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Views > August 19, 2003

Trading in Terror

By Joe Knowles

Thanks to John Poindexter, free-market fundamentalism has finally crossed a line.

What does it take to end a career in public service? Mere treason evidently doesn’t cut it, as has been made clear by the gaggle of current administration officials who were co-conspirators in the Iran/Contra scandal, among them retired Adm. John Poindexter.

As President Reagan’s national security advisor, Poindexter engineered the secret deal to sell weapons to our avowed mortal enemies, the mullahs of Iran, and then used the proceeds to fund the Contras’ bloody rebellion against the elected Sandinista government of Nicaragua. Under George W. Bush, Poindexter’s more recent endeavors have included the Total Information Awareness project, an ambitious effort to collect and organize personal data on all Americans that would have rendered any conception of “privacy” quaint at best. That program hit the skids after bipartisan revulsion in Congress.

But it is only Poindexter’s latest scheme that finally has sent him away from the public trough. His blandly christened Policy Analysis Market, an online betting parlor for predicting political assassinations, revolutions and terrorist attacks in the Middle East, was quickly denounced in Congress—“unbelievably stupid,” as Sen. Byron Dorgan (D-North Dakota) politely put it. In late July, after conferring with the Senate’s Armed Services Committee chairman John Warner (R-Virginia), the Pentagon dropped Poindexter’s plan for the terror casino, which would have registered investors in August and opened for business in October. And the old admiral, now a liability for Bush, has been asked to walk the plank.

While it’s undeniably gratifying to watch Poindexter sink, we should really thank him. Free-market fundamentalism—the superstition that holds that the magic of the market is all we need to solve all our problems—has finally crossed a line. For years, “the market” has defined the terms for mainstream debate in virtually every policy arena—not just trade and foreign affairs, but education, welfare, health care, media deregulation and campaign finance reform. Unsexy technical arguments over trade policy or media ownership rules tend to obscure the fundamental conflict between human and market values, but Poindexter’s terror-trading plan vividly illuminated the clash—and human values won.

So the ideological straitjacket constricting the nation’s politics might be coming loose. And that loosening is helped, not hurt, by variously obtuse editorials that have praised the Policy Analysis Market as a “good idea with bad press.” These exercises in extreme libertarian amorality, ranging from Reason magazine to the New York Times business section, echo the sentiment expressed by the Policy Analysis Market’s Web site (before it was hastily taken offline), that “markets are extremely efficient, effective and timely aggregators of dispersed and even hidden information.” It may not be pretty to see people profit from murder and mayhem, goes this logic, but it just might save lives.

Defenders of the idea point to the Iowa Electronic Markets (sponsored by the business school at the University of Iowa) as an example of another unorthodox “futures market,” which has had some success in predicting the outcomes of elections. Indeed, when the rules of the game are laid out in advance with a finite number of variables—as they are in every electoral contest, with a fixed date and a fixed number of candidates—there’s no reason why a futures-market system can’t “aggregate” useful information, and be just as valuable as a more conventional opinion poll.

But when we leave fantasy-league baseball and enter the real world—you know, the one where actual terrorists live—market mechanisms will fail lethally. Terrorists, by definition, will not do us the favor of playing by any betting rules. On September 10, 2001, what were the Vegas odds that 19 men were about to hijack four jets and change the world? If the following morning taught anybody anything, it is that history is not an elegantly closed system. No oracle could have helped us then—but old-fashioned intelligence gathering, coupled with a competent chief executive who didn’t waste money on charlatans like Poindexter, might have. That much you can bet on.

Joe Knowles is a former culture editor for In These Times.

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  • Reader Comments

    I can’t but wonder how far out of the mainstream of real insiders he will ultimately end up....just now he will be in the shadows and much more dangerous and probably paid much more!

    Posted by 'jt' tally on Aug 19, 2003 at 6:36 PM

    The recently scrapped plan by DARPA for a futures market on terrorist events sounds very similar to a report in the San Francisco Chronicle in September 18, 2001 by C. Berthelsen and a colleague that put options were purchased before 9-11 on United and American Airlines and several of the financial companies with large offices in the World Trade Towers. Since that early report in the Chronicle, I have not seen any follow up although the article indicates that the SEC started an investigation into who purchased the options. Since the options purchase is the clearest indication of prior knowledge of 9-11 and since these options do not seem to be mentioned anywhere in the recent House and Senate Select Committee Report on Intelligence and 9-11, I was wondering whether or not they were investigated and, if so, what was found. Could there have been a ‘pool’ or informal ‘futures market’ going on inside DARPA, the Defense department, or the intelligence agencies with access to threat data prior to 9-11 or were the options purchased by the financiers of terrorism?

    Posted by Mike Wade on Aug 29, 2003 at 11:17 AM

    Sounds like a good idea with bad press to me. I think it could be improved by including US leaders as well. 

    Posted by Corbin Dallas on Sep 5, 2003 at 1:15 PM

    i loved you in the 5th element corbin dallas

    Posted by mike on Sep 5, 2003 at 2:22 PM

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