National Post (Canada)

                    July 31, 2003 Thursday National Edition

SECTION Comment; Pg. A14

LENGTH 716 words

HEADLINE Gauging success one disaster at a time

SOURCE National Post

BYLINE Andrew Marlatt

BODY
The Bush administration was absolutely correct to scrap the Pentagon-created
Policy Analysis Market -- a futures market where people would actually have
invested in terrorist attacks and upheavals in the Middle East. Profiting from
terror, assassination, coups d'etat and turmoil is not the kind of program the
United States government should be involved in. Clearly, this program belongs in
the private sector.

   If you haven't heard, here's how the government-sponsored system was going to
work before it was abandoned Tuesday A small number of investors, just 1,000 at
first, were going to be allowed to buy futures contracts on the likelihood, or
unlikelihood, of hypothetical events, such as whether Turkey's government would
be overthrown; whether a U.S. invasion of Libya would destabilize Egypt; or the
possibility that Yasser Arafat would be assassinated. The price of the contracts
would rise and fall depending on how many people bought them, and because
futures markets are considered pretty good prognosticators, a glut of people
snapping up Arafat assassination futures might signal that event could really
happen. Not surprisingly, politicians from both sides of the aisle called the
idea "grotesque" and "scandalous," and even Senate Majority Leader Bill Frist
said he could "not conceive of any reason" for the federal government to
participate.

   Nor can I, for not only will the privatization of such a market cause it to
be run much more efficiently, but its mere existence will serve as an invaluable
public service. Americans, after all, are renowned for their disinterest in the
outside world, whether the subject is languages, geography, or geopolitics. They
've never really seen the point in it. And truthfully, there has been little to
gain by possessing this knowledge. They could still travel abroad to, say,
Canada or Oregon, without having to learn to speak Canadian, or memorize the
names of all the Oregonian provinces. But give them an economic incentive and
their interest will bubble up, just as it did with the Internet craze. How many
Americans would have known about Cisco or Amazon.com if they couldn't invest in
them?

   And so it is now in the United States. How many high schoolers in Hannibal
can identify Bashar Assad? How many data processors in Denver are familiar with
the tenuous position of Jordan's royal family? How many Democrats in Texas know
who is fighting over Kashmir? (Sorry. Trick question. There are no Democrats in
Texas. They've all fled to New Mexico.)

   But if the average American could put down $5 on the likelihood that Assad
(President of Syria) will be assassinated within the year, and could make $95 on
that contract if it came to pass, you can bet they'd all be pulling out their
maps, enrolling at Berlitz, and demanding that Comcast offer al-Jazeera.

   Doubtless some will claim such a market will only inflame anti-American
passions in the Middle East, where cries of, "Americans are now openly making
money from our suffering!" will fill the air. But please. First, this would be
an open market, and as such, anyone, anywhere, could invest. So theoretically,
you could make money from your own suffering. And secondly, it could be worse.
We could be making this money secretly, like before.

   I'm not saying there won't be drawbacks. Obviously, you'll have to learn to
spell Kyrgyzstan. Also, you'll be flooded by e-mails insisting a "dirty bomb
explosion in Islamabad is a STRONG BUY!" And stock message boards will become
even less trustworthy

   CIAman17 "Hey everybody, I just heard Iran is going to attack Israel!"

   Coup-Dude84 "Yeah right, CIAman. You're just shorting the peace process."

   TroubleBucks "I won't believe anything until I read it in misFortune."

   But with the terror market overall, the positives will outweigh the
negatives. Unless you're betting on something negative. Then that could be
positive. If, of course, the negative actually happens.

   Perhaps it sounds confusing, but look at it this way Just as we were with
the Internet 10 years ago, we are in the pre-bubble phase now. Savour this
moment, relish this opportunity, and don't make the same mistake you made back
then. You missed the chance to buy AOL at $1. Don't miss your chance to buy
Sudanese civil war at 35 cents.