NEW YORK-James Bond and his high-tech Nokia mobile phone may be Hollywood’s idea of the real McCoy. But truth, as journalists well know, often is stranger and scarier than fiction.
For a gripping, spine-tingling experience, read this newly published book: “War by Other Means-Economic Espionage in America,” written by John J. Fialka, a Wall Street Journal reporter.
“The spy of the future is less likely to resemble James Bond, whose chief assets were his fists, than the Line X engineer who lives quietly down the street and never does anything more violent than turn a page of a manual or flick on his microcomputer.”
This quote from Alvin Toffler introduces one of the chapters in Fialka’s precisely researched and well documented call to action. Every page effectively exhorts corporate America to take off its rose colored glasses so it can see how it is being robbed blind of its cutting edge technologies.
It’s not that we, collectively, are innocents. In fact, one of the earliest documented cases of economic espionage was that of Francis Cabot Lowell of Massachusetts. In 1811, he singlehandedly stole from Britain the secrets to the crown jewel of its industrial revolution-Edmund Cartright’s water-powered textile weaving loom.
It is more the case that our memory is short. That is a particularly dangerous national trait when coupled with American smugness-“techno arrogance”-that our ingenuity can always refill the leaking bucket of purloined trade secrets.
“The U.S. knowledge bucket is no longer merely leaking; chunks of it are being exported,” Fialka wrote.
“There are a few intelligent cowboys out there, like Motorola and Amgen (a biotechnology company), that have set up their own internal intelligence operations. The rest are like the United States before Pearl Harbor; there are plenty of clues about the competition around, but no one has the time or the responsibility to collect and analyze them.”
Without sounding hackneyed, Fialka’s message can be distilled into two cliches: You are not paranoid if what you fear is real. Everyone, or every country or company, has the defect of its qualities. Our society, our borders, our universities, our information, all are open to exploitation, and that is what is happening.
“In the late 1990s, the decline in the nation’s economic competitiveness has become a national security issue. The question being wrestled with in Washington is how to address it,” Fialka wrote in the final chapter, called “Winning.”
“In the approaching twenty-first century, it is hard to think of a U.S. administration adopting a defensive strategy-rebuilding Fortress America … Building a new wall around our economy doesn’t sound very attractive, either politically or economically.”
In his recommendations for action to stem the rising tide of idea expropriation, Fialka borrows from the “OODA-Loop” concept developed by retired Air Force Colonel John Boyd for the Pentagon and used during the Gulf War.
“OODA-Loop meant that a pilot who could observe, orient himself, decide and act faster would almost always win, because he was flying inside his enemy’s loop. Now, `Boydian’ ideas have crossed over into business, where making quick, accurate decisions and moving faster than a competitor can react has become one of the theories du jour.
“Good thing, too, because the overused metaphor about `leveling the playing field’ in trade wars needs to be trotted off to the locker room. It always limped, especially in matters involving high technology, where our competitors have been thinking and acting in warlike terms for decades.”
Under the “observe” caveat, Fialka cites Ira Magaziner, President Clinton’s domestic policy adviser, who has been working with an inter-governmental task force to develop an economic competitiveness strategy.
Magaziner believes most U.S. companies would lobby against any large-scale move by federal intelligence gathering agencies into the sphere of economic intelligence gathering. Given that disinclination, Magaziner thinks trade organizations in this country might serve their members well by modeling themselves after their German and Japanese counterparts. Those industry associations collect and share information among members about overseas markets and foreign competition.
Orientation means recognizing where we stand relative to our competitors. In this category, the nation is falling down in at least two key areas. First, there is the failure to fix our troubled public lower and high schools. Instead, our universities routinely encourage enrollment by foreign students, most of whom return home, contrary to popular notions that they remain here.
“China, Japan, Taiwan and lately South Korea have all used student placement as part of a national economic espionage strategy. South Korea’s Ministry of Science and Technology, for example, has mounted a `Brainpool’ project that offers leading scientists abroad a higher salary and airfare to return home. Before getting the better-paying job, the scientists spend six months getting debriefed at a Korean government science and technology facility.”
Second, the openness of our society and resulting public policy have discouraged the use of encryption. That must and will change, according to Kenneth W. Dam, a University of Chicago law professor who headed a recently completed study that Congress commissioned.
“On balance, it concludes wider use of powerful codes by banks, corporations and utilities can curb economic espionage and help law enforcement by better protecting the banking system, electric power grids, public phone networks and the air-traffic control systems that are now vulnerable to manipulation.”
In the decision category, Fialka urged industry to mobilize to fix the troubled public school system and to encourage more American students to take up science and engineering careers. He also said American companies and universities should make more of an effort to send their own personnel and students abroad to study and learn.
The final letter in the OODA-Loop is `A’ for action. For one thing, government sponsored civilian research has become taboo, largely because recent Republican ideology says that picking winners is taboo.
“George Lodge, a lifelong Republican and a professor at Harvard Business School, says Republican theology must be revised to square with economic and historic reality. `We did that (picking winners) for 30 years with defense technology and we were number one … We’ve got to see that commercial competitiveness is just as essential to our national security as technology is for our military’.”
On the legal front, Fialka commends Congress for a new law that makes stealing proprietary economic information a federal crime-punishable by up to $10 million in fines and 15 years in prison. This should be the first of many measures enacted into law to buttress the Federal Bureau of Investigation in its efforts to combat economic espionage, he said.
Another very serious matter in the area of federal law, the journalist author contends, is the need for a thorough review of the federal Freedom of Information Act. Enacted at the behest of the news media, the law makes it incredibly easy and absolutely free for foreign companies and countries to steal proprietary corporate information. Limitations on who has access should be imposed and fees should be levied, Fialka said.
Neither last nor least, the author believes corporations have a major role to play in the international arena, a role that should be guided by long-term thinking and enlightened self-interest.
“(Chief executive officers) of American companies must find a way to disengage with companies in the People’s Republic of China until the United States can sort out which companies are part of China’s military and gulag system and which are not.
“Feeding technology and mountains of har
d currency into the maw of the modernizing army of a nation that enslaves its citizens, systematically sends i
ts spies to steal our secrets, threatens U.S. allies in the Pacific and then proliferates weapons of mass destruction around the world does not make economic sense, let alone political sense.”
