tv Book TV CSPAN February 20, 2011 8:00am-9:00am EST
turn because be the war with russia would have continued, japan -- a far smaller power than russia -- eventually would have been ground down. so the japanese leaders wanted to blame the outcome on the americans, but still have the americans negotiate an end. so it's -- one has to be careful in describing the degree to which the japanese were actually insulted by all this and how much this was done for domestic political consumption. anyway, roosevelt definitely did not want to antagonize the japanese because as roosevelt discovered, roosevelt was one of the strong advocates of annexation of the philippines. and in 1898 and 1899 that seemed like a really good idea. but what roosevelt did not sufficiently appreciate was that the american people were, and i might even say are, essentially anti-imperialist at heart. and americans never, not from
1899 not until 1946 when the philippines got their independence, never sufficiently garrisoned the philippines against potential attack by whom? well, japan was the expansionist country in that part of the world. so roosevelt by 1905 was describing the philippines as, his term was our heel of achilles. it is all that gives us concern in our relations with japan. because this was an american colony, but it was indefensible if japanese made a concerted attack on the philippines when h was why roosevelt had to deal very gently with the japanese. and i'm not sure if there was another agreement besides this gentlemen's agreement because i don't know of the secret treaty you might be talking about. yes. >> [inaudible] >> i'm curious about the current state in this country manufacturing outsource, robotics, name it.
and the american dream, what are the young people going to do if they can't go to war? we've got a big deficit. what is your prognosis for the future? >> i respond to that question two ways. first, i will say that i describe this period of american industrialization, the emergence of the modern capitalist system. and i describe that it began with a war, it -- the period that i talk about in my book closes the war, but then war becomes a regular feature of american life through the 20th century. and i would say from this -- and you're certainly free to disagree -- but i would say that america's economy, modern economies has never demonstrated an ability the thrive in the absence of high military spending. and if you look at the times when the united states was not spending a lot on the military, well, between world war i and world war ii, you know, ten
years of that was the great depression which is not a good indicator. and sense 1945 -- since 1945 spending on the military has been consistently high. those american leaders who were responsible from the test of world war ii to the peace that was supposed to follow were gravely concerned that they knew perfectly well that it was the federal spending during wartime that had pulled the country out of the depression. and they asked themselves, well, what happens when we pull the plug on the federal spending? are we going to go back into a depression? they were seriously concerned. and one of the measures they took to try to insure that it not happen was the embrace for the first time in a consistent and serious way of the american government of free trade. because they harped back to the 1890s when there was a belief, we've got to find foreign markets. dean acheson who at the time 1933, 1934, the undersecretary of state for economic affairs, he went before congress and he
said, we can't figure out how we're going to run the american economy without access to the foreign market. and this was primarily behind america's decision to go in favor of free trade. now, in -- there were -- i'm calling it the modern golden age of the united states. the two decades from 1945 to 1965. i call this golden age for two reasons. one is that, well, for people of my generation -- i was born in 1953 -- for people of the baby boom, these are the folks who are running the country these days, these are the years of our childhood. and there is this recurrent tendency of humans to look back to a golden age. and if you quiz people, the golden age usual liquor responds roughly with their childhood. when life was simpler. well, of course life was simpler. you were 8 years old. [laughter] so there's part of it. there's this thinking, boy, if we could just get back to the way the country was in 1950 or
1960, then all would be well. so part of it is this individual nostalgia. but part of it, also, is the historically anomalous position of the united states during this time because in a fundamental way the united states was the only victor of world war ii. the united states was the only country that came out with a stronger economy than it went in. america's principle industrial competitors were either gravely weakened like britain or absolutely demolished like germany and japan. and so it was easy for the united states to embrace free trade, yeah, level the playing field because we've already leveled the industrial capacity of all of our competitors. [laughter] and so for 20 years until the german and japanese economies in particular got back on their feet, free trade worked to america's benefit. and big companies like general motors could agree to big deals
with the united autoworkers knowing that there was no competition. if you're buying a car in the united states in 1955, it was going to be a detroit-built car. and so there was this period, it was a golden age of the american political economy. and it was a time when somebody could graduate from high school in pittsburgh and go to work in a steel mill in pittsburgh, and with, you know, no more education than high school have a solid blue collar, middle class existence. because americans were competing only with themselves. and there is this belief that if somehow we could get back to that time whether you're a supporter of organized labor, whether you're a supporter of, you know, one breadwinner in the family, whatever you might be thinking of, it's not going to happen because it was this moment of historical anomaly. it wasn't by the virtue or the particular productiveness of the american economy, it was because
the rest of the world was flat on its back. and the rest of the world eventually was going to come up. so just to point out organized labor, there were two decades in american history where industrial unions were strong, and those are the two decades of this period. before the second world war, industrial unions had one hell of a time. they were engaged in strikes, they had to deal with unfriendly courts, they just could not make much of a dent. but then there was this period from '45-'65, but that was because there was this essential unspoken bargain between the big unions and big corporations. because they could get good deals, and they could -- corporations could pass the deals along to their consumers because the consumers had no choice. but once the consumers could start buying nissans and toyotas, then there was a choice. and the industrial union, the deal breaks down. and so when americans complain about globalization, well, it's partly globalization, but it's
partly the fact that the world of today is not the world of 1950, and it couldn't be because the world of 1950 had been built or, i guess, destroyed by world war ii. and that couldn't last unless, i suppose, you wanted to have a world war iii and do it all over again. but, fortunately, nobody's recommending that. okay. >> i recently read a book called woodrow wilson's war, and the thesis was had not woodrow wilson engineered congress to declare war on germany in 1917, the balance of power would have been, would have remained in europe, and there wouldn't have been -- after the treaty of versailles, there wouldn't have been the rise of hitler in world war ii. i'd like to get your opinion on that. >> now, that's an interesting counterfactual. i find counterfactual history to be interesting and constructive, but for no more than about six months or a year beyond when you
diverge from what actually happened because then you have no way of knowing what would have happened. so i haven't heard of this argument in detail, but one supposes then that if germany wins world war i without american intervention that there's no rise of hitler and the nazi party and, i mean, maybe. but, you know, if, you know, if hitler had been run over by an austrian streetcar, things would have been different too. so i really don't know what to make of that. yes. >> i don't know if gentleman is still here, but i think the secret understanding was america looking the other way when japan invaded korea. 1904, 190 -- >> [inaudible] >> i'm sorry? >> oh, the agreement. >> oh, my god. i don't know anything like that. >> yeah. the american secretary of war
and his japanese counterpart. >> there was a book written about it when some of this information was declassified. as you said, roosevelt and the others saw japan as westernized and that was a pacifier. sure, you can invade korea, we'll look the other way and take it over -- >> okay. well, to some extent that might well be true. in fact, roosevelt did consider japan at least until about 1904 to be a force for progress and good in east asia. but there was also a coldly pragmatic calculation. if japan is going to invade korea, what's the united states going to do about it? most americans had no idea where korea was, and the thought that americans, what, should go into battle for korea, that would have boggled anybody's mind. and, you know, this was -- if war with spain had been presented as a war, presented ahead of time as a war to conquer the philippines, it
would have gotten absolutely nowhere. the only way americans could accept this projection of american power beyond american shores, the first time with, you know, the very miles per hour exception of the barbary wars, the first time they projected power beyond american shores was 1898. cuba was only 90 miles from florida. if somebody had said, oh, we ought to project american power 9,000 miles across the pacific, nearly everyone would have said, you've got to have your head examined. it is said even william mckinley had to get out a map to see where the philippines were. do any of you remember where you were when you heard of the invasion of grenada in 1983, and the newscasters had to figure out where in the world it is. well, this was very much the reaction of americans to the news that commodore dewey had
won the first battle of the war with spain. because everybody was looking toward cuba and then, what? the philippines? way over there. so, yes, the basic american attitude toward east asia from 1895, the first -- 1894 and '5, the first war when the japanese take on china and win, this is kind of a surprise to people because japan's small, china's really big. ah, japan is a country we need to pay attention to. not that we're going to do anything about it, exactly. at least nothing more than very briefly in 1898 and 1899 the u.s. state department issued a statement of america's hope that the imperial powers not carve up china. to the exclusion of the united states. and then roosevelt's decision to try to mediate an end to the russo-japanese war before the japanese got too strong. that was the basic idea there. but that was as far as the united states would go.
they wouldn't even garrison their own colony which is why the united states decided eventually to give it up. >> thank you so much. you described war fueling the american economy, and during the last few years with iraq and afghanistan we do not have war fueling the american economy. it seems to me there's a few things going on here which indicate a paradigm shift. one, americans don't have skin in the game emotionally, and there's a lot of outsourcing of what would have in the past fueled the american economy. could you speak to this paradigm shift and how you see it playing out? >> yes. whenever the federal government spends money on anything, there are costs and benefits. when the united states spent a whole lot of on, -- of money on,
to fight world war ii, okay? i've described this as a stimulus to the american economy but, of course, it was borrowing against america's future. and, essentially, it was we will tax, in essence, the future fute generations to restore economic health today. of course, it's to fight the war and win the war, but the economic effect is as i've described. when the united states and when the united states fights the war in afghanistan and iraq, it does the same thing. it borrows money to fuel this, this contest. there is an economic stimulus that comes from spending on the wars in iraq and afghanistan. now, it's not as direct and great as it was in the 1940s because much of it is spent in other countries and doesn't find it way back to the united states. but there is another element that is probably more central, and that is when the united states borrows money today, instead of borrowing money from future american generations, it borrows money from foreign
countries. and if you're simply borrowing from future generations, it's a debt, as was often said, we owe ourselves. yeah, one generation owes another, but it gives no foreign country any particular leverage, or to put it another way, by and large the interest of the creditors and the interest of the debtors align if they're all american. but if creditors are the bank of japan and the bank of china and other sovereign wealth funds, then it's unclear that the interest of the creditors align with the interest of the debtors. when the united states ran these huge deficits during 1942, during 1941, '42, up to '45, it was some concern to the financially minded, but it came l at a moment when the united states was the worlds' largest creditor. everybody owed the united states money. and when you are a creditor, you have a freedom of action you
don't have when you're a debtor. the united states now is far and away the largest debtor in world history which seriously constrains america's freedom of action because if chinese decide that they no longer want to hold american dollars, then interest rates are going to skyrocket, the dollar will get weaker, and people will have to figure out what in the world are we going to do? the chinese are already making noises many that direction. they're not going to dump their dollars overnight because they've got so much of them, but they're talking about diversifying. every time they talk about diversifying, american money markets get very nervous as well they might. so the biggest difference, i think, is in america's financial position with the rest of the world. and when you owe the rest of the world money, you've got to pay attention to what the rest of the world thinks. if you just owe the money to yourselves, well, you can go about your own business largely ignore what the rest of the world thinks.
>> is another factor in the wars of the late 19th century that the unite had an infear yorety complex and many americans thought they were still regarded by the europeans as a frontier country and the edges of civilization? >> okay, very interesting question. were the wars of the late 19th century perhaps a manifestation of indiana inferiority complex? i'm going to answer, yes, and i'm going to remind you something ed said in the introduction. i live in the texas. i'm not a native texan. i got to texas 28 or 9 years ago. and one of the things that i've observed about texas -- well, texas is a lot like the rest of the united states only more so. [laughter] and in one respect that i'm thinking of in particular, there is a lot of swagger in texas. and a lot of people who didn't like president george w. bush,
you know, just the way he carries himself, he swaggers like a texan. well, there is in texas -- i'll go ahead and use the term texas, in the texas national character, there is a combination of this swagger, but also a closet inferiority complex in that, you know, the rest of the country thinks that texans are bump kins or cowboys or something. and texans can't help but be influenced by this. part of it is great pride in being texans, but there's also this sneaking suspicion that the rest of the country or world is not as impressed as the texans like to profess to be. [laughter] and i would contend this is something that's going on in the late 19th century. in fact, i'd carry it forward to american foreign policy almost to today in some regard and that is there is, of course, the strong current of american exceptionalism.
this is the best country on earth east -- either because god made it or or we made it so. but at the same time at least until the first world war, european civilization essentially self-destructs, and after that it's kind of hard for europeans to take on any kind of superiority, superior attitude toward americans. but in the period you're talking about, theodore roosevelt was an anglo file and a lot of people he hung out with -- woodrow wilson was a great admirer of the british parliamentary system and couldn't make sense of the american presidential system despite the fact that he became one of the more effective american presidents. but, yeah, i think you're right. so if europeans are out collecting colonies, it's almost as though americans can't decide for themselves, okay, whether we should or we shouldn't. maybe that sounds a little too harsh.
you know, maybe we don't want colonies today, but what if colonies turn out to be handy in the future? well, if we don't act now, there won't be any possibility for colonies in the future, so it's a safe bet. one last thing, and this has to do with countries get the foreign policy they can afford. to some extent foreign policy and military policy is the equivalent of an insurance policy. 100 years ago, well, you may have heard of the series of terrorist attacks on wall street during the years right after world war i. and there were just one with series of bombings after another. and there was a huge scare. and there was a thought that many of these terrorists had foreign, especially russian, an anarchist root. but it didn't occur to anybody to think that the united states ought to invade russia. now, if 9/11 had occurred 100 years earlier, it wouldn't have occurred to anybody to invade afghanistan. and certainly not to invade
iraq. but the fact is that by the beginning of the 21st century, the united states was so wealthy it could afford to take out insurance policies. if you can attack al-qaeda in afghanistan, then it makes it less likely that al-qaeda can attack us in the united states. and nobody bothered to account the cost. well, there was somebody in the -- i can't remember who it was exactly, somebody in either the bush white house or the pentagon who said, you know, this war is going to -- if we go into iraq, it's going to cost $100 billion. he was immediately followed. well, needless to say, it's cost a whole lot more than that, but there was no serious consideration in congress about this. i, i'm going to go, i'm going to be so bold tonight as to say we are close to the end of america's wars. there aren't going to be any more american wars. okay, i'll back down a little bit. but there are -- >> [inaudible] >> i'm, i'm fairly confident
there will be no more wars like the korean war or the vietnam war or the gulf war or the war in bosnia or the war in iraq or afghanistan because those were, those are wars that are elective wars. they were not forced in any direct way upon the united states. we could argue a little bit about afghanistan; but you could have just bombed the al-qaeda camps and come home. you don't have to remake the country. it's an era that started with the war of 1898. and we've come to the end because we've run out of money. in the 20th century, americans could have guns and butter both. we can't have guns and butter both, we're going to have a hard time just having butter. one last thing and then i will stop. [laughter] and that is that some people say that social security is not going to survive, you know, social security's going to become bankrupt so don't count on social security if you're 25 years old and just starting your career. those people are i don't think, and i'll tell you -- are wrong, and i'll tell you why. because social security's going to be the last federal program standing.
social security's going to be there after the pentagon has been vacated and leased out to somebody else. why do i know this? because every year, maybe it's every six months, i never can keep this straight, i get, you get a statement from the social security administration, and what does it say? it says you have an account balance. here's your account balance, and your name is right next to that account balance, and you start to think that, yeah, there actually is some money in some place in washington with my name on it. and if somebody takes that away, i'm really going to feel hard put upon. i don't get a statement of account from the pentagon. i don't get a statement of account from the department of energy. so you can cut the pentagon, and i'm not going to feel as though you took away something that's owed me. be few you -- but if you start messing with my social security, i'm really going to feel the pain. by the way, do you know why it's that way?
it's that franklin roosevelt in 1935 deliberately designed it that way. he said, he knew this isn't an insurance policy, but let's make it look like an insurance policy, and he said, and i quote, that's so no damn politician can ever take this away. and he was very right and very effect e. thank you very much, it's been a wonderful evening. [applause] >> h.w. brands is the author of several books including "the age of gold "and "the first american" which was a finalist for the pulitzer prize in biography. he is a history professor at the university of texas. visit his web site, hwbrands.com. >> c-span's book, "abraham lincoln: great american historians and our 16th
president," is the unique perspective from 56 journalists and writers from his early years as a lawyer to his presidency during one of our nation's most troubled times and his relevance today. and now for presidents' day and while supplies last, the publishers are offering the c-span viewers the hard cover edition of abraham lincoln for the special price of $5 plus shipping and handling. go to c-span.org/books and click on the abraham lincoln book and be sure to use the promo code lincoln at checkout. >> we're here talking with ralph reid about the confirmation. tell us what this is about. >> this is a fictional account of a sort of knockdown, drag out mother of all supreme court confirmation battles. it involves the nomination of, really, the fifth conservative on the court, kind of ultimately moving the court in a irretrievably conservative direction, and that nomination
goes to a democratic senate. so you can imagine it's a pretty pitch battle. when i actually wrote it which was in late '08 and early '09, it was the first hispanic supreme court justice ever nominated, and then barack obama kind of stole my thunder and nominated sotomayor. sonyasonyasonia sotomayor. so i changed it to the second hispanic. >> and, well, what led you -- how did -- how were you inspired to write this? >> well, i've been involved in not every but just about every supreme court confirmation battle since bork in '87. and i was at the christian coalition in the '90s for the thomas nomination, and a lot of what's in the book really happened including some of the dialogue, some of the specific anecdotes, some of the meetings either happened during the roberts or the alito or the bork or the thomas nominations. and i just decided to
fictionalize it because i think the confirmation process has really become broken. i think what used to be advise and consent has become search and destroy. there's been an ideological litmus test. i think that tends to be one-sided, frankly, and i think it's unfortunate. and i wanted to show it in a way that was accessible to the average reader, and that's why i chose to do it with fiction. >> and where do you see the actual court going? >> well, it kind of depend on what happens in 2012 and who else retires. i think the general conventional wisdom which i tend to subscribe to is that you have a court that is evenly divided, 4-4, with justice kennedy as the swing vote. sandra day o'connor used to be the swing vote. she's now been replaced by sam alito, so it's really four reliable conservatives, four reliable liberals. kennedy's the swing vote. so unless and until kennedy
retires and is replaced either by barack obama or by a republican, it's kind of likely to stay that way. >> you haven't had any recent decisions come as a surprise or do you think that the court pretty much stays along it ideological lines and there have been no surprises in recent years? >> i think there are always surprises because i think there are people like scalia and thomas who while conservative tend to be very free speech and first amendment oriented. so sometimes on privacy issues and things like that they may go in a more, for lack of a better term, libertarian as opposed to a traditional conservative direction. but i tend to think, as i said, it's a 4-4 court with a swing vote, and we've got some very big issues pending before the court. i mean, we're going to have whether or not obamacare is constitutional is going to be decided by this court.
it looks like we have a california marriage decision that is on its way to this court. and i tell you what's funny is in the confirmation, there's a marriage case out of california pending before the supreme court, so i guess life is imitating art or vice versa or a little bit of both. >> thank you very much for your time. >> thank you. >> coming up, tim wu presents a history of media consolidation. he looks at how film, radio, it's and the telephone began open to experimentation only to be closed due to corporate or control throughout each industry's maturation. he questions that the internet will follow the same path. he discusses his book in new york city. it's just over an hour. >> the dean of the graduate school of journalism, welcome, everybody. this week is, maybe every week
is a little bit this way, but this is our sort of media and telecommunications policy week here. we have an event tonight, we have another event on thursday night featuring a speech by fcc commissioner mike copps with a number of respondents to that. so what's, what's all this doing at a journalism school? when i was just starting as dean in the fall of 2003, i was sitting at my desk one day, and the phone rang, and i picked it up, and it was a young woman who was a senior at harvard, and she said i'm writing a senior thesis on the media reform movement. and what i want to know is why is this movement taking place with no journalists ever present at any meeting, convention, conference, etc. and i said to her, well, that's
a good question. i thought that probably wasn't a good thing, although i think i know part of the answer which is for journalists particularly, i notice that of the journalists in the audience, they're a little skewed toward broadcast journalism. so you're kind of off this hook, but certainly for print journalists, we like to imagine ha we are riding -- that we are riding across the prairie on our white horses and practicing journalism, and there is no policy context that matters to us except freedom of the press maybe. maybe reporter shield laws. but i think, actually, you know, the better metaphor would be we're playing on a basketball court or a football field or whatever sports metaphor you want to use, and the way our game unfolds depends on the shape of the field and what the rulebook says. and that's where media and
communications policy comes in. so it's, it's my hope by having these events that we both generate some more interest in the school and in the journalistic community in these areas and get journalists into the conversation, and in so doing we would express sort of the journalistic interest in these issues which i hope to get to tonight. the full disclosure here is that in the two books we're going to discuss, there's very little about journalism, but i think implicitly there's a lot about journalism. so one of the tests is how much of that we can bring to the surface. it's one of the pleasures of being at columbia university is you get to be colleagues with the people who are essentially creating the discourse on a
subject rather than just sort of discussing the work of the people creating the discourse. so here we have two books, both published this year -- i should switch them. "network nation" by richard john of our faculty, and "the master switch" by tim wu of the columbia law school faculty. they're on kind of somewhat related subjects, although in other ways they're quite different books. and we're hoping that we'll get the two authors to disagree somewhat to make the evening more entertaining. [laughter] i would say, though, they agree about a few things if, i'll try this out on you and see if you agree that you agree about these things. they agree that neither is a technological determinist, that
is in the general conversation about the internet in particular and telecommunications in general is a sense of, poof, the telephone is invented and everything just naturally flows from that. poof, the internet is invented and everything flows from that. both authors in different ways would argue quite forcefully that's only part of the story, and it's also when a new mode of of communication comes along, there starts to be a battle royal involving government policy on the one hand, business interests on the other hand and fights over, to use my earlier metaphor, the shape of the playing field. so they both draw forceful attention to that and say it's really not useful to think of the technology itself in a vacuum. if that's fair. and i'll, i'll leave the rest
until later. i want to begin by just asking each of them to give a very brief kind of, the kind of thing you're used to from book tour, short description of the book and this main subject and spine of the argument. i'll take them in chronological order, that is richard's book was both published first by a few months, and it's set mostly about 100 years earlier. [laughter] so i should also say one of the things the books have in common is they share a passionate belief that someone, very few people in the audience have probably ever heard of, theodore vail? does that name ring a bell? he was one of the most important people in american history. so you'll get maybe some of that too. so, richard, why don't you start, and then we'll go to tim, and then i'll ask you some questions. >> good. thank you very much. the book that i wrote is an
attempt to write the history of electrical communications going forward. that is to say to tell the story beginning in the early republic before we had electrical communications, ending the story with the consolidation of the bell system which for much of the 20th century as tim and i agree was the centerpiece of the american information of infrastructure. so i tried to tell the story forward rather than backward. to tell the story, what i try to do is to show how the strategy of the leading players who were business leaders almost without exception, their strategy was shaped by the rules of the game or the political economy in which they operated. so structure shaped strategy. in the case of the telegraph, samuel morse emerged in a political economy in which the rules of the game favored government ownership. post office was a government monopoly, morse thought the telegraph should be too.
well, it didn't work out that way. it turns out a number of players, including powerful new york editors, were frightened at the prospect of the telegraph destroying the metropolitan press. they used state legislation, they also used their own collective power to establish a new regulatory regime which i call antimonopoly. and the antimonopoly regulatory regime, the idea was to promote competition among telegraph companies, among network carriers. and that competition persisted for a couple of decades until lo and behold, the greatest antimonopolist of them all, jay gould, got control of the telegraph network in 1881. he was also the most hated finance ear of the age. it's hard to think of anyone who was as hated as dpowld. you have antimonopoly rules of the game leading to what was effectively a duopoly.
there were two companies in the 1880s. the business strategy that those firms pursued was business oriented, and it was very narrow. it may come as a surprise ha western union, which was the main provider of the telegraph, never aspired to provide access to ordinary americans to spend information over long distances. if you want to communicate with someone in california, boston, send a letter. that was the company policiment the case of the telephone, the story is extremely different. and this isn't a matter of the technology, a matter of the rules of the game. telephone business was never unregulated in the way or lightly regulated in the way the telegraph was. you needed to get a municipal franchise, and to get it, you were thrown into municipal politics. and in new york and chicago that got pretty down and dirty. in order to escape the clutches of the extortionate aldermen, a
second generation of telephone managers decided they were going to try to popularize the medium which was very bold because it turns out there were a lot of reasons not to expand the telephone network. there were no network externalities of the kind we today associate with the internet or very, very few. but the second generation of telephone managers did this. they did it in new york, they did it in chicago, many other cities. the telephone became a social medium around 1900 with the presumption that ordinary people should have access to it. that's a remarkable achievement that was the achievement of bell operating company managers. the story changes once again in the 19 aughts following the collapse of the rivals to this group of telephone operating companies which we can call them bell operating companies, the dominant group. dominant because they controlled patents and had control over resources and so on. they were rivals called the quote-unquote independents. they collapse by 1907, certainly
by 1910, and this leads to a change in the political economy where you have the new york state legislature in 1910, also the congress declaring telephone common care carrier. and this is where vail becomes important. vail had little to do with the popularization of the -- >> tell us who vail was because that was a tease on my part. >> all right. who was vail? vail was the telephone manager who got into the business very early. he was a plunger, he was a speculator, he liked to invest in all sorts of fliers and all sorts of new technological kind of whiz kid ideas, and he was lured away from a very good job from the railway mail service where he developed this very capacious vision of network expansion. his ideas were rooted in the government in the 1870s, post office being the largest organization in the country, one of the largest in the world. he was lured away to take a
flier on the telephone. and it so happens that the consortium that he ended up with got control of the patents in 1879. there was this struggle involving jay gould who was at that time attacking western union, this is before he got control of the telegraph. vail then becomes for a couple of years manager in new york nek city he has to put the wires underground and, very briefly, the president of a very fledgling speck speculative ven, american telephone and telegraph which was a very small part of the network, and it lost money until the 190s. it was -- 1920s. it was not that important. but he was president of that and more importantly, president of metropolitan telephone. he leaves the business for 20 years, he almost went bankrupt in boston. came back in 1907, a consortium of first generation telephone managers, a new banking group in new york which j.p. morgan was important. he came in, and what he tried to
do was to create -- was to bring to fruition his lifelong dream which was to bring together the telephone and the telegraph which if he had the word, we would have called telecommunications. he got his dream fulfilled 1909 when he bought out western union and for a couple of years it looked like the telephone company, at&t, was going to provide universal service which meant a number of things including linkage of low-cost, short distance telephone with low-cost long distance telegraph. in other words, it was vail who helped to popularize the telegraph for the first time. this ran afoul of the justice department, and in 1913 the attorney general, mcreynolds, brokers a settlement, forces vail to give up western union. so he's very important in helping to create a kind of public face for bell, and he helps found corporate/public relations, he helps associate bell with technological
innovation, with long distance which is a public relations coupe for bell. not that important commercially, but hugely important in the realm of public relations. but he loses in a number of ways. he doesn't control telegraph, during the first world war he tries to get control of cable, doesn't control cable, can't control radio. in some ways a tragic figure. but the bell system that he helped to establish and helped to really put on a footing where the stockholders are neutralized, no longer a problem for people like jay gould where the users are relatively happy and most important of all, where the independents are saved. because if independents had continued to fail and cause problems in the state legislatures as they have between 1907 and about 1913, it might have destabilized the telephone business. so everybody ended up happy. the independents got recognition that the claimed, and that was vail's doing too.
>> so the question you are never supposed to ask a historian -- >> yeah. >> -- what is the lesson from this that would be interesting to help us understand the fights goingen over the internet today? >> very interesting. vail's broad vision for telephone which he articulated and tim and i both write about this in some detail, universal service. we have a different explanation for why it came about, but this was a response to federal legislation. congress decreed that the telephone and the telegraph will be common carriers which is a term of art. new york state legislature declared that also in 1910. the broad vision for the telephone was a response to that piece of legislation which made it clear that there was not going to be competition. the telephone business, no one wanted competition in the telephone business after really 1907 or certainly after 1910, but it was going to be on a stable foot, and the investors were going to be neutralized. that is to say there was going to be no financial juggler ri in
the telephone business, and that established a telephone network on a sound footing that made it possible for the u.s. telephone network to be by far the finest in the world, and it helped to create a solid, steady stream of revenue that in bell labs established in 1925 would be directly responsible for some of the most important innovations including the transistor which, of course, is the key innovation in the electronic age. so the analogy for journalism and the takeaway for today was, i think, the money that made possible bell labs came from ordinary telephone users, big cities. they didn't have any interest, really, in supporting bell labs. but they got reasonably good telephone service, local -- because that's all they wanted for the most part -- and that money went to bell labs, and bell labs then acted as a defactor national -- de facto national laboratory. it was only possible because of the extremely come my candidated regulatory -- complicated
regulatory regime in which it operated. no different regulatory regime in telegraph, antimonopoly, not cross subsidies, you didn't have the public benefit. >> that's a perfect cue to throw to tim who, i think, will vigorously disagree with some of that, although maybe not all. i just want to get to the local news angle. i just want to point out that the title of this book is a quote from fred friendly from his days as a columbia j school professor. and fred's widow, ruth, is here tonight, so welcome. and, tim, over to you. >> sure, thanks. first of all, thanks for welcoming a relative outsider to the world of writing and journalism. and back when i, back in the 1990s i worked in silicon valley in the dot.com industry,
and there was one thing that we were absolutely certain about, absolutely certain beyond any other question, that we were living in this times without precedent. anyone could start a web site, fortunes were being made overnight, the internet was radical, was different. there had nothing been leak it before in human history, and there would never be anything like it again. as i got into academia, i started to wonder whether, in fact, that was true. 100 years ago graduates of columbia university as opposed to being interested in start-up or an app company which is sort of a popular career choice today might have thought about starting a telephone company. in the 1920s you might have started thinking about starting a radio station. it turns out that all of these media were at one point open,
competitive entrepreneurial industries. it turns out that we've lived the internet revolution that moment, that kind of environment where things are open, competitive, entrepreneurial, everything seems to be different, that we have been there before. so the reason i wrote this book is i wanted to see what had happened to the other darling, exciting new media of the 20th century. i had wanted to see whether by see what had happened to the enthusiasm and utopia of early radio, the excitement and competition surrounding farmers who were setting up their own phone networks in the west, what had happened to those eras. and what my book is about is about the fate of, essentially, these moments of openness, that there, i suggest, is a long cycle in the information industries between a more open,
competitive entrepreneurial phase and a more closed, integrated, higher-quality and often monopolistic phase dominated either by one company, at&t being the best example, nbc being another and cbs in their time. the third great example, or dominated by a cartel, hollywood being the greatest example. film, competitive industry eventually run by a cartel. so i wanted to know -- and then, finally, ask in our times, is the internet destined for the same future? in other words, the sort of openness and entrepreneurial that we took for granted working in silicon valley that we assumed was forever now that we'd had the revolution, whether it, too, is destined for the same fate of every other new medium and whether we have a choice or not, whether we can change and maintain a more open medium if that's what we want,
if we like things the way they are. >> so that's a lot to talk about here. i want to, i guess, chut to the chase -- cut to the chase in some extent. by the way, in about 15 minutes i'm going to be taking questions from the audience which must be given from this mic, so be thinking. again, i'm sort of canting this a little toward journalism although not completely. you both agree that when this process that you're talking about, tim, happens, the bad news from a public interest standpoint is, is much less diversity of, i guess you'd call opinion or speech or content. >> right. >> because there is a sort of small group of established players. but the upside is some, you know, higher level of quality,
maybe of service and of content. there's a very brief section in your book where you, you know, make reference to the so-called golden age of television. >> right. >> and, you know, bell labs and that we tend to be nostalgic for these old developlies and monopolies because they can use their stable position or do sometimes to create public goods that are very, very expensive and that can't be create inside an open distributive system. so for us in the news business the big question is, if you move the master switch to openness, do you lose the ability for anybody to produce high quality content? >> right. >> so i'm curious for your thoughts on that. >> so you're -- i'll start by
avoiding the question for a minute and say that -- [laughter] it is a hard question. but i'll start by avoiding it for a minute to say even though i've agreed to take the side of open, in truth, if you read the book, it reveals a kind of profound ambiguity with monopoly. i both sort of worship it like a lot of people do in the way people very openly worship monopoly in -- men like vail would just say this is the best, the it's the biggest, it's the greatest. there are these golden ages that are undeniable. you know, and you have the benefits in journalism is oneover them. the birth of journalism has a to do with the structure that can support the kind of journalism we hadn't seen before the 20th century. but to me the drawbacks overweigh the advantages in the long term. the problem with monopoly over the long term is while it starts
promising and results in, often results in a golden age, over the long term entrenchment leads to paranoia, stagnancy and abuse. over the long term. you know, cbs and nbc when they started had a lot to say for them. by the 1970s things had gone too far. and so what i guess i suggest in my book, a more modified version of my position is it is important to have the sort of structures that can support quality things, but not at the cost of entrenching a monopolist for so long that they just lose any sight of what they have to do. and i think that's what happened with many of the media organizations in this country by around the '60s and '70s. >> well, i get too far off question, one is sort of prescriptive and one is descriptive. you do a wonderful job in the
book of describing this sort of tragic process you just described briefly where a new communications medium comes along, all things are possible, there are these wonderful dreams of how fabulous it's going to be, this, the title comes from the now long forgotten period when there were such dreams about cable television. some of you may remember those days. >> uh-huh. >> and then, inevitably, the bad guys take over and get their hands on the master switch. >> yeah. >> how can that not happen again if it happens every time? >> right, right. what journalists need to understand -- >> uh-huh? >> -- is the importance of creative destruction in the journalism industry. the very tech people are, oh, we have to have a dynamic industry. we want to see companies die and be destroyed. journalists are afraid of death. [laughter] they have a poor relationship -- >> that's so unfair. [laughter] >> journalism and media people have a very poor -- i mean, look at these brands. new york times has been going for, that's unheard of in other
industries that have any sort of turmoil or natural market process. to have brands that last for hundreds and hundreds of years and have these dominant positions. journalists are exactly two -- what is needed, what is needed in journalism is a dine schism, a little bit of creative destruction, and it's not comfortable, and journalists will be upset about it. but in the long run, it will be good for you. >> right,. [laughter] you're switching from prescriptive to descriptive. the model, i think richard would say this based on my reading of his book is, tim, you're dreaming because, you know, any communications medium as powerful as the internet just cannot, you -- the, you know, liberal reformer/public interest advocates just cannot ever build a big enough fence around it to keep the process that's always happened in the past from happening again.
so just as a practical matter how do you think we can prevent this process that you've convinced us is cyclical from happening in this instance? >> right, sure. this is, the answer is related to my, some of my other work on things like net neutrality which is to say there always needs to be channels whether it's the internet or other channels where the new can challenge the old. >> right. >> where "the new york times" gets a run for its money, where nbs is suddenly facing off against youtube videos. there has to be these channels. and the problem with -- the problem -- i'll just go on the offensive and say the kind of worship of managerial capitalism in your book is it's too incense ty to the fact -- insensitive to the fact that managerial capitalism tends to make market entry very difficult. just put it that way. >> well, the problem with your argument, tim -- [laughter]
is that there's no getting around the inevitability of the cycle. if i read your book, i would come away very depressed because every single case you tell is one in which you have these bold innovators with these great ideas who are stomped down upon by these sort of either money-mad or reactionary pollute accurates, and then something happens and this wonderful idea's born in someone's garage and someone's attic, and it starts up again, and that just isn't so. there were major public policy tryouts. bell loses big time in the 19 teens. they don't get to control the telegraph as well as the telephone. the kind of separations principle that you write about, i think, so persuasively and movingly in your final section happened there. radio act of 1927 keeps at&t out of the content business, content, conduit are divided there. if you had not had the studio system in hollywood in which you
have the coming together of the people making the movies and the ownership of the theaters, the united states might never have established a dominant position in the world film business. they did in the 1930s and '40s. the british, we have 90% of the world market d80% of the world market. that made possible the creativity that led to the self-sustained development of hollywood. >> if you didn't have the hollywood studio system, you also wouldn't have had the most heinous example of private censorship in american history, private -- >> that is a ridiculous claim, tim. [laughter] look, first, the most heinous example of -- >> private censorship. >> wait, what is the most -- >> let me explain this. >> tell the story, and i'll tell you why you're wrong. [laughter] >> thanks to consolidation of the industry into the hollywood studio system, a cartel of five integrated studios -- or maybe it's six -- >> right.
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