We may look back at President Obama’s speech yesterday declaring a shift in counter-terrorism strategy, as one of the most important addresses of the last 20 years.

For over the last decade, our nation has spent well over a trillion dollars on war, helping to explode our deficits and constraining our ability to nation-build here at home. Our service members and their families have sacrificed far more on our behalf.

Nearly 7,000 Americans have made the ultimate sacrifice. Many more have left a part of themselves on the battlefield or brought the shadows of battle back home. From our use of drones to the detention of terrorist suspects, the decisions we are making will define the type of nation and world that we leave to our children.

So America is at a crossroads. We must define the nature and scope of this struggle, or else it will define us. We have to be mindful of James Madison’s warning that no nation could preserve its freedom in the midst of continual warfare.

It has been the contention of this writer that American renewal cannot begin until “The Long War” ends. Part of the problem is the President’s realization how right Madison really was.

Meanwhile, we strengthened our defenses, hardening targets, tightening transportation security, giving law enforcement new tools to prevent terror. Most of these changes were sound. Some caused inconvenience. But some, like expanded surveillance, raised difficult questions about the balance that we strike between our interests in security and our values of privacy. And in some cases, I believe we compromised our basic values — by using torture to interrogate our enemies, and detaining individuals in a way that ran counter to the rule of law.

So a good start in restoring Democracy will be to change the Administration’s policy on Press Freedom.

President Obama ordered a review on Thursday of the Justice Department’s procedures for legal investigations involving reporters, acknowledging that he was “troubled” that multiple inquiries into national security leaks could chill investigative reporting.

But the much bigger task will be to rethink the whole National Security State that has grown exponentially since 9/11. So while I agree with Obama that, “we must define our effort not as a boundless global war on terror but rather as a series of persistent, targeted efforts to dismantle specific networks of violent extremists that threaten America”, that does not mean we need the massive  domestic counter-terrorism industrial complex that has gorged itself on the public treasury with little to show for it as the Washington Post pointed out in their breakthrough “Top Secret America”.

We have a long way to go before we can really begin America 3.0–the renewal project I have been talking about since the eve of the 2008 market crash. Obama’s speech yesterday was a start down that road. Let us not underestimate the forces that profit from being in a perpetual state of war. Senator Saxby Chamblis spoke for them yesterday.

Some Republicans expressed alarm about Mr. Obama’s shift, saying it was a mistake to go back to the days when terrorism was seen as a manageable law enforcement problem rather than a dire threat.

“The president’s speech today will be viewed by terrorists as a victory,” said Senator Saxby Chambliss of Georgia, the top Republican on the Senate Intelligence Committee. “Rather than continuing successful counterterrorism activities, we are changing course with no clear operational benefit.”

I have been feeling that Washington is just some sort of reality show, in which everyone–politicians, press and lobbyists are playing their role according to a script. But this fight over the end of the Global War on Terror is actually important to those of us who believe power and taxes must be handed over to the states and cities. Ultimately the whole Federal establishment will get smaller. Congressional Staffs, Federal Bureaucracies and most importantly the Pentagon and Homeland Security will shrink. The DC property bubble will burst and Lobbyists will be less important. How long Saxby Chambliss and his forces can fight a rear guard effort against the inevitable is probably the most important story of the next 12 months.

I want to finish with one thought. As I said this is primarily an issue of transparency and I’m glad the Chamber is for transparency in the advertising business. At the risk of biting the hand that has fed me well today, I would ask that the Chamber also support transparency in corporate donations to politicians.  Once again, thank you very much for your support.

When it was all over a man who works for Homeland Security on IP issues thanked me for my work and then we got into a discussion about his job. It turns out he hasn’t had a permanent boss in four years, because the Senate held up the appointment of Obama’s first nominee and now the vetting process for a second nominee is taking months because of an excess of caution. The story seemed so indicative of the mood in Washington I felt in the two days I was there. Everyone seems resigned to paralysis being the new normal. The Republican minority sees it’s task as just gumming up the works to make sure Obama can’t accomplish anything. And the Democrats sometimes display a kind of Stockholm Syndrome: knowing they are being held hostage, they display cordiality towards their captors.

Meanwhile the news media continues to hunt for disaster stories that will increase the citizens sense of fear and dependency. This little item from the Wall Street Journal, showing a dramatic improvement in the deficit went unnoticed and uncommented on Capitol Hill or other organs of the MSM. It is almost impossible to create an optimistic narrative in Washington, so the best option for me is to return my focus to the Golden State. In California, progressives control both the legislature and the executive branch. Remarkable changes are beginning to happen. The state’s finances are coming into balance after the recent tax rise and money is being spent improving our infrastructure and supporting education. The very idea that Los Angeles could be come a walkable community with a great public transportation system seemed impossible five years ago and yet in a year I will be able to ride the light rail from Santa Monica to USC.

I figure if California can once again assume its role as the architect of America’s future, then many states will follow. If we work on the pillars of the new strategy that Patrick Doherty and Mark Mykleby have been advocating: affordable college, walkable cities, low carbon transportation, regenerative agriculture and resource productivity, we will forge an example for both the nation and the world. Let’s ignore Washington and get on with our own optimistic future.

Waiting in the airport for my plane back to LA, I heard one of the CNN bloviators describe the last four days as a “Reign of Terror”. The mind boggles. I don’t mean to discount Boston’s tragedy and obviously these two crazy kids managed to kill four people and wound quite a few others, but by what measure was the 60 hours after the original bomb blast a “Reign of Terror”? Only by the measure of a fear obsessed 24/7 media culture that has taken the old, “if it bleeds, it leads” adage of the tabloids to its natural conclusion.

Lets step back and think about the quality of “terrorist” that has menaced America post 9/11. As incompetent a collection of losers and Osama wannabes as one could imagine. The shoe bomber, the underwear bomber, the Times Square bomber, and now these two confused Chechens. Here is my assumption about the Boston Bombers. The older brother, having been denied US citizenship because he beat up his girlfriend, becomes alienated and starts hanging out on Islamist web sites. Meanwhile the younger brother, already an American citizen is almost preternaturally assimilated into US youth culture. He’s handsome, smokes pot, has lots of girl friends and dresses like a typical hip hopster. The older brother comes back from a trip to Chechnya talking Jihad and the younger brother is too stoned to resist the manic appeal of his beloved brother to participate in the planting of the bombs, which the older brother has manufactured off of Islamist website recipes.

But they are the gang that couldn’t shoot straight. They are clueless to the fact that any big city in America has almost complete surveillance coverage of its streets. They don’t even think of trying to escape! The little brother goes out and gets stoned with his friends the night after the Marathon. It’s only the next morning when he realizes that he might need his car, which is in the shop getting repaired. By the time both their pictures are on TV, they are in a state of complete panic. You can almost hear the younger brother pleading with his sibling, “what the fuck did you get me into?”

When the inevitable happens and they are cornered by the cops, they comically try to throw one of their IED’s at the cops, only to have it bounce 20 feet in front of them, explode and fill their own legs full of shrapnel.

But if you were to tune into Cable news on Thursday or Friday, you would have not heard about this Opera Bouffe, but rather be confronted with all the post 9/11 Terror in our Cities graphic packages, complete with scary music. A whole city shut down for 24 hours over what should have been treated as a high level SWAT operation. Was there anyone who even dared to ask if this was really the appropriate reaction?

As I have been saying for a while, the default setting for American media and finance culture for at least the last 12 years has been FEAR. It has forced us to overreact in almost every sector. It forced us into two unnecessary wars. It forced us to bail out the big banks at the public expense. It has kept Americas great companies from investing in our future, preferring to hold $trillions in cash on their balance sheets for what they are assured is the coming shitstorm where they will no longer be able to borrow. And few realize that most of the Great Wall Street fortunes made in this period have been by taking advantage of the fear culture. The whole hedge fund economy is based on taking a short position (betting on failure) and then “talking your book” so it becomes a self fulfilling prophecy. How did John Paulson accumulate one of the great fortunes of our time? By designing a securitized bundle of mortgages that HE KNEW WOULD FAIL, taking the short side of the trade and then getting some suckers (fooled by the AAA rating) to take the long side.

Nothing productive has come out of this fear culture. Despite the constant barrage of bad news, the world has actually gotten better in the last 12 years. Millions have been lifted out of poverty. Life expectancies have improved. More women and minorities  are being educated and are taking positions of power. Cars are getting more efficient and less polluting. But for a tabloidized media culture, these are not interesting stories. And for speculative capitalism, good news does not bring instant windfalls like a great short play.

As a society we have to realize that Franklin Roosevelt was right when he said, “We have nothing to fear, but fear itself.” America’s innovation culture was not built by being risk averse, just the opposite. Just how the media and the stock speculators could heed Roosevelt’s advice is of course the much larger question.

As you know, I have been in a rather sour state about digital culture in the past couple of months. I didn’t come to New York City with the express intention of taking the cure for that state, but I got it nonetheless. The first treatment was the opening night of Eric Clapton’s Crossroads Guitar Festival. Five solid hours of (mostly) blues played with both acoustic instruments and vintage electric guitars pumped through tube amps,  that mimicked the glorious Marshall’s and Fenders of the time when I was on the road.

There were moments that made the hair on the back of your neck stand up. Eric Clapton, Andy Fairweather and Vince Gill sitting down on acoustic guitars, trading incredible licks. A shuffle blues with Robert Cray, Jimmy Vaughn, Gary Clarke Jr, BB King and Eric that just was extraordinary. That BB King can still swing at 88 is incredible. And Jimmy Vaughn played a solo that had Eric grinning from ear to ear in admiration. And then there was a whole new generation of players like Doyle Bramhall, Citizen Cope, Gary Clark Jr and a 13 year old named Quinn Sullivan who just blew us away. In the end, the Allman Brothers played the classic shuffle, Statesboro Blues with Taj Mahal and Los Lobos. What a gorgeous cultural stew celebrating this most American of art forms.

What is so important about the Blues is that it is a relatively structured form of 12 bars, but one that allows for the most ecstatic improvisation (think Jimmy Hendrix) possible. What was so therapeutic was that the night confirmed that the art form is alive and well–a deep relief from a frightfully inauthentic cultural period.

This morningI went up to the Gagosian Gallery, where my acquaintance Ed Ruscha has an amazing show of small books, curated by Bob Monk. Ruscha started making small books in  1962 with “Twentysix Gasoline Stations”. He continued to make these small editions of everyday sights like swimming pools, parking lots and even a wonderful “Royal Road Test” in which he and two collaborators fiendishly documented throwing a Royal typewriter out the window of his vintage Oldsmobile on a desert highway.  As clever as Ed’s books are, what is really amazing is the mini industry of copycat projects from conceptual artists all over the world. What Ruscha’s show poses is the same question I had from the night before. Why in an age of digital appropriation would you go back to making art that was proudly analogue? Why would you return to books when the Whitney Museum is filled with Video screens. Why make simple blues music when you could avail yourself of all the samples and beats from Pro-tools? These are important questions and I think they represent some sort of counter movement, what Marcuse would have called a Great Refusal.

Long live Books and The Blues.

Friday’s employment numbers have caused many analysts to set their hair on fire. Initially the Dow fell more than 100 points before saner money returned in the afternoon. This reinforces a theme I have been pursuing on these pages for the last year. For 22 years since George Soros made $1.5 Billion in a week, shorting the British Pound and forcing the Bank of England to devalue the currency on Black Wednesday, September 16, 1992, most of the great fortunes on Wall Street have been made short selling. Since that time, with the rise of the Hedge Fund Industry, built to take advantage of the misery of others–be they firms or whole countries as with Soros and the UK or with Paul Singer’s current pusuit of Argentina. The great fortunes made during the 2008 crash, were those betting the market would crash. Exhibit A would be John Paulson, who actually designed the catastrophically toxic mortgage securities, that he then arranged for Goldman Sach’s and his other banking partners to sell to money managers after they had paid the ratings services Moodys, S & P and Fitch to rate this crap AAA. This is what my finance mentor Richard Rainwater used to call a “self-fulfilling prophecy”. John Paulson bought all the short positions in these toxic bonds that he had designed to blow up and then just waited for the sound of the explosion to collect his billions.

Unfuckingbelievable.

And these guys are not in jail?

Anyway, back to my thesis. The great fortunes of the next fifty years will be made betting on the upside of an emerging global democratic capitalism that actually capable of delivering smart and reasonably priced services to all classes of society. People who bet on the short side are going to be the fools of the future. I agree with Ruy Teixeira, The Whole World is Getting Much, Much Better.

For many on the left, a positive attitude toward economic growth and globalization seems counterintuitive. After all, isn’t there a basic lack of progress in the world today—aren’t things just getting worse rather than better?

No, in fact they’re getting better — much better — and that is despite trends toward increased inequality which have damped down economic advance for average citizens in some countries. Consider the American case, where trends toward inequality have been particularly serious. In 1947, the median family income in the US was around $27,000 in today’s dollars. Today, median family income is around $61,000. Looked at another way, in 1947, 60 percent of families made under $30,000. But today only around 20 percent make less than that figure and 40 percent make over $75,000, a figure that was exceeded by less than 5 percent of families in 1947.

So let’s go back to those unemployment numbers and see why all this fear that the Wall Street Bears are constantly trying to gin up is really just guys “talking their book”. First, traders view the fact that the unemployment rate actually fell in a month when only 88,000 jobs were added, as if everyone had just given up looking for a job. What they hardly ever mention is that 300,000 boomers  Every Month are reaching retirement age, with fairly decent pensions and good Social Security Benefits.No wonder many of them are “leaving the workforce.” That’s what “Social Security” means. And in a few months at least half of those people’s positions will have to be replaced every month. Not everyone reaching 65 can or will retire, but we will witness a big transition in the workforce from the Boomers to the Millenials, and that in itself will change the way business is done.

That was also remarked upon by Teixeira.

By the end of the 20^th century, more technological advances had been made in the previous hundred years than in all of history before 1900.  There is no good reason to believe that this breakneck pace will slow in the 21^stcentury, since we are just on the verge of mastering knowledge gleaned from technological revolutions in three interwined areas: computer science, biomolecular science/engineering, and quantum physics.  Indeed, as we transition from an era where we have discovered the basic laws and building blocks in these fields to an era where we apply that knowledge, the pace of innovation, if anything, may accelerate.

We think we are seeing this same acceleration happen in the USC Annenberg Innovation Lab. All of this is counter to the End of the World Crowd, filled with idiots like David Stockman.

So here is my advice. Stop obsessing with the end of world theme. Stop reading the doom and gloom books, Stop buying gold. Stop trading in and out of stocks every time you get scared (like Friday morning). Invest in companies you think are innovative and have a long term plan and pay dividends. And stick with them. I can assure you, Groupon does not have a real long term plan. Apple does.

In your politics, work with candidates that want to build a world of justice and peace. Not with ones who want to scare you that a vote for the other party will mean the end of the world as we know it.

To say that an $85 billion cut out of a $3.7 Trillion budget is hardly cause for alarm. After the military budget doubled in 8 years under both Bush and Obama, reducing the Pentagon budget by 6% hardly qualifies for endangering our national security. This kind of scare talk should be left to John McCain and Lindsay Graham and will only backfire on the President when it turns out that the sky did not fall after the Sequester went through. Anyone who has run a business–big or small–knows that taking 5% out of a budget can be done without killing the enterprise.

Democrats have to be very careful they don’t get themselves in the position of defending Big Government against a natural reform movement that goes beyond party labels.Andrew Kohut wrote an amazing analysis of the Republican’s Presidential problems on Friday. He made it clear that the right wing media has painted the party into a corner, but he also noted the unique blend of opinion that was expressed in the November election.

Voters generally agreed with the GOP that a smaller government is preferable to a larger, activist one, and therefore they disapproved of Obamacare. However, exit polls showed popular support for legalizing same-sex marriage and giving illegal immigrants opportunities for citizenship.

This combination of conservative and liberal views is typical. To win, both parties must appeal to the mixed values of the electorate. But it will be very hard for the Republican Party, given the power of the staunch conservatives in its ranks.

What is so fascinating is that there is a natural constituency for a real reform movement that crosses party lines. It would take on issues of corporate welfare like farm subsidies, pentagon bloat and even such sacred liberal cows as the disability system. Channa Joffe-Walt’s NPR Planet Money series Unfit for Work chronicles the astonishing rise of disability claims in the last 15 years.

In the past three decades, the number of Americans who are on disability has skyrocketed. The rise has come even as medical advances have allowed many more people to remain on the job, and new laws have banned workplace discrimination against the disabled. Every month, 14 million people now get a disability check from the government.

The federal government spends more money each year on cash payments for disabled former workers than it spends on food stamps and welfare combined. Yet people relying on disability payments are often overlooked in discussions of the social safety net. People on federal disability do not work. Yet because they are not technically part of the labor force, they are not counted among the unemployed.

As she points out much of this astonishing rise has stemmed from law firms like Binder and Binder that advertise on daytime TV and take claims into a court system in which THE GOVERNMENT HAS NO REPRESENTATIVE THAT CAN QUESTION THE VALIDITY OF THE DISABILITY CLAIM!. Binder and Binder made $68.7 million last year representing disability claims. Here is the result.

One could look at the subsidies for the phony private college system (University of Phoenix, et al) and see equally galling scams in which the Federal Government is being played for a chump. Or how about one of the biggest corporate welfare scams–farm subsidies? These payments are not going to the little family farmer, they are going to Archer Daniels Midland , ConAgra and other Ag giants. As Taxpayers for Common Sense reported,

Taxpayers could save at least $100 billion over the next ten years by eliminating wasteful agricultural subsidies like direct payments, reining in out-of-control spending on the highly subsidized federal crop insurance program, rejecting new “shallow loss” income guarantee subsidies, and making other federal farm bill programs more transparent and accountable to the public.

And don’t get me started on the Military Industrial Complex. When even a hawk like former Reagan Secretary of the Navy, John Lehman, says the pentagon is bloated, you know it’s time to take out the meat ax.

Lehman, who testified along with former Chief of Naval Operations Adm. Gary Roughead, was asked for his views on the impact of upcoming budget cuts on Navy operations and ship programs. But Lehman said his biggest beef is not with the sequester but with Pentagon bloat that drains resources from combat forces.

“I think that there is a huge amount of overhead fat in the defense budget,” he said. “I don’t see sequester providing the flexibility to remove and cut that overhead that’s in both the uniform and the civilian sides of the Pentagon.” Roughead concurred.

So here is the deal. President Obama has got to find his inner Teddy Roosevelt. His last four years have to be a reform agenda to take on all of absurd waste in our Federal Government. The more he takes the side of defending the status quo, the more his credibility on fiscal matters will crumble. Now is the time. The troops are coming home from two disastrous wars. The economy is recovering and the housing market is once again recovering. Don’t tell us you can’t cut 5% of an incredibly bloated government.

That dog won’t hunt.

Mumbai is a big confident city with some of the wealthiest men in India building houses that would have embarrassed the Maharajas for their opulence. I heard that there are more than 100 members of Parliament worth over $1 billion. This may of course be an urban myth,but the perception that the powerful live in a different world seems well founded. Of course this is no different than the U.S., but what does stand out is the understanding that India is a very young democracy. From the point of view of the film makers I met in Mumbai, basic notions of freedom of speech are constantly trumped by the anger felt from certain (often religious) groups who feel offended by the new sensibilities flowing from young secular voices. Every state in India seems to have a different political make up and the politics reminds one of Israel, in which small right wing religious parties have outsized influence. Thus a film may be censored in one state and a hit in another. As a young former student of mine remarked, it’s quite easy for a populist firebrand to get a thousand people riled up about some rather trivial outrage.

By contrast, the life on the banks of the Ganges in Varanasi seems not to have changed much from the first millennium. Every night the fires of the funeral pires burn until daybreak. The smell of sandalwood drifts out over the water and there are no tears from the relatives who come to say goodbye. My amazing guide Aman Choudhary says that is because life and Moksha live side by side in this pace he calls Kashi. Moksha could perhaps be compared to the Buddhist notion of Nirvana. If your life in this world ends in ashes on the banks of the Ganges, you don’t have to return. I guess what got to me most was the joy in the faces of the pilgrims as they plunged themselves in the Ganges for the first time in their life. Some of them had journeyed for three days by train and had little more than the clothes on their backs. But their faith was still strong.

I don’t know how India is going to resolve the worlds of Mumbai and Kashi. Perhaps they never will. But close to the banks of the river was a Mosque and the Muslims and the Hindus seemed to coexist with ease. I know there are many battles elsewhere in the country, but in this religous city, there is peace. Farther outside of town was the Stupa commemorating the place where Buddha preached his first sermon. Thirty monks from Thailand stood before a magnificent 5th Century Buddha and chanted. I fixed my eyes on the gentle smile of the Buddha, and was pulled by the chants back in time. The worlds of reality TV, Internet Privacy and dystopian fears faded away.

I once taught a graduate seminar on Science Fiction films and their social meaning. From Metropolis  to Minority Report , their view of the future and the role of technology in our lives was universally grim. There is a scene in Ridley’s Scott’s brilliant  Blade Runner , in which the lead genetically engineered robot Roy Batty wants to determine if he is human. He puts his hand down on a nail, which pierces his flesh, but he feels nothing. I’ve thought a lot about that scene recently because the notion of what it means to be human is increasingly challenged by the blind obsession that technology inevitably leads to a better life.

The Greek philosopher Epicurus believed that the honest and good life was made up of three elements.

• The company of good friends
• The freedom and autonomy to enjoy meaningful work
• The willingness to live an examined life with a core faith or philosophy

I think all three of these elements are being challenged by the techno-utopians. Would Epicurus think my 2600 “friends” on Facebook qualify for his first maxim? Of course not. Do the majority ( or even a significant minority) of the world’s citizens have “the freedom and autonomy to enjoy meaningful work”? Of course not. Do most people live “an examined life with a core faith or philosophy”? Of course not.

But you ask, why is technology to blame for this? To begin with, the very nature of friendship is being challenged by our incessant desire to spend our time “networking”. What does a post on Facebook or Twitter really signify, but an idle act of self promotion? Is that friendship? What does the ceaseless march of automation and outsourcing do, but to reduce the supply of meaningful work for those without a job and to reduce the autonomy of those who still have one. And if you have outsourced all your personal decision making to the crowd with an app like Seesaw, can your really be said to have a core faith or philosophy?

Google thinks what you really want is an app to answer questions before you even have them.

Ray Kurzweil, Google’s director of engineering, even wants to give us a “cybernetic friend” that could satisfy our wants before we are aware of them. By monitoring our conversations, e-mails and reading habits, he said, “it may pop up and say: ‘Well, you mentioned two weeks ago you were worried that vitamin B12 isn’t getting into your cells. There was new research just released two seconds ago that speaks to that.’”

So the vision of Minority Report where the commerce genie (photo above) is always whispering in your ear as you wander through the mall is already here. With your Google Glasses always on,sending the video streams to Google of your life and those of strangers and “friends” alike, will the very notion of privacy have been finally banished from our lives?

Perhaps this is why Rand Paul’s 13 hour filibuster caused such a stir last week. Perhaps a somnolent public is waking up from its reality show induced trance to realize that the technologies of geotargeting, drones and behavioral advertising have all made them less human. Maybe the revolt of the Replicants has begun.

As for me, I am off to India for two weeks to try to shock my system with another kind of reality. I may or may not be able to post from there, but I will certainly report back soon.

I was reminded of all this reading an piece by Evgeny Morosov in yesterday’s New York Times. Morosov has been a lonely voice in the wilderness, protesting against the rise of Techno-utopianism. In The Perils of Perfection, he worries about what the rise of the ubiquitous App Culture is doing to us.

LAST month Randi Zuckerberg, Facebook’s former marketing director, enthused about a trendy app to “crowdsource absolutely every decision in your life.” Called Seesaw, the app lets you run instant polls of your friends and ask for advice on anything: what wedding dress to buy, what latte drink to order and soon, perhaps, what political candidate to support.

Seesaw offers an interesting twist on how we think about feedback and failure. It used to be that we bought things to impress our friends, fully aware that they might not like our purchases. Now this logic is inverted: if something impresses our friends, we buy it. The risks of rejection have been minimized; we know well in advance how many Facebook “likes” our every decision would accumulate.

Jean-Paul Sartre, the existentialist philosopher who celebrated the anguish of decision as a hallmark of responsibility, has no place in Silicon Valley. Whatever their contribution to our maturity as human beings, decisions also bring out pain and, faced with a choice between maturity and pain-minimization, Silicon Valley has chosen the latter — perhaps as a result of yet another instant poll.

Maybe people don’t want the responsibility of making choices anymore. Maybe our whole lives should be crowdsourced. After all if my friends told me to do something, its not my fault if it turned out to be a stupid move.