I've rarely been more depressed by the lack of critical thought among my compatriots on the left. The liberal response to the short-lived Policy Analysis Market has been characterized by gleefully ignorant attack. A very few people have raised legitimate objections that would need to be addressed (and presumably would; PAM never even got INTO the experimental stage, much less out of it). Daniel Gross notes that "many of the figures who would have driven the pricing of PAM securities are not what international relations types refer to as 'rational actors.'" (Surowiecki responds to that, as well see), and, most problematically, that "Insofar as the market helped the United States stabilize the region and prevent terror, investors would suffer. The more it succeeded on policy, the more it would fail as a market, and the sooner it would collapse."
But that kind of rational response is the exception. More typically, we get invective from people so sure they're right that they don't even feel the need to make a case. They simply say things like "This stuff is impossible to parody" (while then going on to make a lame attempt at just that) and to assume that because John Poindexter is involved, this must be the next Terrorism Information Awareness. "This plot was launched by people who do not care about human lives, except their own." But even if that's true (and you have to be obtuse to think it is) it doesn't explain what's wrong with the plot itself.
Matt Bivens does no better. Dismissing PAM as "luridly creepy," he makes two stabs at actual arguments against it, which he actually puts in parenthesis, as if arguments are that unimportant: 1) "If I put a million-dollar hedge against someone gunning down Yasser Arafat on Tuesday, don't I have a million-dollar incentive to see that happen?" (If he'd done a little research he'd know that the Pentagon considered this, and put limits on how much profit you can make on any one investment). 2) "And what if I place a very public bet with the Pentagon bookies against the life of, say, a top US official -- and then he or she is killed? Do I really just get a handshake and a check from DARPA?" (This is a better question that the government should have been given a chance to address satisfactorily before putting PAM into operation, but it's not so insurmountable that it should have meant pulling the plug).
Most distressingly, even the usually sharp-as-a-tack Joe Conason falls into the no-actual-argument-necessary camp. (Well, he does toss out one argument, but unfortunately its Bivens' first). Instead he simply says, "Yet such libertarian lunacy should perhaps have been expected from an administration that seems to believe quite literally in the 'magic of the marketplace.' As the president's father might have said, this White House seems to be buried, ideologically, in deep voodoo." Cute, but not convincing.
Partly because as James Surowiecki points out in a new piece for Slate, "you don't have to believe that markets work perfectly to believe that they work well." He's not the only one to say that "canceling the Pentagon's futures market is cowardly and dumb." Slate's Explainer does some splaining about predictions markets in general, and Fortune and New Scientist also cast a rational eye on PAM. NS quotes Hilary Clinton parroting the infuriating moralese that passes for analysis among politicians: PAM is a "market in death and destruction, and not in keeping with our values," she says. Leave it to an actual spook to point out (darkly) the irony: "Among the many things we do for intelligence," he says, "this is one of the least reprehensible."
Preemptive update: Just as I was about to post this, Michael wrote in to say, "markets aren't going to accurately predict the work of a) isolated terrorists, and b) people who don't plan based on the same sense of "self-interest" that markets supposedly take into account. and i won't even get into the grotesque issue of profiting off of such a thing, giving people the ability to game the markets to intentionally foil predictions, insider trading, etc."
To which I reply: First, thanks for making real arguments. Second, read Surowiecki. Here are his built in response to your concerns:
A) For all the hype about "terrorism futures," the vast majority of the "wagers" that PAM traders would have been making would have been on more mundane questions, like the future economic growth of Jordan or how strong Syria's military was. At its core, PAM was not meant to tell us what Hamas was going to do next week. It was meant to give us a better sense of the economic health, civil stability, and military readiness of Middle Eastern nations, with an eye on what that might mean for U.S. interests in the region.
B) It doesn't seem to matter much what markets are being used to predict. Whether the outcome depends on irrational actors (box-office results), animal behavior (horse races), a blend of irrational and rational motives (elections), or a seemingly random interaction between weather and soil (orange-juice crops), market predictions often outperform those of even the best-informed expert.
C) Perhaps what's immoral, though, is that PAM would allow people to make money from predicting catastrophe. But CIA analysts don't volunteer their services. We pay them to predict catastrophes. Is that morally wrong? We also pay informantslike the guy who turned in Odai and Qusaifor valuable information. Again, are we wrong to do so?
D) Had PAM ever become a fully liquid market, it would also have probably had the same problems other markets sometimes have, like bubbles and gaming. But you don't have to believe that markets work perfectly to believe that they work well. Presumably, I add, there would be an equivalent of the SEC to catch inside traders (without scaring off people with useful knowledge who are not actually terrorists). That such a body might be as corrupt and ineffective as the SEC is a real possibility, but neither that nor any of the other legit specific questions that have been raised means that PAM should be scrapped entirely. Again, if you wanted to scrap any form of intelligence gathering that had moral or practical flaws, you might as well just shut down the CIA. Hey, wait, that's actually not a bad idea, but you get my drift.
Update (real one): I was a little harsh on Geov Parrish, whom I didn't even deign to call by name at the top of this post. While his remarks about PAM are idiotic, he has a point when he says the Bush administration is, in general, doing a terrible job fighting terrorism. And I basically agree that his prescriptions would be far more effective than anything John Poindexter's likely to come up with, though (to get harsh again) Parrish seems to have done no research about that either. For instance, he says "If the Bushies knew what they were doing, they would take a small fraction of the money now being spent on nut schemes like PAM and spend it instead on things that would convince the world of our good will." In fact, the Pentagon was seeking only $9 million, on top of $1 million already spent, for PAM. And "the Bushies" are spending a large fraction of that -- 50 percent, to be precise -- on just such a thing to convince the world of our good will. And, as it happens, that thing is a real waste of money compared to PAM. What Parrish means, surely, is not propaganda but a genuine change of our engagement with the world, as proposed brilliantly (regular readers of Radosh.net can see this link coming) by Robert Wright last September. Hmmm... I'd love to know what Wright thinks about PAM.