Let Prediction Markets Fight Terrorism

The Commodity Futures Trading Commission (CFTC)'s recent request for comments about the regulation of prediction markets includes a number of specific questions. I am not sure whether I will manage to write up answers to all of them before the July 7 deadline, but question in particular—question 14—has attracted my attention. The CFTC there asks, "Should certain underlying events or measures--such as those based on assassinations or terrorist activities—be prohibited altogether due to the social perception and impact of such events? What statutory or other legal basis would support this treatment?"

I answer the first part of question 14, "No," (and thus need not answer the second part). I doubt that the CFTC wants to hear that sort of reply, frankly; I instead suspect that it wants a legal excuse to avoid the sort of political firestorm that followed the Pentagon's proposal to create a Policy Analysis Market that included claims about assassinations and terrorist events. My draft answer to question 14 explains why I'm willing to risk disappointing the CFTC:

The CFTC should not forbid trading in claims based on assassinations, terrorist activities, or other criminal acts. Because event markets would offer only relatively thin and traceable trading, they would not offer an attractive investment option to anybody planning to profit from wrongdoing. A would-be terrorist would risk revealing both his plans and his identity if, for instance, he invested in a contract predicting another 9/11. He would instead find it more safe and profitable to simply short certain publicly traded stocks.

Furthermore, event markets in terrorist or criminal acts might benefit the public by revealing life-saving information. Suppose, for instance, that an anthropologist's study of corrido culture convinced her that narcoterrorists had begun planning military raids on border checkpoints in Arizona and California. If she had the opportunity to buy terrorist event claims, she might both profit from her research and tip us all off about looming trouble. Sound public policy suggests that we should encourage that sort of trading—not forbid it.

To judge from their reactions to the Policy Analysis Market proposed by the Pentagon in 2003, politicians might need to learn more about the benefits of using trading to help predict assassinations or other terrorist events. That poses a public relations problem, however—not a legal one. The CFTC thus has no sound reason to presumptively forbid trading in contracts related to such events.

Notably, my answer to question 14 differs sharply from the answer offered by Jed Christiansen. He said, "There should never be any incentive to break a law, so there should never be any contracts that would pay someone if a law was broken." I disagree, of course, but I thank him for stimulating me to offer an alternative take.

[Crossposted at Agoraphilia and Midas Oracle.]

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Terrorism Theories

At Distributed Republic, Constant has posted a list of theories about why terrorists kill us. Of the options given, I lean toward what Constant calls the Synthesis Theory:

Synthesis theory: They would kill us whether or not we killed them, but they kill us more because we killed them.

But I would supplement this with one of my own:

Scapegoat theory: They want to kill people because of their lousy economic circumstances, which result from their zero-sum non-capitalist economies. They kill us because we're rich, and thus we provide a convenient scapegoat.

How can Scapegoat theory be included in the Synthesis? There are lots of scapegoats to choose from, so they target the nation that is richest and most meddlesome. If we reduced our meddling, they would still want to kill us because we're rich. But not quite as much.

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Perspective on Terrorism

At Cato Unbound, in response to a lead essay by John Mueller, Clark Kent Ervin rejects the comparison of the death rate from terrorism to the death rates from bee stings, lightning, drowning, etc. Ervin’s argument is so unpersuasive (to me) that I think it deserves a fisking.

It is undoubtedly true that Americans are far more likely to die from “bee stings, lightning, or accident-causing deer” than terrorism, but so what? ... This statistical argument implicitly equates deaths from bee stings, lightning or close encounters with marauding deer with deaths from terrorism.

They should be equated. It doesn’t make sense to spend a billion dollars to prevent one death by terrorism if the same billion dollars could prevent ten or a hundred deaths by other causes. Death is death. It can be sensible to give different treatment to deaths by different causes, but only if there’s some reason to think one cause of death is more easily deterred than another. More on that later.

But, a moment’s reflection should be more than sufficient to show why this is fallacious.

First of all, tragic as it may be, we instinctively feel less bad about someone’s dying from a bee sting than about someone’s dying from a terror attack. Why? Well, a bee sting is an act of nature, not an act of man. A bee, presumably anyway, does not intend to cause the death of whomever he stings. A bee does not, presumably, have an “agenda” when he stings someone. There is no intention to affect public policy, and no intention to terrorize or otherwise discomfort anyone other than the person stung. These distinctions account for why, though every single day, significantly more people die from car accidents or cancer than terrorism, any deaths any day from another terror attack here at home would surely engender bold face, round-the-clock headline news coverage, while a greater number of deaths on that day by car accidents, bee stings, or cancer would not.

Yup, it’s true: we react differently to terrorism than to other threats. But is the different reaction justified? Ervin is begging the question here. Mueller and others have argued persuasively that we have overreacted to terrorism. Pointing to evidence of the overreaction only strengthens the point.

Ervin’s right that intentions matter. We instinctively get angrier at a murderer than at a killer bee. But when does it make sense to indulge our instincts? A hypothetical: If you had to choose between (a) stopping a single murder in progress and (b) moving a station wagon full of children out of the path of a falling tree, which would you choose? The only sensible reason to choose the former would be that allowing the murder would encourage more murders, by this villain or others. So the justification of our instinct to treat intentional deaths differently is that intentional deaths are often more easily deterred, because a person can choose not to kill while a killer bee cannot. But when that ceases to be the case – when our prevention efforts generate severely diminishing returns – it’s time for us to let reason trump our instincts.

Furthermore, though we tend to take such deaths in stride, we still do everything we reasonably can to minimize deaths from car accidents (mandatory speed limits, seat belts, air bags, and kiddie car seats, for example), bee stings (sensible people don’t stick their heads or hands in bee hives!) and cancer (the FDA warning on cigarette packs, the ban on smoking in public places, the anti-smoking advertising campaign on TV, etc.). If we do everything we reasonably can to prevent deaths that, in the scheme of things, are far more natural and ordinary, shouldn’t we do everything we reasonably can do to prevent deaths by the unnatural and extraordinary means of terrorism?

“Reasonable” is too vague a term. We certainly don’t do everything conceivable to prevent bee stings, drownings, cancer, etc. There’s always more we could do, but some efforts aren’t worth it. A better rule is to do everything cost-effective to prevent deaths. That means asking hard questions about the both the severity of the problem and the costliness of prevention. These are just the kind of calculations that fear-mongering discourages.

Second, the statistical argument misses the fact that, though the chances of a terrorist attack are, indeed, relatively small, the consequences are larger than they would be if the same number of people were killed in some natural way or by means of “garden variety” murder. The economic toll of 9/11 numbered in the billions. The psychic toll was incalculable. As Mueller points out, the impact on civil rights and civil liberties, which he rightly values highly, has likewise been huge.

This isn’t just begging the question; it could be a textbook illustration of the fallacy. The economic toll of 9/11 was in the billions of dollars in large part because of our reaction to it. And the impact on our civil liberties was entirely because of our reaction to it. Remember, the whole question in this debate is whether we should continue to sacrifice money and freedom to the cause of preventing terrorism – so it’s circular reasoning of the highest order to use those very sacrifices as justification for doing more.

And, by showing that the world’s lone superpower can be brought low by 19 guys armed with box cutters, the success of the 9/11 plot can be said to have imperiled our national security by emboldening individual terrorists and nation states who previously regarded us as all but invulnerable.

I’m not sure the terrorists ever thought we were invulnerable. But if they did, then America was benefiting from an illusion; we were never invulnerable, we only appeared to be. Now the genie’s out of the bottle. Actual invulnerability is not an option and never was. Sensible policy now requires weighing benefits and costs of enforcement at the margin. The first step in that process is putting the real magnitude of terrorist threats in perspective.

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Terrorists Don't Win; We Lose

Immediately below, Glen comments that (presumed) overreactions to the attacks of September 11, 2001, lead him to mutter, "The terrorists have won." While I share his frustration, I tend to react differently.

I take it that terrorists aim at far more than simply inconveniencing U.S. citizens or restricting our liberties. They appear to want to recreate the Caliphate, albeit under a form of Islam far more restrictive than was generally practiced in that far-flung empire. So the terrorists do not win just because, for instance, we cannot take nail clippers onto aircraft. Indeed, given their wildly unrealistic goals, Islamofascist terrorists can not win.

Nonetheless, we can lose. We have lost a great deal of time and (its equivalent) money in wasteful overreactions to terrorism. Still worse, we may lose many of our traditional liberties. Those represent woeful losses, which we should try to avoid or at least cure. But they do not mean that the terrorists have won. Indeed, I don't even give those ignorant thugs credit for most of our losses. Rather, I blame the irrationality and opportunism of our own politicians and bureaucrats.

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Overreacting to Terrorism

Gene Healy, at Brainwash, and Will Wilkinson, at The Fly Bottle save me some typing by offering various quotes from John C. Mueller's excellent article in the most recent issue of Regulation magazine: A False Sense of Insecurity [PDF format]. Thanks to Healy and Wilkinson, I can now get by with just saying this: Mueller offers convincing proof that most Americans worry too much about terrorism.

Mueller points out, for instance, that the risk of dying in a traffic accident outweighs the risk of dying in a terrorist attack by a couple of orders of magnitude. People who reacted to the to the World Trade Center attacks of Sept. 11, 2001, by making long drives in lieu of flying thus wildly overreacted. Around 3000 died on that sad, but fortunately still singular day, whereas around 100,000 have died in traffic accidents since. Why don't people put those relative risks into better perspective? As cognitive psychologists have amply documented, humans tend to worry more about unusual and dramatic risks than well-known, ordinary ones. Public panic over the threat of terrorism offers yet another instance of that peculiar sort of irrationality.

Does it follow that politicians have overreacted to the World Trade Center attacks of Sept. 11, 2001? Mueller suggests as much, but I am not so sure. American politicians, because they control military and diplomatic policies, can make credible threats against terrorists. Wise public policy thus might reduce the likelihood of terrorist attacks. The average American citizen, in contrast, can do little more than try to reduce the harm done by terrorist attacks.

Consider an illustration of the point. Suppose that because devastating tornados strike your hometown only rarely, your $500,000 house faces a 1/5,000,000 chance of destruction by high winds each year. Although you could prevent that threat by extraordinary measures, such as building a concrete box around your house, you rationally calculate that you should spend no more than a dime a year on tornado protection ($500,000/5,000,000). Suppose further that your hometown faces a 1/5,000,000 chance each year of being devastated by a nomadic warrior tribe. Unlike tornados, however, nomads respond to incentives. Following one such raid, you might happily pay more than a dime towards your town's Marauding Hoard Smackdown fund. You calculate that the temporary expense of chasing down and punishing the nomads will teach them a hard lesson, convincing them to take your town off their "to sack" list. The risk of further such attacks will thereafter drop, repaying your defense investment with future security.

The political response to terrorism thus partakes more of game theory than of a simple cost/benefit analysis. A dramatically costly political reaction to a terrorist attack calculated to reduce the likelihood of future such attacks—e.g., invading a country that harbors terrorists with the aim of disrupting their operations and capturing or killing their agents—may prove rational even while a dramatically costly personal reaction calculated to reduce the harm from such attacks—e.g., moving to the country and stocking up on canned goods—proves merely that you've succumbed to an irrational fear of dread risks.

That by no means gives politicians a pass. Being human, they are as likely as anyone to overreact to the dread risk of terrorist attacks. Being politicians, moreover, they will readily exploit the risk of terrorism as an excuse to increase their power. And even granting that political reactions to terrorism should meet standards different from those we apply to personal reactions, we may still condemn a particular military or diplomatic anti-terrorist policy as ineffectual or worse.

In particular, my argument goes only toward justifying a temporary and sharp response to terrorism that acts as a long-term disincentive to future such attacks. In contrast, the present War on Terrorism threatens to impose disproportionately large and indefinitely recurring net costs on us, the very people it is supposed to benefit. I thus do not intend to exempt that political program from criticism. I intend only to explain why I think that no cost/benefit analysis of the political response to terrorism should ring with indignant certainty.

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The Market for Terror

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.

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Suicide Bombed

In my last post at Volokh, I promised to extend my economic theory of suicide to the case of suicide bombers. Over a month later, I’m finally getting around to it.

The story so far: I model the suicidal person as engaged in a search for suicide opportunities, akin to a job search or product search. The agent ranks the possible methods in order of desirability (e.g., guns are preferred to pills, pills are preferred to drowning). But some methods are more readily available than others, and waiting for a better method to come along means enduring a bit more of life’s misery. The model counter-intuitively predicts that decreased availability of a preferred method could increase the frequency of suicide, because the agent becomes more willing to employ the less-desirable but more-readily-available methods. (The job-search analogy: A worker is more likely to take a lousy job offer now if he’s unlikely to get a good job offer in the future.)

As I originally conceived the model, all the utility values are negative: life sucks, shooting yourself sucks, etc. The agent just tries to minimize the sum of suckiness. But actually, all the math goes through just as well with positive values. Imagine a would-be terrorist. He doesn’t necessarily hate his life – it has a net positive value – but he also anticipates great utility from the killing of infidels, enough so that he might be willing to sacrifice his life. The more dead infidels, the greater the utility. This provides a natural ranking of his suicide opportunities: a planeful of victims is preferred to a busful, a busful to a carful. But some opportunities are more readily available than others. A 9/11 takes months of preparation (at least), and only a few hijackers. Opportunities to bomb buses arise more often.

The conclusion? If increased security diminishes opportunities for “major” terrorist acts, the result could be increased frequency of “small” terrorist acts. Would-be terrorists, faced with fewer chances to commit big atrocities, become more likely to commit small ones. The total number of terrorist acts or victims could rise or fall. Example: The U.S. had (maybe still has) lousy airport security. We got 9/11. Meanwhile, Israel has had its airport security tight as a drum for decades. They get countless truck bombings, car bombings, restaurant bombings, etc.

I know, I know… that’s purely anecdotal evidence, and I wouldn’t claim otherwise. The U.S. and Israel differ in numerous important ways other than their airport security, including their size and their distance from the terrorist breeding grounds. It would be difficult, maybe impossible, to do a true controlled study. So there’s no proof here, but I think the comparison is suggestive.

Does the theory indicate that increasing airline security is a bad idea? Not necessarily, since the total effect is ambiguous. But at a minimum, we shouldn’t simply assume that increasing security in any given area will have reduce the incidence terrorism. If I worked for Homeland Security, I would anticipate an increase in the number of small-scale terrorist attacks that don’t involve airplanes.

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Terrorist Jokes

I’ve heard very few terrorist jokes since 9/11. I don’t mean that comics and humorists are unwilling to joke about the terrorism; the national funny-bone moratorium ended a couple of months after 9/11, and there’s been plenty of good humor about terrorism since. What I mean is that I’ve heard very few terrorist joke jokes, in the sense of funny stories with punchlines that get passed around mostly by word of mouth, like blonde jokes or lawyer jokes.

But I did hear some terrorist jokes in the late 1970s, during the first wave of Islamic terrorism. I can only remember two of them now. Both of them involved “Aggie terrorists” – you see, I grew up in Texas, and Aggies (Texas A&M students) are the butt of all jokes in Texas. In other parts of the country, it was probably Pollacks, morons, or some other group. What was the first group you heard it took five of to screw in a lightbulb, one to hold the bulb and four to turn the ladder? For me, it was Aggies.

Anyway, here they are. I’m replacing Aggies with morons to achieve more universal appeal:

Q: Did you hear about the moron terrorist who tried to blow up a bus?
A: He burned his lips on the exhaust pipe.

Q: Did you hear about the moron hijacker?
A: Yeah, he tried to hijack a train to Cuba.

Ah, the good old days, when hijackers actually wanted to go somewhere instead of destroy something. It’s almost quaint.

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The Three-Way Terrorism Trade-Off

This pre-9/11 article from the Journal of Law & Economics has disturbing implications for the fight against terrorism. The article demonstrates an unavoidable trade-off among three different goals of the justice system: lowering the crime rate, minimizing the number of innocents convicted, and treating individuals equally before the law (e.g., using the same rules of evidence for all people). The trade-off between the first two goals is probably obvious. But this article takes the argument a step further, by pointing out that our attachment to procedural equality could entail punishing more innocent people.

To put it another way, suppose we hold the crime rate constant. Then applying the same procedural rules to all groups implies jailing more innocent people than if we treated groups differently. The only way to avoid that trade-off is to accept an increase in the crime rate. Here’s how the abstract puts it: “Specifically, we estimate that innocent black Americans would be roughly eight times more likely to be wrongly convicted of murder than innocent white Americans if society placed no value on equality when it comes to convictions. However, we estimate that eliminating inequality entirely could cost up to 1,900 lives annually because of a rise in the murder rate.” (Note that the form of equality referred to here is procedural equality, not equality of conviction rates across groups.)

What’s the logic? Say you’re playing blackjack, and you’re a good card counter. You’re halfway through the shoe, and you know that a disproportionate number of 10-valued cards remain to be dealt. Then it makes sense for you to increase your bet. You would be foolish to make the same bet on every hand, ignoring the information garnered by card-counting (unless, of course, you’re worried about getting kicked out of the casino). Changing your bet based on the count won’t guarantee you better results on every shoe, but you will do better in expected value and over the long haul.

The article’s argument, in a nutshell, relies on the same point. If you know that members of different groups have different probabilities of having committed the crimes they’re accused of, then insisting on the same standards of evidence or burden of proof across groups is equivalent to betting the same amount on every hand, regardless of the card count. You’re throwing away valuable information. Now, there might be very good reasons for doing so – equality before the law is nothing to sneeze at – but there’s no avoiding the trade-off. Ignoring that information means either (a) accepting a higher crime rate (which means innocents getting hurt), (b) punishing more innocent people (again, innocents getting hurt), or (c) both.

Now apply this lesson to the war on terror. Instead of talking about conviction of crimes, we can talk about apprehension of potential terrorists by means of airport searches, detainment, and so on. If we insist on treating everyone equally regardless of ethnic background (i.e., no ethnic profiling), we either (a) accept a greater likelihood of successful terrorist acts, or (b) harass a larger number of people, or (c) both. If it’s indeed the case that Arabs are more likely than non-Arabs to be terrorists (as a proportion of their group’s population, not as a fraction of all terrorists), then the trade-off here is quite real. I’m not actually advocating that we abandon procedural equality and embrace ethnic profiling, but I think we should at least recognize the sacrifice.

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Terrorisks

Last night, I saw some jackass Congressman denouncing the terrorism threat-bet concept as “just plain immoral,” and Hillary Clinton called it a “futures market in death.” Now, I’m not entirely sold on the notion of ideas futures as an efficient means of assessing risks, for reasons I’ll explain below. But to condemn the program out of hand just because it sounds morbid is truly stupid. The question should be a factual one: would these betting markets in fact provide the authorities with better information about likely terrorist events without making such events more likely? If the answer is yes, then I think it would be immoral not to use them.

And it’s quite obvious that the Congressmen who’ve been criticizing the idea really don’t understand it at all. The most common charge is that it would allow terrorists to profit from their planned terrorist acts, because they could engage in a kind of insider trading. As Barbara Boxer puts it, “terrorists knowing they were planning an attack could have bet on the attack and collected a lot of money.” Hmm, let’s see how this would work. Suppose Ahmed the Terrorist is planning to blow up the Seattle Space Needle. So he does months of planning, all in secret so he won’t get caught. And then he gets the brilliant notion of making money at the same time, so he logs onto the DARPA website and buys a whole bunch of shares of “Seattle Space Needle gets blown up.” The price suddenly jumps, and the authorities immediately focus their attention on potential threats to the Space Needle, making it much more likely that Ahmed’s plot will be foiled. That’s exactly how the system is supposed to work.

The problem, as I see it, is that some terrorists won’t be as stupid as Ahmed. Instead, they will spend money with the deliberate purpose of driving up the price on other events -- ones that they have no plan to make happen -- with the intent of drawing attention away from their real plans. Or if they were really foresighted, they could start buying shares for the events they intend to make occur months in advance, and then deliberately dump their shares a little while before the plan goes into effect so that the price goes down. Or they could just buy and sell randomly, in order to create noise in the data. Would they lose money doing this? Yes, but terrorists have shown a great willingness to spend money in order to hurt people.

In short, the terrorism threat-bet plan might not work, but the critics’ criticisms are exactly backward. The problem is not that terrorists would be enabled to make money on their own criminal acts, because the very act of trying to make money on your terrorist plans is exactly what would thwart them. The problem is precisely the opposite: that terrorists might deliberately lose money in order to foil the system.

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Total Information Wariness

The following passage from an article by Brian Doherty in the most recent Reason magazine caught my attention:

Most objections to [heightened concerns] about anonymity and privacy can be reduced to the familiar slogan: Only the Guilty Have Reason to Fear. … That slogan may be silly, but it’s important. Not because it settles any arguments, but because it delineates boldly what’s at stake. It also makes possible a similarly bold, clearly widely believed, yet rarely voiced response: We are all guilty, and we don’t want to live in a world where there is no room to get away with being guilty.

The significance of the point becomes clear when you consider the incredible array of things that are actually illegal, or have the potential to become illegal. If we could trust that information collected by the government would only be used to apprehend real terrorists, that would be one thing – maybe we’d be willing to let the government have “Total Information Awareness” for that one purpose. But we all know it won’t stop with terrorism. It will be used to apprehend drug sellers and users, prostitutes and johns, and perpetrators of so-called hate crimes. One day the list might include owners of guns. If it weren’t for the recent Supreme Court decision, the list could include sodomites.

And then there are the shelves of federal regulations with which individuals and businesses must comply (even without knowing their contents), the laws against sexual harassment, the laws against racial discrimination, ad infinitum. Given the sheer volume of these laws, combined with the built-in vagueness of many of them, and the conclusion is almost inescapable: we are all criminals now. And then consider the fact that law-enforcement officials have near total discretion to decide which laws will get prosecuted against whom, and you realize that a government with the goods on everyone is a government that can prosecute anyone it wants, any time it wants.

The moral here is that we should never evaluate a government policy in isolation. We should always judge it in light of other policies that we might or might not agree with. This is a principle that often cuts in favor of libertarian positions. For instance, we insist that proposals for national healthcare should be evaluated in light of the incentives they would create for regulation of lifestyle choices in the name of cost-control. But other times, the principle creates a problem for libertarians, because we cannot assume the existence of libertarian policies in other areas. In and of itself, the notion that the government should collect and centralize lots of information available from publicly available sources might seem no problem at all. Why would we make illegal for the government what is perfectly legal for a private eye? The problem is that information in the hands of government won’t be used to prosecute only those crimes that libertarians think should qualify. The same argument applies to three-strikes laws, mandatory minimum sentences, and a variety of other “tough on crime” measures: they’re great if applied only to real crimes, downright scary if applied to vices, faux pas, and personal foibles.

On re-reading this post, I realize it must seem incredibly paranoid. And perhaps it is. But I think the point is worth making: centralization of information in the hands of government is qualitatively different from the information simply being “out there” in the possession of umpteen different local governments, businesses, and doctors’ offices.

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Let’s Go Down to the Sunset Grill

So it seems that the GOP wants to make the government’s anti-terrorism powers, granted by the Patriot Act, permanent. That, of course, is exactly why it was wise to include sunset provisions in the original law in the first place: if it weren’t for those provisions, the government wouldn’t even have to ask nicely to keep its exciting new powers, and this debate wouldn’t even be happening. The whole point of a sunset provision is to put the brakes on Robert Higgs’s “ratchet effect”: the size and power of government expand in times of crisis, but they never shrink back to their previous levels when the crisis is over.

I suppose some might argue that the terrorism crisis is not yet over, and perhaps they are right. But the powers granted by the Patriot Act don’t expire until the end of 2005 anyway. If there is still a terrorism crisis when 2005 rolls around, then Congress should simply vote to keep the relevant provisions in place for another two or three years, at which point the debate will – and should – happen again. There is no justification for making the powers granted by the Patriot Act permanent unless the government intends to be in a perpetual state of war. Of course, that’s exactly what’s needed in order to give job security to the bureaucrats at the newly created Department of Homeland Security. Hmm… I wonder which executive agency is lobbying most vigorously for the repeal of the sunset provisions?

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Just for the Record

I've been expressing my opposition to a war on Iraq for quite a long time now. But given that the war has now begun, I'll express my sincere hope (a) that we win decisively, (b) that we do so with minimal loss of life on both sides, and (c) that my concerns about inciting more terrorism turn out to be totally unfounded. This is one of those situations where I'd rather be wrong than right.

UPDATE: With respect to the war-on-Iraq/war-on-terrorism trade-off, read this excellent post by Mark Kleiman (who is and has been reluctantly pro-war), as well as the accompanying UPI story.

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Marginal Terror Avoidance

I didn’t watch the State of the Union address, so Thursday’s press conference was the first time I’d actually seen Bush speaking since – wow, maybe not since 9/11. And I noticed something interesting: he’s learned to speak like a real president. No, seriously. The accent is milder now (I grew up in Texas, and even I couldn’t stand the accent as it was before), he speaks carefully and earnestly, and the lurking smirk is gone. He actually exhibited, dare I say it, gravitas.

And that’s too bad, really, because much of what he had to say doesn’t bear much scrutiny. Will Wilkinson has some choice commentary on the evasiveness of Bush’s answer to a question about the cost of making war on Iraq. The basic gist: in response to a question about costs, the president talked about benefits instead.

What yanked my chain, however, was his reaction to a question about whether making war on Iraq might arouse even greater anti-American sentiments in the Middle East, thereby by inciting more terrorist acts. His reply was eloquent, persuasive, and ostrich’s-head-in-the-sand wrong. “I think, first of all, it's hard to envision more terror on America than September the 11th, 2001. We did nothing to provoke that terrorist attack. It came upon us because there is an enemy which hates America. They hate what we stand for. We love freedom, and we're not changing.” In other words, Bush assumes that terrorism is a function of only one variable – our values – and invariant to changes in anything else. Given the Arab world’s frequent condemnation of American imperialism and involvement in the Middle East, isn’t that claim patently false? Even if we agreed that 90% of their hatred were attributable to our values (and that seems an incredibly high estimate to me), the other 10% would be due to something else that we might be able to influence. And, if I may be excused for invoking econo-speak, it’s always the marginal effect that is most relevant for optimal decision-making. The actions we take now could push the “marginal terrorist” – you know, the Arab who hates American values but is not *quite* ready to join the jihad – over the edge.

And really, is it that difficult to “envision more terror on America than September the 11th, 2001”? I’ll give Bush the benefit of a doubt and assume he meant more *new* terror, since otherwise just one more dead body would do the trick. Still, the rest of us have spent the 17 months since 9/11 thinking of much worse things that could happen: suitcase nukes, smallpox attacks, etc. Moreover, terrorist attacks need not be as spectacular as 9/11 to have a cumulative effect just as horrific. We are more likely to suffer death by a thousand cuts than by a single sword thrust. And this fact, again, puts a premium on thinking at the margin: the question is not whether there will be a terrorist attack, but how many. Every action we take in the war on terror must therefore be weighed in marginal terms: will the marginal benefit from deterrence outweigh the marginal cost from widening the pool of potential terrorists?

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