Futures folly? Maybe not Lois Ember. Chemical & Engineering News. Washington: Aug 18, 2003.Vol.81, Iss. 33; pg. 34 Commentary (weekly) http://pubs.acs.org/isubscribe/journals/cen/81/i33/html/8133gov2.html August 18, 2003 Volume 81, Number 33 CENEAR 81 33 p. 34 ISSN 0009-2347 INSIGHTS FUTURES FOLLY? MAYBE NOT Market to predict Middle East developments was killed with no debate on its merits BY LOIS EMBER There's nothing like summer doldrums in Washington, D.C., to foment a highly charged 24-hour squall. Such a tempest popped up a few weeks ago when the research arm of the Pentagon, the Defense Advanced Research Projects Agency (DARPA), was set to launch what was wrongly perceived as an online futures market trading in mayhem in the Middle East. The Policy Analysis Market (PAM) website was just about ready to register traders when it was abruptly terminated in the wake of bipartisan congressional outrage. Members of Congress interpreted the market as garnering economic gain from somebody else's misfortune and so decried it as "harebrained," "grotesque," and "morally bankrupt." According to people involved in running it, however, PAM's prime focus was on the economic, military, and civil futures of eight nations, not on contracts in specific events such as terrorist attacks, assassinations, and coups. But that was how it was perceived. PAM was the brainchild of a National Science Foundation computer scientist on leave to DARPA's Futures Markets Applied to Prediction (FutureMAP) project, which was spiked abruptly as a result of congressional ire. This is unfortunate because FutureMAP, of which PAM was a small part, was a research project with a laudable aim. It was conceived to use advanced information technologies to enhance national security. In a written statement, Anthony J. Tether, DARPA's director, admitted that FutureMAP "faced a number of daunting technical and market challenges." What the politically tone-deaf agency did not fully anticipate was the congressional--and then public--uproar that followed the outing of the virtual futures market by two Democratic senators. For months, the senators had closely been monitoring DARPA's Office of Information Awareness, looking for any signs of mischievous programs. This office was headed by retired Rear Adm. John M. Poindexter, who resigned under fire. Poindexter was President Reagan's national security adviser who was convicted of lying to Congress about Iran-contra, the selling of arms to Iran to support illegally the activities of Nicaraguan rebels. His conviction was overturned. Poindexter's presence alone was enough to sensitize the senators. But their inquisitiveness was especially whetted after his office tried to set up Total Information Awareness, a massive global electronic sweep of databases to tag terrorists. Congress saw the program as egregiously breaching privacy rights and placed restrictions on it. The program has survived, but its name was changed to Terrorist Information Awareness. If there had been no flap over the Total Information Awareness program, the policy futures market might have received more patient congressional scrutiny. But FutureMAP and its PAM component had the misfortunate of falling under Poindexter's purview, which in large measure explains Congress' rush to judgment. The absence of debate over the worthiness of FutureMAP or of PAM is particularly disheartening because markets have been shown to be "extremely efficient, effective, and timely aggregators of dispersed and even hidden information," Tether said in his statement. They might prove worthy in improving intelligence. They certainly have long been used to predict more than the price of pork bellies. For the past 12 years, the University of Iowa has sponsored the Iowa Electronic Markets (http://www.biz.uiowa.edu/iem), which has consistently predicted the outcome of elections more accurately than polls and expert opinions. Its design is similar to the one DARPA proposed for PAM. The failures to find weapons of mass destruction in Iraq and to track down Osama bin Laden and the perpetrator of the anthrax attacks expose the flawed intelligence methods currently being used. A market-based approach to enhancing intelligence gathering may not be so ludicrous an idea after all. It can't be more ridiculous than the Federal Bureau of Intelligence--on the flimsiest of information--draining an entire pond in Maryland searching for anthrax evidence, only to unearth discarded bicycle parts and fishing rods. Perhaps PAM was ill designed. Sadly, we will never know because the market was squashed without considering its merits--or correcting its flaws. Instead of gaining benefit from lessons learned, PAM now serves as the latest poster child for the ongoing erosion of the deliberative process in Congress. Also overlooked in Congress' haste to dismantle PAM was a recognition of what DARPA is supposed to do. The agency is the bridge between basic academic research and deployed military equipment. DARPA was created during the Cold War as the U.S.'s answer to Russia's 1958 launch of Sputnik. It was charged with being technologically adventurous and has famously lived up to its mandate, becoming known for helping to develop a model of the Internet and stealth jet aircraft. A truly disastrous outcome of this congressional slap-down could be to make DARPA more cautious, more reluctant to stick its neck out. DARPA's Tether said his agency would "continue funding research that examines how to better use advanced information technologies and processes as predictive tools for terrorist acts." But saying this and actually researching such tools are quite different. If DARPA learns a wrong lesson from its run-in over PAM and chooses to play it safe, the nation's security will be diminished.