The NewsHour with Jim Lehrer

MARGARET WARNER: Good evening, I'm Margaret Warner. Jim Lehrer is off this week. On the NewsHour tonight, Microsoft fights a breakup with a counterproposal. Gwen Ifill gets an update. Spencer Michels looks at the not-so-good life in Silicon Valley; we explore the allure of lotteries like the big game; and Ray Suarez talks to a pioneer of the information revolution about its dark side. It all follows our summary of the news this Wednesday.

NEWS SUMMARY

MARGARET WARNER: Microsoft today asked a federal judge to reject the government's proposal to split the company in two. In a filing to U.S. District Court Judge Thomas Penfield Jackson, the software giant said the Justice Department's proposed penalty far exce eded the antitrust violations that the judge ruled last month Microsoft had committed. The company offered instead to change some of its business practices, and some features of its Windows operating system. We'll have more on this story right after the News Summary. In Sierra Leone today, UN peacekeepers and government soldiers braced for a rebel onslaught on the capital. We have this report from Alex Thomson of Independent Television News.

ALEX THOMSON: Near the town of Waterloo, just 18 miles from the capital, Freetown, the Sierra Leone army is now making its stand against the rebels in what is now effectively civil war. The fighting is continuing between these soldiers, with UN troops alongside them, and the rebels, who are coming daily closer to Freetown. There is doubt that the regular army can hold the line against the rebels, which is partly why the UN is urgently trying to beef up its mission, to change the entire nature of it from peacekeeping to peacemaking, which is fighting. The UN Security Council in New York must now ratify that. The capital is tense, but relatively normal. The UN officials plainly have little idea of just where the shifting front line really is. They also have no idea where Foday Sankoh is, the rebel leader whose house remains empty and destroyed in Freetown. Amongst all the rubbish in this destroyed house, the constitution of the rebels' party, the RUF, which says amongst other things that the whole issue can only be solved peacefully, and not by war, and that the loss of life must stop. For several people were killed here in the past few days. The house has been destroyed, and the rebels of course are fighting on several fronts around the capital city. And all the while, numbers of local people displaced by the fighting are rising. Thousands or so crossed the front line near Waterloo this morning, and they're streaming towards the capital.

MARGARET WARNER: The rebels are still holding some 500 UN peacekeepers as hostages. The house voted today to extend the current moratorium on taxing Internet sales until the fall of 2006. Republican leaders said the five-year extension would help ensure the Internet's growth. Some Democrats tried unsuccessfully to limit the extension to two years, saying it unfairly favors Internet retailers over bricks-and-mortar stores.

REP. BOB GOODLATTE, (R) Virginia: It is vitally important that we take a very, very cautious approach toward allowing taxes of any kind on the Internet, because the Internet is the engine causing our economy to grow. Nearly half of the growth in our economy is attributable to the high-tech industry, and the Internet is the engine that is driving that growth.

REP. LLOYD DOGGETT, (D) Texas: It would be good if we could have a dispassionate, objective, bipartisan review of these issues. Our Republican colleagues have found it necessary continually to bring up measures to try to drive a wedge between the new economy, the high-technology portion of our economy, and the Democratic Party.

MARGARET WARNER: The bill now goes to the senate. A new study released today challenged the notion that Internet use isolates people from each other. Research by the Pew Internet and American Life Project found that people who use e-mail are also more likely to visit and phone relatives and friends than people who don't. These findings contradict a recent Stanford University study, which found regular Internet use made some people reclusive and less likely to interact in person. On Wall Street today, fears of higher interest rates drove stocks lower. The NASDAQ Index dropped 200 points to close at 3,384, a loss of 5.6%. The Dow Jones industrial average fell 168 points to finish at 10,367, a loss of 1.6%. Two winning tickets were drawn last night for the biggest lottery jackpot in U.S. history, $363 million. They had been sold at "big game" outlets near Detroit and Chicago. One apparent winner contacted officials in Michigan, but didn't identify himself. There was no word on who holds the other ticket. The chief of the Illinois Lottery cautioned, however, that people not go overboard.

LORI MONTANA: I will tell you that we are looking for reasonable play every single day of the year, and it's important we get that message out. The odds are long; spend a dollar or two, have some fun, enjoy being a part of the game. We certainly don't ever want folks to feel bad about losing their money.

MARGARET WARNER: We'll have more on the big game and the lottery phenomenon later in the program. Also ahead, Microsoft fights back, down in the valley, and the dark side of the future.

UPDATE - MICROSOFT - HANDS OFF

MARGARET WARNER: Microsoft tells the judge breaking up is hard to do. Gwen Ifill has the latest.

GWEN IFILL: Two weeks ago, the Justice Department asked the judge in the Microsoft antitrust trial to split the software giant into two separate companies. The goal, according to the government: To break up an illegal monopoly. Late today, Microsoft submitted its response, rejecting the breakup plan, and instead proposing its own less onerous set of restrictions on its business practices. CEO Steve Ballmer spoke a short while ago in a video statement released at Microsoft headquarters.

STEVE BALLMER: Microsoft has made a proposal that responds to the court's concerns and its conclusions of law. We think the proposal that we have made is reasonable and appropriate, unlike the extreme proposal the government has made to break up the company and to regulate the surviving companies in a way that would literally, I think, set back the high-technology industry and the American consumer years and years and years. While we may respectfully disagree with the court's conclusions of law, I think we have clearly shown that even accepting them, there's an appropriate response and remedy even if you accept those conclusions of law. There's never been a company that has grown through its own efforts that has been broken up. It would be like breaking up Michael Jordan Scottie Pippen or breaking up John Lennon and John McCartney. They've had too many number one hits. I don't think consumers would be very well served at all by that kind of action.

GWEN IFILL: Microsoft as the Beatles. Joining us again, as he has throughout the Microsoft trial, is William Kovacic, an antitrust professor at the George Washington university law school. Can you Professor Kovacic, walk us through what the Microsoft proposal was today -- counterproposal was today?

WILLIAM KOVACIC: Microsoft today said first that the judge ought to simply strike the government's motion to obtain a break-up, should simply cast it aside completely. By way of their own affirmative suggestions about what might be done, Microsoft offered to limit its freedom to control the ability of computer manufacturers to determine what consumers see when they turn on the computer, including allowing them to mask the Internet Explorer icon or take it off of the desktop completely. Microsoft also said that it would agree to limit its efforts in the future to intimidate its customers into dealing only with Microsoft products to the exclusion of competing products -- to say to its customers that if you want to develop a rival type of software, we won't condition the availability of our products and our cooperation on your willingness to abandon that.

GWEN IFILL: Now, this is an awkward situation for Microsoft. On one hand they were trying to make the point again that they felt they had done absolutely nothing wrong and that this entire case, especially the break-up provision should be just thrown out. At the same time they also had to propose remedies, which would concede if the judge accepted them they did something that was untoward.

WILLIAM KOVACIC: It is very awkward, on the one hand, to be saying we've done nothing wrong, we think the law supports us completely. But, oh, by the way, if we have done something wrong here's a suitable set of punishments. I think it was important for the company to do more than simply be a nay sayer, that it was important to offer a set of counterproposals if for no other purpose than to shift the judge's gaze away from the break-up side of the remedy menu, and to focus it on conduct possibilities.

GWEN IFILL: And part of what they were also doing was taking apart the government's case again, especially the parts that weren't presented in court by outside experts, saying that the government's proposal was -- a punishment was greater than the crime that they were accused of.

WILLIAM KOVACIC: Part of what they were arguing is that the government rests its case for divestiture on the possibility that Microsoft's market power will migrate into other product areas, including some that did not attract a great deal of attention during the trial itself. Microsoft is saying at a minimum if you want to move into those areas, you have to allow us a relatively elaborate opportunity to probe the assumptions on which those requests are based.

GWEN IFILL: Microsoft also said that the government's conclusions were based on an unsettled set of legal standards. What are they talking about?

WILLIAM KOVACIC: They're pointing to the fact that a number of existing areas of antitrust doctrine are somewhat turbulent - that you can point to competing strains - some of them very permissive, some of them more restrictive. They're arguing in effect that they've been caught in the work between those and shouldn't be held to a drastic remedy because no firm reasonably could have predicted how those competing views of the law would be resolved.

GWEN IFILL: There area lot of competition between what is happening here in the antitrust case with Microsoft and what happened to AT&T and Standard oil. Microsoft argues that this is not the same case at all.

WILLIAM KOVACIC: There have been 34 occasions since 1890 when the government has achieved a break-up of some type. Microsoft is arguing that in the 24 or so cases in which a court mandated the break-up, that the core basis for the assembly and maintenance of monopoly power was a merger or a conspiracy. They're arguing that no court has ever engaged in a break-up where the firm did not grow and remain big through those means, that its means are curable simply by controlling the bad conduct, not simply dissolving the result of a merger.

GWEN IFILL: Let's look at the remedies that Microsoft is proposing. For instance, you mentioned taking off that icon when you turn on your screen, the very first thing you see is their browser. Is that significant, these kinds of proposals that they came up with today?

WILLIAM KOVACIC: In one respect it seems to address a concern that Judge Jackson did mention several times during the trial. On several occasions you posed the question: Why can't you offer a version of Windows that does not attack the Internet Explorer into the Windows operating system? I think a question that will certainly be raised as the government response to this document a week from now is whether or not the tactic that was used, in fact, might be replicated in other areas and does that dictate a broader approach with the remedy?

GWEN IFILL: Could Microsoft have gotten away in this case with proposing no remedies at all, just sticking their heels in the sand and saying no?

WILLIAM KOVACIC: I think that would have been a very risky approach. It would have seemed to the outside world and to the judge to have been unreasonable. Again it does serve the purpose by offering their own affirmative agenda of directing the judge's attention to conduct rather than structure.

GWEN IFILL: How about the timetable? A great big part of this proposal was about what happens when, if this happens and that happens. And ultimately they're talking about it's conceivable this could still be going on into December.

WILLIAM KOVACIC: The company has given the judge a menu of options. They basically said if the government's full package of remedies including divestiture is to receive serious attention, we want a process that runs through the early part of December to resolve this matter. The shorter alternatives involve casting divestiture aside, throwing aside some of the information disclosure remedies the government wishes. The fastest timetable along that line would bring things to an end in early August. Microsoft has also said if the judge is willing to embrace its package of conduct controls immediately and allow an appeal to progress, Microsoft would accept that right now and allow Judge Jackson to contemplate other remedies in greater detail.

GWEN IFILL: But the one thing that Microsoft seems unwilling to suggest and Steve Ballmer said it again today was that a break-up will never happen. He's been reassuring his employees about that. Does he have basis to be so optimistic?

WILLIAM KOVACIC: I think part of the basis for optimism is that historically it's been rare to order a divestiture in a matter of this sort. It's an extremely sobering matter for a judge or a collection of judges to undertake. And enough of the law that we referred to before, the uncertainties, may break Microsoft's way on appeal but what has to make the company a bit nervous is that the Supreme Court's declarations, especially in the late '40s and early '50s about the scope of the government's remedial requests and the district court's power are exceedingly broad.

GWEN IFILL: Still very strong language in this counterproposal today from Microsoft. They talked about the break-up proposal being like the Sword of Damocles hanging over there head. Do you see any sign in the language or in the way this was proposed that sounds like they were really in the business of finding compromise now?

WILLIAM KOVACIC: I think in some of the specific proposals there's a mix of the language in the document. Some of it is conciliatory, but when you go to the core question of divestiture and the integrity of the company, I think you see more than simply sheer lawyers' advocacy there. I think you see the deeply held view of the company that this is simply unacceptable.

GWEN IFILL: What happens next? This now goes to the judge. Today was Microsoft's deadline. What happens after that?

WILLIAM KOVACIC: One week from today the government will issue its response to Microsoft's filings today. Judge Jackson has scheduled a hearing for May 24. I think originally Judge Jackson thought that might be the day that wraps everything up and puts it aside and we have a final decision sometime in June.

GWEN IFILL: Maybe he was dreaming at that point.

WILLIAM KOVACIC: I think it was a hopeful view of the world. I think realistically what the 24th is likely to turn out to be is a debate between the two sides about what type of process to resolve the remedy is necessary from here on out; Judge Jackson is likely to listen to those arguments and perhaps a short time afterward offer his own view about where we go from here.

GWEN IFILL: Okay. Well, we'll be keeping an eye on that. Bill Kovacic, we'll talk to you again.

WILLIAM KOVACIC: Thank you.

GWEN IFILL: Thank you.

FOCUS - DOWN IN THE VALLEY

MARGARET WARNER: Now, a look at the less- familiar side of life in California's high-tech heaven. Spencer Michels reports.

SPENCER MICHELS: The popular image of Northern California's Silicon Valley is that the streets are paved with gold; that everyone is getting rich, or about to, off high-tech inventions that are changing lives and the economy. And in some cases, the dream actually comes true. Young entrepreneurs like hotmail creator Sabeer Bhatia and his associates have made millions off their creations and their stock options.

SABEER BHATIA: Of the 62 employees that we had at the time of the sale to Microsoft, I would say almost close to half became millionaires.

SPENCER MICHELS: In garages and offices throughout Silicon Valley, software developers burn the midnight oil, with the goal of getting rich.

VIRGINIA GLASPER: Of course, get rich in less than five years, maybe something in three years. Get IPO, and create great software.

SPENCER MICHELS: But it doesn't always work out. At 33, Joe Rowe has had it with the commercial world of high tech. Instead, these days, he is teaching and fixing computers in a San Francisco high school, a job he got after stints with a computer maker and an Internet firm.

JOE ROWE: You had to work late, you had to work long hours, or if you worked 40 hours a week, you worked very intensely. You were seen as... as a slacker if you didn't participate in that movement.

SPENCER MICHELS: Rowe is among an increasingly vocal group of high-tech workers who consider the working conditions degrading.

JOE ROWE: Impossible deadlines, expectations made by people who didn't understand the work that was being done, corporate pressure for stock price-- you name it. It was fine for a long time, until it slowly started saturating into your personal life, and then again you realized-- or at least I realized, when I stepped out of it for a moment-- what I was sacrificing.

SPENCER MICHELS: Brendon Macaraeg quit his high-tech job too, and now works at home. He complains about young managers who seem mostly interested in cashing in on initial public stock offerings, or IPO's.

BRENDON MACARAEG: There are people that are just coming out of MBA schools just wanting to get... make a lot of money off an IPO, not caring about a product or a service, or delivering a high-quality product. You know, you're working with people who have pretty big egos, sometimes, and people, especially in Internet startups, where the job roles are not defined very well, people can butt heads a lot.

SPENCER MICHELS: The view is different among mangers. Docent Incorporated is a Silicon Valley start-up company that makes educational software. Vice President for Human Resources Eric Campbell says sacrifice comes with the high- tech territory.

ERIC CAMPBELL: The idea behind a start-up is, you know, it's a lot of work at the front end, but as time goes on, and as the company becomes successful, hire more staff, you're working less hours. You know, eventually one of these days, that company will go public, and you'll be very, very wealthy.

SPENCER MICHELS: Among those not sharing in the wealth are temporary workers, who get few benefits. In the Valley, temp agencies are increasingly being relied on by industry, especially to fill clerical, assembly, and janitorial jobs. Lucille Moyer, a temp, lives in an apartment in San Jose with her son, and pays $1,100 a month rent, which is low for the Valley. She has been temping as an executive administrative assistant for the last two years, after a series of permanent jobs.

LUCILLE MOYER: Instead of hiring us directly and paying us benefits, paying us sick leave, vacation, being able to participate in profit- sharing, being able to have access to 401(k) plans and retirement, we don't get any of that. We get nothing. If we're sick, we don't get paid. We're not allowed to grow with the company, and participate in the financial rewards of those companies.

SPENCER MICHELS: Labor studies claim that 40% of workers in Silicon Valley are temporary, part-time, or contracted out. Officials at Docent, which hires fewer temps than many firms, say there's often good reason not to hire permanent staff.

SPOKESMAN: The idea behind hiring a temporary work force is you don't know what the company is going to look like a year from now, and you want the flexibility to adjust your variable costs.

SPENCER MICHELS: Even for some permanent workers, surviving in the flourishing Silicon Valley is a struggle. An industry-sponsored study says that while the wealthiest 20% of the population saw big increases in their incomes over the last five years, the income of the lowest 20% of households actually declined.

SPOKESPERSON: I have one that's seven, five...

SPENCER MICHELS: Christy Outen, a single mother, falls into the lower income group. Although she now has a permanent job in administration at a large pharmaceutical firm in Palo Alto, for several years she was a temporary worker here and elsewhere, making up to $15 an hour, with no benefits. That was barely enough to support her and her four children in this expensive area.

CHRISTY OUTEN: The rent is overwhelming; the child care is also overwhelming, as well, because by the time I pay the rent, pay the utilities, just the basic necessities, there's no money left over to do "nice-cessities", as I would call it-- you know, the nicer things in life, like going to the movies, even renting a video, it would have to be a pre-planned deal for us to do that as well.

SPENCER MICHELS: An AFL-CIO study says that 55% of jobs in Silicon Valley pay too little to support a family of four. Housing costs have soared in recent years. The median home price in the Valley last year was $346,000, with many homes selling for over $1 million.

CHRISTY OUTEN: It's stressful, it's very stressful, wanting to achieve the American dream, and knowing that I can't achieve it here, because of the high cost of living.

SPENCER MICHELS: While Christy Outen may not be considered poor elsewhere, in Silicon Valley, she qualifies. The cost of living is so high here that the Housing Authority considers a family of four making less than $46,000 a year as low income. And there are plenty of people poorer than that. Poverty doesn't look as stark as in as urban slums, but the poor stand out here, in contrast to the affluence of the area. Social services agencies like Sunnyvale Community Services distribute food and emergency funds to hard-pressed residents. They are often low-paid workers who provide vital services to the programmers and engineers, but who are being priced out of the area. Nancy Tivol is the agency's executive director.

NANCY TIVOL: If we want to eat, if you want a car wash, if you want clothes cleaned, and the people who have those jobs can't afford to live here, then that's going to affect us.

SPOKESMAN: Please, not to us, don't throw away...

SPENCER MICHELS: This agency serves clients like 24-year-old Joanne Silva, who just moved into Silicon Valley so she can find a job to support her four daughters. She's still looking. Tivol says for a surprising number of families, life here is a constant struggle, partly because of the affluence of the high-tech world.

NANCY TIVOL: An average case, the father will have a full-time job and a part-time job, the mother works, and if there are teenagers, the teenagers work after school-- not as I did in my day, for fun money, but just to put food on the table.

SPOKESPERSON: An employee should be free to make their own choice, without interference from management.

SPENCER MICHELS: Low wages and poverty have spurred the AFL-CIO to try to organize employees in Silicon Valley, starting with the lowest paid, and later incorporating high-tech workers. 37-year-old Amy Dean, a union organizer since the mid-80's, is the executive officer of the local labor council.

AMY DEAN: And so the issue is is that we really need to shine a public eye on these injustices.

PROTESTERS: ...We just need a living wage!

SPENCER MICHELS: In 1998, she mobilized workers to pressure the San Jose City Council to enact the nation's highest living wage, of $9.50 an hour, plus health benefits, for those working under city contracts. (Applause) Dean is currently concentrating on the problems facing clerical workers, hospital workers, and janitors, problems addressed by Will Yamada, a union leader of Justice for Janitors.

WILL YAMADA: We've gotten them health insurance, we've gotten them at least something enough to live off of, now let's get them out of poverty. The money's available here. These companies can pay it. Our janitors work for Cisco Systems, they work in Hewlett- Packard, in IBM. All these companies are billion- dollar companies. For them to pay these janitors 60 cents more an hour, it would cost them, like, an hour of profit in their whole year.

SPENCER MICHELS: The unions, and Amy Dean, are plowing new ground, trying to cope with high-tech companies that change their work force size quickly, and with workers who change jobs often and don't get benefits.

AMY DEAN: The kinds of responses that the labor movement comes up with is to accommodate this new kind of workforce. That means creating portable benefit plans, health plans, pension plans; creating advocacy that allows workers to exercise their rights on the job, even as they move from job to job, and employer to employer.

SPENCER MICHELS: Dean says the Valley can afford to boost the fortunes of the lowest paid. But many executives argue strongly that labor unions for high-tech workers run counter to the entrepreneurial spirit in Silicon Valley.

SPOKESMAN: I think there was a time and a place for unions in our history as a nation. You know, you're not having to worry about child labor, you're not having to worry about companies not paying overtime for work in excess of eight hours in a day-- you know, those were the reason why unions were brought in in the first place. You know, in an environment like this, I don't think there's any need for a union.

SPENCER MICHELS: For Joe Rowe, the answer wasn't to join a union; it was to quit the high-tech industry altogether, and work toward a teaching credential.

JOE ROWE: I'm overworked as always, and I'm not making as much money, but I think I feel much better about myself, because I see the results on the front lines.

JOE ROWE: What that is, is that someone wants to chat online with you.

SPENCER MICHELS: But Rowe is in a distinct minority. Silicon Valley continues to draw workers and residents with its promise of the good life.

JOE ROWE: So you have to scroll down.

MARGARET WARNER: Still to come on the NewsHour tonight, the big game, and the dark side of the future.

FOCUS - THE BIG GAME

MARGARET WARNER: Now, America's fascination with lotteries. We begin with some background.

SPOKESMAN: Somewhere in America, moments from now, there could be a new multimillionaire!

MARGARET WARNER: Millions of people tuned in last night to see if they had picked the lucky numbers. At stake: A jackpot worth $363 million.

CLERK: $60, big game?

MARGARET WARNER: An estimated 30 million to 40 million Americans bought tickets for the so-called "Big Game," a lottery sponsored and managed by seven states: Georgia, Virginia, Illinois, Michigan, Maryland, new jersey, and Massachusetts. The prize amount kept growing when earlier drawings failed to produce winning tickets, but last night, there were two. The holders of the two winning tickets haven't claimed their money yet, but the person who sold one of them, the owner of Sweeney's Citgo station in the Chicago suburb of Lake Zurich, got a bonus check today from the Illinois Lottery Commission.

LORI MONTANA: Today is a very, very special day here in Lake Zurich, because we are presenting the largest check to a retailer, of course, that we have ever presented.

MARGARET WARNER: The other winning ticket- seller, Mr. K's Party Shoppe in suburban Detroit, wasn't as lucky. Michigan will pay him only $2,000. All week, people have been waiting in long lines to buy the $1 tickets.

MAN: Beautiful day to be a millionaire. Thank you. See you.

WOMAN: That is 100 tickets. Those are for me, and the rest are for my bosses.

MARGARET WARNER: Sales were brisk, despite the long-shot odds of winning-- 76 million to one.

MAN: I think it's a little silly. I don't know. It's too... Like, it's too hard to win. You have a better chance of getting hit by lightning.

MARGARET WARNER: Last night's jackpot is the biggest ever in the U.S., topping the $296 million won two years ago by 13 machine shop workers in Ohio. New Hampshire launched the first state lottery in 1964. The phenomenon quickly mushroomed. Now 37 states, plus the District of Columbia, sponsor lotteries, in which last year Americans wagered some $36 billion. (Cheers) The phenomenon is big abroad, too. Last December, the biggest jackpot ever, some $1.2 billion in prizes, was awarded in the Spanish lottery game called El Gordo, or "The Fat One." States in the U.S. siphon off a big take from ticket sales-- between a third to a half, by most estimates. That amounted to about $13 billion last year. Some states earmark the money for special purposes. In Georgia, it's pre- kindergarten schooling, and so- called Hope college scholarships for deserving students. Lottery officials said about one-third of the proceeds from yesterday's Big Game will go for state programs like that. The rest will go for prizes and administrative costs.

MARGARET WARNER: For some insight into lottery fever, we're joined by Greg Ziemak, president of the North American Association of State and Provincial Lotteries, and executive director of the Kansas Lottery; Edward Looney, executive director of the Council on Compulsive Gambling of New Jersey; Alan Wolfe, a social scientist, and the Director of the Center for Religion and American Public Life at Boston College; and Tyler Cowen, professor of economics at George Mason University, and the author of "In Praise of Commercial Culture." Tyler Cowen, there are some estimates that as many as 30 million, maybe even 40 million Americans bought tickets for this. Either they live in those seven states or they came from neighboring states. How do you explain this? What is the appeal?

TYLER COWEN, George Mason University: People play the lottery because it's fun. Every year over a thousand Americans become millionaires by playing the lottery so even if you don't win, it's something you can hope for, something you talk about. You talk about how you spend the money. But most of all people like being part of a wave of collective enthusiasm. It's a modern form of tribalism, akin to celebrity. People like to participate in a collective endeavor in modern society, and this is the lottery.

MARGARET WARNER: Greg Ziemak, I assume you know your target audience, you advertise to the target audience. Is this what's driving them -- a sense of fun, wanting to be part of kind of a collective fad?

GREG ZIEMAK: Lottery is entertainment. People enjoy playing. The Gallup Poll that was taken in 1999 show that 57% of the people who were interviewed had played the lottery within the last year. The poll also said 75% of the people in this country think of lottery as a good way to raise revenues for the state. The bottom line is it's entertainment and they enjoy it. They enjoy the play.

MARGARET WARNER: Edward Looney I read the same poll. 57% of Americans have actually played the lottery. What is the psychology of this?

EDWARD LOONEY: I could tell you that 80% of the people do have fun with it. But there's another group of people called problem and compulsive gamblers. 15% of the people who gamble on lottery have problems with it. There's about 5% of those are what they call compulsive gamblers. These are people that are basically in the grip of an illness. And basically they can't stop. So it's not a social or a fun thing for them. I guess we have a responsibility to, you know, do something and do something more than they're doing right now for lottery.

MARGARET WARNER: What are your insights into the 80% who up wouldn't consider problem or compulsive gamblers, why they're in it?

EDWARD LOONEY: Well, I think people are there for fun and for games and for excitement. Win or lose it's a fun thing. I think the people that lost that are compulsive gamblers are having a rough day today. They've gambled more money than they can afford. Many times it's the lower-income folks who bought those extra quarts of milk that they could have bought with that food that really are being affected by it. Again the Big Game really attracts the higher-income peoplewhich is really is marketed to the people that don't buy lotteries traditionally -- the $50,000 and up people who now come into this picture and really pump up that prize.

MARGARET WARNER: Along Wolfe, address this how much fun this is. When I read interviews of people buying the tickets, they say they're having fun. But also there's a lot of yearning there. They tell interviewers what their dreams are, what they're going to do with the winnings. They're going to quit work and they're going to buy that house in Florida. Isn't there a lot of yearning here?

ALAN WOLFE: Yeah. I think the word of the other people who have spoken that it's fun. I personally don't find it fun. I've never actually done it. I'd rather hold on to my money than give it away to people that are interested in taking it from me. But even if it is fun, there are lots of things in our society that we try to discourage -- even things that people enjoy. We set rules that block the buying and selling of all kinds of things. We don't want women to sell their bodies for a price. That's called prostitution. We don't think people should be able to buy and sell their military obligations to their society. The question is whether the lotteries represent the sale of things that we ought to encourage, like air conditioning or cars, or whether it represents something we ought to discourage like prostitution. I lean very much in the latter direction.

MARGARET WARNER: And what is it that you think the lottery is selling that should be discouraged?

ALAN WOLFE: A sense of irresponsibility about money primarily. I think that we are a society that has established the truth over the centuries and that is that money is hard to come by. It's something that you have to earn by the sweat of your brow. The idea that there's easy money out there that you can get just by the pure random chance is destined to create illusions in people and I don't think that people should live by illusions. I think people should live in reality.

MARGARET WARNER: Now, as an economist Mr. Cowen, do you agree with that or is there something to that, that people are being sold a fraud essentially and something that encourages them to think that they can get something for nothing?

TYLER COWEN: Any area that is fun, we will find excess and mistakes. We find this with food. There are people who eat too much food. They abuse the market for food. They do damage to themselves but we do not as a result condemn food. The problem is the excess. Lotteries are for most people fun. And my vision of a free society is one where people are able to choose the kinds of fun they have, provided they do not infringe upon the rights of others. Lotteries clearly meet that classification, and I believe the government should do nothing to prevent private entrepreneurs from offering lotteries.

MARGARET WARNER: Mr. Ziemak, give us a better profile. 57%, as I said, I saw the same poll, a lot more people play the lottery than any other form of gambling -- I mean casino or, I don't know, playing horses or betting on sporting events. Of the people who play the lottery, it's pretty broad based. Who are they?

GREG ZIEMAK: In Kansas, we find that 51% of the people who play lottery are male, 49% female. Over 93% of our players have a high school education or above. 82% have salaries of $20,000 and above. So, the majority of our play comes from mostly the middle income and upper-middle income players.

MARGARET WARNER: And so you don't ascribe to the argument that only the poor... or that are the poor are being kind of snookered in here?

GREG ZIEMAK: Not at all. Of course, lower-income people play but certainly that is their right to play. No one ever said that if you don't have money, you're not intelligent and you can't make decisions that affect your life. We allow low-income people to get married and vote. So they should be able to spend $1 or two on a lottery ticket.

MARGARET WARNER: Edward Looney, where do you come down on that question? The same Gallup poll which looks at who played the lottery found that two-thirds of the people in the $4520,000-$45,000 a year bracket had bought lottery tickets more than poor people.

EDWARD LOONEY: I can tell you public policy. Here we have a government that is controlling an activity that is addicting to a certain amount of people. I think they have a higher, a higher sense of doing something better than they're doing. I think we're not for or against gambling. I think that people want to gamble. They voted it in. But what they voted in 20 years ago in New Jersey, you can walk into a lottery agent and you cannot only get pick three, pick four, pick your nose, they've got all kinds of scratch-offs. You have 45 different products. And I think that you have no competition. This is the government and it's promoting this activity that's recognized since 1980 as an impulse-control disorder that affects a significant number of people. We need to do better public relations. We have to do better what they call responsible gaming. New Jersey is doing some things and they're doing some things in Ohio. They're doing some things in Kentucky where they're doing PSA's saying there is a down side to this and if you have this problem there's help available. Most states don't do anything. I think we need to do more of that. Let's have as much lottery as we want, but let's do inclusive of the people who are addicted to gambling.

MARGARET WARNER: Alan Wolfe, do you have a problem with the state, particularly the state sponsoring this kind of gambling? I mean as opposed to other gambling where the state isn't involved?

ALAN WOLFE: Yeah, I have a big problem with the idea of the state sponsoring it. I think that government does a lot of things, but one of the things that government does, it stands for the collective moral principles of the society. When government endorses something, it's generally saying that it's a good thing. When government prohibits something like crime or murder, it's saying it's a bad thing. The idea that government is officially recognizing and indeed is dependent on an activity that brings out some of the people's most short-sighted and irresponsible actions tells us that as a society we don't believe in the value, for example, of saving money so that your children can benefit from it in the future. We're saying that as a society we stand for the principle that you're free to indulge your instincts without any sense of responsibility for other people and indeed at great harm to yourself. I think there's something seriously wrong with that.

MARGARET WARNER: So you're saying that you think having the state sponsor it has removed the social stigma from it.

ALAN WOLFE: Absolutely. In fact, what happens when the state sponsors a program, we can talk about the state being neutral, we can talk about the state being against something or we can talk about the state sponsoring it. This kind of active state sponsorship makes government, in fact, makes all of us dependent on the state, encouraging people's worst impulses. In European countries, for example, states collect huge amounts of money from tobacco taxes and from alcohol consumption and the tax on that. And what happens then is government has to encourage people to smoke and then has to encourage people to imbibe alcohol in order to finance its activities. We've seen this huge mushrooming of lotteries from one state to another. We've seen a growth in the lotteries because state governments have become dependent on this form of activity to finance themselves.

MARGARET WARNER: Greg Ziemak, you and your colleagues are in fact in the business of promoting this heavily, aren't you?

GREG ZIEMAK: Yes, we do. We promote it on average advertising budget 1% of our total budget. I would like to respond to that gentleman before me. As you know in this country democracy is of the people. 23 of the 38 lotteries in this country were voted in by the public. So the public likes to play the lottery. Obviously the lottery industry is aware that there are problem gamblers and in 1988 spent over $19 million combined to try to address this problem and every year is doing more and more to do this. So we recognize that problem. We do not want to take advantage of anyone who shouldn't be playing. We also know that the vast majority of people, over 98% gamble and gamble responsibly and deserve to play if they want to spend a few dollars.

MARGARET WARNER: Mr. Wolfe, a brief supply on that one that in many states the public voted for it.

ALAN WOLFE: The public does vote for all kinds of things. I still think the question is, you know, do we want our government to just simply be a kind of like a black computer box. It takes all the inputs that come in and then says, "okay, that's what public policy is going to be"? Or do we want our public officials to think about what is good for the society and to encourage people to go beyond their initial instincts and think more deeply about what their obligations are. I prefer very much that kind of model. If gambling is that popular, then clearly it's responsive to something, but there are a whole lot of other options and a whole lot of other issues that we ought to be discussing that we've never essentially discussed as this thing has mushroomed throughout the society.

MARGARET WARNER: Mr. Cowen, how do you feel about the state being so involved in this?

TYLER COWEN: There's nothing unusual or immoral about lotteries. Lotteries are a form of gambling. We gamble when we play the stock market, futures markets, options markets. We gamble when we take a new job or when we decide what school to go to. This is simply another form of gambling that some people with a relatively elitist outlook have decided they don't like. My view is the problem with state involvement is simply that it costs too much. For every dollar that is spent the government is giving back people who buy tickets 55 cents. The market could do a much better job and give us better odds.

MARGARET WARNER: You mean because they're siphoning off a big chunk for their extra programs or for general state revenues.

TYLER COWEN: The government is a monopolist. It runs the lottery to raise money for itself. There's relatively little competition. Competition would give a better deal to people who buy lottery tickets.

MARGARET WARNER: What about that point, Mr. Ziemak?

GREG ZIEMAK: There's no doubt that when lotteries were formed one of the main reasons was to produce revenue for the states. The average pay-off can go from 50%-60%. Some states pay as high as 75% in some of their scratch games. Every year as the years have gone by we have seen that the payout has been increased but the gentleman is correct. The purpose of the lottery is to raise revenue for the state. The lotteries do not hide this fact, and the people know that. And they still enjoy playing it.

MARGARET WARNER: All right. Mr. Looney, you have the last word. How good do you think the states are in addressing the problem gamblers that you are most concerned about?

EDWARD LOONEY: They would get about a 70 out of 100 right now in moving up. I think that the one percent of the people he's talking about is higher than that. Most of the people, it was high anxiety the last two days. We were getting calls all over the place where people were calling up that were in recovery, that were very moved and very agitated because of all the hype about this. I think more has to be done in that area. I think they have to take the example of Kentucky. Some of the things that are happening in New Jersey where they're doing responsible play -- more of that has to be done -- putting help numbers behind tickets. I think that, you know, the bottom line is that the government has a higher responsibility to do more than they're doing. They've been chastised by the Federal Study Commission when they had the two or three year meeting when they came out with the lottery saying they should be doing more because they are a monopoly and are having a big effect on compulsive gamblers. These are sick people that need treatment. Instead of the 1% we'd like to have more of that for compulsive gambling.

MARGARET WARNER: Thank you all four very much.

CONVERSATION - WHY THE FUTURE DOESN'T NEED US

MARGARET WARNER: Finally tonight, a conversation about the information revolution's darker side, and to Ray Suarez.

RAY SUAREZ: Have you been watching the breathtaking pace of technological change and wondering, where does it all lead? Will humankind control the things it creates or end up controlled by them? Since the industrial revolution, critics have asked that question, but recently readers of "Wired" Magazine saw worries about the inventions of the future coming from a very unexpected source, one of the leading lights of the digital revolution, William Joy of Sun Microsystems, in a cover story called, "Why the Future Doesn't Need Us." William Joy joins us now.

Very provocative title; what are you suggesting is now possible?

WILLIAM JOY, Chief Scientist, Sun Microsystems: Well, my job is to look at the future for sun, and I've been looking at the technologies that a emerging in the 21st century, and in particular some of these technologies-- genetic engineering, nanotech, and robotics-- have enormous potential, but they carry a hidden danger, along with this enormous potential, of a kind that I don't think we've ever faced before. And this concerns me a lot, and so I decided to write this story.

RAY SUAREZ: A lot of people have probably seen the terms genetic modifications or genetic engineering, certainly robotics recently in the news, but what's nanotech?

WILLIAM JOY: Well, just as with genetic engineering you can manipulate the genome, the sequence of letters in our DNA, if you will, and you can bring it into a computer like we've been doing in the Human Genome Project, you can take something that is built out of any material, out of atoms, and make kind of a blueprint for it, and imagine manufacturing almost anything at the atomic scale. Instead of hitting things to knock them apart, to carve things down to what we want, you build things bottom up with atoms. And this has the potential of making almost everything manufacturable at extremely low cost.

RAY SUAREZ: A lot of people answeringthose critics of rapid technological change have said "look, don't worry, these machines, these processes, are essentially dumb. They can't do the things themselves, they can only do what we teach them or tell them to do, so why worry?"

WILLIAM JOY: Well, the situation is different. I think in general, discovering new things and these new technologies bring enormous benefits and progress, and we're creative and we can invent things and solve most of the problems. But with these new technologies you can create things which, if they're released into the environment, make more copies of themselves. You can imagine genetically altering viruses or having a little nanomachine that gets loose and makes more copies of itself, or even creating a robot species which might then evolve on its own. Such things could be created by individuals just using extremely powerful computers, and after they're released into the environment, might be irreversible. It might be impossible to recall them. It's hard to imagine getting rid of them as getting rid of mosquitoes, so we have a special kind of a danger. Even a nuclear threat I don't think had this kind of danger in it, because they're made out of uranium and other materials that are hard to get to, and if you have a nuclear bomb, you can only blow it up once. If you release something into the environment and it makes more copies of itself, it could be a problem that you could never get rid of.

RAY SUAREZ: Some of this stuff sounds like what drove science fiction movies in the 50's, the idea that there was a dark side to technology. What are you suggesting we do?

WILLIAM JOY: Well, it's a very difficult problem. If you believe that these technologies will be widely available, that the technologies will be democratized like a personal computer is, everybody could have access to designing these things just on their personal computer, and the things are incredibly destructive, then I think we've created a situation of extreme peril. So we have to somehow prevent everyone from having the ability to create these kinds of massively destructive things in the 21st century, and this is something that scientists and technologists are going to have to take ethical responsibility for. We can't simply release things that are beyond our ability to control, things of such incredible power.

RAY SUAREZ: But some recent writers have talked about knowledge as being almost like a virus, something that you can't control or bottle up. To hear somebody who's been an architect, a developer of some of the things that we take for granted in the modern world talk about controlling or controlling access to is pretty surprising.

WILLIAM JOY: Well, on one side we have the current track we're on, where we'll develop all this knowledge, the knowledge will be available to everyone; people will have machines, personal computers, say, a million times more powerful than they do today, so you could take the DNA sequence which we're just writing down now and figure out everything. But if that gives you the ability to create your own disease, if you will, because you have a complete map... it would be like in "Mission: Impossible." You have maps of the target, right? You know everything about it. If we let anybody do that, there are crazy people in the world. And what happened in the 20th century was we had terrible things like nuclear weapons, but only a couple nation states had enough nuclear weapons to destroy civilization. The loose nuke problem is dangerous enough, but we wouldn't even begin to conceive of giving technologiesof this power to everybody. And in an information age where information is itself a weapon, essentially, because the designs for weapons, or for diseases or for nanomachines or for robots are just software, we have a problem of figuring out how to control that so that we don't put ourselves in an insane and unacceptable situation.

RAY SUAREZ: Well, all the way over on one extreme is doing nothing; just let everybody know everything they can know. Out on the other extreme is totally slamming on the brakes until we figure out what the next right thing to do is.

WILLIAM JOY: Right.

RAY SUAREZ: So where do we get the wisdom to figure out where we draw the line in a way that makes sense?

WILLIAM JOY: Well, I think the first thing we have to do is we have to judge what the risk is if we do nothing. And competent people have looked at this and said the risk of extinction may be in the range of 30% to 50%. And that, to me, is a number that just knocks me out of my chair. It's beyond completely unacceptable. I don't know what... How to describe that. On the other hand, slamming... Completely slamming on the breaks is never going to happen, so that wouldn't help at all. I think that science operates in a community. The scientific community has to stand up and recognize that because we're in an information age, we have a different nature of the threat, and we have to take ethical responsibility for the use of the tools, and the information, and the knowledge that we are generating, otherwise we're complicit in their further evil uses.

RAY SUAREZ: Have you gotten some criticism, some negative feedback about suggesting that we should step more carefully into that future?

WILLIAM JOY: Surprisingly little. The best thing for me would be if someone stood up and told me I was completely wrong and why. And unfortunately, that hasn't happened, because this seems to be such a difficult problem. I've gotten e-mail from Nobel laureates, I've gotten letters from people in all walks of life who've read the "Wired" article in very, very strong support, and some beginnings of a dialogue. But I think frankly, from what I've seen so far, if we talk about this some, I think we can move the discussion very quickly to what are our choices, because there doesn't seem to be much controversy here. The people who are proposing nanotechnology freely admit the dangers. The people who are proposing the robotics freely discuss the dangers. In the case of genetics, that wasn't... that hasn't been and wasn't so much the case, but these things all share the fact that they're information-based, that the designs are fundamentally software, the tools to make these things are getting cheaper, and they all have this self-replication, amplification, so an individual act can then create irreversible harm.

RAY SUAREZ: Have we gotten to a point that's significantly different in just the past couple of years, that sort of called you to make this point? Have we moved so quickly, so far, so fast, that where this wouldn't have occurred to you a couple of years ago, you had to do it now?

WILLIAM JOY: Yeah, actually I ran into Ray Kurzweil, who's a famous inventor, in a bar at a conference, and he told me he thought intelligent robots, we're going to have them by 2030, and gave me a preprint of his book. And I read the book, I discovered that he quoted the Unabomber, Ted Kaczynski, who's, you know, a criminal psychopath, right? But when I read the quote from Kaczynski, I didn't realize it was Kaczynski's words, thought it was Kurzweil's, and it didn't seem on the surface ofit insane. And then later a physicist told me that he thought nanoelectronics, a form of nanotechnology, would happen, which I didn't think could happen. In fact, he told me ten years before reasons why he didn't think it would happen. The combination of these two things led me to believe what Ray said, that we could have intelligent machines. Then I went back and looked at the threat from nano and I went back and looked at where we are with genetics, and I saw a common pattern of empowerment of extreme individuals, and self- replication. These two factors, among a number of other ones that make the problem worse, are themselves so scary that I felt I had to write an article and explain this to people, because it's extremely concerning.

RAY SUAREZ: Bill Joy, thanks a lot for coming by.

WILLIAM JOY: My pleasure.

RECAP

MARGARET WARNER: Again, the major stories of this Wednesday: Microsoft asked a federal judge to reject the government's plan for breaking up the company. And in Sierra Leone, UN peacekeepers and government troops braced for a rebel onslaught on the capital. We'll see you online, and again here tomorrow evening. I'm Margaret Warner. Thanks for being with us. Good night.