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During the mid-nineties, a talk-show host and friend of mine went to a seminar about how to make money from the brand-new Internet. She came away from the seminar not thinking about how she was going to make money but convinced that the next big war was going to be fought on that big black box sitting on your desk. She should have taken bets. This week, a new government report, “Foreign Spies Stealing U.S. Economic Secrets in Cyberspace,” was released. It got a bit of a mention in print, and NPR did a short piece about it, but other than that it got a yawn. It is too bad. We are putting hundreds of billions of dollars fighting conventional wars and our most valuable resource – innovation – is being taken away by Russia and China.
The governments involved are doing this in much the same way they have run spy operations. They are using third countries, hackers who supposedly have no association with the government in question and sharing of cyber tools. According to the report, the Chinese are the “most active and persistent perpetrators of economic espionage.” Detection has put the spying directly at computers based in China, but finding the responsible parties has been difficult, if not impossible.
The concern is that our intellectual property, which has the fueled the U.S. economy (think Apple and Microsoft and Silicon Valley), will be used by these countries desperate to be at the top of the economic ladder. According to our government, there are four targeted areas: information and communications technology, which supports the Internet and is the “backbone” of what we do, business information, which points to scarce natural resources and the private negotiations for these and civilian technologies, such as in pharmaceuticals. The one that jumped out, however, was the military technologies in marine systems, drones and other aeronautic technologies.
The problem is also that the technology is making it easier to spy. One former conventional spy, who is now doing a long sentence after working for Boeing for years, was found with 250,000 pages of documents in his possession. Now, says the report, he could purchase one CD for $.75 or a flash drive for $13, making it easy to hide and easy to share.
The concern is also about direct economic loss. Companies and the government spend 2.8 percent of the gross domestic product on research and development. Three Chinese employees of American companies were convicted of taking corporate trade secrets. One took secret paint formulas, costing the company $20 million. Another took information on light-emitting diodes and another stole 4,000 documents from Ford.
These people are the ones who got caught. There are countless more who do not get caught. This kind of theft represents a huge amount of our growth rate. If technology developed by our companies is “given” away by out-and-out theft, it represents a huge loss to our economy. If all the R&D went overseas by theft, it is the equivalent of the entire proposed jobs program of President Obama. Or, if you want to be bipartisan about it, it would pay for the Republicans’ “job creators program.” China has an entire program, called the 863 program, to acquire technologies so it can advance.
To be fair, there are some moral issues in hacking. The moral question we were all asked in school: Is it moral to steal a drug from a pharmacy if someone’s wife is dying? That could now be translated to drug formulas. There is also the question of governments lying and the release of information such as Wikileaks. Those are reasonable questions, for sure. However, the overall issue is that we are fighting with blood and bodies in wars that may be not winnable or not relevant to our countries security. We need to pull our attention to a greater long-term threat: cyber war. If we don’t, we could lose our greatest asset – our ability to invent and our intellectual prowess.