It's a crazy, mixed up world down in Washington these days. Black is white, up is down. Renaming French fries "Freedom Fries" is seen as a good idea, and one of the most intelligent schemes to come out of the Bush administration -- the Pentagon's issuing of futures on terrorist attacks -- is deemed an atrocity. Woooooonderful.
For those unfamiliar with the issue, Pentagon-regulated death futures markets would, in brief, allow people to place "bets" on events such as assassinations or bombings in order to bring otherwise obscured information to the surface. Disappointingly, the strategy was struck down this summer, despite the fact that it holds a great deal of merit. Amidst a lot of moral condemnation and not much legitimate counter-argument, death futures have been abandoned, seemingly for no other reason than to avert the massive PR nightmare that would come with trying to explain why these markets work to a nation full of people unskilled in economics.
What most don't know before they form their opinion about death futures is that futures markets have historically been incredibly accurate (roughly 95 percent) at predicting everything from soy-bean famines to the outcomes of presidential elections. This considered, why would the government forego the use of such an efficient predictive defense mechanism?
Well, there are a few frequently referenced "reasons." According to Senate Minority leader Tom Daschle, death futures would give terrorists monetary incentive to strike. To someone uneducated about the proposed market, this might seem reasonable. However, the Pentagon's Defense Advanced Research Projects Agency (DARPA) thought of this issue, and has set the maximum wager at $100. Consequently, any earnings that could be made off of death futures would be meager at best. Companies with operations in vulnerable locations could not even use the market to hedge against attacks. DARPA's scheme relies primarily upon the thrill of predicting correctly (realistically, probably the most legitimately dubious thing about the plan), and not the profit motive, to drive market activity.
A second argument that is often made, is that these markets could be manipulated by terrorists and cause the United States to gather misinformation and misallocate defense resources. While this criticism holds the most merit of those presented, it is still not particularly strong. First of all, the market would be heavily regulated by DARPA and difficult to meddle with. Furthermore, futures markets are so efficient at aggregating information from investors that even the plans to divert attention to an erroneous target through market manipulation could show results in the market itself. In addition, a death futures market would merely compliment traditional defense techniques like espionage, not replace them, thus leaving many avenues intact through which information could surface. Fourthly, market participation would be allowed only through invitation, and the investor pool would remain small, never growing past 10,000 well intellectually qualified investors. Finally, if it weren't so, so sad, it would be hilarious that the U.S. government is denouncing these markets on the grounds that they could deliver erroneous information, after Bush's recent Africa/uranium debacle and assorted other Operation Iraqi Freedom "accidents." Even if futures markets weren't incredibly good at providing and sorting information (they are), it is more than clear that their competition ain't too steep.
And now, my friends, we have saved the worst for last. The final prominent "argument" against death futures is a piece of bleeding-heart garbage so poorly considered that it is truly an embarrassment. This is the unexamined sound bite statement that it is, "wrong to profit off of death." Where to start. First of all, as noted above, the profits aren't that large. Secondly, the entire point of death futures is to circumvent death and destruction through early detection.Obviously, if the government knows an attack is being planned, it can beef up security and decrease the probability of the attack succeeding. Finally, on a side note, if we want to delude ourselves that no one in this country profits off of death that is fine, but the fact is that the life-insurance industry, the weapons industry, funeral homes and many more directly profit off of death every day. To make knee-jerk emotional reactions against Death Futures is foolish, an incomplete assessment of reality, and, most importantly, heightens the probability of the occurrence of those deaths off of which it is "so wrong to profit." All one has to do to see that fact is to pay attention.
Though they are a brilliant idea, our elected officials dismissed the "controversial" death futures out of hand. While it may be too late for them, we can all take a lesson from this incident. As intelligent Americans, we need to turn a critical eye toward our government, and learn to avoid uneducated emotional appeals disguised as facts. Contrary to the words of terror market critics, it is in being deceived by these types of emotional pleas that we will in fact find death. However, should we opt to embrace reason, we may build for ourselves a bright, safe and rational future.
(Laura Parcells's column appears Fridays in The Cavalier Daily. She can be reached at lparcells@cavalierdaily.com).
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