Matthew Yglesias asks whether we’d rather fight against “a consolidated jihadi monopoly or several competing terrorist firms.” Tyler Cowen responds with a few observations.
I think the question is ill-defined (probably because Yglesias posed it half in jest). Consider two different models of terrorist operations:
1. Terrorist organizations sell goods and services in order to raise funds, and then use the profits to support terrorist acts they consider valuable in themselves. The services they sell might include drugs, pirated music and movies, etc. To put it another way, terrorists are actually consumers of terror, which they must buy with money made elsewhere. In this context, I would rather have terrorists operating in a competitive environment vis-à-vis the goods and services they sell, because that will tend to shrink the income they can use to support terrorism. In a perfectly competitive environment, they would make just barely enough revenue to cover the costs of materials, labor, and organization, with little left over for terrorism. (This is, among other reasons, why the drug war is counterproductive to counterterrorism: it reduces competition and inflates drug profits.)
2. Terrorist organizations sell terrorism as a service to buyers. The buyers don’t actually commit terrorist acts themselves, but they enjoy observing the results of terrorism and willingly make contributions to support it. (Think Saudi Arabian royals.) In this context, I’d prefer to have monopolistic terrorists, who will raise the price and reduce the quantity of terrorist acts in order to squeeze the most profit out of their donors.
In reality, both models apply. Terrorists get money both from sales of other products and from donations, and they commit terrorist acts both for consumption and as a business venture. If it’s true that terrorist organizations are becoming more decentralized and independent, the net gain or loss to the victim-class will depend on which source of funding, sales of illicit services or donor contributions, is more important. My sinking suspicion is that it’s the latter.