The Scrapped Policy Analysis Market Proposal
"The time has obviously come to send John Poindexter packing and to shut down the wacky espionage operation he runs at the Pentagon," the New York Times feature editorial requested yesterday. "He is a man of dubious background and dubious ideas."
This proposal embarrassed Pentagon officials and was disowned by Paul Wolfowitz, as cited in the editorial called Poindexter’s Follies. Senators Ron Wyden and Byron Dorgan blew the whistle on the program.
The proposal, which would have become operational October 1st, is not Poindexter’s first folly. His first folly was the Total Information Awareness program that was "designed to identify potential terrorists by compiling a detailed electronic dossier on millions of Americans."
In regards to the nature of the Policy Analysis Market, the "insensitivity of the idea boggles the mind," the NY Times editorial said.
"Quite apart from the tone-deafness of equating terrorist attacks with, say, corn futures, the plan would allow speculators -- even terrorists -- to profit from anonymous bets on future attacks. The project's theoretical underpinnings are equally absurd. Markets do not always operate perfectly in the larger world of stocks and bonds. The idea that they can reliably forecast the behavior of isolated terrorists is ridiculous."
Joe Conason from Salon.com reported on the 29th that the Defense Advanced Research Projects Agency had budgeted $8 million for the development of the Policy Analysis Market. In analyzing the proposal, Conason (besides calling it ludicrous, which it is) describes the obvious problem of the proposal: "[I]t is an idea with great appeal to a certain kind of mind....Aside from being rather distasteful in concept, this notion ignores the potential deadly gaming of a "market" in mayhem by crafty individuals or groups. For instance, the leaders of an Islamist outfit might bet big on a bombing in Manila --just before they strap the plastique onto an unfortunate stooge and send him to his reward."
Conason concludes his thoughts saying that we shouldn’t be surprised in this proposal. After all, "such libertarian lunacy should perhaps have been expected from an administration that seems to believe quite literally in the ‘magic of the marketplace.’ As the president's father might have said, this White House seems to be buried, ideologically, in deep voodoo."
In his Journal on the 30th, Conason added the analysis of one of his "astute" readers, named Henry. Henry explained why this proposal is simply bad:
Once you have a futures market, you have derivative instruments and people selling them and speculating on them ... Scenario: Some rich clown doesn't like Tony Blair -- so he puts $1 million on Blair getting offed in six months. After three months, he doubles [the bet]. People notice and jump on the bandwagon. Pretty soon, people are blowing millions on the idea that Blair's dead meat.
When it appears that it isn't going to happen because the seed money was [bet] by someone who had no intention of offing Blair --but now there are millions riding on it --some asshole is going to figure: 'Hey, it's [been] five months, and I don't see or hear any movement on the Blair thing -- I'm going to lose my shirt!'
So, he hires some sleazy hit man to perforate Tony. Not even a terrorist -- but someone doing the work for the terrorists at the behest of the logic of a market-speculation instrument ... Now the original options were placed for peanuts, so the originator gets filthy rich, and he never had anything to do with Blair's death.
And all these people who invested early in derivatives based on the future options get rich. Their investment forced an assassination. It's like these [Pentagon] people never heard of Heisenberg ... That was the evil of this whole thing.
Another valid source of political analysis and commentary is Scott Rosenberg from Salon.com. Scott explains that this project "does not seem so outlandish if you are versed in the latest trendy theories of the market and emergent behavior."
Why?
Because, according to Scott, "The Web is full of these operations, play markets in celebrity and reputation, most of them relatively frivolous or fun, like blogshares or the Hollywood Stock Exchange."
But Scott counters his thinking with his own question: "Why not harness the collective wisdom of the market to save terror victims' lives? Why not let the invisible hand stop the terrorist's hand?"
Here are Scott’s reasons this proposal is bad on many counts, including morally and ethically:
Markets depend on good information. The DARPA plan is based on the theory that an open market will draw out the best information from multiple sources. That's fine if, in fact, the incentive of making money in the market is strong enough to overcome other motivations of participants. If you were a terrorist planning an attack, would you try to make a little money on the side by using your insider knowledge to place a winning bet? Or would you allocate a little extra money in your operating budget to placing decoy bets to delude those who you knew were turning to the U.S. military-funded terror market for intelligence? Or would you simply stay away, distrusting the market's anonymity mechanism on the assumption that its American designers will have built in some sort of back door? It's nearly impossible to imagine any set of circumstances in which this market would provide untainted information.
Which leads us to the other problem, which just exploded in the face of the Bush administration: How could the folks at DARPA not understand that they had created an unbelievable PR gaffe? What tone-deaf idiot there couldn't see that the relatives of victims of terror attacks or the families of soldiers risking their lives ostensibly to fight terrorism might find it a wee bit disturbing that the government was funding an operation which, if it worked properly, would allow terrorists to profit from their knowledge of their plans?
Here it is useful to remember that today's version of DARPA is the same outfit that brought us the infamous Total Information Awareness program. And all these brilliant efforts have been spearheaded by Admiral John Poindexter-- who apparently learned nothing from his years fending off conspiracy charges relating to his last bout of foreign policy innovation in the Iran-contra scandal.
Again, the proposal met a swift end yesterday. Poindexter’s employment should follow suit.
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