culture & books

Milken, the sorcerer’s accountant with the ill-fitting toupee, who invented the books modern junk-bond market, thereby pro- viding the rocket fuel that launched the The Manichean World of Tim Wu red-hot leveraged buyout business and The Master Switch: The Rise and Fall of Information Empires helped push stock prices and CEO sala- By Tim Wu, Knopf, 366 pages, $27.95 ries to astronomical new heights. There is also the unforgettable Ivan By Paul Starr Boesky, king of risk arbitrage. His short- lived Reagan-era reign ended in pris- on, but not before director Oliver Stone or the past dozen years, several of the pioneers of news). The immortalized him in Wall Street as distinguished thinkers about law basis for Wu’s argument is the develop- the barely fictionalized Gordon Gecko, F and technology have warned that ment of the telephone, , and author of that eternal 1980s battle cry a golden age of Internet freedom may movie industries in the 20th century, of the MBAs, “Greed is good.” be about to close. The most influential and for people who are unfamiliar with As Madrick carries us briskly past alarm-ringer has been , this history, the similarities Wu finds these characters, past Reagan and who argued in his 1999 book, Code, that among these industries may make his Rubin, George Soros and Sandy Weill, under corporate and governmental pres- argument seem convincing. Angelo Mozilo and Alan Greenspan, sures, the Net could be flipped to serve The Master Switch is an entertain- right up to today, we see for the first time top-down control instead of individual ing book, colorfully written with paired clearly how deeply and systematically the freedom. In The Future of the Inter- heroes and villains, typically lone inven- entwined ideology, market innovations, net and How to Stop It (2008), Jona- tors wronged by corporate empire build- and politics of our long Nixon-Reagan- than Zittrain showed why this reversal ers. The best part of Wu’s book concerns Clinton-Bush era finally brought us to might come about as a result of popular recent struggles in the communications the global economy’s shattering near demand. Both the personal computer business. His accounts of the reconsoli- collapse—and its slow and achingly frag- and the Internet are what Zittrain calls dation of the telecom industry and the ile recovery. “generative” technologies, free to be built battle between and Apple are It’s this ability to move across politics, on without corporate or governmental superb. This is the terrain that Wu seems academic economics, and the intricacies permission. Besides generating positive to know best; in fact, the book looks of day-to-day finance at both the per- innovations, however, these technolo- like a case of history written entirely sonal and institutional level that makes gies invite viruses and other mischief, from the standpoint of the present: Wu this such a valuable book. Other volumes which drive people toward safe, reli- observed the conflict between the forces have admirably captured one or another able “information appliances” tethered of openness and closure in the contem- part of the story; none before Age of Greed to particular companies (think Apple’s porary world, and sure enough, turning has brought all the elements together so iPhone). Those appliances may be not to history, he found the same pattern clearly and comprehensively. Beyond his just convenient but even dazzling in their everywhere. scope, however, Madrick’s strength is design and performance, while subtly In the current battles over net neutral- his voice—his ability to present all this transforming the once freewheeling Net ity and other issues, my sympathies are complex history in a way that is neither into a corporate-controlled system. the same as Wu’s. Although I have never dry nor lurid but rather shrewdly intel- Now another book in the same vein, met him, Wu lists me in the acknowledg- ligent and easily digested. For the intelli- Tim Wu’s The Master Switch, presents ments as one of several authors to whose gent reader unversed in financial arcana, a historical argument that the infor- work he is “deeply indebted.” But despite Madrick’s will remain the benchmark mation industries are prone to cycles— some strengths such as his analyses of book for years to come. actually, he calls it the Cycle—in which recent conflicts between tech compa- In the end, it’s a sobering read, though, an initially wide-open industry gives nies, his book is deeply dissatisfying: because after showing us how we got way to a closed empire, until in time, The history he tells is oversimplified and here, there’s little Madrick can offer the empire comes under attack, and the misleading, and when he turns to what about the way out. But that is not his Cycle begins again. ought to be done, he ends up in a tangle fault—and we owe him thanks for what Wu’s title phrase, “the master switch,” of confusion, pulled one way by his nar- he has done. tap is a clever double entendre: Informa- rative and the other way by free-market tion industries switch back and forth ideas that he earlier shows have served Richard Parker teaches political between open and closed, and when they mainly as camouflage for corporate economy at Harvard’s Kennedy School close down, the result is centralized con- ambition. Like many who come out of of Government. He is the biographer of trol through a “master switch” (a phrase the tech world, he has an aversion to gov- John Kenneth Galbraith. Wu borrows from Fred Friendly, one ernment that distorts his understanding

the american prospect 63 of what has shaped the past and how to as a phenomenon of capitalism, invok- for freedom of expression depends on shape the future. ing Joseph Schumpeter on the role of the kind of industry in question as well entrepreneurs in bringing about bursts as policies pursued by government. At Wu’s argument revolves around two of innovation and “creative destruc- the founding of the republic, the United claims: The information industries go tion.” In still other places he writes of States created a communications net- through a predictable Cycle between the “exceptionalism” of the information work that fostered free expression—the open and closed structures, and “indus- industries, implying that something spe- Post Office. But the government didn’t try structure … determines the freedom cific to them produces the Cycle. invite rival postal firms to compete; of expression in the underlying medium.” To be sure, many industries go through in fact, it created a . That If both these claims are correct, free changes in structure, often from an early monopoly, however, was conducive to expression is periodically destined to competitive phase to a “mature,” con- free expression because of the policies be crushed. But neither generalization solidated market, and sometimes new Congress adopted, which subsidized the stands up to close scrutiny. technologies or government policies open circulation of newspapers irrespective of If the Cycle is to be taken seriously, those industries to new competition. But their viewpoint and spread postal ser- there needs to be a causal mechanism because these events do not come with any vice throughout the country. that produces oscillations between open- regularity, there is no law of the Cycle for Likewise, in telephone service, after ness and closure. Unfortunately, Wu the information industries. Wu’s discus- an early period of open competition never provides one. At times he talks sion is limited to the dur- beginning in the 1890s, the advent of about the Cycle as an eternal aspect of ing the 20th century. The Cycle doesn’t the Bell monopoly around 1920 did not all human history, as when he begins reliably show up in other countries, or bring about a decline in free expression. the final chapter with the wisdom of the in other centuries, or in other informa- In the early competitive phase, some 14th-century writer Luo Guanzhong: tion industries that he doesn’t mention. offices had needed both a Bell phone and “An empire long united, must divide; an The history of the print media—of book one from the local independent phone empire long divided, must unite. Thus publishing, for example—is not usefully company to reach all their customers it has ever been, and thus it will always conceived of as following the Cycle. since the two networks didn’t intercon- be.” Elsewhere, Wu presents the Cycle Whether industry structure matters nect. But the shift to one phone network didn’t restrict free expression. As in the case of the Post Office, what was crucial for expression was not industry structure INSIDE tHE WOrLD OF JIHAD, At HOME AND ABrOAD but the rules the government established for the network—in this case, common- JIHAD JOE carrier regulations that required the Bell system to treat customers and their mes- Americans Who Go to War in the Name of sages without discrimination. Islam Wu’s real concern about the structure of BY J. M. BErgEr the telephone industry is not free expres- Cloth; 978-1-59797-693-0; $29.95 $23.96 sion but technological innovation, and in MAY 2011 his selective account, AT&T engaged in a long history of efforts to suppress new ENDLESS ENEMIES technologies. But the reader should keep Inside FBI Counterterrorism in mind that during the era of the Bell BY rAYMOND W. HOLCOMB monopoly, virtually every major advance WItH LILLIAN S. WEISS in in the world Cloth; 978-1-59797-361-8; $29.95 $23.96 came out of the United States, almost all JUNE 2011 of those from Bell Laboratories. Here as elsewhere, Wu fails to provide any com- parative, international reference for judg- ing U.S. policy and performance. What’s also missing is any nuanced analysis of how government policy sometimes stimu- To order, call 1-800-775-2518 or lates technological progress, even in a reg- log onto www.potomacbooksinc.com. ulated monopoly, and sometimes inhibits Use SOURCE CODE AMPR11 to receive discount innovation (as American policy long did pricing. Offer expires 8/31/2011 in ceding too much control to Bell over devices connected to the network).

64 july / august 2011 www.prospect.org culture & books

Wu’s selective, Manichean history is here is that Wu’s Sarnoff parable does results. That blindness is especially nowhere more evident than in his treat- not explain what he thinks it explains— noticeable in his treatment of the his- ment of radio and television. His arch the development of broadcasting. If tory of computing and the Internet. villain is David Sarnoff, the longtime Sarnoff’s efforts caused the delay in “Coming of age concurrently with an president of the Radio Corporation of developing FM, other countries beyond ideological backlash against centralized America and founder of NBC, portrayed Sarnoff’s influence should have seen FM planning and authority,” Wu writes, “the by Wu as being in league with the Fed- radio spread faster. The typical pattern Internet became a creature of its times.” eral Communications Commission around the world, however, was for FM In Wu’s telling, Friedrich Hayek is the in squelching a series of independent radio to develop slowly because AM was Internet’s patron saint. Wu somehow inventors whose work threatened RCA— so well established. Australia, for exam- skips over the role of the Defense Depart- Edwin Armstrong (FM radio), Charles ple, began FM broadcasting in 1947, shut ment not just in creating the Internet but Francis Jenkins (mechanical television), it down in 1961 for lack of an audience, in financing almost all the early develop- and (electronic televi- and restarted it in 1975, but it still took ment of electronics and computers in the sion). “Sarnoff’s story,” Wu writes, “is years for FM to spread there. FM took off years after World War II. And it wasn’t perhaps this book’s most compelling par- in the United States in the 1970s. just money the Defense Department sup- able of the Kronos effect [a father eating Wu also argues unconvincingly that plied; it provided standards and guid- his children to prevent rivals from devel- ance, which amounted to—horrible to oping], and what bears most attention think!—planning. is the power of his particular methods. At one point in his treatment of the … Sarnoff managed his empire by using history of cable television, Wu says that government to restrict inventions, and Ted Turner hit upon the brilliant idea of hence the future.” using satellites to create a cable network The key FCC decisions about FM radio instead of relying on AT&T’s long lines. and television came in the late 1930s Then he writes, “To give credit where it and 1940s. To make his parable convinc- is due, the use of satellites to carry tele- ing, Wu has to leave out critical infor- vision” had originated with Home Box mation that would undermine his case Office. But, wait a minute, how did those that federal officials were in Sarnoff’s satellites get up there? pocket. In 1941, the FCC concluded a three-year investigation into network Sarnoff’s insidious efforts to dom- Following Wu’s principle, the early broadcasting targeted at RCA, which at inate television explain why TV that time owned two radio networks. proved to be so mediocre, “offering American republic would not have The investigation resulted in new rules programming aimed at the mass- created the Post Office or fostered limiting network ownership of stations es, homogenous in sensibility, the development of newspapers. and control of affiliates and forced RCA broadly drawn and unprovocative to divest itself of one of its networks, by design, according to the imperatives of In his final prescriptions, Wu says which became ABC. ‘entertainment that sells.’” But American he favors what he calls a “constitution- The omission of this history—indeed, television was devoted to mass “enter- al” rather than a “regulatory” system, the entire history of federal ownership tainment that sells” because of the limited though he hastens to add in a footnote limits in broadcasting—is especially number of channels at the time, the eco- that he doesn’t really mean constitu- strange in a book that claims industry nomics of network programming, and— tional in a “formal” sense. Actually, what structure determines the limits of free crucially—the formative political decision he means is regulation—he just can’t expression. The FCC, according to Wu, not to invest public funds in broadcast- bring himself to admit it. But the only “was obsessed with the perceived benefits ing. Sarnoff’s theft of Philo Farnsworth’s kind of role that Wu can imagine for of ‘planning,’” akin, he suggests, to Soviet discoveries was irrelevant. government is negative: “Government’s central planning—a false comparison in One of the odd things about Wu’s book only proper role is as a check on private general but especially misleading about is that although he criticizes broadcast power, never as an aid to it.” If the early the later New Deal, with its emphasis on and later cable television for offering American republic had followed that antitrust policy. After equating FCC regu- choices “only in the commercial range,” principle, it would not have created the lation with Soviet planning, how awk- he never mentions decisions about pub- Post Office or fostered the rapid devel- ward it would be for Wu to acknowledge lic spending as an explanation for that opment of newspapers, and American that the FCC sought to promote compe- pattern or suggests any remedy that democracy would have suffered. More tition by breaking up RCA and limiting would actually have worked. Nor does he recently, the United States would not concentrated station ownership. acknowledge the role of public-­spending have developed the Internet or public Yet the more fundamental problem decisions that contributed to positive broadcasting. Wu’s position is not just

the american prospect 65 wrong; it’s incoherent. In conflicts that pit opposed models against each other— books closed and open, let’s say—the govern- ment’s check on private power of one A Man With a Clear Conscience kind is an aid to private power of another The Age of Deception: Nuclear Diplomacy in Treacherous Times kind. Checking one side means favoring By Mohamed ElBaradei, Metropolitan Books, 340 pages, $27.00 the other; there’s no way around it. The trouble with The Master Switch is By Joseph Cirincione that Wu thinks he has a master key to the history and future of communications, and he doesn’t. A reader who pays close e warned us. On Jan. 27, 2003, order to disarm Iraq.” That, of course, is attention to the Cycle in its various itera- Mohamed ElBaradei told the Unit- what the administration did when, as one tions will notice a clever sleight of hand: H ed Nations Security Council that Bush official declared on March 3, 2003, The terms “open” and “closed” change in his initial inspections had revealed no “The inspections have turned out to be a meaning from one chapter to another. evidence of nuclear-weapons activities in trap.” Secretary of Defense Donald Rums- Wu says, for example, that with the fall Iraq. The next day, ignoring this new intel- feld portrayed ElBaradei as a bumbling of United Artists in the early 1980s came ligence, President George W. Bush pre- Inspector Clouseau and contemptuously “the second closing of the film industry.” sented an urgent case for military action claimed, “We know where they [Iraq’s But this second closing is not a closing in his State of the Union address, and The nuclear weapons] are.” in the sense that the first one was; , The Washington Post, In his final report to the U.N. Secu- 1980s brought no movie com- and most leading experts followed Bush’s rity Council on March 7, 2003, ElBara- parable to the Production Code imposed lead: Saddam was building a bomb, and dei demolished the central pillars of the in the 1930s. war was the only way to stop him. administration’s case for war: The famous Since Wu wants his readers to agitate By January 2005, the official U.S. aluminum tubes were not appropriate for for , he couldn’t very well inquiry by the Iraq Survey Group would centrifuges; the documents showing Iraq end his book holding to the notion that verify ElBaradei’s findings: Iraq had no was importing yellow cake from Niger the Cycle is inevitable. But his mythical weapons of mass destruction and no pro- were forgeries; Iraq’s capabilities had Cycle is a pretty good recipe for fatal- gram to produce them, and it was not deteriorated, not improved. But to this ism and passivity. Through a distorted making any “concerted efforts to restart day, the architects of the Iraq War say account of the past, he gives no sense that [its earlier] program.” By then, the war that faulty intelligence misled them. In politics holds much hope. Government was entering its third year. an interview on Fox last February, Sean policy, in Wu’s distorted recounting, is In his new memoir, The Age of Decep- Hannity asked Rumsfeld, “How did we mostly a record of regulatory capture tion, ElBaradei grapples with some tough get it wrong on weapons of mass destruc- and craven mistakes that Americans issues, but none brings out his passion tion?” Rumsfeld replied, “Our intelligence should be ashamed of—even though, more than the Iraq War. As the direc- community, the CIA, and the entire com- strangely enough, the United States has tor general of the International Atomic munity, concluded that he had them. So, for much of its history been a leader in Energy Agency (IAEA), a Nobel laureate, too, did the intelligence communities of communications, partly because of the and now a player in Egypt’s new politics, other nations. And it was a perfectly ratio- constructive role government has played. ElBaradei has had major roles in a series nal, reasonable judgment, in my view.” Of course, some political decisions have of events with global ramifications. This This is simply not true. The U.N. been mistakes—that’s why we have to behind-the-scenes view provides new inspectors provided accurate intel- fight for good policy, often against great details of key nuclear dramas, including ligence, and the Bush administration odds. What ought to be gleaned from North Korea’s nuclear program, the high- chose to ignore it. In an onstage inter- the past is not the eternal rise and fall tech bazaar of Pakistan’s A.Q. Khan, and view at a conference in November 2005, of empires—“Thus it has ever been, and the controversial inspections of Iran. I asked ElBaradei how he felt about the thus it will always be”—but the necessity Readers, however, will likely find the everyone-got-it-wrong excuse. “I simply of politics, at least for those who have opening chapters on the 2003 struggle was reading the data we were getting,” some clarity about it. tap over Iraq the most gripping. ElBaradei he replied. “I remember my last state- reminds us how “Western officials and ment to the Security Council when I Paul Starr, the Prospect’s founding media pundits … were pointing to circum- said I needed three more months. And co-editor, is the author of The Creation stantial what-ifs and characterizing them I remember I said, clearly, this would be of the Media, a history of the develop- as proof.” He quotes Vice President Dick an investment in peace. It didn’t work ment of communications in the United Cheney’s ominous warning to him during out that way, but at least my conscience States and Europe from the 17th to an early White House meeting that Cheney is clear.” Not many in the Bush adminis- the 20th centuries. was “ready to discredit the inspections in tration can honestly say as much.

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