Bill Gates and Mike Dertouzos at Davos - World Economic Forum 1997

[MUSIC PLAYING]

DERTOUZOS: Ladies and gentlemen, welcome. We're looking forward to informative and fun discussion. Bill and I will look at the future, the road ahead-- or what will be, depending on what book title you like. We have agreed to focus on the bigger picture, further out, longer range rather than shorter range, stay away from brand name discussions and issues, try to see how it might affect our way of living, our lifestyle, our society.

Bill will begin. We'll go for 10 to 15 minutes, maybe 12 and 1/2, plus or minus 2 and 1/2. And I will do the same. Then maybe we'll fight with each other for five minutes and turn it over for Q&A live, Q&A with microphones, to the floor. So let us begin-- Bill.

GATES: Well, it's a very, very exciting time, in terms of giving people better tools of communication. Actually, calling them tools of communication may not give the full import of what a variety of things people will be able to do with PCs connected up to the internet. I've created a new term, which is that people either live a web lifestyle or they don't live a web lifestyle.

And what I mean by that is that somebody who several times a day goes to the web, several times a day checks electronic mail, sends electronic mail-- and for any new topic or anything they want to do, they take it as a given that they're going to turn to the internet to be informed and to collaborate-- that's somebody living a web lifestyle. And very few people are doing that today. If you want to find large groups that meet that test, you have to go to universities, particularly some university campuses in the United States, where the only way you sign up for courses is to get on the web. The way you arrange things with your friends, the way you order pizzas, is through the web.

And my view is that, as those young people move into the economy, and more and more people have that kind of experience, that those consumers will demand companies to use the web in a very, very creative way, whether it's for paying bills or taxes or selling products or simply just informing them. I think we can already see that the efficiencies to be gained through the new medium are pretty incredible.

One distinction you can make is that some people will live a web lifestyle in their office well before they do it as part of their home life. There's quite a divergence in terms of the bandwidth that will be available to businesses in the near term and in the office, versus in the home. If we take, though, a 10-year period, I think the internet has been greatly underestimated. In the next two or three years, I think it's almost been overestimated. Some of the articles that go on and on about how everybody's going to be shopping there or banking there or buying their cars there-- it's just not realistic. It takes time for this to happen.

Some of the key breakthroughs have not been made yet. Flat panel screens with wonderful resolution are not yet available. Now, there are lots of companies pursuing quite a variety of techniques, including straightforward refinement of approaches that we use today, as well as revolutionary approaches, that I feel certain will deliver that sometime in the next 5 to 10 years. There are many software companies working on the very tough problems of letting you interface with the computer in some way other than using a keyboard and a pointing device.

The Microsoft Research group is very optimistic that speech recognition, speech synthesis, visual recognition, will be primary ways of working with a computer. And the cost of the hardware to do these things is very straightforward. You need a pretty good microphone and a semi-decent camera. But the extra cost of those built into any type of device will be on the order of $100 or well less as the volume goes up there.

And so when we talk about the PC and where the PC is going, it's important to keep in mind the rapid innovation, particularly the rapid innovation in the user interface. A year ago, people were talking about that the internet and the PC didn't really go together. Well, today, through our efforts and efforts of many other companies, those things go together very, very well. In fact, if you buy a new PC, the internet is a few clicks away. You just merely pick the service provider that you want and how you want to be billed for that, and you're up and running. Even the software that lets you do internet telephony, internet meetings, all of those things are coming built into the computer, so you don't have to go out and take a lot of trouble to set those up.

Right now, people are worried about the complexity of the PC. And this is a very legitimate worry, whether it comes in terms of cost of ownership or the difficulty of updating software or the confusion people have. Once again, I have a very optimistic viewpoint here, partly through inside knowledge of things that are being done and partly just the view of how rapidly software can improve. People are going to be surprised probably in the next year, but certainly over the next several years, on how that PC interface can be improved, how we can take things and hide them from the user, and be doing more for the user, so that underneath, there's a lot going on.

But when you sit down to use it, it's very, very straightforward. You just think of the documents you want to use. You think of the topics you're interested in. And that kind of experience can be delivered against the PC.

It's a very competitive business. It's a business where no product that's out today will be popular in three or four years. So it's simply a question of the companies who make products-- are they going to replace their own product, or are they going to let somebody else come in and do that?

I thought the picture that Andy painted today was a very important picture. Another speech of his that I think was quite good was one that he gave at COMDEX, where he looked 10 years out at what kind of chips Intel would be making. And when he talked about gigahertz, clock speeds, and the instruction speeds being 100 times what they are today, it's very clear that we need to do more than just run a spreadsheet or a word processor to take good advantage of that. And that's where supply and demand come together and the software that learns about the user and becomes a reasonable assistant in helping you in every way, in this information economy, comes across.

A final concept is one that I talk about in my book, and that's friction-free capitalism. These tools are going to take capitalism, which has always had the frictional problem of buyers and sellers locating each other, it's going to take that and reduce the frictional costs very, very dramatically. And so even markets in consulting, which are very poorly mediated today-- it's hard to find the best consultant.

When you find a consultant you don't know-- that you didn't look at all the people who are willing to do that work-- it's just that a friend mentioned it to you-- markets like that-- the availability of people, their references, their price-- all will be there. And your ability to collaborate with them at a distance will be very dramatic. So it's a good thing capitalism works, because this tool will be used to bring it to new levels of effectiveness on a global basis and really make the world a far smaller place. Okay?

DERTOUZOS: This is a lot shorter than 12 and 1/2 minutes, Bill. Well, let's see. I believe we're headed to about half a billion to one billion interconnected computers by the year 2007. Andy thinks my half a billion estimate is low. Now, what will all these computers, the interconnected computers, and the people behind them be doing?

I have a simple model I like to think of. It's called the information marketplace, and it says that all these computers and their people will be doing three things, one of three things, or more of them. They'll be buying, selling, or freely exchanging information and information work. Now, to me, the latter is very important, because when we think of information, we think usually of text, pictures, video, sounds-- what I like to call information as a noun. But there is this other thing, which is information work-- massaging information, altering it, which is information as a verb. It's done by computer programs, like Bill's Microsoft Word and others, and it's done by people, like accountants and tax clerks, and so on.

It turns out that the fraction of the industrial economy that consists of office workers is huge. It's about half of the economy. So I think a lot of this new medium, this new world, the network society, will really have information work flowing over it, as well as, of course, information as a noun, which is the one we talk about, and the content, and so forth. But this huge amount, which is $9 trillion of information work, gives us an idea of how big things could be on the financial side.

But there will be also free exchanges and things that will be not measured in dollars. One of the things I discuss in what will be is the possibility of a virtual Peace Corps, a gigantic clearinghouse where the providers of help and those who wish to receive help find their place over the World Wide Web-- it's going to be a big site there, a big server-- but with a lot of compartments for different kinds of activities.

There is a lot of this in the world. There are a lot of people who need help, a lot of people who can provide it, and why not provide a clearinghouse where these two could be matched? And the help doesn't have to go all ways from the wealthy to the not wealthy. I could envision a Sri Lankan doctor providing medical help through the network society to a homeless person in San Francisco, where the care would be affordable.

Now, I think the movement that we're seeing will be fully integrated into our lives. It will be pretty much like air, water, breathing. It will not be a cyber-space out there that we go visit. It will be in everything we do.

I agree with Bill. I think speech will be the dominant interface, because the technology is here and because we're born with mouths and ears, rather than with keyboard and mouse sockets. In terms of what are the big forces-- can we reduce all these thousands of things we've been talking about here to a few fundamental forces? I believe we can.

I believe the first course is, what I like to call, electronic bulldozers-- the ability of our computers to offload human work from the human brain. I'm not talking about creativity or complex things, but simple work that we do repetitive work, processing, and X-ray annotating it, et cetera. Offloading human work-- now, we think that we're doing this, and we are to some extent. But if you look at what we do with a World Wide Web and with electronic mail, we are using 100% our eyes and our brains. In pre-industrial terms, it's as if we had shovels shoveling. Then somebody handed us a shovel that said high-tech shovel, and we kept shoveling.

It's time to stop doing things with our brains entirely-- clerical, simple things-- throw the high-tech shovels away, and automate a lot of the activities among the machines to relieve us of work. I know that computers are good for a lot of other things beyond increasing our productivity. But no socioeconomic movement worth its salt has lasted if it didn't also help human productivity. And I think this one will, and it might take us even as high up the productivity curve as the industrial movement did. It may be that we'll see a 300% increase in office productivity during the 21st century.

The second force is the force of electronic proximity, as I like to call it. That is the very exciting part of the web and of these other technologies that brings people closer together. Now, it's amazing how big this force is. When we were in the villages, maybe we could reach 200 people, 100 people, in our lifetime by walking. When the car came, that number increased by a factor of 1,000. We could now reach potentially 200,000 people maybe. We wouldn't reach all of them, but we could reach them by driving.

Now, the amazing thing to me is that the information age increases this ability by yet another factor of 1,000, and we can reach 200,000,000, 300,000,000 people. We won't reach them, but we can. It's a very strange notion. It brings all of us closer together. And this world will have its good things, like communities of seniors and handicapped people, and all the network groups that will be helping each other, commercially and otherwise. But it will also have info crime and info predators and all the problems that come with proximity.

Let me touch a little bit on culture. There is a great fear that this increased proximity is going to impose a universal culture on the world or that some nation will take its culture and try to impose it on another. I won't mention any names.

Let me suggest to you that this new technology that we're all witnessing has the very strange capability of strengthening simultaneously ethnicity and diversity. Let me explain. I'm a Greek, and half of the Greeks are outside Greece. Half of the Jews are outside Israel, and half of the Palestinians-- and I could go on. Even 20% of the Canadians are outside Canada. And as the world becomes increasingly global, more people will be outside their landmass that is their nation.

Now, if we could use the network society to keep connected among us the Greeks outside and inside, then we might have a very strange situation where, 30 years from now, 50 years from now, the Greek nation isn't the land mass in the Mediterranean, but it's a network. It's a frightening notion, the Greek nation network. Actually, it's much closer, much closer, to the notion of nation-- ethnos, the Greek notion which implied that you could be anywhere and being in that national circle-- a fascinating thought.

On the side of diversity, let's just look at the European Union. The presence of a common language, like English, has not obliterated the national differences. It's a thin cultural veneer that permits the people to communicate with each other, along with other conventions-- taxation, and so on. But underneath are the gigantic, national, indigenous cultures of Europe. The Greeks are Greeks. Italians are Italians, and so on. I expect exactly the same thing to happen in this new medium-- no universal culture, but a thin veneer, a thin veneer of shared culture, that's going to bind us and level some of our differences, help us understand each other, but still strengthen ethnicity.

Wealth-- I believe-- and here, we disagree with Bill-- that, left to its own devices, the movement will increase the gap between rich and poor people and between rich and poor nations. The reason, to my thinking, is that information helps the rich, because it helps with the material goods that the rich have and the services that they offer. So it helps them do them more efficiently, and they get better and richer.

The poor cannot afford these technologies or to learn about them, so they stay behind. And the gap will increase. Mind you, I'm saying, left to its own devices-- that means we should help. We should help with a variety of measures. But if we don't, I believe the gap will increase.

The next point is that, if we have a billion computers-- which sounds reasonable in 10 to 15 years-- and on each of them, there is between 1,000 and a million pieces of information, the grand total, if I do my arithmetic right, is between a trillion and a quadrillion pieces of information. And what is useful to this person is not useful to me. Or what's useful to me is not useful to that person. So there's a huge amount of info junk floating around. And I think that is going to make necessary middleman brokers, people and, to some extent, computers, that will help match the various interests. It's as if, in a marketplace, people came from both sides, huge numbers of people, there would be a tremendous chaos, if there wasn't a way to sort things out.

I think this is another area where we might disagree, Bill-- agents, computer agents, are overrated and overhyped, at this stage of their history anyway, and because they can't have human intelligence or anywhere near it. So they can't really help much. I think I've talked too much. I'd like to say something about human relations and how they fare through this medium, but I'll save this for a little later on.

For the time being, let me just conclude by saying that I think we are into this third major socioeconomic movement, and we need not fear it any more or any less than we feared the automobile, electricity, chemicals, steam engines. I think we ought to embrace it. We are, after all, the same ancient humans. We've always been with the same ancient goals and aspirations. All that's changing is a new set of tools. Thank you.

[APPLAUSE]

I think it's between you and me for five minutes.

GATES: Okay, I want to talk about rich and poor a little bit and see where the core of the disagreement is. I disagree pretty strongly about rich nation, versus poor nation. Today if you wanted to know what somebody's yearly income was, and you could only ask them one question about themselves, the question you would ask is, what country do you live in? That is the dominant factor for vast differences in income.

I claim that, with this network, the question you will ask 10 years from now is, what is your education level? And that you'll have a much better predictor asking about education level than you will about their geography. Now, what do I mean concretely? I mean that the high-paying jobs today are service-related jobs. Manufacturing jobs were allowed to move around the world, to the person who was willing to bid for them at the best price, by low cost transportation.

This network now allows that same geographic dispersion of the high-paying jobs. You can design things. You can translate things. You can do all those nice service-oriented things. You can even be a lawyer and in laws of another country, if people are willing to pay you enough. And you can deliver that in a nice video conference way and collaborate.

And so countries that don't have good educational structures will have a problem with this. But the human resources of developing countries, of India and China, there basically is a pretty reasonable educational system there. And the motivation to become well-educated in these areas will be so dramatic, that I think we'll actually see a leveling. And it won't take that long before we'll see this leveling.

DERTOUZOS: Okay, I fully agree. I fully agree about the potential, and I fully agree even that we can use that technology to help in various parts of the world with health, with learning, with matching labor to other parts of the world. I fully agree with all that.

My problem is that, left to its own devices-- I just did a calculation and checked it-- in the US, we spend 10% of our economy on computer hardware, computer software, and the salaries of the people who write computer programs. So you could say computing is about 10% of our GNP. Germany and Japan are pretty close.

I checked that number in Bangladesh, and we had a lot of trouble getting the number. We had to go all the way up to the Bangladeshi embassy. Finally, we estimated it. It was less than 1/10 of 1% today. Now, that's to be expected. But Bill, where will the poor nations and the poor people within any nation find the money to buy the hardware, to buy the software, to get educated about the indigenous things that computers need to do, so that they can give of their education and services?

GATES: Well, I guess it shows my faith in capitalism. There will be middlemen that will emerge who will invest in the education and equipping with hardware people in Bangladesh in order that they can take a 10% fee on the wonderful service work that those people will to. The power of capitalism to mediate that, I think, is pretty incredible.

Now, I have to admit governments have a big role here in terms of putting in the communications infrastructure. In terms of the large cities in these countries and the universities there, I think we're probably okay on that. Going out beyond that, I'm partly very optimistic about satellite systems, including the Teledesic one or others like that, coming along and providing very high speed bandwidth to every part of the globe. And I'm quite optimistic about, even as PCs become more powerful and simpler, that the average price will go down.

So the act of mediation required here, I don't think, is very difficult. The one and only one question mark on my thing is, is the education systems-- will they rise to that challenge? Another factor I think comes into this, is rich countries a little bit get lazy. And the poor countries try harder. Given a chance, they try harder, and you get this leveling effect.

DERTOUZOS: So our difference seems to be that you believe that, through capitalism, middlemen will help. And I seem to think that we need to help a little more through perhaps our governments setting up some libraries, some places where people can use and learn about the machines, and through individual and corporate donations of help and money and hardware.

GATES: No, that's not the point of disagreement. I think it's important that not be the point of disagreement. I am absolutely a big believer that anything we can do to make this come true sooner is great. My claim is that year by year, the gap gets less. But I think it's absolutely worth having governments and philanthropists accelerate that. The disagreement is, do they go apart and then come together? I claim they go together, and it's in our power to make that sooner than later.

For example, in the same way that books have been available to people to give them a chance to read and learn, I think that in those libraries, we should have PCs connected to the internet. Anybody should be able to go in and use those. And I want to make sure that happens sooner than later.

DERTOUZOS: Let's leave that to be the last word. And we spent five minutes fighting-- not too hard. But maybe we can do some more fighting later. Audience, we have taken 30 precious minutes of your life. Now we'd like to hear from you. Please, questions. I know at first, were timid. But after a while, you'll be competing for the microphone. So give it a try.

GATES: If you raise your hand, there are mics around. Someone will bring you a microphone.

DERTOUZOS: There is a hand on that quadrant and another hand on this quadrant.

[FOOTSTEPS]

AUDIENCE: Bill, Mike-- a question-- how many hours in your research do you find people are able or willing to spend in front of a screen on a daily basis? And how will that affect all the distribution that you plan to put through the PC?

DERTOUZOS: Don't use us as examples.

GATES: Well, the average American household somehow sits in front of a TV 100 hours a week. Now, somebody who sits in front of a TV zero hours a week, I find it mind-blowing. I mean, it's not a very high-quality screen, and it's not interactive. So people's ability to sit in front of a video display seems to be very high. And the quality of these screens will improve dramatically.

I don't read The Wall Street Journal or The Economist, long things, off of the screen. I still read them on paper. If I want to look for a specific article or get it a little bit faster than I can otherwise, then I'll go onto the electronic. But I admit that the screen, the field of view and resolution, still has some drawbacks. But that will go away. Eventually, your whole desk will be a screen. Your walls will be screens.

[CHUCKLING]

Seriously-- come to my house.

[LAUGHTER]

DERTOUZOS: You're invited.

GATES: Absolutely.

DERTOUZOS: Let me let me add a little bit here. From the history of this business, which I've been watching for the last 35 years and living it, at MIT, we would get students that would sit in front of the terminal. In fact, the guy who invented the spreadsheet was a student of mine-- Frankston. He used to just work so long that he would finally fall asleep with his face on the terminal. And we had to lift him, not because we were compassionate, but to free up the terminal.

[LAUGHTER]

But even Frankston, and everybody else-- or perhaps not Frankston-- but the people who exhibited this addictive behavior, after a while, lower down [INAUDIBLE]. And my point is that we human beings have thousands and thousands of years of experience in adapting. And my answer to you, sir, is that we will adapt to whatever it takes, so we don't get too tired, too anxious, and so forth. More questions?

AUDIENCE: A couple of [? telegraphic ?] questions-- my name is [INAUDIBLE]-- regarding the future of the network society or the global information society, and just rethinking the way things happened during [? this ?] century regarding having people who thought about having cities, having buildings, having highways, and at the point in time they put the blueprint of the society around them, and putting what you've just said, both of you together, don't you think we need to put, at different levels, government, industry professionals, the blueprint of this global information society?

One; two-- what about the Teledesic project? Is it still in the dreaming phase? Or there is anything which is more than what has been reported that you can share with us?

GATES: Well, let me start with the second part. Teledesic's a very exciting company, because their goal is to build a very high-speed internet in the sky. And it's very complementary to what's being done by communications companies around the world, in terms of running fiber. There are parts of the world where you just don't have the density-- even the rural United States, rural Europe-- you just don't have the density to ever run out the fibers to give those people the capacity. And that's where the satellite, a lower orbiting satellite, can come in and give you extremely high capacity in these areas, and then transfer that-- if the destination is into a city, transfer it down to a ground station where it goes through the optic fiber network, or vice versa.

And so Teledesic-- I hope it's not a dream. They're spending serious amounts of my money, and it's a capitalistic venture, where Craig McCaw, who is involved in the [? seller ?] industries, is the chairman of the company. There are other people doing things that are slightly different. So it's not the only company going after data connections in the sky. And I tell you with great confidence that one or multiple of these schemes will fill in the gap that the world has in this connectivity.

The beauty of these satellite systems is that the marginal cost of making it available, when you're over, say, Mali, or some territory where you might not get much revenue, because the marginal cost is zero, you'll find a price, a clearing price, to offer connectivity for every point on the globe. And so it's a fairly leveling development that, with luck, will be in place within five to six years.

DERTOUZOS: Okay, I don't want to comment on Teledesic. But all the comments that Bill made apply to all the other satellite schemes, namely the geosynchronous satellites that cost a huge amount of money-- $300, $400, million, to put up into orbit. But of course, they don't have the ability to go around the world, like the low-earth orbit ones. But all the other issues-- reaching a lagoon in the Pacific and absorbing bursts of traffic from the cities-- are there. I think satellites are going to be a very important part of this.

Now, onto your blueprint question, sir-- I don't know exactly what you mean by this. The European Union has already been working on this through their various papers. And government in the US has been studying the national information infrastructure. But I think the bulk of this drive is happening by the people, who are finding ways to use the internet, and entrepreneurial companies are being born.

And isn't this a little bit similar to what happened before, when manufacturing and the factories were set up, and then when electricity and the automobile came, there was a lot of activity by a lot of people and, if you wish, capitalism, which gave rise to these things. So I'm not sure how much centralization and planning should take place here. Probably it will vary through the various cultures of the world.

GATES: I would say one thing, which is I think the goal of writing a book about this is to get a broad set of people to think about what are the societal issues, to start thinking about privacy, and have, versus have-nots. And so to the degree that there needs to be a broad agreement on a blueprint for those tough issues, I agree with you.

In terms of a blueprint of what it all looks like, it's a lot better to just let marketplace competition play this thing out. The opinions about what people are going to do on the internet-- you know, just think two years ago what they said would be happening now. I mean, people were wrong, 90% wrong. And I think the way that companies succeed and fail, this is a wonderful thing for high-risk capitalism to jump in.

DERTOUZOS: More questions?

AUDIENCE: Gentlemen, given the fact that our society today-- all our social systems and value systems are centric around employment, and given your ideas about massive increases of productivity, what's your vision of that relationship between technology and employment?

DERTOUZOS: I struggled with this. I struggled with this. Thank you. It's a very good question. And I even got spanked several times by my colleague Bob Solow, the Nobel Prize winner in economics. Here is what I know, and it's very little.

I believe productivity will increase. We have no assurances, okay? But we believe-- I think, generally, there's a belief it will increase. After all, things are done inefficiently today. And when we apply all this horsepower to things that are done haphazardly and efficiently, you expect some improvement. So that will increase.

The problem is that for employment or unemployment to move, we have to understand what happens to demand. Because unemployment happens when those two are out of kilter. The productivity increases, and demand doesn't increase, for example. Then people are thrown off on this side, and they cannot do work.

Now, there will be displacements, even if those two attract. So I'm convinced that there will be changes in jobs. People who are doing job A now will not have that job in the future, even if productivity doesn't change. But the key issue behind your question, what will happen to employment/unemployment, hinges on what will happen to demand. And all my economist friends say we don't know. So I'm afraid the answer is we don't know.

GATES: I have a little bit more optimistic view of this. Essentially, demand in some areas is finite. When farmers got very, very productive, and the price of food came down, people didn't eat 10 times as much. I mean, they ate meat, so they eating more cows. But there was a limit. When radial tires came into the car market, people then say-- wow, these tires are better; we'll drive a lot more-- and so that the amount of society's resources in the car market shrank.

If you think of the resources that go on today to printing bills and mailing them out and answering questions about those, that's huge. And this technology will greatly reduce the number of people you need to handle that. But there are areas where I see near infinite demand. Take education. You know, why not? If there's productivity here, why not have five children in a classroom?

Take medicine-- if there's all this productivity, why not have much better personalized health care? Take leisure time activities-- with all this productivity, we should have more options there. We'll have more wealth to spend there. Eventually, you'll even shorten the workweek. People will choose to take more time off. Maybe Americans will take longer vacations. I think that would be nice.

DERTOUZOS: That's not in the cards.

GATES: Not in the near term-- but if you're talking about a situation where all these productivity plays out 20 years from now, I believe it's very, very much what will happen.

DERTOUZOS: In principle, elected leisure is available to us. The thing that's scary is that the Industrial Revolution made it possible for us, with this multi-fold increase in productivity, to basically live in an essential way, the way we lived before the Industrial Revolution, by working much less. But our working hours kept up and even increased, so there is something inside us that keeps us working hard. But I agree with you. Elective leisure is an option. And maybe in the long future, it may be a way in which we will go. Let's get some more questions. Yes?

AUDIENCE: A follow-up on governance point that we are discussing, the impact of information sharing on the way the societies will be run-- NBC, MS, CNN, Berlin Wall, penetration of information to the society at large-- what do you think it will do to the role of the governments, governments and governance at large?

DERTOUZOS: Do you want to take that or not?

GATES: I think there's some exciting opportunities with government. I think citizens will be more educated on the issues. They'll have a chance not just to read the headlines, but to dive in. If the headline says, Budget cut by $20 billion, they can go in and see, well, what was the budget? How was the money spent? How has that changed over time?

There's various debates about how far we should go with direct democracy. But no longer will the argument against direct democracy be that it's just too expensive to go out and consult all the people. We'll have a mechanism that makes that a possibility. And the economists pointed out that Switzerland uses that with reasonable success. And I think we'll see more and more push along that line.

I think government will be the greatest beneficiary in terms of its efficiency, the way it tracks things, uses paperwork, gathers knowledge, shares that knowledge. It's ripe. Take tax collecting or medical payments-- these things can be made an order of magnitude more effective. I don't think any government will be able to restrict information flow to its citizens as much as in the past. Every advance in communication, from the phone to the fax machine, have made that far more difficult, and the internet just takes that to a new level. And so governments will have to operate in an environment where citizens have access to the full range of opinions.

DERTOUZOS: I fully agree with what Bill said. Let me add something else-- big question raised in various settings here in Davos about governments is what is their role insofar as the information crossing national boundaries? Whereas, the internet isn't subjected to any passports or checkpoint. I have some suggestions about that for governments.

I think within a nation, the government should try to preserve the cultural status quo of that nation by using technology to that end. Let me explain. If you believe, in your nation, that anonymity should never exist, then you can use technology of public key cryptography, require every message to be signed, which will call for a public key to be used to read it. And then you'll know who sent that message or who was it that signed.

If, on the other hand, you want to be open, you can do that. If you want to have a rating system, there is technology so that even third parties can rate the sites that you can access. So within a nation, I think governments should try to preserve the cultural status quo. Because thousands of years have been spent to build up this cultural status quo, and nothing has changed. The people are still the same.

But the difficult thing is what happens between nations? And there, I think governments should strike agreement among each other internationally. We've had the same situation with crime. We've had the same situation with trade. And I think we should do the same. They should begin striking agreements as to what they will do with each other if there are violations through their boundaries and borders.

GATES: Well, I think I can agree with all that. But there are a few very tricky problems. Let's say somebody in the US writes something that is sort of Nazi propaganda, which is clearly allowed by the freedom of speech in the US and is clearly banned by German laws. Who should deal with that? Well, the US government is not, I can almost assure you, going to force a rating to be put on that page.

In Germany, you have many internet service providers, none of whom have the resources to filter the World Net and see if there's anything appropriate out there. So in between the person who published in the US and the person who's receiving that-- which, say, the Germans don't want to have happen-- who's going to find that and block it? And unfortunately, country by country, you're going to have to get resources together to see which things are out there that you don't want to come in.

You can have a policy of only letting things in that you review, but that would probably overwhelm you, and you'd lose the benefits of the internet; or have a policy of just blocking certain named things. But you'll have to accept the fact that things will get through. And so whatever culture has relied on restricting information flow, that won't be there as a tool as much as it has been.

DERTOUZOS: Well, I agree that there will be imperfections. I don't want to take more time debating this. Let me make a couple of announcements. First of all, following immediately after this session will be the president of South Africa, Mr. Mandela, who has agreed to come and speak for a short while. And the audience is asked to please stay for his address. The second announcement I'm asked to make is speakers, please identify yourselves-- your name and where you're from-- before asking your question. Let's move on to a next question, please.

AUDIENCE: I have a question.

DERTOUZOS: Yes, ma'am?

AUDIENCE: Margaret Wilson, chairman of Scarborough's, Austin, Texas-- I'm interested in your perspectives on future meetings of the World Economic Forum, either here in Davos or around the world, and how technology may affect these and how they may be different as a result, realizing that Klaus Schwab has already brought a great deal of technology here and provided us with computers to use for messages and other services? And secondly, would be interested, Bill, in your sharing a little bit more with us about your home as related to technology and how that may affect our homes in the future.

[LAUGHTER]

GATES: Okay, well, if my home is the future, then there'll be a lot of large homes that take a long time to get built.

[LAUGHTER]

The key neat thing I've done with this home is really pushed the limit on screen technology and by-- put a lot of screens all over the place, that it'll be quite some time before those are mass market type items. There are LCD projector technologies. There's a chip technology called direct digital mirror device that's a Texas Instruments approach. And these are very neat ways of displaying images with incredible quality.

And so there are many companies that are gathering image libraries and putting those onto the internet. I'm involved with a company called Corvus that does that and does it at very high resolution. And those images are indexed so that you can find them easily. So if I'm, one day, at home, saying, hm, I'm interested in Russia, I can have images come up on all the screens of the house about Russia. And if I'm passing by one-- I'm curious about its background and more images like that-- I just click on a little remote control and get that information and see more.

So whether it's Renaissance art or sailboats or sunsets, any topic, those images come in. And it's very fun, informative, and educational. That's probably the thing that's been done that's the most unusual.

DERTOUZOS: Okay, let me take the other part of your question, about the World Economic Forum. To answer that question, it's a broader question that you're raising, I think, which is really what kind of activities pass and do not pass? What kind of human activities pass and do not pass through the wires and the wireless links of the network society? And that's a fascinating question.

Let me suggest some pretty simple things-- straight text information, images, video, pass rather nicely. Video conferencing-- we could be talking to each other and passing signals to each other. Emotions-- I believe they passed partially. We cry and laugh in front of our TV. I don't see why we won't cry and laugh in front of this. So to the extent you cry and laugh here, you can carry that through the electronic world.

But there are some things, I submit, that do not pass at all. And maybe I can demonstrate. Can I touch you here?

GATES: Sure.

DERTOUZOS: Good, thank you.

[CHUCKLING]

If Bill-- I don't know. Maybe he would react badly.

[LAUGHTER]

If Bill had not gone to Harvard, if he had come to MIT, and if you hadn't left Harvard-- God knows what would have happened to the software industry-- but it would illustrate my point. If he was graduating from MIT, and he was my student, and a good student, and all that, I could grab him here by the collar, and I could say, Bill, I expect you to do very well when you graduate from here.

Now, I could email that to him, right? But it wouldn't be the same. I could pass it through video, and it would be a little better. But still, he wouldn't feel a pain here. Or I could use the things we describe in our books, which are the tactile things you talk about and the body nets and the bodysuits I talk about. So either he could wear a suit and feel the pressure while he sees me approaching, or a robot could grab him. I mean, any one of these solutions could work. But let me--

GATES: Or electrical shock.

DERTOUZOS: Or electrical shock.

[LAUGHTER]

But let me make the point that that is not the same thing. Now, this is a serious point. Why? Because both Bill knows and I know that we can turn off the switch and stop the robot. So the whole thing is cerebral. It's not a primal force. And I believe these primal forces of the cave, the forces that we felt, when millions of years ago, we were in the cave-- the animal growling at the door or the nurturing we felt for a loved one or the food, the wish for those things-- those primal forces cannot pass.

Now, you're going to say, how many of these primal forces do we use in the World Economic Forum? I suggest that we use a lot of them in our daily life. The relationships between siblings, between doctor and patient, the trust that we build with business associates are all based on the forces of the cave. And at MIT, where we're thinking of having virtual classes, we will be requiring students to come back every year or every two semesters to take courses on campus, so they can feel these forces of the cave, build the trust, recharge the battery. So I think, in answer to your question, a lot can happen through the network. But ultimately, you'll have to come back to Davos.

[LAUGHTER]

[APPLAUSE]

GATES: It's a very good question, because, although face-to-face meetings will always be superior in many, many respects to even the best video conferencing environments, sometimes a face-to-face meeting is so much trouble, you'll take the lesser approach. Videoconferencing business-to-business is going to catch on wildly. I mean, when people see this welcome system, a lot of what they're responding to is high-quality videoconferencing, whose price is getting to be very reasonable.

And so it's a very good question, how many things like this there will be? The speeches-- we're all sitting in a room here-- that can be recreated through technology very easily. What can't be recreated is when you get up, and you're mingling around, meeting somebody new, running into somebody at dinner, and kind of the isolation we have, that we're all here and in this common meeting-- which is a very important element of it.

DERTOUZOS: Okay, I think we've answered this one enough. Let's go to another question. Yes, and then on the other side, please-- first here and then there.