Free markets everywhere

Anyone have any information on the evidence DARPA found to lead them to
claim that markets are better predictors than experts?

I don't care about the typical moral smoke screen, I think the scheme is
specious and an astonishing example of how deeply free market ideology
penetrates this administration. Almost surreal.

Alan H.

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Pentagon Cancels Terrorism Betting Plan
Tue Jul 29, 7:06 PM ET

By KEN GUGGENHEIM, Associated Press Writer

WASHINGTON - Under fire from all sides, the Pentagon (news - web sites)
on Tuesday dropped plans for a futures market that would have allowed
traders to profit from accurate predictions on terrorism, assassinations
and other events in the Middle East.

Republicans said they knew nothing about the program and would never
have approved it. They called the head of the Pentagon agency overseeing
the project to Capitol Hill to answer questions.

Democrats demanded details of any related Pentagon programs, an apology
from the Bush administration and the firing of those responsible for the
market.

"I think those who thought it up ought not only close down the program.
They ought not be on the public payroll any longer," said Sen. Byron
Dorgan (news, bio, voting record), D-N.D, at a news conference.

At a hearing where senators criticized the program, Deputy Defense
Secretary Paul Wolfowitz said, "I share your shock at this kind of
program." But he also defended the Pentagon office that came up with the
project, saying "it is brilliantly imaginative in places where we want
them to be imaginative."

Dorgan and Sen. Ron Wyden (news, bio, voting record), D-Ore., touched
off the furor Monday by disclosing details of the Policy Analysis
Market, a project that seemed so bizarre that some lawmakers said they
thought it was a hoax.

The Pentagon's Defense Advanced Research Projects Agency, working with
two private partners, would have set up an Internet futures trading
market on events in the Middle East. Traders could buy and sell futures
contracts based on their predictions about what would happen in the
region. Examples given on the market's Web site included the
assassination of Palestinian leader Yasser Arafat (news - web sites) and
a biological weapons attack on Israel.

Investors were to begin registering Friday and trading was to begin Oct. 1.

From the trading patterns, the Pentagon agency, known as DARPA, hoped
to gain clues about possible terrorist attacks. In statements Monday and
Tuesday, it said markets are often better than experts in making
predictions.

But the response from both parties was outrage.

"This program could provide an incentive actually to commit acts of
terrorism," Democratic Leader Tom Daschle of South Dakota said on the
Senate floor. He described it as a "plan to trade in death."

Majority Leader Bill Frist of Tennessee asked Appropriations Committee
Chairman Ted Stevens, R-Alaska, and Armed Services Chairman John Warner,
R-Va., to make sure the market wasn't funded.

"I cannot conceive of any reason why the United States government should
be involved in a project of this nature," Frist said.

By late morning, Warner and Wolfowitz, at separate hearings, announced
the program would be ended.

As he praised DARPA at a Senate Foreign Relations hearing, Wolfowitz
said with a smile, "It sounds like maybe they got too imaginative."

Sen. Barbara Boxer (news, bio, voting record), D-Calif., told Wolfowitz,
"I don't think we can laugh off that program."

"There is something very sick about it," she said. "And if it's going to
end, I think you ought to end the careers of whoever it was thought that
up. Because terrorists knowing they were planning an attack could have
bet on the attack and collected a lot of money. It's a sick idea."

Warner said he had spoken with the head of DARPA, Tony Tether, who
agreed the program should end.

Warner said in an interview that DARPA "didn't think through the full
ramifications of the program."

Senators said they had only vague information about the DARPA project
that included the market. That project, FutureMAP, or "Futures Markets
Applied to Predictions," will end along with the market Web site, the
Pentagon said.

The Pentagon had requested $3 million for FutureMAP next year. The
senators said the money attracted little attention in the overall the $3
billion DARPA budget proposal.

About $750,000 had been approved for FutureMAP in past budgets.

"It's totally unauthorized as far as we're concerned," Stevens said. "No
funds should have been used for it at all. It's really a serious mistake
on the part of DARPA."

Tether was called to Capitol Hill to meet with Warner and Sen. Pat
Roberts (news, bio, voting record), chairman of the Intelligence
Committee and Armed Services' emerging threats subcommittee.

Warner's spokesman, John Ullyot, described the meeting as businesslike
and professional. He said the senators will submit written questions to
Tether and will await responses before deciding if hearings or other
actions are needed.

Tether was asked as he left whether retired Adm. John Poindexter, who
runs the DARPA division that included the market program, would keep his
job.

"I don't see why not," he said.

Poindexter, who runs DARPA's Information Awareness Office, is used to
political storms. A former national security adviser to President
Reagan, Poindexter was a key figure in the 1980s Iran-Contra scandal. In
addition to FutureMAP, his office oversees the Terrorism Information
Awareness project, a computerized surveillance program that has raised
privacy concerns.

Asked if Poindexter remained on the DARPA payroll, Pentagon spokesman
Lawrence Di Rita said, "At the moment, Admiral Poindexter continues to
serve in DARPA."

Alan Hogue wrote:

 > Anyone have any information on the evidence DARPA found to lead them to
 > claim that markets are better predictors than experts?
 >
 > I don't care about the typical moral smoke screen, I think the scheme is
 > specious and an astonishing example of how deeply free market ideology
 > penetrates this administration. Almost surreal.
 >
 > Alan H.

Well, now, opening a book (pardon me, "establishing a futures market") on
terrorism would have been a highly effective way to flush out people who (1)
had the moral emptiness to bet money on other people's deaths, *and* (2)
considered themselves well-informed enough to bet on them successfully.

It would really have been a pretty good idea to devote special intelligence
attention to the kind of amoral, politicized, well-connected sociopaths who
would have tried to profit by staking money on these "futures". If what DARPA
intended all along was to develop a list of bettors who could be investigated
for possible "insider trading", I'd say that would actually have been a pretty
good way to keep the general public a little bit safer.

/M<!-- ~MESSAGE_AFTER~ -->