New Part Three - September 19:
James Fallows
Michael Lewis

Part Two - September 4:
James Fallows
Michael Lewis

Part One - August 29:
James Fallows
Michael Lewis

Michael Lewis is the author of several books, including the international bestsellers Liar's Poker and The New New Thing. He has been the American editor of the British weekly The Spectator and a senior editor at The New Republic. Currently a contributing writer for The New York Times Magazine, he lives in Berkeley with his wife, Tabitha Soren, and their daughter, Quinn.

James Fallows is The Atlantic's national correspondent and the author of Breaking the News: How the Media Undermine American Democracy (1996) and of Free Flight: From Airline Hell to a New Age of Travel, published this month. To learn about his new book and look through an archive of his recent articles, visit

Previously in Fallows@large:

The Waste Land (June 21, 2001)
An e-mail exchange with Alex Kerr, author of Dogs and Demons.

Working Classes (May 2, 2001)
An e-mail exchange with Barbara Ehrenreich, author of Nickel and Dimed.

The Work of Words (February 21, 2001)
An e-mail exchange with Christopher Hitchens, author of Unacknowledged Legislation and would-be prosecutor of Henry Kissinger.

More by James Fallows

More on books

More on technology

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Atlantic Unbound | September 19, 2001
fallows@large | Dialogues with James Fallows
From: Michael Lewis
To: James Fallows
Subject: Re: The (next) Age of the Internet - Part Three

Dear Jim:

All of a sudden everything that happens in the world happens in reference to last week's catastrophe, and I don't see why our exchange should be any different. We should let readers know that you have not—as it appears—ignored current events to indulge some deep abiding passion for my book. You wrote your half of the exchange just before the planes crashed, and I sat on it for a week, watching CNN, and feeling distinctly dis-savantaged. Since then I've been told by our editor to ignore whichever of your questions I feel like ignoring. I've been doing that anyway, but guiltily. Now I'll do it self-righteously. I don't have any original content to add to the discussion about the future of Internet content. So let me try to say something useful about your first two questions.

I never really thought of the eighties as a financial bubble. Many of the trends that got up and running during the most frenzied days of the eighties—junk-bond financing, leveraged buyouts, twenty-six-year-old millionaires, globalization of finance—are still with us. I also don't think that the Silicon Valley nineties were financially distinct, but rather a natural extension of the ideas that undergirded the Wall Street eighties. The central insight that led to much of the turmoil on Wall Street in the eighties was Michael Milken's understanding that certain kinds of risky debt were systematically undervalued. The central insight of the nineties in financial terms was the Silicon Valley capitalists' understanding that certain kinds of risky equity was also systematically undervalued.

In both cases insights about risk led to a perhaps excessive financial appetite for risk. Too much capital went into junk bonds in the eighties, just as too much capital went into venture-capital funds in the nineties. But when the dust settles—which, with the collapse of the Twin Towers, may take a bit longer than previously thought—there will be huge and thriving industries devoted to investing in risky debt and equity. And these industries will be the cutting edge of American finance, the place where the smartest financiers want to work.

The eighties on Wall Street and the nineties in Silicon Valley were both periods in which businessmen projected themselves out of their usual narrow contexts, and shaped the larger world in their image. But in each case the larger world responded differently to the business man's influence. For instance, the people who got rich in Silicon Valley, unlike the people who got rich on Wall Street, didn't have a lot of annoying people telling them they didn't deserve their fortunes. The larger world identified its own interests in the interests of the Silicon Valley mogul. Wall Street just seemed like a lot of greedy young men getting rich at other people's expense. Silicon Valley has benefited from a trend in the moral climate of money—a trend that last week's bombings may have reversed. I think Maureen Dowd was the one who said that in the eighties people felt guilty for getting rich, while in the nineties people felt guilty for not getting rich. I'd like to steal that line, if I thought I could get away with it.

You also want to know if I really mean it when I say that the Internet gives some people power and takes power from others. I do. I think the Internet will permanently change big tracts of the economy. I think, for instance, that anyone whose power depends on privileged access to information is likely to find that power undermined. It may take a while, and so it may never come as a shock, but the end result, if it could be viewed right now, would appear shocking.

One of the things I tried to get across in the book was how new technology is always coming along to change the rules of the game, and, in doing this, often makes life easier for people who were losing under the old rules. It's true that the process is not static. Once the rules get broken, new rules are created to shore up the authority of those in power. It's also true that not all technology is a weapon in the hands of the weak. The atom bomb was in many ways great for established authority. (On the other hand it meant that the people in power could no longer insulate themselves from personal danger in war.) But many new technologies create momentary opportunities for people who do not have power to seize some. The Internet has already done this. It is now being tamed, and made less threatening.

By the way, I just finished reading the FBI's description of the people who staged last week's hijackings. Did you notice that most of them were as wired as Silicon Valley venture capitalists?

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