Tom Tomorrow linked to this story about how the Pentagon is setting up a futures market where investors can bet on the likelihood of terrorist attacks around the world.

I think Tom and the senators quoted in the article adequately describe the horrible stupidity, arrogance, and insensitivity of this plan. Instead, I would like to focus on DARPAs own justification for the program:

In its statement Monday, DARPA said that markets offer efficient, effective and timely methods for collecting dispersed and even hidden information. Futures markets have proven themselves to be good at predicting such things as elections results; they are often better than expert opinions.”

Huh? Futures markets have proven themselves to be good at predicting such things…”? Since when? Since when have markets proven themselves good at predicting anything? I’m no economist, but I know that there exists a large body of material on the irrationality of markets. Look at the 90s for god’s sakes. I would be much more comfortable if our national defense was based on the I-Ching, or Ifa Divination — but markets!? This is just crazy.

Look at their picture:

This says it all. I mean, who would even consider using polls of experts” as a way of predicting attacks on the US? How about intelligence”? How about a knowledge of history and of world politics? How about actually learning something about the language and culture of the people in places where we know terrorist threats are likely to come from? How about the fact that we actually were warned about 9-11 but never acted on that knowledge?

UPDATE: Or, we could kidnap people’s families and hold them hostage instead!

2nd UPDATE: The NY Times on this story:

The senators also suggested that terrorists could participate because the traders’ identities will be unknown.

“This appears to encourage terrorists to participate, either to profit from their terrorist activities or to bet against them in order to mislead U.S. intelligence authorities,” they said in a letter to Admiral Poindexter, the director of the Terrorism Information Awareness Office, which the opponents said had developed the idea.

3rd UPDATE: From the comments on Slashdot:

Reminds me of the old joke about two efficient-market economists walking down the street. Economist one: Look — there’s a $50 bill on the sidewalk” Economist two: Don’t be stupid, if it was somebody would have picked it up already” I reckon that’s about the predictive power of this initiative.

(Posted by misterpies (632880))

4th UPDATE: Tom Tomorrow reports that DARPA seems to have dropped the plan like a hot potato.