companies or part of them to use the information that Chinese citizens put in when they`re applying for bank loan and so on into a system which will then produce kind of a rating. In some cases, this is so that, you know, so that people who couldn`t get loans would be able to get them because they`re too small.

But the fact is that it puts all that information into a system which the government controls and which is now the behest of the government by these companies. The Chinese government couldn`t do that on its own but at this point you have Chinese companies, they are so large and have so much information from their citizens that they can then become the -- used by the government to control the Chinese citizens, and that to me seems inevitable.

CHARLIE ROSE: This central theme of splinter, the Splinternet is simply that countries now want control of the internet.

SCOTT MALCOMSON: Yes. Yes. And hopefully, I mean, I think there are ways to, if not oppose that trend, to put brakes on it. So that for example, through internet governance and through some, you know, mild agreements between governments which the Obama Administration and Xi Jingping Administration have been trying to come up with where you can at least limit the damage and retain some kind of broader public sphere online.

I think that`ll happen but unfortunately, the Utopian moment where cyberspace would sort of trump physical space and where borders would be erased and, you know, these weary states would fall by the wayside and sovereignty would no longer exist. I just don`t think it`s going to happen.

CHARLIE ROSE: And the trend is in the other direction, just what you argued?

SCOTT MALCOMSON: Yes, exactly.

CHARLIE ROSE: To what end? Where -- I mean, how will this play itself out? The internet will be splintered.

SCOTT MALCOMSON: There will be a splinter. I think that there is -- first of all, I do think that the cat is to some degree, out of the bag. You know, there are ways to get around state surveillance, there are ways to communicate and so on.

CHARLIE ROSE: Right. Right, right.

SCOTT MALCOMSON: And those ...

CHARLIE ROSE: We still hear from them even though they have tight control of the internet.

SCOTT MALCOMSON: Right. Right exactly. And the sort of internet community, the sort of global geek subculture is not going to just sort of raise the white flag. I mean, those -- there was a subculture that`s been global since the late 1950s, that is dedicated to open code and to open communication. And they`re not -- going to stop that. I mean, they preserve the public space for all of us. Hackers always get, you know, criticized and everything and of course there are lots of hackers who do lots of terrible things. But the fact is that there`s somewhat, I think unrecognized global culture that does keep these things alive.

The second thing is that, I put a fair amount of faith in just capitalism. You know, that these -- Alibaba does want to be a Chinese Company. It`s building, spending about a billion dollars so far on building cloud computing centers around the world. It`s not doing that because it only wants to sell to Chinese citizens, you know, these companies, Google and Facebook, all of these companies want to be global companies. I mean that`s one reason why I think Silicon Valley reacted so strongly against these efforts and encryption in the post Snowden Period because they see an enormous threat to their income. You know, that they -- they see an enormous to their income.

So, you know, those are large companies and, you know, we don`t want to be run by corporate power but in some ways it establishes a space of freedom because of it`s ambitions.

CHARLIE ROSE: ... on encryption? I mean, do think the Apple is right?

SCOTT MALCOMSON: Yes. I think Apple`s absolutely right. I think it`s absolutely right. And then, you know, Mike Rogers came out in favor of it the other day.

CHARLIE ROSE: It totally in favor it or?

SCOTT MALCOMSON: He said arguments about, you know, no end to end encryption are just not worth having. And I ...

CHARLIE ROSE: So, the debate about encryption Mike Rogers said is not worth having. I missed that. So, I`m asking.

SCOTT MALCOMSON: Yes. Yes, he said that this is -- he would speak at the Atlantic council a couple days ago and he said these arguments over end to end encryption not worth having. There needs an end to end encryption. And for his perspective on ...

CHARLIE ROSE: Randall L. Stephenson an AT&T CEO said, he attacked Apple`s encryption efforts saying that it was not up to Silicon Valley to decide whether encryption is the right thing to do, that that should not be the decision of Silicon Valley. My impression is, you`re nodding like what? The, how could I read what`s in your mind, right now?

SCOTT MALCOMSON: There are a lot of decisions that I suppose might be better left to a democratically elected government but that just simply isn`t the way it works, not with the internet and not with companies on this scale, you know. I mean social media censorship is another one.

CHARLIE ROSE: I interviewed most of those people out there including Tim Cook, including Michael Rogers including, you know, most of them. And my impression is that -- and Secretary Clinton has spoken to this and other people have spoken to this in the political environment, that there is a real effort to find some common ground here. And that is not all or nothing.

SCOTT MALCOMSON: I think that`s right. And it hasn`t been these, you know, these arguments have been going on since the 90`s. They sort of -- they kind of keep coming back. The clipper chip argument and the backdoor argument, and the clipper chip argument of the mid 90`s and the backdoor argument now are not fundamentally different. This is a power struggle between large companies and governments over who gets to decide certain things.

CHARLIE ROSE: And you`re saying, companies.

SCOTT MALCOMSON: I think on the whole they have done a better job. They have a better track record with it and their motivated.

CHARLIE ROSE: No the reason you say it, what you say is companies?

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