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-
- Computer underground Digest Wed Feb 4, 1998 Volume 10 : Issue 09
- ISSN 1004-042X
-
- Editor: Jim Thomas (cudigest@sun.soci.niu.edu)
- News Editor: Gordon Meyer (gmeyer@sun.soci.niu.edu)
- Archivist: Brendan Kehoe
- Shadow Master: Stanton McCandlish
- Shadow-Archivists: Dan Carosone / Paul Southworth
- Ralph Sims / Jyrki Kuoppala
- Ian Dickinson
- Field Agent Extraordinaire: David Smith
- Cu Digest Homepage: http://www.soci.niu.edu/~cudigest
-
- CONTENTS, #10.09 (Wed, Feb 4, 1998)
-
- File 1--Air Force & an Incomptent prosecution of "hacker"?
- File 2--THREE MYTHS ABOUT GOVERNMENT, MARKETS, AND THE NET (fwd)
- File 3--"Growing Up Digital", Don Tapscott
- File 4--Cu Digest Header Info (unchanged since 7 May, 1997)
-
- CuD ADMINISTRATIVE, EDITORIAL, AND SUBSCRIPTION INFORMATION APPEARS IN
- THE CONCLUDING FILE AT THE END OF EACH ISSUE.
-
- ---------------------------------------------------------------------
-
- Date: Wed, 7 Jan 1998 23:32:22 -0500
- From: "George Smith [CRYPTN]" <70743.1711@compuserve.com>
- Subject: File 1--Air Force & an Incomptent prosecution of "hacker"?
-
- Source - CRYPT NEWSLETTER 46 January 1998
-
- AIR FORCE INVESTIGATIVE OFFICE DEEMED INCOMPETENT DURING
- ROME LABS 'INFO-WAR' BREAK-IN
-
- "The cream of US military intelligence last week had their
- bungled attempt to prosecute a bedroom hacker thrown out by a British
- court," screamed the lead of a November 28, 1997 piece in the United
- Kingdom newspaper, The Guardian.
-
- Even as the President's Commission on Critical Infrastructure Protection
- was spinning yet more scenarios of imminent techno-Gotterdammerung, the
- wheels were coming off one of the U.S. military's most extensive
- public relations campaigns. Aimed at creating the image of menacing
- hackers in the employ of foreign powers, U.S. Air Force claims fell
- apart in English court, out of sight of the U.S. newsmedia as the U.K.
- press looked on and smirked.
-
- Matthew Bevan, 23, a hacker known as Kuji, walked out of a south London
- Crown Court a free man as prosecutors confessed it wasn't worth trying
- him on the basis of flimsy claims made by the U.S. military. Further,
- he was deemed no threat to national computer security.
-
- Since 1994, the U.S. government has used Bevan, and a younger partner,
- Richard Pryce, in reports by the Air Force, the Government Accounting
- Office, the Pentagon's Defense Science Board report on information warfare
- and the recent Marsh Commission, on the dangers posed by international
- terrorists using the worldwide computer networks to attack the
- United States.
-
- ". . . [the] story of the Bevan and Pryce cases shows [the Air Force's]
- forensic work to have been so poor it would have been unlikely to have
- stood up in court and convicted Bevan. The public portrayal of the two
- Britons as major threats to U.S. national security was pure hype," wrote
- Duncan Campbell for The Guardian.
-
- However, events really began in 1994, when the two young men broke
- into an Air Force installation known as Rome Labs, a facility at the now
- closed Griffiss Air Force Base, in New York. This break-in
- became the centerpiece of a Government Accounting Office report on network
- intrusions at the Department of Defense in 1996 and also constituted
- the meat of a report entitled "Security and Cyberspace" by Dan Gelber
- and Jim Christy, presented to the Senate Permanent Subcommittee on
- Investigations during hearings on hacker break-ins the same year.
- It is interesting to note that Christy, the Air Force Office of Special
- Investigations staffer/author of this report, was never at Rome while
- the break-ins were being monitored.
-
- Before delving into this in detail, it's interesting to read what
- a British newspaper published about Richard Pryce, known as Datastream
- Cowboy, then seventeen, about a year before he was made the poster boy
- by the GAO.
-
- In a brief article, blessedly so in contrast to the reams of propaganda
- published on the incident for Congress, the July 5, 1995 edition of The
- Independent wrote, "[Datastream Cowboy] appeared before Bow Street
- magistrates yesterday charged with unlawfully gaining access to a series
- of American defense computers. Richard Pryce, who was 16 at the time of
- the alleged offences, is accused of accessing key U.S. Air Force systems
- and a network owned by Lockheed, the missile and aircraft
- manufacturers."
-
- Pryce, a resident of a northwest suburb of London, was charged with 12
- separate offenses under the British Computer Misuse Act. He was arrested
- on May 12, 1994, by New Scotland Yard. The Times of London reported when
- police came for Pryce, they found him at his PC on the third floor of
- his family's house. Knowing he was about to be arrested, he "curled up
- on the floor and cried."
-
- The Air Force's tracking of Pryce, and to a lesser extent, Bevan,
- was recounted in an eight page appendix to Gelber's and Christy's
- "Security and Cyberspace," entitled "The Case Study: Rome Laboratory,
- Griffiss Air Force Base, NY Intrusion."
-
- Pryce's entry into Air Force computers was originally noticed on
- March 28, 1994, when personnel discovered a sniffer program he had
- installed on one of the Air Force systems in Rome. The Defense Information
- System Agency (DISA) was notified. DISA subsequently called the Air
- Force Office of Special Investigations (AFOSI) at the Air Force
- Information Warfare Center (AFIWC) in San Antonio, Texas. AFIWC then
- sent a team to Rome to appraise the break-in, secure the system and
- trace those responsible. During the process, the AFIWC team
- of computer scientists -- not AFOSI investigators, a point not
- clearly made by the Air Force authors and one that becomes more important
- upon viewing the fallout and repercussions of the case -- discovered
- Datastream Cowboy had entered the Rome Air Force computers for the
- first time on March 25. Passwords had been compromised, electronic
- mail read and deleted and unclassified "battlefield simulation" data
- copied off the facility. The Rome network was also used as a staging
- area for penetration of other systems on the Internet.
-
- Air Force personnel initially traced the break-in back one step to
- the New York City provider, Mindvox. According to the Christy
- report, this put the NYC provider under suspicion because "newspaper
- articles" said Mindvox's computer security was furnished by two "former
- Legion of Doom members." "The Legion of Doom is a loose-knit computer
- hacker group which had several members convicted for intrusions into
- corporate telephone switches in 1990 and 1991," wrote Gelber and
- Christy.
-
- The Air Force then got permission to begin monitoring -- the
- equivalent of wiretapping -- all communications on the Rome Labs network.
- Limited observation of other Internet providers being used during the
- break-in was conducted from the Rome facilities. Monitoring told the
- investigators the handles of hackers involved in the break-in were
- Datastream Cowboy and Kuji.
-
- Since the monitoring was of limited value in determining the
- whereabouts of Datastream Cowboy and Kuji, investigators resorted to
- "their human intelligence network of informants, i.e., stool pigeons,
- that 'surf the Internet.' Gossip from one 'Net stoolie to Air Force
- investigators uncovered that Datastream Cowboy -- [Richard Pryce] -- was
- from Britain. The anonymous source said he had e-mail correspondence
- with Datastream Cowboy in which the hacker said
- he was a 16-year old living in England who enjoyed penetrating ".MIL"
- systems. Datastream Cowboy also apparently ran a bulletin board system
- and gave the telephone number to the AFOSI source.
-
- The Air Force team contacted New Scotland Yard and the British law
- enforcement agency identified the residence, the home of Richard
- Pryce, which corresponded to Datastream Cowboy's system phone number.
- English authorities began observing Pryce's phone calls and noticed
- he was making fraudulent use of British Telecom. In addition,
- whenever intrusions at the Air Force network in Rome occurred, Pryce's
- number was seen to be making illegal calls out of Britain.
-
- Pryce travelled everywhere on the Internet, going through South America,
- multiple countries in Europe and Mexico, occasionally entering the Rome
- network. From Air Force computers, he would enter systems at Jet
- Propulsion Laboratory in Pasadena, California, and the Goddard Space
- Flight Center in Greenbelt, Maryland. Since Pryce was, according to
- Air Force investigators, capturing the logins
- and passwords of the networks in Rome Labs, he was then able to
- get into the home systems of Rome network users, defense contractors
- like Lockheed.
-
- By mid-April of 1994 the Air Force was monitoring other systems being
- used by the British hackers. On the 14th of the month, Kuji logged on
- to the Goddard Space Center from a system in Latvia and copied data
- from it to the Baltic country. According to Gelber's report, the
- Air Force observers assumed the worst, that it was a sign that someone
- in an eastern European country was making a grab for sensitive
- information. They broke the connection but not before Kuji had
- copied files off the Goddard system. As it turned out, the Latvian
- computer was just another system the British hackers were using as
- a stepping stone; Pryce had also used it to cover his tracks when
- penetrating networks at Wright-Patterson Air Force Base in Ohio, via
- an intermediate system in Seattle, cyberspace.com.
-
- The next day, according to the AFOSI report, Kuji was again observed
- trying to probe various systems at NATO in Brussels and The Hague as
- well as Wright-Patterson. On the 19th, Datastream Cowboy successfully
- returned to NATO systems in The Hague through Mindvox. The point Gelber
- and Christy were laboriously trying to make was that Kuji -- Matthew
- Bevan -- a 21-year old, was coaching Pryce during some of his attacks
- on various systems.
-
- By this point, New Scotland Yard had a search warrant for Pryce
- with the plan being to swoop down on him the next time he accessed
- the Air Force network in Rome.
-
- In April, Datastream Cowboy penetrated a system on the Korean
- peninsula and copied material off a facility called the Korean Atomic
- Research Institute to an Air Force computer in Rome. At the time, the
- investigators had no idea whether the system was in North or South Korea.
- The impression created was one of hysteria and confusion at Rome. There
- was fear that the system, if in North Korea, would trigger an international
- incident, with the hack interpreted as an "aggressive act of war." The
- system turned out to be in South Korea.
-
- It's worth noting that while the story was portrayed as the work of
- an anonymous hacker, New Scotland Yard already had a suspect.
- Further, according to Gelber's and Christy's report, English authorities
- already had a search warrant for Pryce's house.
-
- On May 12, British authorities pounced. Pryce was arrested
- and his residence searched. He crumbled, according to the Times of
- London, and began to cry. Gelber and Christy write that Pryce promptly
- admitted to the Air Force break-ins as well as others. Pryce
- confessed he had copied a large program that used artificial intelligence
- to construct theoretical Air Orders of Battle from an Air Force computer
- to Mindvox and left it there because of its great size, 3-4 megabytes.
- Pryce paid for his Internet service with a fraudulent credit card number.
- At the time, the investigators were unable to find out the name and
- whereabouts of Kuji. A lead to an Australian underground bulletin board
- system yielded nothing.
-
- On June 23 of 1996, Reuters reported that Matthew Bevan had been
- arrested and also charged in connection with the 1994 Air Force break-ins
- in Rome.
-
- Bevan was found in the same low-tech manner as Pryce. His phone number
- was eventually lifted by Scotland Yard from Pryce's seized PC. "Had it not
- been for Scotland Yard, the relatively innocuous Pryce and Bevan would
- never have been found and the U.S. Senate would still be hearing about
- cyberterrorists from faraway lands," wrote the Guardian's reporter.
-
- Lacking much evidence for conspiratorial computer-waged
- campaigns of terror and chaos against the U.S., the makers of
- Congressional reports nevertheless resorted to telling the same story
- over and over in 1996, three times in the space of the hearings on the
- subject.
-
- As a result, Pryce and Bevan appeared in "Security in Cyberspace" and
- twice in Government Accounting Office reports AIMD-96-84 and T-AIMD96-92
- in 1996, which were essentially rewritten versions of the former with
- additional editorializing.
-
- Jack Brock, the author of these now famous GAO reports on hacker
- intrusions at the Department of Defense wrote, ". . . Air Force officials
- told us that at least one of the hackers [of Rome Labs] may have been
- working for a foreign country interested in obtaining military research
- data or areas in which the Air Force was conducting advanced
- research."
-
- This was not even close to the truth.
-
- [Alert Crypt Newsletter readers will recall Mr. Brock was a
- nominee in the 1996 Computer Virus Hysteria Awards.]
-
- But what were Bevan and Pryce really after?
-
- Not Air Force advanced research! Unless . . . you are one of those
- who are convinced the U.S. military is really hiding a flying saucer
- at Area 51 in Nevada. According to the Guardian account, Matthew
- Bevan was interested in little but gathering evidence confirming
- that Area 51 was a secret hangar for captured alien spacecraft.
-
- The Guardian news report was also extremely critical of Air Force
- computer scientist Kevin Ziese.
-
- Ziese, said the Guardian, "led a six-strong team [from San Antonio]
- whose members, or so he told Fortune magazine, slept under their desks
- for three weeks, hacking backwards until Pryce was arrested."
-
- "Since then, Ziese has hit the US lecture circuit and [privatized]
- his infowar business. As the WheelGroup corporation of San Antonio, he
- now sells friendly hacking services to top U.S. corporations," reported
- the Guardian.
-
- However, while the Guardian was accurate in its assessment of the
- trivial menace of Bevan and Pryce, it was off in its characterization
- of Ziese, missing the real target -- investigators from AFOSI and the
- authors of the Gelber/Christy report, according to information
- supplied in interviews with Ziese.
-
- Ziese commented to Crypt Newsletter that he "[had] not hit the lecture
- circuit." He added that he was amused by the content of the article in
- the Guardian and that "to date, no one has ever asked me even one question
- -- beyond my initial deposition to New Scotland Yard in 1996 --
- regarding the Rome Lab case!"
-
- Digging more deeply into the story, the evidence gathered on
- the Rome Labs break-in can be separated into two distinct classes.
- "The first," said Ziese," [was] the deposition I gave sometime in
- and about May of 1996 to New Scotland Yard." The second is the
- same shopworn story the "extremely incompetent criminal investigators
- had gathered originally," he added.
-
- It was the investigators from the Air Force Office of Special
- Investigations, not the group of computer scientists from the Air Force's
- Information Warfare Center in San Antonio -- which Ziese led --
- who peddled the Rome Labs break-in as evidence of international
- spying.
-
- "Unbeknownst to the public at large, we had a very complete set of
- tools [and a] chronology," said Ziese. "It was the criminal
- investigators who tied our hands, lost critical pieces of data and
- refused to allow us to testify/discuss the case. "They wanted to make
- a mountain out of a molehill."
-
- In this, they were successful.
-
- ". . . it was incompetent criminal investigators who saw a spy under
- every rock," Ziese continued, "not the computer scientists I brought
- with me to Rome." AFOSI was responsible for the "hogwash that has been
- published to date about the Rome Lab attacks."
-
- By the English account, the evidence submitted by the U.S. military
- investigative team was almost worthless: "[E-mails] of edited files
- that had been relayed to Ziese and others."
-
- A desire for secrecy also backfired on the Air Force. In May
- of this year, the Air Force declined to allow Bevan's defense to look
- at the test programs they claimed to have used to monitor his
- intrusions and " . . . having set traps to catch hackers, [the Air Force]
- neglected to produce before and after file dumps of the target
- computers."
-
- The result was: "In the end, all the Americans handed over was patchy
- and circumstantial evidence that their computers had been hacked from
- Britain."
-
- In March of this year, Richard Pryce -- now 19 -- was fined 1,200 pounds
- for offenses related to unauthorized access in connection with the
- break-ins at Rome Labs.
- ============================
-
- In sort of related news:
-
- About the same time the wheels were coming off the Rome Labs
- myth, a similar fate was being meted out to the hoary tale of
- electromagnetic pulse gun attacks on banks in the United
- Kingdom.
-
- Alert Crypt Newsletter readers already know the publication
- has dissed the legend of the non-nuclear electromagnetic pulse
- (HERF, microwave, radio frequency) gun as the chupacabras of
- cyberspace for the last two years.
-
- On December 4, a British journalist for TechWeb dubbed
- them the same.
-
- These stories are nonsense, said Michael Corcoran of Britain's
- Defense Evaluation and Research Agency, for TechWeb.
- "There are no radio-frequency weapons out there that anyone is in a
- position to use against banks." Corcoran then waffled for the
- publication and equivocated that they might be sometime in the
- future.
-
- =======================
-
- Editor: George Smith, Ph.D.
- INTERNET: 70743.1711@compuserve.com
- crypt@sun.soci.niu.edu
- http://www.soci.niu.edu/~crypt
-
- Mail to:
- Crypt Newsletter
- 1635 Wagner St.
- Pasadena, CA 91106
- ph: 626-568-1748
-
- ------------------------------
-
- Date: Thu, 22 Jan 1998 09:43:09 -0500
- From: Paul Kneisel <tallpaul@nyct.net>
- Subject: File 2--THREE MYTHS ABOUT GOVERNMENT, MARKETS, AND THE NET (fwd)
-
- Since we've been talking about the proper role of the government in the IT
- market, I thought I'd post a quickie critique I wrote of the Clinton
- Admin's "Framework for Global Economic Commerce," which a number of issues
- that have appeared in the discussion of Microsoft.
-
- Anders Schneiderman
- Progressive Communications
- <aschneid@ix.netcom.com>
- Wed, 21 Jan 1998
-
- ----------------------------------------
-
- THREE MYTHS ABOUT GOVERNMENT, MARKETS, AND THE NET:
- A SPECIAL REPORT ON THE CLINTON ADMINISTRATION'S PLANS
- FOR GLOBAL ELECTRONIC COMMERCE
-
-
- "A cutting-edge, history-making blueprint." That's what Newsweek columnist
- Steven Levy calls the Clinton Administration's grand plan for the
- Internet's future. "A Framework for Global Electronic Commerce" was
- released on July 1 to a chorus of favorable reviews. Some commentators
- fretted about its position on encryption and privacy, but overall, it
- earned high marks.
-
- The reason for this praise? Because, as Levy says, "the report bluntly
- asserts that the most important thing the govern can do about [the Net] is
- _get the hell out of the way_." Let the free market work its magic.
-
- The Clinton Administration report is a perfect example of how far Newt
- Gingrich and others have come in creating the myth of Government Bad, Free
- Enterprise Good. If we patiently troll through this document's murky prose,
- we can reveal glimpses of our society's confusion about how markets and
- government work.
-
-
- MYTH #1: THE MARKET IS ALWAYS SMARTER THAN THE GOVERNMENT.
-
- The Clinton Administration's report is based on a simple principle: "the
- private sector should lead." Why? Because "innovation, expanded
- services, broader participation, and lower prices will arise in a
- market-driven arena, not in an environment that operates as a regulated
- industry."
-
- This raises an obvious question. If the government is so incompetent, why
- did the Internet come from Uncle Sam and not CompuServe or AOL? Why did
- the private sector have to play catch-up with this stellar innovation?
-
- The report knows this is a problem, so it tries to gloss over this
- unpleasantness as quickly as possible. It says, "though government played a
- role in financing the initial development of the Internet, its expansion
- has been driven primarily by the private sector."
-
- But the only reason the private sector is in the driver's seat is that
- Uncle Sam handed over the keys. Netscape succeeded because it ripped off the
- University of Illinois and U of I didn't fight back. More generally, the
- Clinton Administration pulled the government out of the business of
- developing the Net. You can argue whether or not this was a good
- decision, but it's hard to see the Net's history as evidence that the
- private sector _must_ lead.
-
- Our myopia about the Net's history is a classic example of the trouble
- Americans have acknowledging how government facilitates the economy.
- Conservatives like to say, let's get back to the glory days of the 1950s,
- when the government left the private sector alone. And they're right, it
- did mostly stay out of the market. Except for the military, which nurtured
- the electronics and computer industries. And the FHA and VA, which
- underwrote half the houses in the 'burbs. And the massive highway building
- programs that helped people commute between the 'burbs and the city and
- expanded the auto market. And the GI Education Bill and government grants
- that paid for the explosive growth of higher education. And the NIH, the
- NSF. Medicare, and Medicaid programs that poured massive money into the
- health care system. And the tax breaks that underwrote a new system of
- pensions. And of course there's agriculture. And banking. But aside from
- computers, electronics, housing, construction, cars, education, health
- care, agriculture, and banking--and, indirectly, steel, plastic, and
- concrete--government hasn't done a thing to help our economy.
-
-
- MYTH #2: GOVERNMENT REGULATIONS ARE BAD FOR MARKETS
-
- Even if the government did a great job creating the Internet, maybe it's
- time to turn it over to the free market. The Internet is moving so fast
- that government bureaucrats may not be able to keep up. That's what the
- Clinton Administration thinks. According to the Executive Summary, "The
- Internet should develop as a market driven arena not a regulated industry."
-
- But this bold statement isn't the whole story. The report also says that
- "governments must adopt a non-regulatory, market-oriented approach to
- electronic commerce, one that facilitates the emergence of a transparent
- and predictable legal environment to support global business and
- commerce." In other words, the government should butt out, except for
- one, little, minor task. It must create a vast new infrastructure to make
- Net commerce work.
-
- The problem is simple. If the government really butts out, Internet
- commerce will die. The day the report came out, Sun Microsystems director
- Dennis Tsu complained to the press that the U.S. wasn't aggressive enough
- about expanding intellectual property rights, patents, and copyright
- protection. Net commerce depends on them. So if Net commerce is to
- flourish, we need to radically change our legal system.
-
- For example, in the next few years there will be a huge brawl over
- copyright law. Right now, most Netizens ignore copyright rules. The Net
- grew so rapidly because no one worried about whether they were violating
- intellectual property law. "Information wants to be free!" was the Net's
- motto. But now that there's money to be made, Sun and Microsoft and IBM
- and Times-Warner and all the other players want a new set of rules that
- make damn sure this attitude goes away. And they need the government to do
- it for them.
-
- The government is also needed to create online equivalents of money,
- signatures (for signing contracts), and other fundamental features of Net
- mass commerce. The industry can take the lead in developing these
- standards, but none of it will work if the government doesn't enforce them,
- because ultimately only the government can create legally-binding courts or
- cash.
-
- The report tries to get around this paradox by using one of the clever
- shell games conservatives have adopted: we don't want 'government,' just
- contracts and courts. When the government must intervene, the report says,
- it "should establish a predictable and simple legal environment based on a
- decentralized, contractual model of law rather than one based on top-down
- regulation."
-
- For those of you who have an infant, I have a piece of advice: tape that
- sentence over their crib. It's the Corporate Lawyer Full Employment Act.
- The computer world is already lawsuit-crazy, and if Clinton--a lawyer by
- training--has his way, we'll be up to our eyebrows in 'em. This isn't less
- government, it is more lawyers.
-
- Far from decreasing the scope of regulation, this approach will increase
- it. Nathan's column in this issue of E-Node tells the story of the ISPs
- and AT&T, where attempts to get the government out of the market have led
- to more government, not less.
-
- This paradox is evident throughout the report. The report warns against
- "potential areas of problematic regulation," one of which is "rate
- regulation of [Internet] service providers." But while protecting us from
- Internet service providers (ISPs) is bad, protecting ISPs from the phone
- companies is good. The report warns that "monopolies or dominant telephone
- companies often price interconnection well above cost, and refuse to
- interconnect because of alleged concerns." In other words, if Clinton
- really let competition loose, the phone companies would simply refuse to
- let ISPs connect up to their customers: you want to serve 'em, you run
- wires to their houses. So government should butt out--except where it must
- butt in.
-
- As a result of this sophistry, the report is littered with sentences like,
- "genuine market opening will lead to increased competition, improved
- telecommunications infrastructures, more customer choice, lower prices and
- increased and improved services." Translation: every few years, we will
- hold a fascinating philosophical debate over the proper definition of a
- "genuine market." Federal courts and bureaucrats will hand out
- billion-dollar prizes to the debate winners in the form of regulations and
- court decisions, which spell out in excruciating detail how we will ensure
- we have "genuine markets." This is less government?
-
- Finally, as someone who loves the Internet, I'd argue that if some of the
- anti-government fears are realized and the government does slow down the
- pace of innovation a little, that might not be such a bad thing.
- Today, companies scrambling to survive are forced to throw in new
- features and create new toys without knowing whether they work well or are
- even useful. To solve many serious Net problems, we need more
- thoughtfulness, not more speed. Maybe a little sand in the wheels is a
- good thing.
-
-
- MYTH #3: IF THE GOVERNMENT GETS OUT OF THE WAY, WE'LL ALL BENEFIT.
-
- The last myth is that market competition is good for everybody. As noted
- above, the report insists that "Innovation, expanded services, broader
- participation, and lower prices will arise in a market-driven arena, not in
- an environment that operates as a regulated industry." That's why "where
- governmental involvement is needed, its aim should be to support and
- enforce a predictable, minimalist, consistent and simple legal environment
- for commerce," and not, say, justice, fairness, or other bleeding-heart
- concerns.
-
- This approach makes cheery assumptions about the world that experience does
- not bear out. In a recent issue of Salon Magazine, Andrew Leonard points
- out one example that's already reared its ugly head: privacy. The
- Administration wants the market to take the lead in developing standards
- for protecting consumer privacy. But so far, says Leonard, the
- market-driven Open Profiling Standard proposal has no means "for taking
- care of the basic problem of whether or not information should be collected
- in the first place." There's a good reason for that: "The desire for
- online privacy runs directly at odds with one of the most attractive
- aspects of doing business online -- the Net's capacity for helping target
- marketing and advertising efforts directly at specific users." Consumer
- choice ends where corporate needs begin.
-
- Experience has also shown us that increased competition can have a
- paradoxical effect: sometimes more competition means that fewer, not more,
- people benefit. In a terrific article in Newsweek last year, Marc Levinson
- showed that in the the financial world, banks don't _want_ to compete for
- most of us. On average, "20 percent of households account for almost all
- of consumer-banking profits, while three out of five customers are money
- losers." That means that if there's more competition, the banks will
- compete to attract the 20 percent who generate profits and they will
- compete to dump the 60 percent who don't.
-
- As Nathan demonstrated in his last two E-Node columns, we see similar
- economics in electrical and telephone services. When competition kicks
- into high gear in some markets, companies understandably focus on "cream
- skimming" the customers who can turn a profit. If the same holds true for
- Internet commerce in general, then far from leading to high-quality
- universal access, more competition could leave a lot of us worse off.
-
- The final example of the disconnect between who markets are supposed to
- help and who they really do help is the tricky issue of taxes. Most
- accounts of the report's conclusions about taxes make the same mistake that
- Steven Levy makes. According to Levy, the report argues that "one thing
- governments should most decidedly _not_ do is tax the Internet"--it should
- be a "tariff-free zone." In other words, the government should not stifle
- the Net's explosive growth with taxes.
-
- There's an obvious problem with this approach. If the Net is tax-free,
- then anybody with any sense will move every sales transaction onto the Net
- that they can. Even if Net commerce isn't more efficient--even if it's a
- little less efficient--you'll save money. Needless to say, that would
- strongly penalize many people who don't have access to the Net,
- particularly poor folk. But the most devastating effect would be on state
- and local government.
-
- On June 24th, a few days before the report was due out, the U.S. Conference
- of Mayors passed a resolution telling the Feds to butt out of the question
- of how Net commerce should be taxed. That's because state and local
- governments are terrified. Without revenue from sales taxes, local
- services and the people that depend on them will be road kill (for more
- details, see the report, "Prop 13 Meets the Internet," at
- http://garnet.berkeley.edu:3333/).
-
- And that's the reason why the Administration's report does _not_ advocate
- making the Net tax-free. This is what the report says: "the United States
- believes that no new taxes should be imposed on Internet commerce." No new
- taxes, but what about the old ones? The report doesn't really say. Its
- authors know that there is a problem. At one point, it proclaims that "no
- tax system should discriminate among types of commerce, nor should it
- create incentives that will change the nature or location of transactions."
- But this is more of a wish than an answer.
-
- So how does the Administration propose solving this problem, this
- life-and-death issue that will determine the fate of all state and local
- governments and the people who rely on them? Very simply: "No new taxes
- should be applied to electronic commerce, and states should coordinate
- their allocation of income derived from electronic commerce." Got it?
- No "new" taxes. Just somehow, magically, we're going to collect the same
- revenue local governments used to obtain from sales tax and we'll divvy it
- up so it works out just like it used to.
-
- Having dumped the readers into a very murky swamp, the report then pushes
- us in further with its next sentence: "Of course, implementation of these
- principles may differ at the [state and local] level where indirect
- taxation plays a larger role." And in case our heads are still above water,
- one more shove: "the system should be simple and transparent," "capable of
- capturing the overwhelming majorities of appropriate revenues" while
- "minimiz[ing] burdensome record keeping and costs for all parties."
-
- This is a cutting-edge, history-making blueprint? This is more like one of
- those challenges they give engineering students where they say, here's 20
- boxes of toothpicks, 100 bowls of Lime Jello, and a magnifying glass, now
- build us a working model of La Guardia Airport. This is a recipe for disaster.
-
-
- CONCLUSION
-
- Economic markets are a wonder to behold. Like natural ecosystems, they can
- produce marvels that are hard to imagine occurring any other way. And like
- nature, ultimately they resist our control. Even with the best of
- intentions, clumsy attempts to nurture or direct economic markets can turn
- around and bite us. The experience of Europe's ham-handed attempts to
- force the creation of a European computer industry was not so different
- from the experience of people who live in flood plains, who learn the hard
- way that Mother Nature respects no engineer.
-
- But at the same time, we need to be careful that in respecting the power of
- markets we don't blind ourselves to the crucial role played by our
- government. Because when we do turn a blind eye, we stop debating an
- important question: who benefits? Who will reap the harvest from our tax
- dollars? Instead, those questions are settled in private, behind closed
- doors. That's not right. If Uncle Sam must ask his family to help tend
- the garden of the Internet, then all members of his family should partake
- of its bounty.
-
- ------------------------------
-
- Date: Tue, 3 Feb 1998 07:54:42 -0800
- From: "Rob Slade" <rslade@sprint.ca>
- Subject: File 3--"Growing Up Digital", Don Tapscott
-
- BKGRUPDI.RVW 971107
-
- "Growing Up Digital", Don Tapscott, 1997, 0-07-063361-4,
- U$22.95/C$32.95
- %A Don Tapscott
- %C 300 Water Street, Whitby, Ontario L1N 9B6
- %D 1997
- %G 0-07-063361-4
- %I McGraw-Hill Ryerson/Osborne
- %O U$22.95/C$32.95 800-565-5758 fax: 905-430-5020
- %O lisah@McGrawHill.ca
- %P 256
- %T "Growing Up Digital: The Rise of the Net Generation"
-
- Don Tapscott apparently gets a lot of mileage out of the story about
- his kids being unimpressed by Tapscott's TV appearance that had him
- demonstrating how to surf the Web. According to Tapscott, this proves
- that his kids are N-Geners: yet another "generation", this one that
- has grown up with, and is attuned to, the massive international
- networks, and the technology behind them. Experienced network users
- might take a different interpretation from the story. Web surfing is
- a particularly pedestrian skill, if it is a skill at all, and
- "demonstrating" the use of a graphical browser, with its point and
- click interface, tends to be both pointless and rather boring for the
- observer.
-
- This book takes a rather dubious premise, and extends it as far as
- possible, and probably considerably beyond. In the first chapter
- Tapscott looks at demographics to chart the Baby Boom generation
- (those born from 1946 to 1964), Douglas Coupland's Generation X (1964
- to 1978), and N-Gen (1978 to 2000). However, a look at real
- demographic statistics points out an unfortunate fact: while most of
- those in the N-Gen group will have heard of the net, and a great
- number might have had some experience on it, even among the singularly
- fortunate population of North America only a minority elite have
- regular and consistent access to it. The book itself appears to be
- based on research conducted with a small sample of subjects culled
- from a single site representing a ridiculously small number of
- individuals in comparison to the population of the United States
- alone. (A great deal of the book is based on self-reports from those
- subjects.) The N-Gen may come, but it probably hasn't been born yet.
-
- (The author does, rather frequently, admit that the presence of
- technology "haves" and "have nots" is a problem, but he never really
- analyzes the situation, the potential outcomes, or possible fixes.
- While there is an entire chapter devoted to the topic, it tends to
- recycle anecdotes rather than look seriously at the issue. In the
- course of the review I burst out laughing, and had to explain the
- guffaw to my wife by reading the sentence on page 266 that occasioned
- it: "Homeless people online at the local library can log on to the
- community information bulletin board to find beds in a shelter, a hot
- shower, or even medical and counseling services." Her response was an
- immediate and disbelieving "Yeah, right!" followed by the observation
- that the statement was pathetically naive and unrealistic. I really
- couldn't argue with her. I spend considerable time at our regional
- libraries, and while we are blessed with access to Freenet through all
- the card catalogue terminals, and have, in addition, a number of
- graphical Web browsing terminals, I can't say that I've ever seen one
- of the homeless looking up a shelter. The Vancouver CommunityNet and
- Victoria TeleCommunity Net seem to agree with me: they don't even have
- a listing for shelter for the homeless, although Vancouver does have
- one for wildlife. I think Tapscott has been getting his information
- from "Doonesbury.")
-
- One of the great unchallenged assertions of our day is that children
- feel more comfortable with technology, and learn it faster than
- adults. Tapscott holds fast to this premise, and uses it frequently
- in telling how our kids are going to be much different than we are, or
- were. His most important assertion based upon this fact is the
- Generation Lap, which he uses to mean that traditional teaching roles
- are becoming reversed as children are becoming instructors of their
- parents in regard to computers. There is only one problem: the
- central statement is not true. Those under the age of eighteen do not
- have any magical skill or empathy with technology. They are just as
- confused and frightened about technology as anyone else. If they tend
- to learn more than those around them, that has more to do with the
- general lack of experience with computing in the population as a
- whole. If I have dealt with many adults who couldn't remember that a
- Window out of sight is not also necessarily out of memory, I have
- equally taught children who were so afraid of computers that they
- wouldn't input a program without typing on a typewriter first, and
- others who had so much trouble with the concept of double clicking
- that they had to be taught to click and then hit return in order to
- invoke a program. Even if it were true, though, that children learn
- software applications by some sort of effortless osmosis, I fail to
- understand why that would automatically lead to an understanding of
- the fundamental technologies involved, as Tapscott implies when
- talking about education.
-
- The book does make some interesting observations. Those who use the
- net tend to accept diversity, to be more curious, and to be confident.
- However, these occasional insights tend to be buried in a mass of
- commentary that is either trivial and obvious (computers are fun!) or
- questionable (the Internet automatically teaches children how to
- learn). Repeated statements about the "success" enjoyed by some of
- the young people contacted in the course of writing the book seem to
- say much more about entrepreneurship than technology. A defence of
- the violence of video games makes a weak nod toward the work of
- Bandura, but unconvincingly states that it really isn't important.
- (The makers of violent computer games, toys, and television programmes
- will undoubtedly be relieved to hear it.)
-
- Some points in the book may well be true, but unhelpful. Tapscott's
- statement that mass education is a product of the industrial economy
- falls into this category. "Individual" instruction probably *is*
- better for the student. The text fails, however, to look at how such
- education might realistically (and economically) be provided, and how
- a free-for-all curriculum might result in some kind of graduation or
- assessment that would convince potential employers as to the skills of
- the products of this type of schooling. (OK, that statement is a
- product of an industrial economy too. Generalize it, then: how are we
- to know anything about the success of such an educational system?)
-
- Other parts of the book are best described as pseudoprofound. There
- are frequent quotes from the young participants that, on first glance,
- seem to point out some kind of new age wisdom. Chapter ten has the N-
- Gen focus group express surprise that adults would have trouble
- sharing information: a relatively easy statement to make if you have
- never put a lot of work into study and the development of information.
- Given a moment's thought, though, the statements tend to demonstrate a
- kind of naive ignorance. This is simply a result of lack of
- experience and study of history on the part of the young. It is not
- their fault, of course, and may provide a brief moment of amusement in
- comparing their blind spots with our own.
-
- Those who are experienced with the net will find that this book
- doesn't say anything that isn't pretty widely known already. But I
- dare say the knowledgeable user is not the target audience. For the
- uninitiated, then, Tapscott provides a bewildering variety of new
- insights. I use the word bewildering deliberately, since many of
- these insights are either trivial or untrue, and it will be quite
- difficult for the reader from the general public to sort the wheat
- from the chaff.
-
- copyright Robert M. Slade, 1997 BKGRUPDI.RVW 971107
-
- ------------------------------
-
- Date: Thu, 7 May 1997 22:51:01 CST
- From: CuD Moderators <cudigest@sun.soci.niu.edu>
- Subject: File 4--Cu Digest Header Info (unchanged since 7 May, 1997)
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- ------------------------------
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- End of Computer Underground Digest #10.09
- ************************************
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-