and the cost of fear

and the age of fear from which we are now emerging.

I would like you to feel comfortable with my doing that

by letting you know that I know something about fear and anxiety.

I'm a Jewish guy from New Jersey.

(Laughter)

I could worry before I could walk.

(Laughter)

Please, applaud that.

(Applause)

Thank you.

But I also grew up in a time where there was something to fear.

We were brought out in the hall when I was a little kid

and taught how to put our coats over our heads

to protect us from global thermonuclear war.

Now even my seven-year-old brain knew that wasn't going to work.

But I also knew

that global thermonuclear war was something to be concerned with.

And yet, despite the fact that we lived for 50 years

with the threat of such a war,

the response of our government and of our society

was to do wonderful things.

We created the space program in response to that.

We built our highway system in response to that.

We created the Internet in response to that.

So sometimes fear can produce a constructive response.

But sometimes it can produce an un-constructive response.

On September 11, 2001,

19 guys took over four airplanes

and flew them into a couple of buildings.

They exacted a horrible toll.

It is not for us to minimize what that toll was.

But the response that we had was clearly disproportionate --

disproportionate to the point of verging on the unhinged.

We rearranged the national security apparatus of the United States

and of many governments

to address a threat that, at the time that those attacks took place,

was quite limited.

In fact, according to our intelligence services,

on September 11, 2001,

there were 100 members of core Al-Qaeda.

There were just a few thousand terrorists.

They posed an existential threat

to no one.

But we rearranged our entire national security apparatus

in the most sweeping way since the end of the Second World War.

We launched two wars.

We spent trillions of dollars.

We suspended our values.

We violated international law.

We embraced torture.

We embraced the idea

that if these 19 guys could do this, anybody could do it.

And therefore, for the first time in history,

we were seeing everybody as a threat.

And what was the result of that?

Surveillance programs that listened in on the emails and phone calls

of entire countries --

hundreds of millions of people --

setting aside whether those countries were our allies,

setting aside what our interests were.

I would argue that 15 years later,

since today there are more terrorists,

more terrorist attacks, more terrorist casualties --

this by the count of the U.S. State Department --

since today the region from which those attacks emanate

is more unstable than at any time in its history,

since the Flood, perhaps,

we have not succeeded in our response.

Now you have to ask, where did we go wrong?

What did we do? What was the mistake that was made?

And you might say, well look, Washington is a dysfunctional place.

There are political food fights.

We've turned our discourse into a cage match.

And that's true.

But there are bigger problems, believe it or not, than that dysfunction,

even though I would argue

that dysfunction that makes it impossible to get anything done

in the richest and most powerful country in the world

is far more dangerous than anything that a group like ISIS could do,

because it stops us in our tracks and it keeps us from progress.

But there are other problems.

And the other problems

came from the fact that in Washington and in many capitals right now,

we're in a creativity crisis.

In Washington, in think tanks,

where people are supposed to be thinking of new ideas,

you don't get bold new ideas,

because if you offer up a bold new idea,

not only are you attacked on Twitter,

but you will not get confirmed in a government job.

Because we are reactive to the heightened venom of the political debate,

you get governments that have an us-versus-them mentality,

tiny groups of people making decisions.

When you sit in a room with a small group of people making decisions,

what do you get?

You get groupthink.

Everybody has the same worldview,

and any view from outside of the group is seen as a threat.

That's a danger.

You also have processes that become reactive to news cycles.

And so the parts of the U.S. government that do foresight, that look forward,

that do strategy --

the parts in other governments that do this -- can't do it,

because they're reacting to the news cycle.

And so we're not looking ahead.

On 9/11, we had a crisis because we were looking the wrong way.

Today we have a crisis because, because of 9/11,

we are still looking in the wrong direction,

and we know because we see transformational trends on the horizon

that are far more important than what we saw on 9/11;

far more important than the threat posed by these terrorists;

far more important even than the instability that we've got

in some areas of the world that are racked by instability today.

In fact, the things that we are seeing in those parts of the world

may be symptoms.

They may be a reaction to bigger trends.

And if we are treating the symptom and ignoring the bigger trend,

then we've got far bigger problems to deal with.

And so what are those trends?

Well, to a group like you,

the trends are apparent.

We are living at a moment in which the very fabric of human society

is being rewoven.

If you saw the cover of The Economist a couple of days ago --

it said that 80 percent of the people on the planet,

by the year 2020, would have a smartphone.

They would have a small computer connected to the Internet in their pocket.

In most of Africa, the cell phone penetration rate is 80 percent.

We passed the point last October

when there were more mobile cellular devices, SIM cards,

out in the world than there were people.

We are within years of a profound moment in our history,

when effectively every single human being on the planet

is going to be part of a man-made system for the first time,

able to touch anyone else --

touch them for good, touch them for ill.

And the changes associated with that are changing the very nature

of every aspect of governance and life on the planet

in ways that our leaders ought to be thinking about,

when they're thinking about these immediate threats.

On the security side,

we've come out of a Cold War in which it was too costly to fight a nuclear war,

and so we didn't,

to a period that I call Cool War, cyber war,

where the costs of conflict are actually so low, that we may never stop.

We may enter a period of constant warfare,

and we know this because we've been in it for several years.

And yet, we don't have the basic doctrines to guide us in this regard.

We don't have the basic ideas formulated.

If someone attacks us with a cyber attack,

do have the ability to respond with a kinetic attack?

We don't know.

If somebody launches a cyber attack, how do we deter them?

When China launched a series of cyber attacks,

what did the U.S. government do?

It said, we're going to indict a few of these Chinese guys,

who are never coming to America.

They're never going to be anywhere near a law enforcement officer

who's going to take them into custody.

It's a gesture -- it's not a deterrent.

Special forces operators out there in the field today

discover that small groups of insurgents with cell phones

have access to satellite imagery that once only superpowers had.

In fact, if you've got a cell phone,

you've got access to power that a superpower didn't have,

and would have highly classified 10 years ago.

In my cell phone, I have an app that tells me

where every plane in the world is, and its altitude, and its speed,

and what kind of aircraft it is,

and where it's going and where it's landing.

They have apps that allow them to know

what their adversary is about to do.

They're using these tools in new ways.

When a cafe in Sydney was taken over by a terrorist,

he went in with a rifle...

and an iPad.

And the weapon was the iPad.

Because he captured people, he terrorized them,

he pointed the iPad at them,

and then he took the video and he put it on the Internet,

and he took over the world's media.

But it doesn't just affect the security side.

The relations between great powers --

we thought we were past the bipolar era.

We thought we were in a unipolar world,

where all the big issues were resolved.

Remember? It was the end of history.

But we're not.

We're now seeing that our basic assumptions about the Internet --

that it was going to connect us, weave society together --

are not necessarily true.

In countries like China, you have the Great Firewall of China.

You've got countries saying no, if the Internet happens within our borders

we control it within our borders.

We control the content. We are going to control our security.

We are going to manage that Internet.

We are going to say what can be on it.

We're going to set a different set of rules.

Now you might think, well, that's just China.

But it's not just China.

It's China, India, Russia.

It's Saudi Arabia, it's Singapore, it's Brazil.

After the NSA scandal, the Russians, the Chinese, the Indians, the Brazilians,

they said, let's create a new Internet backbone,

because we can't be dependent on this other one.

And so all of a sudden, what do you have?

You have a new bipolar world

in which cyber-internationalism,

our belief,

is challenged by cyber-nationalism,

another belief.

We are seeing these changes everywhere we look.

We are seeing the advent of mobile money.

It's happening in the places you wouldn't expect.

It's happening in Kenya and Tanzania,

where millions of people who haven't had access to financial services

now conduct all those services on their phones.

There are 2.5 million people who don't have financial service access

that are going to get it soon.

A billion of them are going to have the ability to access it

on their cell phone soon.

It's not just going to give them the ability to bank.

It's going to change what monetary policy is.

It's going to change what money is.

Education is changing in the same way.

Healthcare is changing in the same way.

How government services are delivered is changing in the same way.

And yet, in Washington, we are debating

whether to call the terrorist group that has taken over Syria and Iraq

ISIS or ISIL or Islamic State.

We are trying to determine

how much we want to give in a negotiation with the Iranians

on a nuclear deal which deals with the technologies of 50 years ago,

when in fact, we know that the Iranians right now are engaged in cyber war with us

and we're ignoring it, partially because businesses are not willing