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Pointerdexter the Terror Bookie

 

Once again, Adm. John Poindexter, the convicted felon of Iran-Contra scandal fame who brought us the Total Information Awareness–oops, make that the Terrorism Information Awareness project–is ahead of his time and in the news. And once again, he’s coming in for heavy criticism. His first sin, back in the 1980s was trying to establish a secret fund to allow President Ronald Reagan to finance the Contra guerrillas in Nicaragua using drug money from Latin America and funds from sale of Stinger missiles to Iran. Then, more recently, it was trying to develop a supercomputer that could track every financial move of every person in America, or perhaps the world. Slapped down for that bold scheme, now the plucky admiral with the ultimate geeky surname has run afoul of liberal sensitivities with a plan to have the Pentagon operate an online futures market that would allow investors to place bets on the likelihood of terror attacks, assassinations and other man-made calamities.

So what’s all the fuss about?

Adm. Poindexter’s idea–based upon the Republican shibboleth that “the market is always right”–is that by allowing investors to invest based upon their individual intuition about what terrorists are likely to do next, American intelligence, law enforcement and military organizations will be better able to anticipate those actions.

The idea of American investors betting on the assassination of Israeli Prime Minister Ariel Sharon or American Iraq Viceroy L. Paul Bremer, or on a future bombing of Disney World, has so nauseated Democrats (and so embarrassed congressional Republicans), that a move is afoot now in Congress to defund the program. In the words of a leading critic of the proposed terrorism futures market, Sen. Byron Dorgan (D-ND), the idea is “wasteful and absurd.”

I disagree.

Let’s for a moment accept the underlying premise that investors, acting collectively, have a prescience beyond that of ordinary individual mortals–that they can predict the future direction of the stock market, the national economy, or even the interest rate policy of Federal Reserve. Why not give them a shot at predicting the future of terrorism activity? There certainly can be no harm in letting people risk their money, and maybe even make some, on trying to guess where the next big bomb will go off? And how much worse can investors do at predicting terrorism than the Homeland Security Department whose system of color-coded threat-level announcements so far has batted 000, or than the U.S. intelligence community, which missed 9/11 (not to mention the collapse of the Soviet Union) completely?

Instead of criticizing Poindexter, the government should be taking his bold idea and expanding on it. Why limit this futures market concept of his to terrorism? Why not put the vaunted predictive capacities of the American investment community to work helping government plan ahead in other areas of public concern?

The Federal Elections Commission fir example, could establish a futures market for federal elections. People could bet on the outcome of the 2004 presidential race and the race for control of the Senate and the House. If the system proves itself reliable over the course of one or two election cycles, perhaps costly national elections could be dispensed with altogether, and offices could be filled based upon investor predictions in the future.

The EPA could establish a futures market on global warming, where investors could bet on what number of degrees the earth’s temperature will rise by different years over the next century, or perhaps how many feet the sea level will rise by different dates, allowing urban planners and clothing manufacturers to anticipate demand. (A side market could take bets on which animals would become extinct by certain dates, helping zoo mangers plan on which new exhibits to open.)

The Education Department could offer a futures market where people could bet on the drop-out rate for different ethnic groups or income levels as school funding continues to be cut, allowing school boards across the country to slash staffing and classroom space in advance of declining enrolments.

The Department of Health and Human Services could offer a futures market on the number of children suffering from malnutrition over the life of the welfare “reform” program, allowing public hospitals to gear up their treatment programs for rickets and other heretofore Third World ailments. The Bureau of Labor Statistics could let people place bets on the unemployment rate as the Bush tax cut program plays out in ever larger national deficits, giving states a heads up on the construction of homeless shelters and the need for increased police budgets. NASA could run a market based on investors1 bets on when the next space shuttle will blow up or burn up (a transaction tax on each trade could go towards financing a replacement vehicle).

Really, the possibilities for allowing investors to parlay individual greed and ignorance into collective wisdom, thereby providing government officials with much-needed policy guidance and planning assistance, is endless.

The only real fly in the ointment here is the original premise. The idea that investors–most of whom are incredibly narrow and provincial in their backgrounds, education, experience and interests–have some kind of transcendental collective wisdom and prophetic insight really is not borne out, except in the short term. Investors can do a relatively good job forecasting what the stock market, or exchange rates will do out a few weeks, or maybe months, based upon what they have been doing up to the present date, as long as nothing surprising occurs. Since they1re basically predicting their own future behavior, this makes perfect sense. Where they fail is predicting longer-term trends, which of course respond to events about which futures investors, like the rest of us mortals, haven’t a clue.

No stock futures marketeer could have predicted the 9/11 attacks that shattered both the stock market and the U.S. economy. Nor do futures investors have any idea what global warming will do to American business prospects.

Then, of course, there’s the danger of manipulation.

The Hunt brothers were pretty successful, for a while, in their efforts to corner the silver commodities futures market a few years ago.

They simply collected enough of the available silver to put them in a commanding position to manipulate silver futures. Indeed, manipulating futures markets is a common problem, because trading in futures, unlike trading in equities, involves relatively fewer players. The fewer the players, the easier it is to manipulate a market.

So we’d have to worry about people manipulating the terrorism futures market, I guess. And how would you do that? Bet on a dramatic but highly unlikely assassination, maybe, like the president of the United States perhaps, or the terror bombing of a high-profile target like Disney Land or the Chunnel. And then go out and finance the hit by some willing terror cell. Such market manipulation would give a whole new meaning to that Wall Street term “making a killing.”

On second thought, maybe Poindexter’s latest brainstorm, like his others, is a bad idea.

Dave Lindorff is the author of Killing Time: an Investigation into the Death Row Case of Mumia Abu-Jamal. A collection of Lindorff’s stories can be found here: http://www.nwuphilly.org/dave.html

 

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Dave Lindorff is a founding member of ThisCantBeHappening!, an online newspaper collective, and is a contributor to Hopeless: Barack Obama and the Politics of Illusion (AK Press).

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