News and views, culled and edited from my online eJournal (www.dangillmor.com):

Market madness: It's tempting to launch pure ridicule at the U.S. government scheme, made public Monday but canceled a day later, to create a speculative marketplace predicting terrorist attacks and other major political and economic events.

The abortive ``Policy Analysis Market'' proposed by the Defense Advanced Research Projects Agency (DARPA) was politically foolish, morally ugly and open to manipulation in the worst kind of way. But it wasn't entirely ridiculous.

The idea of asking people to bet their own money on the outcome of events has a certain allure. In theory, they will do their homework. If they guess, they'll make educated guesses.

The Policy Analysis Market wasn't about predicting specifically when a terrorist attack would happen in any event, says Robin Hanson, an assistant professor of economics at George Mason University in suburban Washington, D.C., and a DARPA subcontractor who came up with the idea for the project. Terrorists wouldn't have been able to make money by knowing when they were going to attack and then ``betting'' on it, Hanson insists.

The major purpose was to use markets as one more mechanism of gathering intelligence, Hanson says -- and to see what else could be done with such tools.

But the political firestorm surrounding the plan erased any possibility of the project going forward.

Futures betting on non-financial matters isn't new. An Irish site called TradeSports (www.tradesports.com) measures public perceptions, through the bets people are willing to place, of the odds for or against many kinds of things, such as the likelihood that Saddam Hussein will be captured by the end of July or December. The Iowa Electronic Market (www.biz.

uiowa.edu/iem), meanwhile, has been running a political and economic futures market since 1988, with a solid track record of predictions.

Relying on markets for intelligence, of course, is a risky proposition, given the tendency of markets to be wrong. Remember how wrong the markets were about the future of technology stocks in 1999 and early 2000?

DARPA's job is to look at ideas that seem far-fetched. It's also worth remembering that the agency's predecessor was instrumental in the creation of something that seemed fairly absurd to many people when it was first proposed -- the Internet.

Media diversity: Amazingly, given how stacked the deck had seemed, Congress is having strong second thoughts about letting the Republican majority on the Federal Communications Commission, egged on by the Bush Administration, allow massive new consolidation in the media industry. The House of Representatives voted overwhelmingly to roll back a portion of the FCC's recent rules changes, and the Senate seems likely to go along despite a threatened Bush veto.

What happened? A genuine public groundswell of opposition is being heard by politicians, and they're voting accordingly.

The Bush people should listen to what people in the heartland are saying on this issue. They're suspicious of media concentration. They're worried, with good reason, because robber baronies like Rupert Murdoch's News Corp., Walt Disney and Clear Channel Communications already control too much of public discourse and entertainment.

I asked you to write or call your House member. Pat yourself on the back if you did. Now it's time to call (202-224-3121) or write (www.

senate.gov) your U.S. senators.

Help put a stop to a pernicious trend.

Loy's complaint: In a letter this newspaper printed Sunday, the head of the Transportation Security Administration took issue with some things I said about his agency in a recent column. I believe he accused me of saying things I didn't say, and misrepresented things I did say. I linked to his letter and posted a reply on my Weblog (http://weblog.silicon

valley.com/column/

dangillmor/archives/ 001236.shtml). Decide for yourself who's closer to reality.