Pentagon Buys Into Tragedy (How the Terror Market would have worked)

Christian Science Monitor ^ | 7.31.03

[mhking]

The Pentagon at least deserves credit for thinking inventively in coming up with a new way to spot terrorists before they strike.

Its Defense Advanced Research Projects Agency (DARPA) was due to launch a project Friday that would have tried to forecast major political events in the world by tapping inside knowledge within the business community through a government-run speculative financial market.

Here's how it would have worked (before an uproar in Congress forced the Defense Department to kill it): Up to 10,000 investors would have been invited to buy contracts that would have paid out money based on the outcome of a range of speculative political events.

This "policy analysis market," as DARPA called it, was based on the theory that someone somewhere in business may know something about a political development that US spies and diplomats might be missing.

DARPA was right in its theory, but it failed to forecast the moral problem in having public servants encourage capitalists to profit by investing in forecasts of tragedies befalling Americans - with the hypothetical tragedies selected by government.

Private markets can do that, and do so already by tracking political events to decide where to place investments. But government shouldn't be in that business.

Much of that information already is available, often for sale. DARPA's plan revealed that the government's intelligence agencies need more resources to match the secretive tactics of terrorists. Now that Congress has made its point, it can calmly ask what more it can do to help.

[Dog]

This was a good idea. We need to think outside the box our enemy does.

[Cold Heat]

Private markets can do that, and do so already by tracking political events to decide where to place investments. But government shouldn't be in that business

That is exactly what I said.

[LibWhacker]

. . . the moral problem in having public servants encourage capitalists to profit by investing in forecasts of tragedies befalling Americans . . .

For every trader who takes that position, there is another trader who takes the opposite position. And that person stands a better than equal chance of profiting on his trade. Indeed, that's why the market was conceived, isn't it?: To better allow the authorities to anticipate and prevent incidents of terror. But of course, rats WOULD NEVER go along with anything that might accomplish that, so they spiked the whole idea, and namby-pamby conservatives once again acquiesed in their machinations . . . grrrrrrr!

[2 Kool 2 Be 4-Gotten]

The people who typically do well in financial markets are ... those with inside information. (Haven't we at least learned that much over the last few years?)

There are two ways to look at this. If the pentagon is really "out there" they will try to lure the terrorists into placing bets on their own outcomes (easy money for the terrorists) and then use sophisticated techniques to find out who made the bets. Supposedly some people sold the airlines short right before 9/11. If you find out who makes these bets you can maybe even find out this info before the fact and do something about it. This raises all kinds of ethical and moral issues and probably makes for better "over a couple of beers" conversation than it does for sound national policy.

If the pentagon thinks they are going to learn anything special from people without inside information, I suggest they are mistaken and probably belong with the folks who purchase those kits from late night TV on how to make a killing on Wall street, in real estate, etc. etc.

Which is the real scenario? I'd favor the latter.

[FairOpinion]

"We need to think outside the box our enemy does. "

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Read the Pointdexter resignation thread and weep. Apparently even freepers, and the US government doesn't want people to do it, you get fired for it, even when you are doing it as research. Much better to keep doing what we've been doing, even if it doesn't work, rather than think of anything new that may work. (/sarcas, in case it isn't obvious)

http://www.freerepublic.com/focus/f-news/955896/posts