Along the Tracks

Wednesday, July 30, 2003

Predicting Terror

You’ve got to wake up pretty early in the morning - then immediately sit down at your computer - to beat the blogosphere on most things. Sure enough, a number of writers are already explaining how incredibly short-sighted, uninformed, PC and ultimately reckless was the Congressional decision to pressure the Pentagon into shutting down the Foreign Policy Futures Market program, better known as the “terrorism stock market.” Glenn Reynolds’ Instapundit has a good roundup.

My own two cents: Innovation is key to defeating terrorism - or any enemy. The Pentagon’s program was an attempt to “capitalize” on the expertise and insights of interested experts across the world in an effort to predict terrorist and rogue state activities. Simple facts and evidence are of course helpful in predicting future activities, but, paralleling quantum mechanics, the very action of “measurement” (interviewing captured terrorists, uncovering plots through informants or documents, monitoring fund transfers, etc.) interferes with the “motion” (plans, organization, funding routes, communication methods, etc.) of the terrorists. Talk to a terrorist in Guantanamo about a plot to poison a reservoir in Virginia, and al Qaeda leaders - who now know that we know about the plot - pick a different target or a different operation entirely. The anti-terror forces remain one step behind.

If, instead, there was a clearinghouse of opinions on future terrorism, facts and evidence could mingle with hints, rumor and hunches to pull together predictions of terrorist acts, targets, plans, funding sources and other key components of their “world.” Someone might have a hunch based on some known evidence, say, a plot to poison a Virgina reservoir, a discovery that funds have just been transferred overseas from Ohio, and an uncorroborated rumor that several al Qaeda operatives are working undercover as truck drivers and - BINGO! - the expert “invests” in the idea that a terror attack is planned for the next two weeks and will involve transporting a poison by semi from Ohio. If enough other experts are “bullish” on that hypothesis, its “stock” will quickly rise. Above a certain level of “growth,” the Homeland Security Department will be tipped that this hypothesis is strongly held by a number of experts. The department can then do something: It can investigate Ohio trucking companies, check out the credentials of Ohio truck drivers, look at what specifications would be necessary for a truck to haul the poison, etc. It could put out a bulletin to every weigh station in the country to inspect trucks from Ohio which meet the criteria. Now, maybe the hypothesis is completely off base, nothing is found, and nothing happens - in fact, that’s the most likely scenario. But occasionally, these hypotheses will be right, and they will be based on things difficult to quantify or to establish inside a bureaucratic review system such as presently employed by the FBI, CIA, Homeland Security, etc.

The critics of the “terror market” are either incredibly ignorant of statistical analysis, game theory and the like (this sounds heavy-duty, but in fact, anyone familiar with the basics of capitalism - or poker or euchre or Monopoly® - should realize the potential here) or they are so blinded by political correctness they cannot get past the superficial description of this effort. Oh, there is another possibility - one I believe explains many of the complaints: An absolute, visceral hatred for John Poindexter. Poindexter was apparently behind this “terror market,” as he was with the Total Information Awareness program. He also was at the heart of the Iran-Contra scandal during the Reagan years. He was convicted of lying to Congress, but a judge overturned the conviction on appeal. Many have not forgotten, and consider anything under his name to be tainted.

Now, I’m not going to defend Poindexter’s past. But he has a good mind, and as long as his efforts are carefully overseen (and they certainly are!), it’s hard to see why his ideas must be dismissed out of hand.

Remember (I keep repeating this fact because so many keep forgetting it), after 9/11 the top criticism was we failed to “connect the dots.” In each of his efforts since, Poindexter has attempted to create systems which will “connect the dots” to terrorist plots. While concerns over civil liberties with the Total Information Awareness plan were well-founded and ultimately limited its scope, the critics of the “terror market” are merely succumbing to an “icky factor,” that no one should “profit” in any way from terrible plans and actions of the terrorists. Yet, they don’t seem to be troubled by insurance companies profiting by raising municipal and business rates - very much a result of the quasi-“terror market” in underwriting, financing and risk management circles. What about the oil market? Even airline industry stocks?

And that, my friends, is part of the point here. This “terror market” would allow all these other assessments of risk to come together in a single location, where they might actually have predictive value.

One of the dumbest criticisms I heard was that “terrorists themselves might profit.” Technically, that is true, if the “market” was opened to public trading. But consider this: To profit, the “stock” - the hypothesis - must rise. Stock prices rise based on demand. So if a terrorist makes a “public offering” of a “stock” in an effort to cash in on his operation, it will have to be convincing to others - enough so that they buy the stock at a higher price than it was originally sold. For the terrorist to really make money, the stock price must go up substantially. That, in turn, would trigger the interest of the market analysts - the government’s anti-terror units. First, the plot on which the stock is based becomes a focus of investigation - reducing its odds of success. Second, it would be only natural that the person who “released the stock” - in this case, the terrorist - would be contacted about the “whys” and “hows” of the hypothesis itself. In other words, the terrorist would be uncovered.

I would go so far as to suggest it might be better to keep the “traders” and “companies” anonymous. Let the terrorists into the game. They’d only be selling themselves out. That would be a very good thing, no?

A final point. If the “terror market” had been in operation in the summer of 2001, FBI agents who were concerned about foreign Arabs learning to pilot jets and not worried about learning to land could have coalesced around a “stock” that said just that. As many agents and outside analysts as have come forward with their concerns, it seems likely the stock would have skyrocketed. This would have initiated an investigation into the hypothesis behind the stock, which very likely would have intercepted the terrorists. There’s no reason to believe the system would be any less effective today.

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