Brendan I. Koerner

Where To Hide From Mother Nature

Cecille Isidro — Thu, 15 Sep 2005 00:00:00 -0400

Human beings are self-absorbed creatures, so the response to Hurricane Katrina has naturally included some hand-wringing over the question: Could this happen to my hometown? Depending on the worrywart's location, the theoretical catastrophe could be a flash flood, a wildfire, or an earthquake rather than a hurricane; no corner of the United States is immune to lethal natural disasters.

Still, some corners are safer than others. If an American wants to minimize his chances of dying at Mother Nature's hands, where should he set up house? Slate crunched the numbers "and did some educated guesswork" to find the U.S. city where the odds of perishing in a natural disaster are closest to nil.

We started by taking a look at every presidential disaster declaration from 1965 through 2004. As this color-coded map reveals, the Eastern half of the nation has had the most officially declared disasters, although North Dakota, Washington, and California have endured more than their share of woe. Going by presidential decrees alone, then, Western states such as Nevada or Wyoming appear safest.

But the data are skewed by the fact that disasters are more likely to be declared in populated areas. As this FEMA primer makes clear, disasters are declared in order to make funds available to people and businesses affected by a catastrophe. So, a severe storm in the Milwaukee suburbs is a lot likelier to be declared a federal disaster than a severe storm in an unpopulated expanse of southwestern Wyoming.

The declared disasters list was useful, however, in helping to eliminate the obvious noncontenders. Like, say, California. The state's massive population gives it a low per-capita fatality rate for natural disasters, but no one would consider it a safe haven from nature's worst: It's susceptible to earthquakes, mudslides, wildfires, torrential rains, rip currents, and even volcanoes. Unsurprisingly, then, California has had more declared disasters than any other state but Texas, which is frequently hammered by tornadoes, thunderstorms, and floods.

For simplicity's sake "Slate still lacks a supercomputer to handle massive number-crunching assignments "we automatically eliminated the 30 states with the most declared disasters. Most were no-brainers, such as the hurricane-prone states of the Gulf Coast and the heartland states that lie in Tornado Alley. Sparsely populated North Dakota has regular problems with severe flooding, as do Virginia, Tennessee, and New York. (Flooding, tornadoes, and tropical storms/hurricanes have been the most prolific killers in recent years, although heat waves often take significant tolls.) Illinois and Pennsylvania didn't make the grade because their cities can get lethally hot. Also disqualified were some notably frigid members of the union, such as Wisconsin and Minnesota; blizzards and icy conditions are frequently deadly, especially for motorists. And seemingly placid West Virginia? It has some issues with landslides, particularly in the counties that border Ohio.

That left 20 states, two of which we knocked out immediately on common-sense grounds: Hawaii, since islands are inherently at the ocean's mercy (plus there's a slew of volcanoes), and Alaska, where severe winter storms are the norm. For the remaining 18 states, then, we looked at year-by-year fatalities resulting from severe weather, dating back to 1995, as recorded by the National Weather Service. The NWS statistics cover 27 different types of weather events, including such relative rarities as deaths due to volcanic ash, fog, dust devils, and miscellaneous. (Since California had been eliminated at this stage, we ignored earthquake fatalities, which the NWS does not track.) We then used the total number of fatalities from each state to arrive at a deaths-per-thousand figure, based on population numbers taken from the 2000 Census.

Of the 18 states, only three had a fatality rate lower than 0.01 per thousand for the last decade: Connecticut (0.00587 per thousand), Massachusetts (0.00299), and Rhode Island (0.00286). These figures are somewhat surprising, given that all three of these New England states have ample coastlines and are thus susceptible to fierce storms. But they are also more immune to hurricanes than their southerly counterparts, virtually free of tornadoes, and blessed with relatively cool summers and winters that, although cold, aren't quite North Dakota cold. They're also affluent "all three boast family median incomes above the national average "and, as Hurricane Katrina reminded us, socioeconomics matter when it comes to preserving life during natural disasters.

For the three finalists, we looked at the county-by-county breakdowns of presidential-disaster declarations since 1995. Rhode Island only had one, during the Blizzard of '96. Connecticut was hit by that storm, too, as well as by Tropical Storm Floyd in 1999, which affected Litchfield, Hartford, and Fairfield counties. Massachusetts, meanwhile, had five major declared disasters, mostly associated with heavy rains and flooding in its seven easternmost counties.

Based solely on the numbers, then, Rhode Island would seem to be the winner. But the tiny state's cities are clustered around bays and rivers, which means a major hurricane could cause flooding. During the Great New England Hurricane of 1938, for example, a violent storm surge hit Providence.

Eastern Massachusetts is dicey because its long coastline is exposed to the unforgiving Atlantic Ocean. The rural west has proven statistically safer, but winter in the Berkshires can be snowy and harsh.

That leaves Connecticut, whose coastline faces the Long Island Sound rather than the open ocean. Still, living near the water is not recommended for the truly tense; a safer bet is somewhere inland, away from rivers and lakes, but not too deep in the boonies. The state's winters aren't tropical, but they tend to be not quite as snowbound as those in western Massachusetts.

After much debate, then, we settled on Slate's America's Best Place to Avoid Death Due to Natural Disaster: the area in and around Storrs, Conn., home to the University of Connecticut. It lies in Tolland County, which was not part of the 1999 federal disaster declaration for Tropical Storm Floyd. It's a safe 50 miles from the sound and not close to any rivers. It also has relatively easy access to a major city (Hartford) in the event an evacuation or hospitalization becomes necessary.*

This conclusion is by no means scientific, nor can safety ever be completely guaranteed; as moviegoers and Rick Moody fans are already aware, Connecticut does have its share of dangerous ice storms. And we're open to suggestions about other candidates for the title. If you want to make a case for your hometown, please drop us a line. In the meantime, the parents of UConn students can sleep a little easier tonight.

*Correction, September 15, 2005: This piece originally asserted that the University of Connecticut Health Center is in Storrs, Conn. It's actually in Farmington.

Brain Brew

Cecille Isidro — Tue, 14 Jun 2005 00:00:00 -0400

Coffee is the drug that changed my life. Without its brain-perking effects, it's doubtful that I could have passed astronomy in college, read The Wealth of Nations cover to cover, or made a favorable first impression on my girlfriend's parents despite suffering from a colossal hangover. In fact, this very review would be immeasurably harder to write were it not for the steaming cup of milk-tinged joe to my laptop's left.

But I seem to have derived less benefit from my addiction than many other habitual caffeine ingesters whom Antony Wild describes in Coffee: A Dark History. A British coffee merchant who is credited with introducing specialty brews to his native country, as well as the author of several histories of the East India Company, Wild credits the brew, somewhat outlandishly, with having inspired some proverbial Great Men to create the modern stock exchange, the British insurance house Lloyd's, and London's first organized police force, among other legacies. Without the energizing effects of the native African bean, he argues, the world would be a far more Neanderthal place.

But Wild's chief goal with Coffee is laying out how the First World's modern addiction to the drink is wreaking havoc on the poor and powerless. The book's sweeping ambition, if not its politics, is similar to that of several other recent single-topic histories, from Cod: A Biography of the Fish That Changed the World to Mauve: How One Man Invented a Color That Changed the World, which all promise to prove, in the space of a few hundred pages, that some hitherto overlooked thing in fact played a pivotal role in world history. Though his storytelling and logic could often use refinement, and despite his unfortunate tendency to meander off topic, Wild does conjure up some eye-opening trivia on the coffee manufacturing process, and there is merit to his claim that Third World farmers are facing a raw deal in part because of free trade's unintended consequences.

It's unknown exactly who first discovered coffee's sprightliness, but Wild surmises that it was likely a resident of Ethiopia, where the Arabica bush grows wild in the highlands -- perhaps a shepherd who noticed his animals skipping about after chowing down on the plant's cherry-like beans. And, in due course, some clever person figured out that roasting the beans over a fire, then brewing them with boiling water, made the process of caffeine-ingestion much more enjoyable. Members of the Sufi sect of Islam were among the most famous adopters of this practice, and, by the 1400s, they had incorporated coffee drinking into their mystical rites. Arab traders, and perhaps a Chinese naval commander or two, soon spread the beverage throughout the Middle East.

Any Ottoman fashion was bound to hit Europe soon enough, and, by the mid-1600s, coffee houses were all the rage in Paris and London where the stimulant helped kickstart the latter-day brain explosion known as the Enlightenment. Wild argues that the creative output of the movement's greatest artists and thinkers might have been significantly less if they'd been fans of sloth-inducing ale instead of energizing coffee. The Royal Society, for example, a group of pals who gathered to slurp coffee and discuss alchemy at an Oxford cafe named Tillyard's, was later responsible for publishing the works of its chairman, Isaac Newton. The Coffee Club of Rota met in Westminster at the Turk's Head, where luminaries such as Andrew Marvell and Samuel Pepys discussed and promoted new political concepts, including the early adoption of the modern ballot box. In France, meanwhile, Voltaire was reputedly downing between 50 and 72 cups of coffee a day, a habit that many link to the brevity and mania of Candide.

None of this mental activity much pleased the powers-that-be, who viewed coffee drinkers as a threat. Unlike alcohol, which merely caused buffoons to pound on each other and pass out in the gutters, coffee seemed to foment true anti-establishment behavior among the intelligentsia. England's King Charles II went so far as to issue a proclamation banning coffee houses, though popular uproar forced him to quickly rescind the order. And his Prussian peer, King Frederick, urged his subjects to drink more beer instead of coffee, though he wasn't entirely motivated by a desire to suppress dissent -- he also wanted to keep the nation's money out of the hands of English and French coffee merchants.

Wild also chronicles coffee's spread in more recent centuries to domestic kitchens, often in freeze-dried or other adulterated, long-lasting forms. The mass planting of inferior Robusta bushes in countries such as Vietnam has made the commodity ridiculously cheap, which is why a cup from the local bodega still costs just 50 cents. And the all-important invention of instant coffee has helped make java the preferred drink of millions who don't wish to bother with percolators or French presses -- and, presumably, don't mind quaffing a beverage that tastes vaguely metallic.

The story of coffee's journey from African obscurity to European connoisseurship to worldwide ubiquity shouldn't be a dull one, but Wild's storytelling skills are mediocre at best. Too much of the book's first half reads like a 1950s university textbook, wall-to-wall with the names of people and places that even a memory champion would be hard-pressed to keep in order. Complicating matters is Wild's penchant for unnecessary thoroughness -- he'll often put forth a theory as to a particular merchant who might have been responsible for taking Arabica beans to the West, but then he'll step back and admit that no real evidence supports that contention.

In a chapter about Napoleon's exile in St. Helena, where coffee has always been a vital crop, Wild informs the reader that he intends to show "how the history of coffee and colonialism evolved together over the last five hundred years to forge an unholy alliance that still exists for the benefit of Western coffee consumers at the expense of the people of the Third World countries." It's an ambitious and admirable goal, but one seemingly too complicated for a writer of Wild's modest literary gifts. The extended chapter on Napoleon's time on the island seems particularly pointless, filled with the minutiae of the deposed emperor's daily routine (which reportedly included drinking two cups of coffee per day). Only the most hardcore of Napoleon aficionados will thrill to the information that their hero spent a good deal of time teaching billiards to a lively teenager named Betsy. Similarly incongruous is a chapter on the French poet Rimbaud, whose tangential connection to coffee is that he made a living dealing it for several years. Though Wild deserves some credit for digging up details on the doomed poet's merchant days in the Middle East, the Rimbaud material doesn't advance the reader's understanding of coffee's role in shaping the world economy.

That is curious, indeed, seeing that one of Wild's main aims in Coffee is to explain how, as he writes in the first chapter, "coffee lay at the very heart of the triumph of free-market economics in our times." The irony of that fact, he argues, is that coffee is now bastardized by the free market it made possible in the first place, and the crop's degradation is dragging down millions of Third World farmers in the process. Yet it's not until very late in the book that Wild finally starts dishing the dirt on Starbucks and Nestle, whom he seemingly regards as only slightly less reprehensible than Idi Amin. He cycles through a laundry list of nations that are dependent on coffee exports, a situation that he largely blames on America's wicked colonialist tendencies. Wild's big gripe is that corporate middlemen are insensitive to the economic needs of coffee farmers, paying them a pittance for their crops, then jacking up the price to ridiculous levels at the Starbucks counter. The same, of course, could be said about any number of foodstuffs -- anyone interested in Bananas: A Yellow History? -- so there's very little in Wild's ostensible expose that will shock readers. His argument would have resonated with much more force if the book's focus on coffee were a bit more unwavering, but Wild's rhetoric too often descends into a stock harangue against corporate avarice. Though the book is titled Coffee, the drink vanishes for vast stretches, as Wild instead discusses everything from the School of the Americas to Agent Orange to the United States' anti-cocaine efforts -- and not with particular lucidity or flair, either.

The constant digressions are a pity, as there is doubtless validity to his claims that the dire circumstances in Colombia or Nicaragua have much to do with Western bullying in the coffee trade. But Wild simply does a poor job of connecting the dots between the crop and the Third World's many woes; he hints, for example, that the Zapatista rebels in Mexico emerged in response to artificially low coffee prices in Chiapas, but he provides neither further explanation nor backstory. And though Wild teases the reader with his insinuations that overzealous Robusta planting has destroyed Vietnam's agriculture, he spends too much space on the war and how it "haunts the American psyche."

The jumble might have made more sense were Wild a reporter, but he is not. There is no evidence in Coffee that the author ever interviewed anyone in these coffee producing nations, let alone an actual coffee farmer. His information on various left-wing bogeymen seems culled entirely from secondhand sources, and not particularly good ones at that. At one point, when an anecdote might have really strengthened his case about the need for Fair Trade coffee, Wild instead conjures up a meandering hypothetical about the fictional Ahab Coffee House.

What's really missing from Coffee, perhaps, is any trace of humor, or at least a sense of fun. The single-topic genre is obviously doomed to offer less-than-comprehensive takes on history and the world, a shortcoming that Cod and Mauve and How Soccer Explains the World acknowledge with occasional winks at the reader. But Coffee is a serious book from first page to last, and you get the sense that Wild would make for a rather didactic dinner-table companion.

Worse yet, despite his background in the coffee trade, he never once seems to actually like coffee. He spends considerable space excoriating people who deign to like instant coffee, Starbucks coffee, Robusta coffee, espresso, or any number of so-called specialty blends. But he rarely, if ever, expresses an affection for any incarnation of the beverage himself. The overall effect is that Wild comes off as something of a snob, the sort who never stops sniffing at your tastes as well beneath his educated palate.

That's a shame, because Coffee is not a terrible book, just a jumbled and blandly written one. The dire circumstances faced by Vietnamese coffee farmers are troubling, indeed, and he sheds some much-needed light on the consequences of Starbucks' coffee-house hegemony. But given how potentially scintillating and explosive Coffee could have been, it's disappointing to discover that it requires several strong pots of the black stuff to get you all the way through.

Rise of the Green Machine

Cecille Isidro — Wed, 06 Apr 2005 03:00:00 -0400

Toyota promised me 60. The spec sheet on the 2005 Prius clearly states that the car gets five dozen miles per gallon of gas on city streets. But I'm test-driving a beige hatchback along Sepulveda Boulevard on the outskirts of Los Angeles, and according to the touchscreen on the dash, I'm topping out at 49.7.

Granted, 49.7 miles per gallon is at least twice what all the gas hogs around me are getting. But whenever I hit the accelerator, no matter how gradually, my mileage dips. I must be doing something wrong. I click the screen over to a real-time schematic of the hybrid gas-electric power train. Rolling out of a stop, the car is golf-cart silent while the display shows the 50-kilowatt electric motor providing all the power to the wheels. Once I hit 9 miles per hour, the gas engine takes over, transforming the electric motor into a performance booster that kicks in only when I need some extra juice. The secret to increasing my fuel economy, I realize, is to manipulate the relationship between the two halves of the engine. The more I can use the electric propulsion, the better mileage I'll get.

And that's when I have my eureka moment. There's a sweet spot on the accelerator. When the car hits 40 miles per hour, I coast for a few seconds, letting the gas engine go idle, then use the electricity to maintain my speed by depressing the pedal ever so slightly. My mileage starts to climb -- 50.1, 50.4, 50.8.

My ad hoc videogame on the traffic-clogged streets of LA is nothing new to the 120,000 Prius owners in the US. Some fanatics even drive shoeless to be in better touch with the accelerator. For true masters, 50 miles per gallon is a piker's score; they shoot for a consistent 60. When it comes to gas mileage, Prius owners can make TiVo users and Mac addicts seem blase. A typical newsgroup posting from one of hundreds of customers who frequent fansites like PriusChat.com: "This is the greatest car ever invented!"

Which is pretty much how Toyota feels. The company introduced an environmentally friendly, rather homely car to a niche of pocketbook activists five years ago. Having proved a market, Toyota remodeled the car's body, increased the engine's power, worked out the bugs, and turned a profit. Now it's rolling out phase two of its strategy: bringing hybrids to the masses. "We're at the edge of making the internal combustion engine similar to regular film for a camera," says Ernest Bastien, VP of Toyota's vehicle operations group. Bold words, considering that more than 99 percent of the cars Toyota sold last year had traditional internal combustion engines.

In phase two, Toyota is doubling production to sell 100,000 new Priuses in the US this year. This spring, the company will introduce the Lexus RX 400h, billed as the world's first luxury hybrid, followed by the Toyota Highlander Hybrid SUV. And it's considering opening a US manufacturing facility. Toyota has also begun advertising the Prius to the mass market. The company kicked off a TV ad campaign with a $5 million, 60-second spot during the Super Bowl that hit on a few important marketing messages: The Prius is good for Mother Earth, and it doesn't need to be plugged in -- a major point of confusion in Middle America. The commercial also confirmed Toyota's role as Detroit antagonist by jabbing the industry for failing to advance the automobile engine in the last 120 years.

Of course, Toyota's not the only company with a hybrid on the market (see "Hybrids Hed2Hed"). Honda has the Civic Hybrid, Accord Hybrid, and Insight. Nissan licensed Toyota's technology for the forthcoming Altima Hybrid. Ford introduced the Escape Hybrid SUV and Chevrolet has the Silverado Hybrid pickup. But Toyota has sold more hybrids than all other automakers combined, and it's the only manufacturer fully embracing the technology's long-term prospects. Other automakers fear that hybrids are too expensive or too complex to augur real change -- not the digital camera that eventually revolutionized that market, to use Bastien's analogy, but rather a niche product like the old-fashioned Polaroid -- and that hybrid technology will be supplanted by hydrogen-powered fuel cells.

Which means that if there's going to be a hybrid in every garage come 2020, Toyota must lead the way. It may seem odd that the company poised to overtake General Motors in the next few years as the world's biggest automaker is out to render the traditional internal combustion engine obsolete. But the early success of the Prius is making believers out of Toyota suppliers. Toshiba, for example, recently committed $95 million to build a facility to manufacture hybrid control system microchips. Likewise, Sanyo announced that it will double output of its rechargeable hybrid batteries. For hybrids to become ubiquitous, however, Toyota needs to make a convincing case to drivers from Baltimore to Beijing -- not to mention executives in Detroit -- that hybrids are neither a stopgap nor a luxury, but affordable, cool, and here to stay.

Who but a tree hugger or a Hollywood politico would pay $20,000 for a four-door hatchback with a puny 1.5-liter engine? Toyota COO Jim Press has heard the question before, and he jumps on it. "How much premium are people paying today for their Hemi V-8?" he asks, referring to the 345-horsepower engine that's an option on the Dodge Ram pickup. The answer: about $1,000. "What do they get out of that? They can go faster from stoplight to stoplight. Why wouldn't they pay for a more fuel-efficient engine that gives you better performance but also saves the planet?"

"Saves the planet"? OK. The EPA classifies the Prius as a Super Ultra Low Emissions Vehicle. It uses less fuel than the most efficient diesel car and emits 95 percent fewer carcinogens into the atmosphere. So its green cred is irrefutable. But "better performance"?

Ever since General Electric first dabbled unsuccessfully in gas-electric technology in the early 1900s, the knock on hybrids has been that they don't have enough pep. (Engineers of the day couldn't get the cars much past the 35-mph barrier.) That was true of the first Prius, introduced in Japan eight years ago. Like today's version, it had a gas engine and an electric motor linked by a "power split device," a set of gears connecting two power systems to one axle. Each half of the power train can work independently or together, depending on the situation. The battery is recharged by the gas engine, as well as through a process called regenerative braking, in which the car's kinetic energy is converted into juice that's stored in the battery.

Despite the technologically impressive power train, the original Prius was suited to little more than the start-and-stop city driving that's common in Japan. Basic hybrid technology works well in vehicles that stop frequently and travel at low speed. (Which is why several package-delivery companies, including FedEx, are experimenting with hybrid fleets.) When Toyota brought the Prius to the US in 2000, it increased the electric motor's power to meet the typical American driver's hunger for acceleration. Still, the Prius went zero to 60 in a lethargic 14 seconds -- making highway on-ramps an adventure -- and drivers had to tolerate the annoyance of feeling the power train toggle between gas and electric.

Despite these drawbacks, and a sticker price about $3,000 higher than a similarly equipped Corolla, dealers could hardly keep the early Prius on their lots, in part because of Toyota's savvy rollout strategy. New cars are usually doled out evenly to 12 US sales regions. But the marketing department knew that only a special customer would pay $20,000 for a compact car. Specifically, someone with a master's degree, a six-figure income, and a fondness for composting.

So Toyota diverted a larger percentage of cars to the San Francisco Bay Area. "If we had used a conventional distribution system, we would have had consumers waiting in Northern California, and dealers with cars sitting on lots in Jacksonville," says Bastien. Bay Area early adopters were willing to sacrifice performance for psychological rewards.

But if the goal is to go big, there can be no sacrifices. The second-gen Prius accelerates 25 percent faster due to a new boost converter that turns the nickel metal hydride battery's 200 volts of DC output into 500 volts of AC to power the electric motor. Advances in battery chemistry also helped the battery shed nearly 29 pounds, making the car a bit quicker off the line and stingier with fuel.

The biggest development in the Prius 2.0 comes in the way the transmission manages both halves of the engine. As I discovered on my test-drive, the power train doesn't merely use electricity at low speeds, gas on the highway. Rather, the two sides of the engine work in tandem. The patented algorithm that manages that relationship is the real secret to the power train's success. It tells each part of the system when to whir to life or shut down, optimizing both fuel efficiency and performance. Toyota's engineers also sped up interaction between the onboard computer and the transmission, which now allows the power train to more quickly sense when the electric motor should provide extra oomph to merge onto the freeway or climb a steep incline.

The second-generation Prius handles like any other midsize sedan, and has impressive power on straightaways. Last August, Toyota's engineers set a hybrid speed record on the Bonneville Salt Flats: 134 miles per hour. Except for a few minor modifications -- reduced weight, enhanced gear ratios -- the green and white speedster was a street-grade Prius; the Bonneville team even left the CD changer intact. The Highlander Hybrid and Lexus RX 400h perform even better. The all-wheel-drive Lexus boasts a 268-horsepower 3.3-liter V-6, two electric motors, and a more powerful boost converter, which transforms the battery's 200 volts into 650 volts. And though its estimated 30 miles per gallon can't match the Prius, the Lexus offers fuel efficiency that beats most four-cylinder sedans.

The question now is how to further improve the fuel efficiency and performance of hybrids without increasing the sticker price. Toyota's engineers have exhausted the most obvious tricks. The boost converter probably can't produce much more than 650 volts unless the entire electronics system is overhauled. It may be possible to capture more energy from the brakes and return it to the battery, but that will be an incremental improvement. One significant advance could come in battery development, as companies such as South Korea's LG Electronics develop lithium ion. Li-ion batteries pack the same wallop as NiMH units but cut 18 pounds off the weight of hybrid power trains -- enough to add a few more miles per gallon.

Beyond that, automakers are going to have to get more creative to reach new levels of fuel economy. One option is to use carbon fiber parts to decrease weight, but that will significantly increase costs. "There is room for triple-digit fuel economy if you're willing to go to a very, very low-mass solution," says Dave Hermance, executive engineer for Toyota's environmental engineering group. "But I'm not sure the market is ready for an all-aluminum body."

The record of the Honda Insight suggests Hermance is right about how much change the market will accept in return for better mileage. The tiny two-seat Insight is even more fuel efficient than the Prius, averaging 66 miles per gallon on the highway, thanks to the car's aluminum chassis and funkier, more aerodynamic teardrop shape. But Honda sold only 583 Insights in the US last year; Toyota sold 55,390 Priuses.

Beyond looming engineering challenges, Toyota also faces a marketing dilemma as hybrid engines find their way into normal-looking vehicles. The Prius has been a hit in part because of its unique looks: Buy a hybrid and passersby will know that you're both hip and intelligent, not to mention part of a club that includes Leonardo DiCaprio, Cameron Diaz, and former CIA director James Woolsey. The look-at-me factor, however, is soon to fade. The Highlander Hybrid appears almost identical to its gas-burning cousin. Toyota is rumored to be introducing for 2006 a hybrid version of the Camry, the best-selling car in the US, which will probably look exactly like its vanilla namesake. Word is that the Lexus GS 450h, a hybrid version of the GS 430 sports sedan, will hit the market around the same time. Only then will Toyota know whether Prius owners are plunking down the extra $3,000 to help the environment or for the head-turning appeal.

The internal combustion engine under your car's hood isn't much different from the one that Gottlieb Daimler and Wilhelm Maybach patented in 1885. There have been occasional advances to limit emissions and increase fuel efficiency, most notably the introduction of electronic fuel injection in the 1980s. Otherwise, automotive innovation has focused on adding horsepower to ever smaller, ever cheaper internal combustion engines. Between 1981 and 2003, the average horsepower of cars sold in the US rose 93 percent.

Until recently, there seemed little need to worry about fuel economy. The thermo-dynamic properties of fossil fuels are hard to beat, and as long as oil remained cheap and plentiful, there was no reason to spend a fortune bringing a new type of car to market. Compared with tech-driven industries, automaking has been on a flat innovation curve. "You can't design a new car, bake it, and start using it when it comes out the other end," says Jim Press. "You've got billions of dollars of research and testing, and parts suppliers that have to be dealt with. On engines and power trains, you need 10- to 20-year life cycles to amortize the investments."

The long investment cycle makes some auto companies skittish about adopting new approaches. Selling 120,000 cars in Palo Alto and Hollywood is one thing -- but what do middle-class families in Houston want? The average fuel economy of all 2004 vehicles was, in fact, 6 percent less than it was in 1987. Automakers say they're just giving the market what it demands -- more of the same.

And so it came as no surprise that the word at this winter's auto show in Detroit was horsepower. Sure, the Ford Escape Hybrid was a promising newcomer, winning the trophy for 2005 North American Truck of the Year. And Ford vows to roll out four more hybrid models by the end of 2008. But for now, the company is making only 20,000 Escape Hybrids a year because it considers a $5,000 premium over the conventional Escape too steep for the mass market.

The same goes for Nissan. It will release a hybrid Altima in 2006 with Toyota's power train under the hood, but CEO Carlos Ghosn isn't sold on the technology. At the Detroit show, he warned that unless costs are reduced dramatically, "the hybrid is going to be like the electric cars" -- a historical footnote, on par with the famously failed EV1 of the late 1990s. Honda, which put the first hybrid on the US market, still doesn't have real traction. Sales of its Civic hybrid have been disappointing; the company moved just 1,169 in January, a 45 percent drop from the previous month. Honda has no plans to put its hybrid system into the Element or Pilot SUVs.

One reason carmakers like to focus on horsepower is that it's damn hard to develop an algorithm that manages a hybrid power train. No company has been able to come up with a formula that beats Toyota's. Ford developed its own algorithm only to realize it was very similar to the Toyota approach; in order to avoid a lawsuit, it ended up purchasing a license rather than pursuing a patent. Mercedes was stunned to discover that its vaunted F 500 Mind concept car, a diesel-electric hybrid, actually got worse mileage on the highway than a gas-only version. Nissan just threw up its arms and licensed nearly all of Toyota's hybrid technology.

GM seems enthusiastic about hybrids, trumpeting a system it's developing with DaimlerChrysler that can beat Toyota on highway mileage. But GM doesn't exactly have a stellar track record in this arena. The company convinced King County, Washington, that its GM Allison New Flyer buses could increase fuel efficiency up to 40 percent over conventional diesels. The county purchased 235 buses at $645,000 each, a $200,000 premium per vehicle over their existing fleet, only to realize that the New Flyers don't get better mileage.

As a result of hybrid tech's complexities, many companies are looking in other directions. Audi, BMW, and Volkswagen are working on clean diesel. At the Detroit auto show, most manufacturers showed off hydrogen vehicles, which use fuel cells and emit only water vapor. Hydrogen cars are definitely the endgame, but making fuel for them requires copious energy. Building a network of filling stations will cost hundreds of billions of dollars. It'll take decades to solve such problems. In the meantime, many automakers seem content to point to their hydrogen prototypes as evidence that they're working on new solutions while actually embracing the status quo.

Not so at Toyota. Hybrid vehicles are showing up all over US roads because the Japanese carmaker has thrown its full weight behind the technology. The company has its own fuel cell prototype in the works, but executives are quick to note that the Prius is actually more efficient when you factor in how much energy it takes to produce the hydrogen fuel in the first place. And unlike hydrogen cars, hybrids work with the current energy infrastructure.

As far as the price premium that's so troubling to other automakers, Toyota just doesn't seem all that concerned. Even in a best-case scenario, hybrid power trains will always be more expensive due to the engine's increased sophistication. But the company is betting gas prices are going nowhere but up. If that's true, the hybrid tax begins to recede. It's a gamble, but a calculated one. Prius sales rise or fall from month to month in almost direct correlation to the fluctuating price of oil. And then there are the geopolitical factors to consider. "The cost of oil, the real cost of oil, is not just what you pay at the pump," says Press. "It's what we're paying in Iraq. That's the true cost." In short, Toyota has chosen the hybrid track for a simple reason: The world cannot afford to wait another 40 years.

Global warming. There. We said it. So declared a 2001 advertisement taken out by Ford in newspapers nationwide. It was an unusually frank admission from an industry better known for pooh-poohing all evidence of rising greenhouse gas emissions. But carmakers have begun to do the math. Right now, there are about 800 million cars in active use. By 2050, as cars become ubiquitous in China and India, it'll be 3.25 billion. That increase represents an enormous sales opportunity for automakers and an almost unimaginable threat to our environment. Quadruple the cars means quadruple the carbon dioxide emissions -- unless cleaner, less gas-hungry vehicles become the norm.

Toyota knows China is the future. It will open a Prius manufacturing plant in Chang-chun by the end of the year, and Press believes driving conditions in China make hybrids an ideal fit -- if not the Prius, then perhaps a more low-cost, low-power alternative perfect for puttering around megacities (see "China's Next Cultural Revolution," page 106). Or maybe the demand will be for so-called mild hybrids, like Honda's Civic Hybrid, which save fuel and limit emissions but can't run on electricity alone. Such vehicles improve fuel economy by 10 to 25 percent, chiefly by using an electric motor to start the engine. The technology is nowhere near as impressive as the Prius power train, but it's simpler and cheaper -- which will be important to Chinese workers making $800 a month.

If Prius' early track record is any indication, the world will embrace hybrids. Prius waiting times have stretched six months or more, even with dealers selling above MSRP; the Lexus RX 400h had a preorder list of 18,000 names in January, three months before its release. And the masses are taking notice. A 2004 study by the Public Policy Institute of California found that 47 percent of those surveyed would consider buying a hybrid, higher prices and all.

Being pro-environment and actually slapping down an extra $3,000 are two different matters, of course. But several ominous forces could easily tip the market toward hybrids: worsening climate change, war in the Middle East, a tripling of gas prices due to regional turmoil, raised emission standards in China.

Jim Press says "the oil-drinking party" is nearing an end. When the lights come on, the US auto industry will see the energy equivalent of a Wall Street correction. And it will realize there's money to be made in slowing the depletion of our ozone and tapping into fears that we're leaving the planet worse than we found it. Toyota already understands this. Before long, Detroit will remember the last time a Japanese carmaker came up with a better way to build automobiles.

Riches to Rags

Cecille Isidro — Thu, 10 Mar 2005 00:00:00 -0500

A successful scam consists of two essential parts: the fraud and the getaway. An ill-gotten fortune, no matter how spectacular, isn't very useful if it can only be spent on cigarettes and candy bars at the prison commissary. So a competent con artist will figure out from square one not only how to part the suckers from their cash, but also how to disappear when the inevitable end becomes imminent.

Casual fans of flim-flam history are already aware that Charles Ponzi, whose surname is now synonymous with "pyramid scheme," couldn't dodge the law when his financial house of cards collapsed in 1920. The pint-sized immigrant from Lugo, Italy, born Carlos Pietro Giovanni Gugliemlo Tebaldo Ponzi, never went on the lam, nor did he try to hide his fortune from investigators. He was incarcerated then deported, and spent his final years living in penury in Brazil, dying with $75 in his bank account. Hardly a post-scam resume worthy of the Hucksters Hall of Fame.

It's easy to interpret Ponzi's failure to abscond with the loot as an indicator that he was only half a scammer -- excellent at the fraud part of the equation, but not so strong on the endgame. But Mitchell Zuckoff offers a different take in the terrific Ponzi's Scheme: The True Story of a Financial Legend, portraying the man as more delusional than criminal. His Ponzi never fled because, like Enron's Kenneth Lay or WorldCom's Bernard Ebbers, he somehow convinced himself that he could forestall the day of reckoning long enough to make a buck for his investors. His real sin was similar to that of so many failed CEOs of the past few years: Ponzi bought into his own spiel and decided that words were more important than facts.

The whole tale seems ludicrous to modern readers, given our day-to-day familiarity with real-estate infomercials and emails promising a slice of Mobutu Sese Seko's riches. We're trained to be wary of too-good-to-be-true offers -- a company peddling mortgage rates of 3 percent is obviously not on the up-and-up. Bostonians in 1920, alas, weren't quite as sharp when it came to separating opportunity from swindle. This was the era in which, much like the mid-to-late 1990s, securities speculation seemed the road to wealth for Everyman, and federal regulation was still virtually non-existent. Ponzi did especially well by targeting people like himself, immigrants and blue-collar sorts who felt entitled to the same financial perks as Boston's patricians. Zuckoff brings this undercurrent of class conflict front and center by interweaving Ponzi's tale with that of his blue-blooded nemesis, Boston Post editor Richard Grozier. Unlike Ponzi, who had to scrape through lean years working menial jobs and enduring a few prison stints, Grozier was the stereotypical scion of privilege -- his father edited the paper before him, and Richard ascended to the job despite disastrous careers at Exeter and Harvard. Grozier was exactly the sort of man that Ponzi's immigrant investors detested, an aristocrat whose very status seemed more Old World than New. This was America, after all, where the streets were supposedly paved with gold (a cliche that, Zuckoff notes, inspired Ponzi himself to set sail for the United States in 1903). Didn't the little guy deserve to profit from the nation's post-World War I boom, too?

Ponzi's trademark scheme was, in fact, pegged to World War I's deleterious effects on European currencies. As Zuckoff expertly explains, his subject's eureka moment came while examining an International Reply Coupon, a certificate meant to facilitate the flow of mail between countries. Back then, countries did not recognize one another's stamps, so there was no such thing as the self-addressed, stamped envelope for transatlantic letters. To remedy this problem, an arcane international body called the Universal Postal Union had invented the coupons, which could be redeemed for local stamps. A sender in France would buy a coupon, include it in his mailing to the United States, and the American recipient would redeem it for stamps at an American post office.

Ponzi, who had just failed to launch a business-to-business advertising guide, saw the International Reply Coupon as an ingenious way to take advantage of Europe's post-war chaos. The coupon's inventors had made the error of fixing the values long before World War I caused a nosedive in European currency valuations. "By redeeming [the coupons] in Boston rather than Barcelona," writes Zuckoff, "Ponzi would earn a profit before expenses of ten cents, or ten percent on each dollar's worth of coupons he bought in Spain and redeemed in the United States." And the Italian lira had suffered even worse than the Spanish peseta. Ponzi dreamed of conjuring up his contacts in his native land, having them ship over coupons by the boatload, and making a killing.

It was just the sort of arbitrage play that might warm George Soros's heart. Except that Ponzi made one critical miscalculation -- the coupons could only be redeem-ed for stamps, not cash. Ponzi initially believed there was some way around this and began issuing certificates to investors that promised a 50-percent return on principal after 90 days. Even after it became clear that no bank or post office would monetize the coupons -- the Universal Postal Union went so far as to issue a statement making clear that the vouchers were not intended for speculation -- Ponzi went right on accepting investments at his School Street headquarters. And as the money rolled in, a combination of avarice and fear compelled him to perpetuate the fraud, rather than admit that ruin was the inevitable outcome.

The earliest investors, of course, were the lucky ones. As the people at the top of the pyramid, they were paid their returns out of the principals anted up by latecomers. But Zuckoff argues that Ponzi thought he'd only have to rob Peter to pay Paul in the short term, and that eventually he'd figure out a way to make good on his wild promises. He was a shyster, for sure, but not quite the evildoer of the popular imagination. Once it became clear that his postal coupon strategy would never work, he thought he could stall as he worked out a new get-rich-quick scheme.

Zuckoff bolsters this more sympathetic take on Ponzi by delving deep into the man's troubled background. Ponzi came from upper-middle-class stock but had washed out of a Roman university thanks to his fondness for late-night parties and gambling. He lived a rough-and-tumble, itinerant life during much of his time in America, occasionally finding a white-collar job that suited his natural intelligence. But he was a born bumbler. He was involved in a shady bank failure in Montreal, for example, though Zuckoff suggests that Ponzi may have been the fall guy for higher ups. He also served time in a relatively cushy federal penitentiary in Atlanta for helping bring several illegal immigrants over the border from Canada. Again, Zuckoff argues that Ponzi got a bum rap and was merely the victim of circumstance and anti-Italian prejudice.

In his efforts to humanize his infamous subject, Zuckoff even goes so far as to dredge up a tale from Ponzi's days as a nurse to injured miners. Without prompting or reward, he volunteered large swaths of his flesh, so a severely burned woman whom he barely knew could receive critical skin grafts. Not exactly the sort of sacrifice to be expected from a truly larcenous soul.

Though his currency speculation scheme was truly harebrained, Ponzi was not without his talents. He wasn't the first to use pyramid tactics, but he added some clever flourishes, such as employing early investors to recruit new marks -- the foundation for what is now referred to as multi-level marketing. In an even more modern stroke, Ponzi also hired himself a public-relations mouthpiece, an ex-reporter named William McMasters, who deftly assuaged a skeptical media -- at least for a few months. (Ponzi would come to regret the hire when McMasters figured out that his boss was essentially insolvent and ratted to the press.)

Ponzi's Securities Exchange Company -- the irony of the venture's acronym surely wasn't lost on post-Black Tuesday regulators -- made him a very, very wealthy man, rich enough to purchase his own bank, several food producers, and a mansion in a tony Boston suburb. Some Bostonians even hoped that the immigrant millionaire would take the Red Sox off the hands of Harry Frazee, the owner who had traded away Babe Ruth earlier in 1920. They'd rather have a hero like Ponzi at the helm than the man who sold baseball's greatest player in order to finance his girlfriend's flop of a musical.

There's no doubt that Ponzi's scheme was doomed to fail from the start, but its demise was hastened by Richard Grozier's Boston Post. Struggling to emerge from his father's considerable shadow, Grozier saw Ponzi as his own version of the International Reply Coupon, a clever shortcut to his ultimate goal of turning the Post into Boston's preeminent newspaper. Like its competitors, the Post initially flubbed the story, writing meaningless puff, but Grozier quickly became suspicious of the popular Ponzi. He sicced his best reporters on the case, and they made mincemeat of their target. The hoi polloi who admired Ponzi, however, didn't believe the Post's takedowns at first. The SEC's investors were the sorts of folks who were shut out from more conventional avenues of investment, and most suspected that the Harvard set was furious that Ponzi had outsmarted them. Better to trust the self-made man, they figured, than the one with a silver spoon dangling from his mouth.

Yet class antagonism can only blind people from the truth for so long, and the Post's discovery that Ponzi had been involved in the Montreal bank failure was the final nail in his coffin. After his arrest, it quickly became apparent that Ponzi was at least $3 million short, and that the poor latecomers might have been better served by using their hard-earned cash as winter kindling. The folk hero Ponzi ended up in the clink and, eventually, on a boat back to Italy; the aristocrat Grozier and his staff nabbed a Pulitzer.

The inevitability of the scheme's outcome doesn't diminish from Zuckoff's book, which is paced more like a detective novel than a skilled work of financial journalism. Zuckoff took great pains to sift through the primary sources of the day, particularly court transcripts and newspaper accounts, and his details are impressive. Anyone who has ever wondered about Charles Ponzi's views on human sexual proclivities need look no further. A strict historian might quibble with Zuckoff's recreations of conversations that no one recorded, such as an exchange between Ponzi and legendary boxer "Gentleman Jim" Corbett, but they ring true enough.

Above all, Zuckoff successfully pushes Ponzi beyond mere biography by making Grozier a co-star. This is not simply a common tale of greed gone wrong but rather a small window onto America's economic rise and collapse over the 1920s. After World War I, people like Ponzi's dupes looked around at the wealth being created by the elite and asked, "Why not us?" Unfortunately, people as self-deluded and incompetent as Ponzi -- and often far more malicious and powerful -- were only too willing to answer that question with a resounding, "Why, no reason at all. If you trust me completely." That answer, and the nanvete of the investors who heeded it, played no small part in bringing economic cataclysm at decade's end.

Welcome To The Machine

Cecille Isidro — Thu, 01 Apr 2004 00:00:00 -0500

That serious problems plague our new, computerized voting machines -- on which 29 percent of U.S. voters are poised to cast their votes in November -- has been apparent ever since $3.9 billion in federal funding for the machines was made available in 2002, in the aftermath of Bush v. Gore. In the years since, report after report has cautioned that the machines lack the security and robustness necessary to withstand the assaults of hackers or unscrupulous technicians. But no one seems likely to stop the rollout of the machines, more than 50,000 of which have been purchased by states. For those who hope to salvage the integrity of this year's election, then, energies must shift from the effort to stop vote-hacking- -- now a doomed task, it would appear -- to an effort, instead, to ensure that access to vote-hacking will be as open and democratic as possible.

In that spirit, Harper's Magazine is pleased to offer the following primer. To be sure, you will not find it a simple task to steal the 2004 election -- not compared with the Gilded Age, when one could cram ballot boxes with fraudulent votes in a ploy that Texans called the "Harrison County Methods." (Decrying such trickery in his memoir, one frustrated Texan politician wrote that "dead Negroes, mules and horses" had cast ballots for his opponent, as had Fido Jenkins, a dog who nevertheless had managed to vote five times.) But when voting-machine vendors dismiss the possibility of their machines being tampered with as "academic," they underestimate the intelligence, skill, and tenacity of the world's hackers -- and even, perhaps, of ordinary readers such as yourself.

Option 1: Take a job at a voting-machine company.

The most destructive means of attack, albeit the most challenging, would be to seed the voting machines with a "Trojan horse," a malicious software program that would lie dormant and undetected until its services were required. Such a program could be triggered by the voting machine's internal clock to awaken only between the hours of 8:00 A.M. and 6:00 P.M. on the first Tuesday in November, at which time it could, for example, begin to subtract or disregard one vote out of every 100 for each candidate with a particular party affiliation. Note that for this option to succeed, you will need to stay in your boss's good graces: Hiding a Trojan horse in the machines will require administrative access to the machines' basic source code, which is ostensibly limited to trusted individuals within the company.

Having risen through the ranks at a voting-machine company, will you still be willing to risk your career for a candidate? Perhaps not. But should your partisanship flag, you can simply fall back on greed. Consider the good fortunes of Ron Harris, a mid-level computer technician for Nevada's Gaming Control Board, who embedded Trojan horses in dozens of video-poker and slot machines in the early to mid-1990s. Harris's program allowed accomplices to trigger maximum jackpots by placing bets in particular sequences. In this fashion he netted nearly $50,000 without arousing the casinos' suspicion. (Be careful not to overstep: when Harris attempted to hack a one-time, $100,000 jackpot in a New Jersey Keno game, his entire scheme was discovered.) Imagine how much a Bush Pioneer or an Emily's Lister might pay to guarantee victory.

Option 2: Take a job as an election worker.

Another kind of attack is possible in the period after the polls have closed, when the storage media that contain the voting records are manually transported to a central office. Some of the machines, such as those manufactured by Ohio-based Diebold Election Systems, store votes on simple PCMCIA cards, a storage device familiar to users of digital cameras. After stealing one of the PCMCIA cards, you can pass it to a confederate who will decode and reencode it off-site.

Will it be possible to crack the code quickly enough? Probably so. Experts have long known DES, the encryption algorithm used to protect Diebold's cards, to be second-rate. More than five years ago, the Electronic Frontier Foundation decoded a DES-protected message in twenty-two hours, and today's computers no doubt can accomplish the task much more rapidly. An added boon: all Diebold cards are encrypted using the same, hard-coded key -- a design mistake inveighed against in even the most rudimentary cryptography class. If you can determine the DES key of a single machine prior to an election (an easy task, if a unit could be "kidnapped" for a day or two), you will have access to every machine manufactured by Diebold.

Option 3: Make your own "smart card."

Not all of the options will require a change of career. Many of the voting machines -- for example, Diebold's which are being used in more than 6,000 precincts nationwide -- are operated by "smart cards" that are handed out to voters as they check in at their polling places. These smart cards perform no cryptographic function; that is, they do not try very hard to verify that the terminal they are communicating with is legitimate, and vice versa. If you can figure out the protocol that the card and the machine use to communicate with each other, then you can create a homemade smart card that allows for unlimited voting. (Programmable smart cards sell at computer shops for as little as $3.50 each.)

To figure out the protocol, you could fashion a sort of wiretap device to insert into the smart-card slot, allowing you to eavesdrop on the machine-to-card dialogue. Of course, far easier would be to consult the source codes of the various machines. Although these source codes are proprietary, in at least one case they have found their way into public circulation. Avi Rubin, the Johns Hopkins University computer scientist who was the first to warn of the possibility of smart-card attacks, was able to conduct his research because large portions of Diebold's source code had been discovered on one of the company's publicly accessible websites. (The code was stumbled upon during a routine Google search.) And in December the network of Vote-Here, a voting-machine company based in Bellevue, Washington, was breached by a hacker; VoteHere officials have refused to reveal what information, if any, was stolen.

Option 4: Think demographically.

Perhaps the easiest way to use voting machines to tip an election will simply be to crash the machines of the most partisan districts. The smart-card-based machines are shut down using "ender cards," which poll workers insert at the end of the election day. If you make a smart card that mimics an ender card, you could shut down or slow voting for hours in, say, Orange County, or in a heavily African-American district. (One brand of voting machine, Sequoia's AVC Edge, does not even require an ender card to shut down; the machine can be flipped into "supervisor mode" simply by pressing a button on the back. If poll workers neglect to lock the wire seal that protects the button, interfering with the election will be as easy as flicking a light switch.)

In their brutal simplicity, these final, most accessible options recall some of the most effective vote-hacking schemes from elections gone by: suppressing the African-American vote, whether through confusion or outright intimidation; delivering voting booths late, or not at all, to precincts that vote in an objectionable manner. If there is anything to be learned from the history of election stealing -- or for that matter, of computer hacking -- it is that any possible tricks will be tried sooner or later. And, given the porousness of voting-machine security, some of these tricks will doubtless succeed. Having been presented an opportunity to make vote-hacking nearly impossible, our government seems merely to have handled the ability to do so from one class of criminal to another.

The Ambition Tax

Cecille Isidro — Sat, 27 Mar 2004 00:00:00 -0500

From this side of the Pacific, we've always shuddered at the prospects for young people in a place like Japan. The routine of archetypal sarariman, or corporate drone, sure sounds dreadful: a drab college education followed by a youth of low-paid toil, long commutes into Tokyo, and little chance for advancement beyond middle management. The very best a sarariman can hope for, we're led to believe, is to someday go into hock for a suburban condo and to scrape together enough money so the kids can attend after-school cram sessions.

It all seems so tedious, so pointless, so restrictive -- in short, so un-American. In our country, the story goes, a youngster's economic options are limitless as long as he or she's got gumption and smarts. At 21 or 22, the age at which a sarariman supposedly begins his trudge toward a corporate pension, his American peer should be wrapping up college and preparing to enter a workforce that justly rewards ambition. By 33 or 34, an American with a bachelor's degree should be sitting pretty, with a worthwhile job, a house with a backyard, and enough scratch in the bank to send Junior to preschool. Anyone who falls short of that middle-class dream is obviously a no-count layabout.

But is the sarariman treadmill really so alien to the American experience today? The average collegian in the U.S. isn't graduating into a world of boundless opportunity, but rather is $20,000-plus in the hole thanks to student loans and credit cards. So begins the snowball effect: The most desirable entry-level jobs often pay wages too low for the indebted, who must fork over a large percentage of their salaries to Sallie Mae or Citibank. Other posts are reserved for those who can afford to work unpaid internships, or whose parents can support them through an extra year or two of graduate studies.

Employers are increasingly reluctant to defray the cost of health care, so tack on an extra several hundred bucks a year, even $2,000 or more for the technically self-employed -- "permanent temps," as the saying goes. Though housing is supposedly cheaper than ever, due to record-low interest rates, the ambitious young aren't necessarily enjoying the trend. Rents in many metro areas, where a good portion of knowledge-based jobs are located, remain sky-high; cheaper digs exist in the suburbs, though that means enduring sarariman-like commutes.

High levels of debt preclude the young from getting the sweetest mortgage deals, and they often end up in the clutches of sub-prime lenders. On average, people who had to borrow their way to a graduate degree are already behind $45,900; median debt for grad students has increased 72 percent since 1997. (Aspiring doctors have it the worst, with average loans of $103,855.) Add to those obligations an investment in a humble bungalow, and you're on the hook for a quarter million or more -- not counting interest.

The cumulative effect is that merely keeping one's head above water, rather than getting ahead, has become the top priority for Americans between the ages of 18 and 34. Pursuing the relatively modest dream of doing better than the generation before requires serious capital -- up front in the form of tuition and loans, and hidden in the form of lost opportunities. Call it the ambition tax -- the money you've got to pony up if you want a college degree and a shot at middle-class bliss. But it's really more of a gamble, as there's no guarantee those tens of thousands of dollars will get you where you want to go.

"The next generation is starting their economic race 50 yards behind the starting line," says Elizabeth Warren, a Harvard Law School professor and author of The Two-Income Trap. "They've got to pay off the equivalent of one full mortgage before they make it to flat broke, in order to pay for their education. They can never get ahead of the game, because they're constantly trying to play catch-up.

"And once you've got accumulated debt, the debt takes on a life of its own. It demands to be fed, and it takes that first bite out of the paycheck. And it means the opportunity to accumulate a little, to get a little ahead, to maybe put together a down payment -- it's just never there. It's just staggering to me that this is not a part of our national debate right now."

If the early rhetoric in the presidential race is any indicator, neither candidate cares a whit about the struggles of America's young. George Bush and John Kerry are happy to trade barbs about draft dodging and flip-flopping. But they've yet to utter more than a few peeps about alleviating the unique economic burdens of the next generation, and the one after, and the one after. It's almost as if Americans under the age of 35 don't exist.

Let's try to correct that oversight by following the travails of a fictional payer of the ambition tax. With apologies to Cormac McCarthy, he'll be known as the Kid. The Kid is average in every way, save for determination. He'd like to earn the college degree his father missed out on, and eventually find a job he doesn't loathe going to every morning. At some point, he's hoping to find that special someone, settle down, and squeeze out a few namesakes. Nothing fancy.

The first step, of course, is a bachelor's degree, the minimum requirement for most of the jobs typically associated with upward mobility. Recipients of four-year degrees have much higher average earnings than people sans sheepskins -- $52,200 for a full-time worker with a college diploma, versus $30,400 for a mere high school graduate. For the Kid, college is where he'll start climbing the economic ladder.

It's also where he'll start digging his financial hole. The notion of skyrocketing tuition is such a cliche, it's easy to miss exactly how steep the increase has been. Over the past decade, according to the College Board, average tuition and fees in real dollars rose 47 percent at public four-year colleges, and 42 percent at private four-years. Just in the past year, tuition and fees nationwide rose an average of 14.1 percent; in New York, where Governor George Pataki cut $184 million from the State University of New York budget, a 35 percent tuition hike is on the table.

So a year at Big State U will run the Kid $4,694, not including room and board (which averages another $5,942 in 2003-04). Unless he can snag substantial financial aid, the private route is almost out of the question for the Kid -- tuition and fees average $19,710 per year, plus $7,144 for a dorm and three squares a day.

Federal Pell Grants were once a boon to students like the Kid, but no longer. In 1980, the average Pell Grant covered 77 percent of the cost of a four-year public college; today, it's just 40 percent. Worse yet, despite President Bush's brief State of the Union aside about "larger Pell Grants for students who prepare for college with demanding courses," obtaining a Pell is harder than ever. The Department of Education recently revised its eligibility guidelines, which will exclude 84,000 students from the program entirely, and reduce awards for 1.5 million.

If the nation's commitment to economic mobility is genuine, it's hard to understand the logic behind the Pell Grant cutbacks. When the Minnesota Private College Research Foundation studied the post-graduate fortunes of the state's class of 2002, for example, it found that recipients of state grants earned average incomes on par with their peers who hadn't received aid. "Few other government programs are capable of producing such a positive transformation," the Minneapolis Star-Tribune wrote. Yet federal grants were slashed despite the evidence of their value. Perhaps those who've suffered as a result of Pell cutbacks can take solace in the fact that the money may go toward helping astronauts walk on the moon. Again.

Shafted by the Pell system, the Kid has to pay a visit to a federal loan office or a private bank, just like over 60 percent of his post-secondary peers. The average student loan debt for an undergraduate like the Kid is $18,900, up 66 percent since 1997; over the same time period, by way of comparison, per capita income in real terms increased by just 8 percent. Kathryn Rube of the Public Interest Research Group's Higher Education Project says surveys reveal that nearly 40 percent of these debt loads can be classified as "unmanageable" -- in order to service the debt, recent graduates must fork over more than 8 percent of their monthly income. And over a third of student borrowers are simply not prepared to meet their debt service obligations once they've left campus.

But we're jumping ahead a bit here, for the Kid has yet to earn that coveted bachelor's. Like three-quarters of his fellow higher-education enrollees, the Kid needs to work while taking classes -- books don't buy themselves, as a snarky parent might say. For undergraduates who identify themselves primarily as students -- as opposed to full-time workers taking classes in their spare time -- the average number of hours worked per week is 26. Since the Kid is working to meet expenses, rather than to further his career ambitions, he doesn't have the luxury of taking on an unpaid internship, or even a work-study job with a modest stipend. Instead, he slings ribs at the local chain restaurant, and the hours spent amid the grease have a predictably deleterious effect on his grades.

The other financial ogre the Kid must contend with are credit card shills, who swarm his campus like ants on a picnic chicken. Colleges make millions off credit card hawkers, who pay for the privilege of setting up kiosks or affixing a school's logo to their plastic. Students, in turn, get stuck with deceptively marketed cards at near usurious rates. True, the students deserve some blame, especially when they charge needless luxuries. Groceries and books, however, don't qualify as needless.

The good news, if there's any, is that the average credit card balance among the Kid's demographic has slipped a smidge since 2000 to $2,327; the bad news is that 21 percent of card-toting undergrads have balances between $3,000 and $7,000 -- the high end marking a 61 percent increase from 2000.

The twin burdens of debt and after-hours work, piled atop the rigors of hitting the books, are a big part of why 600,000 undergraduates drop out of four-year schools each year. According to College for All? Is There Too Much Emphasis on Getting a College Degree?, a 1999 study published by the U.S. Department of Education, those dropouts end up making less long-term than peers who earned only an associate's degree. "In addition," the authors add, "they (or their parents) pay more in tuition and are more likely to have student loan debts than are 2-year college students." In other words, the gamble on a bachelor's came up snake eyes.

The Kid's a survivor, though, and after five or six years of loans, study, and work, he dons his cap and gown. Handshakes all around, and Dad buys him an engraved Seiko to commemorate the occasion. Now it's time to join the labor force, $20,402 in the red -- the average combined education and credit card debt for a recent college graduate, according to the federal loan company Nellie Mae.

Forget about grad school, of course, as that would mean taking on a whole new set of loans. A Law & Order fan growing up, the Kid once imagined becoming a public defender. But then he read an American Bar Association report noting that a J.D. would, on average, raise his total debt burden to $80,000, and that the median salary for entry-level, public-service legal jobs is $36,000. So never mind that dream.

The Kid's at first a bit dismayed to discover that his other dream jobs have been cherry-picked by more privileged graduates who were able to hop from prestigious internship to prestigious internship rather than wait tables. A job is finally found, though the pay's not quite what the Kid had imagined. In fact, real hourly wages for young college graduates actually fell between 2001 and 2002, the last year for which complete data are available. Prior to that, wages for recent college graduates increased an average of 3 percent annually throughout the 1990s. Those modest increases, of course, hardly kept pace with the attendant rise in student debt.

And as the Economic Policy Institute also recently noted in one of its regular "Economic Snapshots," the majority of job growth has been in lower-paying industries. "Nationwide, industries that are gaining jobs relative to industries that are losing jobs pay 21 percent less annually," the report notes.

Of course, a good portion of the Kid's monthly wages go directly toward servicing his debt. Demos, a public-policy group that focuses on inequality issues, is preparing a report on debt hardship among the young. One of the stats the group is using to track debt is "debt service to income ratio," which is debt payment divided by total income. Between 1992 and 2001, Demos found that the ratio increased by 28 percent for Americans in the 18-34 demographic. And for those in the third income quintile -- which typically covers recent college graduates -- the increase was 43 percent.

In layman's terms, those fatter ratios mean that the Kid and his cohorts are handing over an ever growing chunk of their hard-won cash to creditors. A contrarian might point out that bankruptcies among the young remain a mere blip. But that's largely because student debt, like child support obligations, can rarely be discharged that way.

Another misleading stat is that defaults on student loans have grown increasingly rare. Last year, student defaults hit an all-time low of 5.4 percent, down from a 1990 peak of 22 percent. The downward trend, of course, didn't come about because students are carrying more manageable debt loads. Rather, the federal government got a lot more aggressive about pursuing deadbeats and using collection agencies to force payment. Defaulters were punished with additional fees and sometimes forced to enter consolidation agreements that prolonged repayment until approximately the end of time.

Aside from the debt he accumulated during his college years, the Kid has a new financial bogeyman -- health insurance. Premiums are spiraling ever higher, a trend that doesn't fit into employers' cost-cutting plans. Health-care premiums increased 13.9 percent last year, according to the Kaiser Family Foundation; it was the largest single-year increase since 1990, and the third straight year of double-digit upticks. A good portion of that cost was passed along to employees, especially if they were contract or temporary workers, who expect to get shafted on benefits. Just over 45 percent of America's temp agency workers, for example, are between the ages of 20 and 34 -- well over half a million in total. (That doesn't include another 2.2 million independent contractors and "on-call workers" in the age group.) Barely over 10 percent of these temps receive any sort of health insurance from their employers, according to the latest survey from the Bureau of Labor Statistics.

Given the Kid's low pay and high debt service, there's a good chance he'd join the 17.9 million other 18-to-34ers who lack even the most basic health insurance. His demographic accounts for the single biggest bloc of uninsured Americans -- 41 percent of the country's total. The Kid enjoys the occasional game of pickup basketball, of course, so he'd best pray that his ACLs are sound. Otherwise, a $5,000 hospital bill could nudge him into the abyss.

A few years pass, a significant other comes along, and the Kid's elders start badgering him about growing up, getting with the American dream, and purchasing a home. Up to this point, the Kid has been renting in a metro area. It's a drag throwing away that money each month, but at least he's not living in his parents' attic. (According to the 2000 census, 14 percent of 24- to 34-year-olds live at home, a 50 percent increase since 1970.)

Adding yet another fixed cost to his debt load might seem like an unwise choice, especially since the Kid doesn't have much in the bank for a down payment. But the way house prices are going, it feels like a now-or-never proposition. "If housing prices continue to escalate, at least you'll be on the train," says Harvard's Elizabeth Warren. "As the train moves, you'll move with it. But it's also a high-risk proposition if it's going to take your income and your spouse's income to make the mortgage payment every month."

Any real estate agent will vouch for the fact that now's an ideal time to be home-shopping, with interest rates at all-time lows. The debt-laden young, however, often don't qualify for the best rates, especially if they've been delinquent in meeting their obligations. Warren points out that in 2001, when the typical mortgage rate hovered around 6.5 percent, Citibank's average was 15.6 percent.

The Kid only needs to put 3 percent down on a house, rather than the 18 percent that was typical during the 1970s. But the lower down payment is a curse in disguise, as it means the Kid will be saddled with much higher mortgage payments. Both he and his spouse will have to work full-time to stave off a foreclosure. "When we look at the median cost of housing, it used to be 30 years ago that a teacher could purchase a home on their own salary," says Tamara Draut, director of the Economic Opportunity Program at Demos. "Nowadays, it's hard for two teachers to purchase a home on their combined salaries."

With the Kid and his partner working full-time to pay the mortgage, they'll need day care for the family's new additions. Day care for a one-year-old costs more than $5,750 per year in two-thirds of American cities, and more than $6,750 annually in one-third of cities. And so the financial onus grows even heavier.

With a little luck and lots of scrimping, the Kid and his kids could do all right, considering. Families like the Kid's are spending far less of their income on consumables than the previous generation -- 21 percent less on food, 22 percent less on clothing, and so on and so forth. Hopefully that spartan philosophy will keep the Kid afloat until middle age and beyond. Hey, he made it this far, right?

But what if some unforeseen catastrophe strikes, like a lost job, an illness, an ailing parent who needs around-the-clock care? The mortgage, the student debt, the credit card debt, the day care tab, health insurance -- the margin for error is virtually nonexistent. By the most generous estimates, in the event of a financial emergency, the typical American family doesn't have enough saved up to last more than a few months. The Kid's just got to hope his legs can keep pumping on the financial treadmill, and that no one ups the speed.

The myth of economic mobility has taken quite a drubbing lately, and rightly so. In September 2002, an economist at the Federal Reserve Bank of Chicago, Bhash Mazumder, concluded that "the persistence in inequality is about 50 percent higher than previously thought" -- in other words, jumping from one class to the next is trickier than advertised. More recently, a pair of French economists, Thomas Piketty and Emmanuel Saez, found that between 1973 and 2000, the bottom 90 percent of American taxpayers saw their average real income fall by 7 percent.

There's little agreement in the ivory tower as to why mobility is so hard to come by nowadays. Flailing around for someone or something to blame, economists have pointed fingers at regressive taxes, greedy corporations, weakening unions, and Wal-Martization. "The underlying factors that cause substantial immobility in the U.S. remain poorly understood," Mazumder confessed in his 2002 report.

From the vantage point of the Kid and his millions of real-life contemporaries, one big answer is obvious: The system punishes the young who dare strive for something better. For those on the young side of 35, debt and its ripple effects have made upward mobility a fiction more often than not.

Yet the presidential candidates seldom address the economic burdens of the young. Ask a candidate to outline his economic plans, and it's all about Medicare, Social Security, slashing the deficit -- important issues, to be sure, but of little consequence to the millions of Americans in their twenties and thirties who agonize every month over their avalanche of debt and diminishing prospects. Howard Dean kicked around the student loan issue at a few press conferences before he flamed out, and John Edwards proposed giving a year's tuition to students willing to work 10 hours a week in their community. Other than that, the rhetoric has been scarce, and concrete proposals scarcer.

The conventional wisdom dictates that this is merely smart politics, since the young tend not to vote. Nor do college kids make for particularly sympathetic characters -- they're often portrayed as hedonists who simply want to spend Mommy and Daddy's cash on a Cancun bender.

So the Kid pays his ambition tax in virtual silence, like that stereotypical sarariman putting in a 16-hour day with nary a complaint. Somewhere on the other side of the world, a Japanese youth preparing for his first trip to the U.S. may read the Kid's woeful tale and marvel, "How tedious, how pointless, how restrictive, how dreadful." He'd be right.

Intel's Tiny Hope for the Future

Cecille Isidro — Wed, 31 Dec 2003 04:00:00 -0500

As a department head at the Defense Advanced Research Projects Agency, the Pentagon's R&D arm, David Tennenhouse spent the late 1990s approving or denying funding for hundreds of far-out military programs. One proposal he reviewed, from a research team at UC Berkeley, outlined a concept called smart dust -- fleck-sized wireless sensors intelligent enough to organize themselves into autonomous networks. Dropped from a passing helicopter, the sensors could spy on enemy movements or detect a hidden stash of mustard gas. Tennenhouse was intrigued enough to authorize several hundred thousand dollars in funding. Then he moved on to the next bizarre proposal.

Tennenhouse left Darpa in 1999 to found Intel Research, the semiconductor giant's stab at offbeat R&D. Charged with finding up-and-coming growth technologies, he gave little thought to smart dust. A neat plaything for the Pentagon folks maybe, "but not all that relevant to my new role at Intel," he recalls thinking. A network of minuscule sensors, each containing only a few dollars' worth of circuitry, just didn't seem like a moneymaker.

That is, until August 2000, when Tennenhouse was invited to Berkeley to check out a student-designed mote -- the housing that contains a sensor assembly and a radio antenna to allow it to communicate with other motes. While examining the circuit board, something clicked. If motes could get significantly smaller -- say, small enough to fit inside pill-bottle caps -- they'd be unobtrusive enough to go anywhere. And that, Tennenhouse thought, would mean a windfall to the company providing the processors. Intel could dominate the high-volume sensor market just as it has ruled the high-powered chip scene with Pentiums.

This time, Tennenhouse threw millions at sensor research. He set up an Intel facility at UC Berkeley and told his researchers to use their imagination to develop new configurations and applications. Three years after that landmark trip to the East Bay, Intel's sensor investment remains trivial compared to the billions it has plunged into, say, the new Centrino wireless chip or its Flash memory business. The entire annual Berkeley lab budget is about $5 million. But in this case, Intel is acting more like an angel investor -- one with $15 billion in the bank -- feeling around in the dark for something that's not only different, but transformative. "It's not a high-end computer play or a low-end mote play," says Intel CEO Craig Barrett. "We're looking for growth opportunities outside our core competency."

Intel is hoping for a two-tiered payout. If sensor networks take off, that will create a need for more silicon. But the networks will also generate a huge amount of data, driving demand for more high-end PCs to process it all. The company now foresees networks consisting of thousands of motes, located wherever there's a need for data collection, streaming real-time data to one another and to central servers. Intel imagines the day when every assembly line, soybean field, and nursing home on the planet will be peppered with motes, prodding factory foremen to replace faulty machines, farmers to water fields, and nurses to check on something unusual in room E214.

Barrett's CTO, the perpetually caffeinated Patrick Gelsinger, can't contain his excitement about the sensor play. Like Tennenhouse, he was converted from skeptic to devotee after a single demo. "Intellectually, it probably felt like Gordon Moore's experience after he first saw the microprocessor and started envisioning all sorts of uses for it," says Gelsinger. "I was a believer." Now he hopes to produce "tens of billions of units" by the end of the decade.

Listen to technologists like Gelsinger and Tennenhouse long enough and the outlines of a strategy emerge: By thinking small, Intel could be on the cusp of something huge. Which is exactly where Intel likes to be.

Intel Research Berkeley is just one of four university-based research "lablets," so-dubbed for their relative size and independence, set up by Tennenhouse beginning in 2001. The others -- at the University of Washington, Carnegie Mellon, and the University of Cambridge -- are likewise dedicated to developing disruptive technologies. Though wholly funded by Intel, the lablets aren't expected to push products down a pre-determined pipeline. As long as their work is tangentially related to silicon, the research centers can pursue whatever they wish. In England, the projects include optical switches and new programming languages; in Pittsburgh, it's data mining tools for webcam networks; in Seattle, XML-based messaging and wireless personal area networks. In Berkeley, sensor networks rule.

The Berkeley lab occupies a plum penthouse space adjacent to the university, with a gorgeous view of San Francisco Bay. Joe Hellerstein, the director, leans back in his chair and looks toward Sausalito. The Golden Gate Bridge, he notes proudly, will soon play host to an experimental sensor network designed by professor David Culler and his students. "It's hard to tell just by looking at it, but the bridge actually sways a few feet in high winds," he says. "The motes, they'll measure how far it moves to either side."

By this June, a stretch of the bridge will be lined with about 200 motes. Each will contain chips running at 8 megahertz and accelerometers designed to measure movement caused by strong gusts. Those readings will be radioed to nearby supermotes -- data way stations that are 25 times more powerful than a regular mote -- before being relayed to the central server. If one reading seems out of whack, it could be a sign of a structural weakness that needs addressing before the next big earthquake.

The Golden Gate project will join several other trials already under way. Berkeley researchers installed 80 motes in the redwood groves of Sonoma County, measuring the temperature and humidity around the mammoth trees. An agriculture project placed 65 motes in a British Columbian vineyard, ready to buzz the manager's laptop whenever an early-morning frost looms. The health research team has mocked up a home of the future at Intel's Hillsboro, Oregon, campus, which uses wireless sensors to remind Alzheimer's patients how to make tea or take their medication. And about 100 UC Berkeley motes help monitor the nesting burrows of Leach's storm petrels, elusive seabirds that breed off the Maine coast.

What's Intel's interest in all this? Think of Maytag bankrolling research into cheaper prefab houses: More homeowners means more dishwashers. "Do I care about ducks in Maine? Absolutely not," says Gelsinger. "Do I care about exploring applications so we can start to demonstrate the value of these networks? Absolutely. What I'm really interested in is selling a lot of silicon for these little devices here."

UC Berkeley's relationship with Intel is governed by an open collaborative research agreement, which requires that nearly all of its work be nonexclusive. Sensor net software, in particular, is flourishing in this open environment. The motes are powered by TinyOS, a Berkeley-designed, stripped-down operating system built to run on 128 kilobytes of memory. Hellerstein estimates that only a few dozen programmers worldwide have mastered TinyOS. But that number is growing rapidly as curious geeks download the code from open source software development site SourceForge.net. Hundreds of downloaders are experimenting with TinyOS, and Hellerstein credits non-Intel developers with honing the motes' ability to coordinate their relative positions to one another. He hopes a compatible database program, TinyDB, will get similar treatment.

The lablet has also farmed out its hardware needs, striking a deal with San Jose's Crossbow Technology. Crossbow agreed to make a few hundred motes for researchers at a cut rate; in return, it received an undisclosed investment from Intel Capital.

Sensors can't become the next big thing until a host of mundane technical issues are resolved: How to get the chipset radios off the crowded 900-MHz spectrum? How to program the networks to not just spew reams of information but be intelligent enough to figure out which measurements are vital and which are junk? "The challenge in tiny sensors is doing some computation at the level of the motes," says Hellerstein. "It's just too expensive to ship out all the data."

Then there's the power issue. Despite TinyOS's relatively scant memory requirements, the motes still burn through batteries far too quickly. And even if they didn't, there would be no room for alkaline AAs in a sensor-filled future. There's talk among researchers of using solar cells, or even MEMS devices that harvest imperceptible vibrations in the environment, but no ready solution.

The toughest challenge of all is creating motes clever enough to function without constant tending. "How do you ensure that people build motes that can be deployed by a local farmer?" asks Richard Beckwith, who heads Intel's sensor experiments in vineyard maintenance. "That's a really hard problem. I'm sure it's going to happen, but I'm not sure how."

"We used to joke inside the company that Intel is the largest single-cell organism on the planet," says Gelsinger. The joke, like many engineering cracks, isn't exactly ha-ha funny, but it is revealing. For all of its runaway success with processors, Intel has had a tough time diversifying.

Despite a triumphant third quarter, the firm realizes that the desktop processor market is starting to plateau. In the not-too-distant future, Moore's law could become too pricey to maintain; there's no point in building yet another multibillion-dollar fab if its chips are too expensive for the lion's share of users. The company needs new industries to colonize, and sensors are a logical first step. Intel won't say exactly how much it has put toward sensor nets so far, but it's certainly less than $50 million. "That's not even Intel's latte budget," says G. Dan Hutcheson, president of VLSI Research, which tracks the semiconductor industry.

The good news about sensors as a diversification play is there's no competition to fend off; other companies have shown little initiative in developing the technology. And sensor nets certainly make for impressive demos. At an Intel Developer Forum early last year, Gelsinger wowed the audience by releasing a swarm of sensor-studded beach balls. As they bounced around, the balls beamed their ever-shifting coordinates to a base station, which in turn charted each orb's movement on a large display. It was proof, Gelsinger announced, that sensor networks can self-configure on the fly -- the key to fulfilling his vision of motes that can be deployed like pixie dust.

Right now, the motes are a lot closer in size to golf balls. Which means that the company is looking for short-term uses that don't require the sensors to be ultrasmall -- or ultracheap. The example that Gelsinger loves to bandy about is an assembly line outfitted with $200 motes designed to gauge machine vibration. If a robot's rumble feels out of sync, the motes relay a warning to a supervisor's laptop: Machine number 27 will break down in the next 30 days. "Now, this piece of equipment costs a million dollars, and it's a disaster if it breaks," he says. "In that case, a $200 sensor is a very cheap device. I mean, it's trivial if you can actually solve this nightmare problem."

But Gelsinger knows that assembly-line motes will do little to burnish Intel's rep as a trailblazer. The hoopla, in large part generated by Gelsinger's fervor, is over smart dust, sensors shrunk down literally to the size of specks. The goal is to halve the size and price of a mote every 18 months, which would have each unit about the size of a grain of rice and selling for around $5 by 2011. That would enable the company to scatter tiny self-configuring hardware as casually as corn seeds. "I want to get to where I'm cranking up huge fabs to deliver, you know, Intel Inside Band-Aids," says Gelsinger. "Let's say a Band-Aid today costs a penny. In the future, they'll sell 10-cent Band-Aids that are also interactive heart monitors. We'll get to a price point where everything starts to have sensors. And when we get there, Intel will be building enormous fabs for consumables as well as ones for maintainable devices."

Has Gelsinger been reading too much Neal Stephenson? "Intel's whole business is built around selling $200 processors," says Linley Gwennap, president of the Linley Group and former editor in chief of Microprocessor Report. "You have to sell an awful lot of $2 processors to make the same amount of money. Sure, if you put them in Band-Aids the volume is going to be tremendously high. But it's not a slam dunk that the mathematics will make it profitable."

If the prospect of ubiquitous silicon seems frightening because you're already flummoxed by the constant beeping from your Outlook inbox, BlackBerry, and cell phone, not to mention the tangle of noncompatible software and breakdown-prone accessories, don't sweat it. Deployed the way Tennenhouse envisions, the networks will require zero human input. We'll reap the benefits without having to interact with the networks, and Intel will eliminate a long-standing obstacle to its growth: the feebleness of the human brain. "Sensor nets let us relieve the human being of the responsibility of drawing information out of the physical world," says Tennenhouse. "We need to have computers anticipating our needs and sometimes taking action on our behalf."

Once sensor nets liberate humans from the burden of computer interaction, there's no limit to how much silicon Intel can push. "I'm not going to have 10 computers per person," Gelsinger froths. "I'm going to have thousands of computers per person."

That vision represents a departure from business as usual in Santa Clara, California. Intel grew into the bluest of blue chips by hewing to Gordon Moore's famous observation about transistors, an axiom that has become a corporate strategy: Keep on building a chip that's twice as fast every 18 months, and everything will be all right.

The sensor game plan, on the other hand, has little to do with speed and a lot to do with size. Yes, the silicon that goes into each mote may eventually be dirt cheap. But when those chips are small enough to be blended into house paint or sewn into blue jeans, Intel will sell them by the billions. Smart dust?

It could be ingenious.

In Computer Security, a Bigger Reason to Squirm

Cecille Isidro — Sun, 07 Sep 2003 00:00:00 -0400

Like prison wardens marveling at an escapee's spoon-dug tunnel, computer-security professionals acknowledge grudging admiration for the author of SoBig.F, the virus that deluged e-mail In boxes last month. At the epidemic's peak in mid-August, according to the antivirus company Central Command, SoBig.F-related messages accounted for 73 percent of e-mail traffic worldwide, making it history's most aggressive online contagion.

"You have to think the person who did this has some awareness of the Internet's infrastructure," said Mark Carey, an independent computer security consultant in Columbus, Ohio, who has analyzed SoBig's code. "It's a little more sophisticated than what we've previously seen."

On Wednesday, SoBig's self-destruct mechanism is supposed to kick in, spelling an end to the pesky e-mail messages it generated with subject lines like "Wicked Screensaver." But as SoBig -- in colloquial parlance, a self-contained type of virus called a worm -- has faded, concern has grown that computer networks, and the power grids and nuclear plants they control, are no better equipped to ward off infections than they were three and a half years ago, when the infamous I Love You worm ravaged cyberspace.

IDC, a research firm, estimates that $2.2 billion was spent on antivirus products last year, but scofflaws always seem to be a step ahead. Antivirus vendors can do little but shrug and point out that even their fanciest software isn't perfect.

"The whole problem here is not just having antiviral products and using antiviral updates, but a lack of computer knowledge among users," says Steven Sundermeier, a vice president of Central Command, which is based in Medina, Ohio, and makes and sells antivirus products. "Users need to start developing safe computing practices." That means being more vigilant about not opening suspicious attachments and updating virus scanners every few days.

Despite the brochures and educational Web sites that the antivirus industry churns out, some experts fear that many users will never alter their surfing habits. Security experts like William Knowles, senior analyst at c4i.org, a security news Web site, say SoBig was probably disguised as a pornographic picture and first spread by pornography newsgroups. "Are you really going to go down to users and say, 'You can't surf Usenet for porn,' 'You can't download pictures of Britney Spears'?" he said.

Even people who have worked with computer technology for years can be careless, despite the warnings. In July, Roelof Temmingh, technical director at SensePost Information Security, a South African company that advises corporations, presented a paper at a Las Vegas security conference describing an experiment in which a test virus was sent anonymously via e-mail to 13 members of a bank's computer security team. Five recipients ran the infected attachment. "Five members of an I.T.-security-savvy team in the financial sector executed an in-your-face" virus, Mr. Temmingh pointed out, adding, "How many marketing, sales or management type people would do the same?"

In the past, if someone clicked on infected attachments, the damage was limited to certain computers, like the ones running Microsoft Windows. But omnivorous viruses that chew through a variety of operating systems are surfacing. Last summer, for example, a benign virus, Simile.D, infected Linux-based and Windows machines.

"What if you had a virus that had all these different types of code: one for Windows, one for Solaris, one for Unix?" Mr. Carey said. "And say it was smart enough to know what kind of platform it was attacking? We've suddenly gone from a single-platform impact to something that affects everything from your desktops all the way back to the data core" -- the lockboxes where companies store their most precious digital assets.

In theory, such a problem should not affect utilities, transportation and other essential services because vital systems should never be linked to the Internet. But an incident in January at the Davis-Besse Nuclear Power Station, run by the FirstEnergy Corporation outside Toledo, Ohio, showed that this was not always the case. The nuclear plant has not been generating power since early 2002, but a computer system there that was not supposed to be linked to the Internet was invaded by a worm known as Slammer, causing the system to shut down for five hours. The event was not made public until Kevin Poulsen reported it on Aug. 20 on SecurityFocus.com, an information-security news site.

Richard Wilkins, a FirstEnergy spokesman, said the company realized after the worm struck that it did not have a firewall isolating its corporate computers from the computers controlling the reactors, but that it now had such a safety precaution in place.

Six months after the Davis-Besse problem, the North American Electric Reliability Council, the industry group overseeing the electrical grid, announced that there were "documented cases in which bulk electric system control was impaired" by the same worm. It recommended that utility companies separate the computers running their power grids from their corporate networks.

It is important to keep vital systems isolated, said Stuart Staniford, president of Silicon Defense, a security company based in Eureka, Calif. But experts in running nuclear plants "aren't necessarily going to be experts in security," he said, adding: "They connect up all their machines so they can easily control and administer their infrastructure. And now all of a sudden, all their machines are vulnerable to the same inherent security risks."

One of the biggest risks comes from remote users, whose personal laptops may transmit viruses when linking with networks -- the mode of transmission in the Davis-Besse case, according to the company and an April report filed with the federal Nuclear Regulatory Commission. A 1997 report for President Bill Clinton by the National Security Telecommunications Advisory Committee, a group of experts that makes recommendations to the president, warned against allowing such outside access to plants' computer systems.

The system architects who have the expertise to eliminate such flaws are increasingly hampered by tight technology budgets. According to Forrester Research, spending on information technology in North America this year will grow by just 1.3 percent, compared with the 2002 total; Goldman Sachs is predicting a 1 percent decrease this year. Greg Shipley, chief technology officer of Neohapsis, a security consulting company based in Chicago, said the shrinking budgets meant that network holes were seldom being fixed, or "patched."

Even companies with ample resources and information-technology staffs are having trouble keeping networks patched. A study in August by Eric Rescorla, founder of RTFM Inc., a network security firm based in Palo Alto, Calif., looked at how quickly system administrators at many companies responded to a security alert in July 2002 concerning a problem with OpenSSL, a security "tool kit" commonly installed on Apache Web servers. By mid-September, only a third of the vulnerable servers had been patched. Then a worm called Slapper appeared, which exploited the security hole in question. But Mr. Rescorla has found that more than 30 percent of those servers have yet to be fixed.

Digital pathogens spread so quickly, however, that even the most diligent patchers could be at risk. At a security symposium last August, Mr. Staniford and two co-authors presented "How to Own the Internet in Your Spare Time," which described a computer simulation of a worm attack. The worm in the simulation attacked machines that had been selected earlier as ripe targets, instead of randomly probing the Internet. The simulation found that within 15 minutes, the worm would have infected more than nine million machines. Mr. Staniford called it the Warhol worm, a nod to Andy Warhol's famous line about fame.

Mr. Staniford, like many of his peers, offers few easy remedies for heading off such an attack, aside from calling for more federal research funds. The SoBig outbreak, as well as last month's Blaster worm, have inspired new interest in "trusted computing," a much-discussed concept to prevent computers from running any software without a specific cryptographic signature. This solution would require agreement between hardware and software makers. It is being advanced by the Trusted Computing Group, founded by Microsoft, Advanced Micro Devices, Intel, Hewlett-Packard and I.B.M.

But trusted computing will have a tough public relations fight. Microsoft's Trustworthy Computing initiative, which began before the group was formed, has been criticized for giving Microsoft too much control over users' access to documents.

Even if the privacy problems can be worked out, the details of how trusted computing will ward off viruses are still hazy.

Similarly murky is the prospect for legislation. Russ Cooper, who holds the title of surgeon general at TruSecure, a security company based in Herndon, Va., says he would like to see legislation making Internet service providers liable for negligently allowing viruses to spread, but no member of Congress has signed on to the idea.

Other prominent experts, like Bruce Schneier, the chief technical officer at Counterpane Internet Security, based in Cupertino, Calif., favor holding software vendors accountable for easily exploitable code, but that does not seem legally feasible, given recent court decisions that uphold "end user" license agreements that let software companies sell their products "as is."

"The software industry is the only industry I can think of that has its own 'get out of jail free' card, and that's the end-user license agreement," said Richard Forno, co-author of "The Art of Information Warfare."

People worried about computer security agree, however, that the situation demands immediate attention because of the threat of viruses more lethal than SoBig. "If something big were to happen in the next 12 months," Mr. Carey said, "there would effectively be nothing we could do."

Fat Pipe Dream

Cecille Isidro — Fri, 01 Aug 2003 00:00:00 -0400

"My dream is big, OK?"

Coming from a man who used to boast of having a 300-year business plan, that's saying a lot. But Masayoshi Son isn't exaggerating. His latest master plan includes nothing less than the demolition of Japan's telecom industry, and, not incidentally, the revival of his moribund company, Softbank. To get there, he's hawking next-generation, superfast, supercheap DSL to the Japanese masses.

He may no longer be the world's eighth-richest man -- Softbank's stock price is down 98 percent from its bubble peak -- but Son still moves with an impressive entourage. A cadre of yes-men, crowded around him in a Tokyo conference room, nod anxiously as their diminutive, balding maestro tries to sell me on Softbank's improbable makeover from venture capital washout to broadband pioneer. "We are the first service to have a pure IP-based network," crows Son, his placid face betraying an I-told-you-so smirk. "It is more powerful than anything else that exists around the world."

Softbank has spent close to $2 billion building out a gigabit Ethernet network and leasing copper wire from Japanese telecom giant Nippon Telegraph and Telephone. The result is a service, offered under the Yahoo! BB brand, that provides Internet access to Japanese homes at 12 megabits per second -- eight times faster than what Americans are used to -- for about $21 a month. Every day, as many as 7,000 new subscribers fire up their plug-and-play DSL modems, making Yahoo! BB the world's fastest-growing broadband service.

So things are looking rosy, right? Not quite. Softbank is spending $250 to acquire every new customer -- $50 million per month. Outside Tokyo subway stations, rain or shine, cute teens in white Yahoo! BB mackintosh coats hand out a free modem to anyone who breaks stride. A second-rate baseball team, the Orix Blue Wave, now plays in Yahoo! BB Stadium. Such marketing gambits increase the company's profile but only add to Softbank's staggering $3.9 billion debt.

The safe move, given such a financial mess, would be to lay off workers, slash budgets, and curb investment -- as so many stateside VCs and IT companies have done. But that's not Son's style. This is a man who poured nearly $400 million into Yahoo!, $100 million of it when the company was a 15-person nothing. He's a high-roller who would rather go all-in on a pair of deuces than fold.

Of course, Son believes he's holding more than a pair of deuces. He thinks the Japanese appetite for broadband connectivity makes the climate right to humble his nemesis NTT. Yahoo! BB's main draw, even more than superfast Net access, has been a voice-over-IP feature. It's an economical approach to telephony that allows Softbank to offer ridiculously low rates (less than 3 cents a minute for a call from Tokyo to New York). Son even foresees the not too distant day when VoIP calls are virtually free -- the email of the 21st century.

If he's right, Yahoo! BB could herald the beginning of the end for NTT's fixed-line telephone business -- a cataclysm for the Ma Bell of Japan -- and portend dark days for doddering US telcos. But Son's not stopping there. His IP backbone is so robust, it has him eyeing Japan's TV industry, too. Last year, Softbank began rolling out a video-on-demand service that can cheaply pump Hollywood movies into Japan's living rooms -- over the same 12-Mbps DSL connection.

Will Son survive long enough to see his huge bet pay off? Softbank's plan for making money isn't nearly as remarkable as its fancy new network. To a legion doubters, Yahoo! BB is a return to that most foolish of dotcom ploys: selling a dollar for 80 cents and making it up on volume.

Son shrugs off the skepticism. Broadband is good for the economy, he suggests, and a revived economy is good for Softbank's far-flung investments, from Yahoo! Japan to E*Trade. His peers acknowledge he's at least half right. "If Japan can create a broadband network that really works, the country will be able to get back to its core strength -- marketing new technology at home and pushing it overseas," says Joichi Ito, CEO of the Tokyo VC firm Neoteny. If everyone in Japan can suddenly swap video, for example, imagine the impetus for consumer electronics firms to create cheaper, faster digital cameras. Or Wi-Fi phone handsets that can play movies.

"People say we're crazy, and maybe we are" was among the first lines I heard from Taro Hashimoto, president of Softbank Broadmedia, the subsidiary that manages the network's content delivery. It seemed like a rare instance of bluntness for a Japanese executive, but it's a rehearsed line from a playbook. Son later recited the identical quip.

To Son, crazy is a slightly warped outlook that sparks innovation. Of course, there's the other kind of crazy -- as in Napoleon assuming the Russian winter wouldn't be so cold. Give Son's dealmaking record a scan, and he starts to look more like he's marching into Moscow in mid-September. In 1996, he bought trade mag publisher Ziff-Davis for an estimated $2.1 billion from Forstmann Little, which had purchased Ziff only 15 months earlier and flipped it to Softbank for a $700 million profit. By the time Son unloaded it, he was out a cool billion.

Softbank blew billions more on Asahi TV, Asia Global Crossing, SKY Perfect, and a throng of dotcom dogs: Kozmo.com, More.com, SportsBrain. Webvan? Yep, that was him. He envisioned setting up an independent Nasdaq in Tokyo, which would list the energetic startups that couldn't be found on the stodgy Nikkei. But government regulators nixed the idea. For Son, the whole Nasdaq experience amounted to another billion-dollar write-down -- $1.2 billion, to be exact.

But all of Son's failures are overshadowed by one amazing jackpot: Yahoo! His investment has become a tale of dotcom prescience -- and dotcom cojones. He wagered $374 million on Yahoo! between 1995 and 1998, a bet that, at its peak, increased in value more than 50-fold.

Now he's pouring money into Softbank subsidiary Yahoo! BB with the same vigor. It's easy to see why customers are flocking to high-speed, low-cost DSL: In Japan, monthly tolls for 56-Kbps users regularly exceed $90. Yahoo! BB's low price comes from the technology in its underlying network.

In the US, DSL still routes through asynchronous transfer mode switches, old-school phone equipment that's reliable but inefficient, prone to breakdowns, and profligate with bandwidth. Softbank's network opts instead for gigabit Ethernet switches, which transmit data via IP routers. Thanks to lower maintenance costs, a GbE network can be up to 100 times cheaper to operate than an ATM backbone -- even while providing faster speeds.

And it handles voice like a dream. With traditional VoIP, a call is converted to data packets, which hop from an IP network onto a phone network, like NTT's, through ATM switches. But ATM switches were designed to handle old-fashioned phone calls. They tend to leak data, which erodes call quality. With an end-to-end Ethernet network, there is no ATM switching -- "Our packets stay inside the network," says Hashimoto, "so there is no spill." The sound quality of a Yahoo! BB call is indistinguishable from a fixed-line call.

The difference is the price, and it's a whopper. Average rates are just a tenth of what NTT charges, and Yahoo! BB customers call each other for free. The number of subscribers has rocketed to 2.5 million since VoIP service was added in April 2002.

To NTT, which collects nearly 40 percent of its revenue from fixed-line calls, it's an alarming trend. "If toll calls just disappeared, it would crush them," says Ito. "The question is whether technologists can convince the financial analysts that phone companies are securing their bonds with equipment that isn't worth anything anymore," he continues. "If that happens, the phone companies could go ka-boom!"

For Son to benefit from such a seismic shift in telecom, he must first succeed with a company quite different from its namesake. Unlike the Internet portal, Yahoo! BB is capital-intensive. Before the first packet ever flowed, the network had cost Softbank $1.3 billion. Couple that investment with a huge customer acquisition budget, and Yahoo! BB needs to hold a subscriber for 15 months just to break even. That makes Son's gamble audacious -- even by his own lofty standards.

As a Korean growing up on the southern Japanese island of Kyushu, Masayoshi Son was a frequent target of playground bigotry, despite his family's adoption of a Japanese surname, Yasumoto. He is not, however, a rags-to-riches story. His father ran a thriving chain of pachinko parlors. At 16, Son shipped off to California to learn English and eventually enrolled at UC Berkeley.

A born hustler, he imported cheap Space Invaders machines from his dad, renting them to laundromats and splitting the proceeds. He also patented a pocket-sized electronic dictionary and cold-called companies until Sharp bought it for $1 million.

Son founded Softbank in 1981 as a PC software distributor. It was lucrative work -- but rather anonymous for the ambitious Son, who considered himself a worthy peer to the US tech elite. In 1994, he helped Cisco CEO John Chambers corner the Japanese router market by luring 14 companies to invest in Nihon Cisco; Son received a nice stake for his troubles and earned a reputation as a rainmaker.

A year later, flush with cash from taking Softbank public, Son began looking to buy up online real estate. Nicknamed "Mr. Internet" back home, he spoke of creating the cyberworld's premier zaibatsu, a pre-World War II term for Japan's vertically integrated conglomerates.

Another handle Son picked up was "the Bill Gates of Japan." His personal wealth was estimated at $76 billion in 2000, when he breathed down the neck of Paul Allen on the Forbes 400. He built a Tokyo technomansion to rival Gates' estate -- the highlight being a programmable golf range that can precisely mimic a Pebble Beach fog or an Augusta dogleg. (Son brags that the course once spurred a visiting Gates to utter the ultimate compliment: "Wow!") Then there's his fondness for argyle sweaters, similar to Bill's frumpy threads.

American business held up Son as a model of the New Japan. It helped that he spoke fluent English, told ironic jokes, and shook hands rather than bowed. Son was the sort of chummy, outspoken Japanese executive that Westerners could safely embrace.

Then the markets buckled, exposing the less than rigorous decisionmaking behind Son's investments. For example, he once gave E*Trade $400 million based on a single phone call from the company's founder. Like so many Softbank companies, E*Trade has since flatlined, its stock price dipping to less than $3 from a mid-1999 high of about $60. (Softbank's current stake is worth $22 million.) And, of course, Son's own net worth has cratered to around $1.1 billion, a slide that makes him History's Biggest Money Loser.

There could be more carnage to come. Son has frequently been faulted for creative accounting. Even veteran analysts have trouble making sense of Softbank's maze of partnerships and subsidiaries. "Softbank's method of business is to shift money from one pocket to the other at an accelerated rate," says Ben Wedmore, an HSBC analyst and a vocal Son critic. "When the first pocket generates losses, you IPO the second. They've done it again and again."

No amount of financial engineering, however, can cover up Softbank's mounting losses. Despite profits at Yahoo! Japan, which has benefited from increased use of its flagship portal, the rest of Softbank's assets are dead weight. Last fiscal year, the company booked a record $842 million loss; in announcing the results, Son insisted profit could come "at any time." To some, Softbank's resilience defies logic.

"I thought it would be bankrupt by last August," says Wedmore.

To keep Yahoo! BB growing, Son is selling off other Softbank assets. He's already shed 16 percent of his Yahoo! Japan holdings. There's also the proposed sale of Aozora Bank, a huge controversy in Japan. When Son purchased the bank from the government two years ago, he promised that he'd hold on to it and nurse it back to health. The quick reversal is not endearing him to Tokyo politicians.

The sell-off has observers scratching their heads. "The company is holding on to the crappy stuff, and selling the really good stuff," says Neoteny's Ito. "Long-term, I could see Softbank opening the box and realizing that it sold its golden goose."

Son believes the route to profits lies in the loyalty of his customers. "Our churn rate is 1.5 percent or less," he says. "Our customers will definitely stay longer than 15 months, so that should be sufficient."

Until the churn increases, and it will. Japan Telecom, KDDI, and others are all rolling out low-cost DSL/VoIP services. NTT is offering three free months of service, plus price breaks on new PCs, and tapping deep government contacts to frustrate its rivals. In March, the behemoth lobbied the telecom bureaucracy to approve a 12 percent hike in interconnection fees, which it charges to IP telephony providers for the use of its fiber. The fees can be levied retroactively, which means Softbank could face a steep bill from its broadband rival.

Rather than playing financial chicken with NTT, Son's fighting back by adding features to his service. Now that VoIP will soon be commonplace, Yahoo! BB will be delivering TV and video over ordinary phone lines. Yahoo! BB compresses video content in MPEG-2 format and transmits it to customized set-top boxes outfitted with Ethernet jacks.

As advertised, the picture is every bit as crisp as a DVD. The system is also cheaper to deploy than fiber; upgrading a DSL household to TV-over-IP can cost a provider as little as $300, compared with the thousands necessary to build and maintain last-mile fiber. That's why Softbank headquarters teems with a stream of American and European delegations, all keen to learn more about Son's network and video-over-DSL approach. A few days after my visit, a group from Alcatel was slated to fly in, check out the demo, and head right back to Paris.

Too bad no one's gawking at the business model. It's unlikely that Yahoo! BB customers will spend another $21 a month, and an $83 installation fee, for 19 to 22 channels and a pay-per-view service. Hashimoto dreams of offering thousands of movies, but that means striking deals with Hollywood studios, notoriously jealous guardians of their content. And if Yahoo! BB can't upsell, it's toast.

Most financial analysts are betting against Softbank. Predicting the company's demise has become something of a parlor game in Japan. But Son pays the doomsayers little mind. As he sees it, Softbank stands to benefit from the type of head start that only true vision can provide. "In this industry, the first mover, the pioneer, very often gets a big success," he says, rattling off some of his favorites -- AOL, Cisco, Dell, Intel, Microsoft. "These companies did not necessarily have big capital to begin with, but they had the vision and the passion."

The "first mover advantage" theory worked for a while. More popular nowadays is the first-mover disadvantage, the idea that innovators go bust, while the refiners get rich. Which would make Son a broadband martyr. And that's definitely not part of the big dream.

Your Cellphone is a Homing Device

Cecille Isidro — Tue, 01 Jul 2003 03:00:00 -0400

If you purchased a new cellphone over the past 18 months or so, odds are that one of the features listed in small print on the side of the box was "E911 capable." Or, as in the case of my latest Motorola, "Location technology for piece [sic] of mind." Perhaps you asked the salesman to explain the feature, and he replied that it means that cops can home in on your phone in case of an emergency, a potentially important perk should you ever find your hand pinned beneath an immovable boulder in rural Utah, as Aron Ralston did recently. Assuming he could have gotten a signal, an E911-capable phone might have saved the young backpacker the pain of having to amputate his own arm.

What your salesman probably failed to tell you -- and may not even realize -- is that an E911-capable phone can give your wireless carrier continual updates on your location. The phone is embedded with a Global Positioning System chip, which can calculate your coordinates to within a few yards by receiving signals from satellites. GPS technology gave U.S. military commanders a vital edge during Gulf War II, and sailors and pilots depend on it as well. In the E911-capable phone, the GPS chip does not wait until it senses danger, springing to life when catastrophe strikes; it's switched on whenever your handset is powered up and is always ready to transmit your location data back to a wireless carrier's computers. Verizon or T-Mobile can figure out which manicurist you visit just as easily as they can pinpoint a stranded motorist on Highway 59.

So what's preventing them from doing so, at the behest of either direct marketers or, perhaps more chillingly, the police? Not the law, which is essentially mum on the subject of location-data privacy. As often happens with emergent technology, the law has struggled to keep pace with the gizmo. No federal statute is keeping your wireless provider from informing Dunkin' Donuts that your visits to Starbucks have been dropping off and you may be ripe for a special coupon offer. Nor are cops explicitly required to obtain a judicial warrant before compiling a record of where you sneaked off to last Thursday night. Despite such obvious potential for abuse, the Federal Communications Commission and the Federal Trade Commission, the American consumer's ostensible protectors, show little enthusiasm for stepping into the breach. As things stand now, the only real barrier to the dissemination of your daily movements is the benevolence of the telecommunications industry. A show of hands from those who find this a comforting thought? Anyone?

GPS tracking is already a staple of workplace surveillance, especially for those not bound to desks. Trucking companies have long outfitted their fleets' semis with devices that monitor how long and how frequently a driver stops to rest. Now the vogue is for smarter GPS versions, which can pinpoint exactly where each truck stops en route. A New York Times article reported on a Texas company that busted an employee whose vehicles had been spending on-the-job time in the parking lot of a strip club.

The difference between that and E911 tracking is the nature of the relationship between the tracker and the trackee. Private-sector employees are essentially at the mercy of their bosses, a power dynamic that the courts have affirmed again and again. When using company-issued equipment, there is no "expectation of privacy," perhaps the most important legal test in deciding whether incriminating data was obtained lawfully. That's why The Times was able to check the cellphone records of the disgraced reporter Jayson Blair, who was fired for fabricating interviews and facts. The records revealed that on days that Blair professed to be reporting from West Virginia or Maryland, his calls were routed through cellphone towers in New York -- ironclad evidence that he'd never actually left home.

Obviously, Verizon and I have a vendor-customer relationship, not a boss-underling one. But the matter is complicated by the public nature of E911 information: It is designed to be shared with emergency services. So a police-friendly judge could easily decide that with this third, governmental player involved, no cellphone user should count on privacy, at least as far as location data goes. Which way the courts will lean, though, is anybody's guess; as of this writing, no criminal case involving E911 has yet materialized.

Handwringing over prickly privacy issues has, of course, inspired many books in recent years. The most popular viewpoint is that espoused in Jeffrey Rosen's The Unwanted Gaze: that electronic records are too accessible and that laws are needed to guarantee that certain data will rarely see the light of day. A smaller -- and, frankly, geekier -- crowd advances the thesis of David Brin's The Transparent Society, which amounts to the following: "Privacy is vanishing. Get over it." Brin, a sci-fi author, contends that the end of privacy as we know it needn't necessarily mean an Orwellian future, because technology will allow citizens to monitor the authorities, too.

Much of the academic discourse has focused on what can be termed "fixed surveillance": websites that track user preferences, bosses who covertly scrutinize employee performance, companies that leak employee medical records to insurers. Tracking a person's physical movement throughout the day is a new type of violation, one that naturally conjures up rather nasty comparisons to the East German Stasi and similarly thuggish outfits. It's one thing for Amazon.com to suggest that, judging by my past CD purchases, I may enjoy the new Mobb Deep album, and quite another for Amazon to spam my phone with a message beginning, "We notice you are standing in a Tower Records store. Did you know that Amazon is selling the new Mobb Deep album for $2 less than Tower?"

The wireless industry has a name for such custom-tailored hawking: "location-based services," or LBS. The idea is that GPS chips can be used to locate friends, find the nearest pizzeria, or ensure that Junior is really at the library rather than a keg party. One estimate expects LBS to be a $15 billion market by 2007, a much-needed boost for the flagging telecom sector.

That may be fine for some consumers, but what about those who'd rather opt out of the tracking? The industry's promise is that LBS customers will have to give explicit permission for their data to be shared with third parties. This is certainly in the spirit of the Wireless Communications and Public Safety Act of 1999, which anticipated that all cellphone carriers will feature E911 technology by 2006. The law stipulated that E911 data -- that is, an individual's second-by-second GPS coordinates -- could only be used for nonemergency purposes if "express prior authorization" was provided by the consumer.

"But no one clearly understands what that means," explains David Sobel, general counsel for the Electronic Privacy Information Center, which has repeatedly petitioned the FCC for a clarification of the law's language -- to no avail. " 'Express prior authorization' has never been fleshed out." Think about the consent process in the realm of software law, where a user must click "I agree" to a licensing agreement in order to install the program. A user irked by some aspect of the agreement can select "I do not agree," but that prevents the software from being installed, which makes the product essentially worthless. There's nothing stopping a cellphone carrier from instituting a telecom equivalent of the shrinkwrap license -- when you break the seal on the box and activate the phone, you agree to abide by the company's conditions. One of those could easily be, "I authorize for my location data to be shared with third parties."

This could very well be the case with my Motorola, one of those spiffy picture phones advertised on TV every 60 seconds. The thick user's guide makes no mention of the GPS chip's privacy implications; Verizon Wireless's website is devoid of any specific language relating to location privacy. The technology industry's attitude toward end-user licenses seems to be "Don't worry, it's too complicated for you to understand." When I asked to be pointed in the direction of Verizon's E911 privacy policy, a company spokesman named Jeffrey Nelson told me, "We don't have a policy, because we're not offering any location-based services at this time." I pushed a little, pointing out that the phones are still GPS-enabled and thus remain able to collect data. "What I can say," Nelson responded, "is that in all of our internal discussions, we do acknowledge the importance of very healthy opt-in promises."

The libertarian counterargument would be that the market will ultimately favor privacy, since most consumers would balk at onerous privacy terms. Smart companies will eventually differentiate themselves from the pack by getting serious about privacy, and the advantage will go to the carrier that can honestly claim, "We're the ones who protect your data, unlike the folks at XYZ Communications, who sell your restaurant habits to the highest bidder." Governmental privacy laws, this line of logic goes, are an unnecessary burden on the private sector.

But laissez faire hasn't really worked as a way of protecting consumers online. Partly it's their own fault. Consumers do a poor job of reading and understanding the privacy statements of the websites they visit. Given the complexity of these sites, though, can you blame them? No one would shop online, or even surf, if it meant reading a long slab of legalese for each site. Cookies? Registration forms that ask for a home address, age, and income? Anything to get that cool Shockwave game a little faster. John Soma, a University of Denver law professor and the author of Computer Technology and the Law, explains that consumers are easily seduced into giving up their privacy: "If you were at a McDonald's in downtown Denver, and you agreed to give everyone three free Big Macs, fries, and a shake if they'd sign away their DNA, you'd have 200 people lined up." Since medical information is considered more sensitive than, say, mere web browsing habits -- think of how your insurance company would love to factor your genetic predispositions into their actuarial tables -- the inducements to obtain other types of data needn't be that lavish. And once signed away, privacy is hard to recoup.

Consumers may also be quite willing to accept an erosion in privacy in exchange for a sweet enough reward. Take the growth of wireless "communities," groups of cellphone users who swap text messages about The Lord of the Rings, pro basketball, or whatever interests they share. As a recent Marketplace report noted, these groups need corporate sponsorship to survive and grow, since most draw no revenue. If the choice eventually comes down to catching the latest Frodo Baggins gossip or staving off Kmart spam, many aficionados will accept the spam. Finnish hunters are already signing up in droves for "dog radar," which allows them to use their cellphones to pinpoint their wandering hounds, who bear GPS locators in their collars. It would take a cold heart to give up on protecting Fido merely because he gives away your location when you take him for a walk.

Then there are LBS companies like Calgary's Cell-Loc, which plans to pitch its location service to worried parents. "I have a daughter turning 16, and I know I'm getting her a cellphone for her birthday," one Cell-Loc employee told The Toronto Star. "She'll be like, 'Great, Mom, thanks for the phone.' I'll be like, 'No problem, I'm going to be tracking your every step.' "

Corporate data collectors do their best to present a trustworthy image, but they haven't always been entirely forthcoming about the details of their practices. Early adopters of the TiVo digital video recorder knew that the box somehow uses the Internet, since it needs to be plugged into a telephone jack. But it wasn't until the Privacy Foundation attached a "sniffer" to a test unit that TiVo's true nature was revealed. Every night, the recorder transmits the day's viewing records back to the company's servers -- which channels were viewed when, when the volume was turned up and down, even the device's internal temperature. (That's not to mention TiVo's habit of recommending shows to viewers based on their past viewing habits, a feature that has famously vexed homophobes, who worry that a peek at a Miss America pageant will convince their box to recommend "gay" fare.) None of this was revealed in TiVo's brochure, which contained only a vague privacy pledge that records are stripped of identification markers -- and a statement that the company's privacy policy was subject to change.

Despite Congressional testimony by Privacy Foundation founder Richard M. Smith, the TiVo revelation stirred only the barest of public outcries and did nothing to push forward privacy legislation. That's not a surprise, as Congress has always been slow to recognize the privacy implications of new technologies. Unauthorized wiretapping wasn't outlawed until 1967, 91 years after "Mr. Watson, come here, I want to see you," and 77 years after Louis Brandeis and Samuel Warren's famous Harvard Law Review article on the importance of privacy as a legal concept. As Rosen writes in The Unwanted Gaze, "The politics of privacy tends to be largely reactive, fired by heartstring-tugging anecdotes that capture the public imagination." Not until after The Washington City Paper published Judge Robert Bork's video-rental records in 1987, for example, did Congress pass the Video Privacy Protection Act, which outlawed that kind of disclosure. At the intersection of privacy and technology, the legislative wheels require considerable grease to start turning.

There's also a substantial anti-privacy lobby, composed of industry front groups that view tough privacy laws as potential revenue killers. The Online Privacy Alliance and the Privacy Council may sound like muckraking Naderite organizations, but they're pure "Astroturf," fake grass-roots lobbies that hammer home the message that privacy restrictions hurt American business.

Law enforcement likewise views privacy laws as an impediment, especially now that it has grown accustomed to accessing location data virtually at will. Take the MetroCard, the only way for New York City commuters to pay their transit fares since the elimination of tokens. Unbeknownst to the vast majority of straphangers, the humble MetroCard is essentially a floppy disk, uniquely identified by a serial number on the flip side. Each time a subway rider swipes the card, the turnstile reads the bevy of information stored on the card's magnetic stripe, such as serial number, value, and expiration date. That data is then relayed back to the Metropolitan Transportation Authority's central computers, which also record the passenger's station and entry time; the stated reason is that this allows for free transfers between buses and subways. (Bus fare machines communicate with MTA computers wirelessly.) Police have been taking full advantage of this location info to confirm or destroy alibis; in 2000, The Daily News estimated that detectives were requesting that roughly 1,000 MetroCard records be checked each year.

A mere request seems sufficient for the MTA to fork over the data. The authority learned its lesson back in 1997, when it initially balked at a New York Police Department request to view the E-ZPass toll records of a murder suspect; the cops wanted to see whether or not he'd crossed the Verrazano Narrows Bridge around the time of the crime. The MTA demanded that the NYPD obtain a subpoena, but then-Justice Colleen McMahon of the State Supreme Court disagreed. She ruled that "a reasonable person holds no expectation of confidentiality" when using E-ZPass on a public highway, and an administrative subpoena -- a simple OK from a police higher-up -- was enough to compel the MTA to hand over the goods.

What McMahon was advancing, in effect, was an extension of the rationale behind the rules governing "pen register" and "trap and trace" surveillance of phone lines. While police need a warrant to listen in on the content of calls, they do not need judicial warrants to monitor the phone numbers a person calls or is called from. The phone company already knows what numbers you are dialing, and their existence as a knowing third party means that you should not expect this data to be kept private -- or so the logic goes. On the Verrazano Narrows Bridge, how could a toll transaction between a driver and the MTA be private, since the bridge is a public space with a zillion other drivers (third parties all) around to witness it? It doesn't take a genius to see how this argument could be extended to location data obtained through E911; if the emergency operator can get access to your GPS coordinates, how can you expect privacy? It's not like the cops are asking to know what you talked about, only where you were.

The 2002 Washington State case State v. Jackson is perhaps the only other instance of the use of location data being contested on appeal, and the conclusion was similar. In the absence of laws specifically addressing GPS, the court ruled that the police didn't need a warrant to attach a tracking device to a suspect's vehicles. The vehicle was in plain view, and the cops weren't intercepting any "communication"; in other words, the tracking conformed to the "trap and trace" standards. Never mind the obvious stretch of applying wiretap laws from the 1960s to such a novel technology.

Any time the police are allowed to act without obtaining a judicial warrant, it is natural to be concerned about whom they're accountable to. How much evidence must a detective present before he or she is given access to someone's subway habits? How easy would it be for the men and women of the 10th Precinct, right behind my apartment in New York City, to find out that I'm fond of taking the F train to East Broadway on Sunday mornings? How about the GPS data from my Motorola? The NYPD's lips are apparently sealed about this matter; despite repeated phone calls and a formal written request, spokesman Detective Walter Burnes did not respond to questions.

The Department of Justice is equally silent on the topic. I submitted a request to the organization's press office for information about the FBI's methods of obtaining location data from a target's GPS-enabled phone, but received no response. David Sobel was not surprised by my defeat, as his organization, EPIC, has been asking for the exact same clarification for well over a year now. Without a potentially precedent-setting case moving through the federal justice system, however, the Justice Department's silence is at least understandable. You get away with what you can.

If new laws aren't forthcoming, perhaps our location-data guardians will be those twin pillars of federal bureaucracy, the FCC and the FTC. Wireless communications are the former's responsibility, and the FCC's official mission, as set out in the 1934 act that created it, is to protect the "public interest." Yet under Bush-appointed chairman Michael Powell, an avowed fan of laissez faire, the FCC has shown little interest in employing its rule-making powers to take responsibility for protecting the privacy of cellphone users. Last August, the FCC turned down a request from the Cellular Telecommunications Industry Association to draw up location-data privacy rules. (Though it is an industry group, the CTIA believes that federal rules -- lenient ones, if it has its way -- would convince consumers that LBS isn't as menacing as it sounds.) The commission explained that it did "not wish to artificially constrain the still-developing market for location-based services."

So all hopes rest with the FTC, charged with holding companies to their contractual word. This is exactly the sort of oversight that's required for the libertarian fantasy to come true. If a cellphone carrier is going to one-up its competitors by positioning itself as a stickler for privacy, there need to be consequences if it breaks its pledge. In Connecticut, the Department of Consumer Protection took a step in the direction of punishing privacy violations in February 2002 when it backed a suit against Acme Rent-a-Car for using GPS monitors installed in its autos to fine renters for exceeding the speed limit. The department successfully argued that Acme's contracts were not upfront about this monitoring, and the company discontinued its policy.

Optimistic that the FTC would confirm that, in lieu of federal statutes on the matter, it would take the lead in making sure no one finds out that I enjoy the occasional Taco Bell feast, I called the agency. Staff members seemed mystified at the prospect of scrutinizing a company's location-privacy policy. I started with a gruff Consumer Protection staffer, high in the hierarchy. He was obviously less than pleased to hear from me. "Never dealt with an issue like that . . . I don't have anyone that's readily available to talk to you," he said, before kicking me down to the Office of Public Affairs.

Despite my appeals to speak with an actual lawyer, an FTC spokeswoman rebuffed my every request -- and, in true government style, passed the buck. "Talk to the F-C-C," she added, enunciating each letter to emphasize her irritation. Clearly, E911 is not an issue to which the FTC has given much thought.

Back to square one, then: no clear laws, no bureaucratic oversight, a permissive judiciary. Aside from saying "Trust us," industry's response is to push technological safeguards, like GPS phones equipped with "I AM HERE" buttons. If you don't want to be bothered, don't press that button when the handset starts flashing. Trouble is, this doesn't really shut off the GPS chip -- the satellites still know where you are. They just won't remind you of that fact.

When it comes to consumer protections, technology simply doesn't have the teeth necessary for the job -- especially when the safeguards in question are manufactured by the same folks who'd love to peddle your location data. But until some privacy Waterloo embarrasses the law into catching up, technology is what we're stuck with. The legendary hacker zine Phrack recently published a how-to guide on building a GPS-jamming device. Maybe I'll head to RadioShack this weekend and pick up the parts. And I'll leave the cellphone at home when I go -- the only surefire way to opt out.