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Microsoft is an American company. Bill Gates lives in Washington State and so do most of the programmers under his dominion. The software they write gets used around the globe in countries big and small, and the money people pay for the software comes flooding back to the Seattle area, where it buys huge houses, designer foods, and lots of serious and very competitive consumption. Through the years, this sort of economic imperialism has built the great cities of Rome, London, Tokyo, Barcelona, and many other minor cities. History is just a long series of epochs when some company comes up with a clever mechanism for moving the wealth of the world home to its cities. Britain relied on opium for a while. Rome, it might be said, sold a legal system. Spain trafficked in pure gold and silver. Microsoft is selling structured information in one of the most efficient schemes yet.

Of course, these periods of wealth-building invariably come to an abrupt end when some army, which is invariably described as "ragtag," shows up to pillage and plunder. The Mongolian hordes, the Visigoths, and the Vikings are just a few of the lightweight, lean groups that appeared over the horizon and beat the standing army of the fat and complacent society. This was the cycle of boom and doom that built and trashed empire after dynasty after great society.

Perhaps it's just a coincidence that Linus Torvalds has Viking blood in him. Although he grew up in Finland, he comes from the minority of the population for whom Swedish is the native tongue. The famous neutrality during World War II, the lumbering welfare states, the Nobel Peace Prize, and the bays filled with hiding Russian submarines give the impression that the Viking way is just a thing of the past, but maybe some of the old hack and sack is still left in the bloodlines.

The Linux movement isn't really about nations and it's not really about war in the old-fashioned sense. It's about nerds building software and letting other nerds see how cool their code is. It's about empowering the world of programmers and cutting out the corporate suits. It's about spending all night coding on wonderful, magnificent software with massive colonnades, endless plazas, big brass bells, and huge steam whistles without asking a boss "Mother, may I?" It's very individualistic and peaceful.

That stirring romantic vision may be moving the boys in the trenches, but the side effects are beginning to be felt in the world of global politics. Every time Linux, FreeBSD, or OpenBSD is installed, several dollars don't go flowing to Seattle. There's a little bit less available for the Microsoft crowd to spend on mega-mansions, SUVs, and local taxes. The local library, the local police force, and the local schools are going to have a bit less local wealth to tax. In essence, the Linux boys are sacking Seattle without getting out of their chairs or breaking a sweat. You won't see this battle retold on those cable channels that traffic in war documentaries, but it's unfolding as we speak.

The repercussions go deeper. Microsoft is not just a Seattle firm. Microsoft is an American company and whatever is good for Microsoft is usually good, at least in some form, for the United States. There may be some fraternal squabbling between Microsoft and Silicon Valley, but the United States is doing quite well. The info boom is putting millions to work and raising trillions in taxes.

The free software revolution undermines this great scheme in two very insidious ways. The first is subtle. No one officially has much control over a free software product, and that means that no country can claim it as its own. If Bill Gates says that the Japanese version of Windows will require a three-button mouse, then Japan will have to adjust. But Torvalds, Stallman, and the rest can't do a darn thing about anyone. People can just reprogram their mouse. If being boss means making people jump, then no one in the free software world is boss of anything. Free source code isn't on anyone's side. It's more neutral than Switzerland was in World War II. The United States can only take solace in the fact that many of the great free source minds choose to live in its boundaries.

The second effect is more incendiary. Free software doesn't pay taxes. In the last several centuries, governments around the world have spent their days working out schemes to tax every transaction they can find. First, there were just tariffs on goods crossing borders, then the bold went after the income, and now the sales tax and the VAT are the crowning achievement. Along the way, the computer with its selfless ability to count made this possible. But how do you tax something that's free? How do you take a slice out of something that costs nothing?

These are two insidious effects. The main job of governments is to tax people. Occasionally, one government will lust after the tax revenue of another and a war will break out that will force people to choose sides. The GPL and the BSD licenses destroy this tax mechanism, and no one knows what this will bring.

One of the best places to see this destabilization is in the efforts of the United States government to regulate the flow of encryption software around the globe. Open source versions of encryption technology are oozing through the cracks of a carefully developed mechanism for restricting the flow of the software. The U.S. government has tried to keep a lid on the technology behind codes and ciphers since World War II. Some argue that the United States won World War II and many of the following wars by a judicious use of eavesdropping. Codebreakers in England and Poland cracked the German Enigma cipher, giving the Allies a valuable clue about German plans. The Allies also poked holes in the Japanese code system and used this to win countless battles. No one has written a comprehensive history of how code-breaking shifted the course of the conflicts in Vietnam, Korea, or the Middle East, but the stories are bound to be compelling.

In recent years, the job of eavesdropping on conversations around the world has fallen on the National Security Agency, which is loath to lose the high ground that gave the United States so many victories in the past. Cheap consumer cryptographic software threatened the agency's ability to vacuum up bits of intelligence throughout the world, and something needed to be done. If good scrambling software was built into every copy of Eudora and Microsoft Word, then many documents would be virtually unreadable. The United States fought the threat by regulating the export of all encryption source code. The laws allowed the country to regulate the export of munitions, and scrambling software was put in that category.

These regulations have caused an endless amount of grief in Silicon Valley. The software companies don't want someone telling them what to write. Clearing some piece of software with a bureaucrat in Washington, D.C., is a real pain in the neck. It's hard enough to clear it with your boss. Most of the time, the bureaucrat won't approve decent encryption software, and that means the U.S. company has a tough choice: it can either not export its product, or build a substandard one.

There are branches of the U.S. government that would like to go further. The Federal Bureau of Investigation continues to worry that criminals will use the scrambling software to thwart investigations. The fact that encryption software can also be used by average folks to protect their money and privacy has presented a difficult challenge to policy analysts from the FBI. From time to time, the FBI raises the specter of just banning encryption software outright.

The software industry has lobbied long and hard to lift these regulations, but they've had limited success. They've pointed out that much foreign software is as good as if not better than American encryption software. They've screamed that they were losing sales to foreign competitors from places like Germany, Australia, and Canada, competitors who could import their software into the U.S. and compete against American companies. None of these arguments went very far because the interests of the U.S. intelligence community always won when the president had to make a decision.

The free source code world tripped into this debate when a peace activist named Phil Zimmerman sat down one day and wrote a program he called Pretty Good Privacy, or simply PGP. Zimmerman's package was solid, pretty easy to use, and free. To make matters worse for the government, Zimmerman gave away all of the source code and didn't even use a BSD or GPL license. It was just out there for all the world to see.

The free source code had several effects. First, it made it easy for everyone to learn how to build encryption systems and add the features to their own software. Somewhere there are probably several programmers being paid by drug dealers to use PGP's source code to scramble their data. At least one person trading child pornography was caught using PGP.

Of course, many legitimate folks embraced it. Network Solutions, the branch of SAIC, the techno powerhouse, uses digital signatures generated by PGP to protect the integrity of the Internet's root server. Many companies use PGP to protect their e-mail and proprietary documents. Banks continue to explore using tools like PGP to run transaction networks. Parents use PGP to protect their kids' e-mail from stalkers.

The free source code also opened the door to scrutiny. Users, programmers, and other cryptographers took apart the PGP code and looked for bugs and mistakes. After several years of poking, everyone pretty much decided that the software was secure and safe.

This type of assurance is important in cryptography. Paul Kocher, an expert in cryptography who runs Cryptography Research in San Francisco, explains that free source software is an essential part of developing cryptography."You need source code to test software, and careful testing is the only way to eliminate security problems in crypto-systems," he says. "We need everyone to review the design and code to look for weaknesses."

Today, security products that come with open source code are the most trusted in the industry. Private companies like RSA Data Security or Entrust can brag about the quality of their in-house scientists or the number of outside contractors who've audited the code, but nothing compares to letting everyone look over the code.

When Zimmerman launched PGP, however, he knew it was an explicitly political act designed to create the kind of veil of privacy that worried the eavesdroppers. He framed his decision, however, in crisp terms that implicitly gave each person the right to control their thoughts and words. "It's personal. It's private. And it's no one's business but yours," he wrote in the introduction to the manual accompanying the software. "You may be planning a political campaign, discussing your taxes, or having an illicit affair. Or you may be doing something that you feel shouldn't be illegal, but is. Whatever it is, you don't want your private electronic mail (e-mail) or confidential documents read by anyone else. There's nothing wrong with asserting your privacy. Privacy is as apple-pie as the Constitution."

Initially, Zimmerman distributed PGP under the GPL, but backed away from that when he discovered that the GPL didn't give him much control over improvements. In fact, they proliferated and it made it hard to keep track of who created them. Today, the source code comes with a license that is very similar to the BSD license and lets people circulate the source code as much as they want.

"I place no restraints on your modifying the source code for your own use," he writes in the accompanying documentation, and then catches himself."However, do not distribute a modified version of PGP under the name 'PGP' without first

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