2001 : WHAT NOW?

Where were you? In years to come, everyone will remember where they were on Sept. 11, 2001.

I was in Sofia, Bulgaria, with people who had every reason to be grateful to America and Americans: I was speaking at a conference of men and women engaged in bringing democracy and open markets to the post-Soviet world, sponsored by the U.S. Agency for International Development. The idea was (properly) not to create a conference of U.S. experts preaching to the natives but to get the local freedom fighters to meet themselves — NGOs (non-government organizations) from Albania and Moldova, reform politicians and officials from Georgia and Romania, journalists from Poland and Serbia, and more. But USAID was the host and, in his opening remarks, Andrew Natsios, the head of that agency, told stories of America's route to democracy and its president John Adams. The United States was the model, but at the same time, it seemed far away, invulnerable, a place not just of free speech but of "freedom after speech."

The next afternoon (seven hours later than New York on European time), the tables had turned. Serbians familiar with bombings, reformers used to constant fear, businesspeople accustomed to taking risks with little guarantee of results, offered their sympathy and shared our horror.

Despite our loss of innocence, Americans should not lose our hope and the optimism that led to our success as a vibrant democracy. (In its worst form it was smugness and support of corrupt regimes; in its best, courage.) There is one victory at least that all of us — the free world — can deny the terrorists. We can refuse to remake our world in their image: a place of fear and mind control, where citizens are tracked and followed, where people are afraid to look or act different.

We can also refuse to lose our expansive attitude toward the future. For the terrorists, the modern world — and the change and openness it means — is scary. By contrast, Americans generally feel secure about the future, in terms of personal life and business. It is no coincidence that the two are bound together. Businesspeople expect investments to bring returns. The World Trade Center is a good example. It represented not just trade but investment. The towers themselves were built to last for years and to return their investment over decades. It's that faith in the future that led to the U.S. economic miracle, including the technology that enabled it. (Much of the world has access to the same technology but has not reaped the same rewards because they do not use it.)

Now, in the aftermath of the attacks last week, the danger is that we'll lose sight of the long term.

In the old Soviet Union, to use the example most familiar to me, people generally wouldn't make appointments more than a few days in advance (though this is changing in the new Russia). If you called someone to set up an appointment for the middle of the next week, he would say: "Why don't you just call me next Tuesday, and we'll see." Sometimes that made me wonder if he was hoping for a better offer in the meantime, but clearly there's some sense of uncertainty that still leaves many Russians loath to make commitments.

In the United States this month and in coming months, we'll likely see similar behavior: a retreat to the present (if not the past). This comes at an unfortunate time for the economy as a whole and for the high-tech industry in particular. Tech companies and software companies do much of their business in the last weeks of each quarter — and the last two weeks of this quarter have been lost.

Such a retreat would be costly, for investors and for society as a whole. Consider this: Time horizons for investors range from the very short one of day traders, to the longer one of equity investors who pick companies, to that of venture capitalists who take long-term stakes and get involved in the management of the companies. But it is the long-term investors, not the clever day-traders or resource allocators, who have really built our economy. A retreat to "safe" investments means a self-fulfilling prophecy of contraction.

You can see that same spectrum of attitudes in philanthropy, from the person who gives a coin or two to a beggar in the street, to people who give regularly to particular charities and read their literature, to people who give significant sums and join the boards of the charities they "invest" in.

In both spheres, the active participants hope for a return and work hard to get it. In one case, the visible return goes to the individual; in the other, except for the satisfactions — which may be great — the tangible returns go to the beneficiaries of the charity. But in both cases, society benefits - from happier people, fewer social problems, better schools, the presence of art, all the riches created by "civil society."

Moreover, for-profit ventures sometimes turn out to be "charities" too: They may lose money, but often they train people (sometimes in how not to run a company!) or design innovative products on which some later-arriving competitor may make money. In other words (as pointed out by Virginia Postrel in a recent economics column for The New York Times), society benefits from this long-term investment even when the individual investor does not. By contrast, much of the world is scared to count on the future. Moreover, it does not welcome change. The American dream is constant progress, whereas the terrorist dream is to bomb the world back into some supposed state of purity. Somewhere in the middle lies the truth.

The old Soviet world had yet a different view. They wanted to construct a new world, but somehow their vision was of a bigger present rather than a broader future. Their plans left no room for flexibility or innovation or experiment. Their future was defined from the top, rather than grown from the dispersed efforts and visions of individuals. The old Soviet five-year production plans, after the first few, fostered not hope but cynicism. The people had no expectation that they would produce real results or that they would change the world.

What can we learn from this, and from the people I met in Sofia? Even when the world changed for those in the old Soviet bloc, many of their compatriots, through years of habit, still did not trust in long-term returns. Many were afraid of the new climate, still scared to speak their minds because, after all, the world might change back. (I remember the university professor who kept a bust of Lenin in his cupboard "just in case.") In business, the post-Soviet world began as a world of trade rather than of investment. People wanted immediate returns because they did not trust in the long term.

Ironically, there has recently been the same flight to inaction in the venture community, built on last year's overoptimism and the ensuing reality — a disaster in the short term but just a blip in the long term. The danger now is that terrorism will aggravate that fear of uncertainty and spread it well beyond the high-tech community. I hope this doesn't happen. Now is the time not to fear the future, but to rebuild it and make it even better — not because we don't understand the risks but because we can face them. Americans may have been so optimistic because to some extent we were unaware of the risks, isolated in our happy country. Now we need to take heart from the example of the people I met in Bulgaria. Rather than risk reward calculations and unthinking optimism, what we need now is courage.