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This blog is the work of an educated civilian, not of an expert in the fields discussed.

Thursday, July 31, 2003

Unintelligent Response To Intelligence Proposal: A quick blip during an otherwise slow news cycle (time for President Bush to go on vacation for a month again, isn't it?) involved a twist on the future market, this time as a tool for intelligence gathering. The basic idea is that the markets as a whole are a useful tool to determine information and has been shown to be so even outside the usual economic context. For instance, it has been shown to be a good determinant of political campaigns. Thus, the Pentagon suggested that it be used to collect intelligence ... using financial incentives in a creative, and hopefully successful way. It was struck down as an immoral gambling of human lives. The level of moralistic holier than thou breast-beating involved was a tad sickening.

Various arguments made against it suggest that knee-jerk emotional appeals are as unwise as the term implies. First, the very moral horror at "gambling" is ridiculous given our basic financial system is based on such risk taking, including areas such as insurance and the basic well being of millions of people that surely at some level involves betting on human lives. I don't care what you call it, if "gambling" provides a service, name calling will not make it any less useful. Second, many suggest the information is not as open and verifiable as other markets offer ... but again, in economic and other markets, the information is often not "clean" and at times involves specialized information that means only a limited group can "bet" or "play." A related concern is that the people involved, let's say terrorists, are not rational actors. This is a dubious preposition (e.g. it is a timed honored falsehood that Saddam is an irrational actor and your average suicide bomber does not kill himself for no reason ... and experts in the field will tell you that) and the implication that other markets (e.g. political campaign strategy) do not have irrationality inherent to it is erroneous. All the same, markets have some value in such fields.

Next, some suggest that the market would benefit terrorists. As some note, an intelligent terrorist could benefit from the financial markets now ... for instance, some well timed investments pre-9/11, or how about if one knew a certain captain of industry would die in a car crash the next day? Second, do these critics suggest that any useful intelligence collection techniques be totally secret, and not open to public view? If not, any number of useful techniques has a potential to benefit terrorism ... the argument is that in the long run, openness will benefit the "good guys" more.

A related concern is that "successful" predictions would result in the U.S. stopping the event, and therefore there would be no "payoff." This could be factored in, so the predictions alone would benefit the investor. Likewise, the idea that terrorists or others can "fix" the system would suggest that any number of very important markets also is unwise. Again, the idea is that in the long run we will benefit more than we will suffer. Fear of some kind of foreign policy backlash also is raised ... but if the net result is less harm, I don't quite understand why this is a problem. Is the "this looks bad" factor that troubling to require a potentially useful tool not be used? And note that it is but "a" tool ... some criticism somehow seems to feel that it is misplaced use of money and effort better earmarked elsewhere, as if such alternatives will not be offered anyway. The distrust in this system alone would counsel policy makers not to put too many eggs in this one basket, and to have many other alternatives and even redundant sources of information for those loathe to rely on future markets such as this.

Finally, various other emotional appeals were raised. I will note two that suggest the misplaced concerns that contributed to the quick disposal of a potentially useful idea. Some see this as just one more unsavory technique offered by the Bush White House or the current bunch of intelligence types ... the same class of people who have been criticized for not thinking "outside of the box" or creatively enough to prevent harm ... as if the idea actually came from other fields such as economic theorists. Anyway, the whole concept seems comparable to "Game Theory" (the area John Nash of A Beautiful Mind helped originate), which has been around for around fifty years or more, and also is involved various decisions that affects life and death. One person suggested terrorism has "no demand" or even "negative demand," which is wrong, since obvious someone wants it! Experts, experts the country as a whole in some form pays for and is willing to "gamble" on as worth their salaries, spend their careers analyzing such demand.

The ultimate success of the process, dropped like a hot potato, is unclear, but it was worth trying. I would not be surprised if it is actually tried in some form, perhaps as an unofficial market or as an unpublicized field study of some sort. Putting aside largely misplaced moral concerns, the cost/benefits of potentially risky activities and procedures can only be determined if they are actually field tested. A country that accepted the rather controversial and potentially dangerous concept of pre-emptive war should not be so opposed to the use of a potentially valuable, and probably much less lethal, additional tool in the ongoing struggle against domestic and foreign insecurity.