The news that the Defense Advanced Research Projects Agency(DARPA) — the agency whose predecessors were responsible for the primordial development of the Internet — has planned to open an anonymous global futures market or gambling parlor in which participants can bet on future terrorist acts has elicited understandable perplexity and consternation. Sen. Byron Dorgan tells the New York Times he has had trouble persuading people it’s not a hoax.
But the project does not seem quite so outlandish if you are versed in the latest trendy theories of the market and emergent behavior. 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. 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’s why.
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.
If there were a futures market in Poindexter’s career it would just have cratered.
POSTCRIPT Apparently this project has already met a swift end. Think of it as a sort of anaerobic-bacteria idea — hatched in the darkness of an agency, unable to survive once exposed to the oxygen of public awareness.
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