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IGNORANCE IS BLISS

4 August 2003
The Richmond Times-Dispatch
City
A-8

The phrase "knee-jerk liberal" gets tossed around too easily, but the r eaction to the Pentagon's proposed futures market epitomizes the expresx sion. Democrats (and a few Republicans) denounced the idea in scathing terms as soon as they heard of it, without bothering to stop for even a microsecond to think about what they were condemning. As a consequence, the Defense Advanced sniff out any other seemingly nefarious projects it might have going. That is The Policy Analysis Market might seem macabre at first blush, given that it might have allowed investors to bet on the likelihood of various events in the Middle East, from coups and assassinations to missile attacks and terrorism. death. (What does he think life insurers do?) But the premise was sound.

The premise is that markets are often very good predictors. Indeed, the Iowa Electronic Markets run by faculty at the University of Iowa has a track record better than the pollsters in predicting the outcome of presidential elections. George Mason economics professor Robin Hanson is one of the chief advocates of idea futures, and his proposals regarding, for instance, the hiring of corporate CEOs have won praise in The New York Times.

Idea markets are a way for analysts to collect a lot of widely dispersed information. What Ms. Boxer never stopped to consider was that terrorists planning, say, a smallpox attack in New York who bought futures in New York Smallpox Attacks would be sending a strong signal to the intelligence community tht such an event was likely and something had better be done to thwart it. As Hanson explains, they would be "giving up information to gain money. In other words, we're bribing them to tell us what they are going to do. That's kind of like normal intelligence-gathering when we bribe agents for information."

And it needn't have been just terrorists. A low-level CIA agent who had connected the dots about an impending event, but who could not get a hearing from superiors, could have bought futures as a way of sending up a red flag someone would be more likely to notice. That's just one example among many.

The Democrats who so strenuously denounced the Policy Analysis Market and who have demanded a review of all other DARPA projects have sent a signal of their own, of course. They have told an agency tasked with thinking outside the box - it's called Advanced Research - not to try anything too unconventional or imaginative, and not to try anything that might give the squeamish butterflies. In response to unconventional warfare, they implicitly say, only conventional thinking will do.

The futures project might not have worked. It might have turned out to be know. But at least the knee-jerks are happy.
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