DEATH MARKET II
John Lemon explains why he thinks the terrorism futures market–which has already been killed off–was a good idea.
Virginia Postrel is noncomital. Some guy calling himself “InstaPundit” thinks it’s probably okay, but mainly just offers up a lot of links on the subject rather than any real analysis. (Frankly, he’s never going to catch on with a name like that, especially if he’s too lazy to write anything.)
Update (1605): Stephen Green made an interesting argument about it very early this morning and had scrolled so far down my blogroll by the time I got in that I missed it.
I might know about a few tech stocks, and maybe you have some good blue chip recommendations. But between the two of us, our knowledge just can’t compare to that of tens of millions of investors, all acting independently, all over the nation. And for that reason, the stock markets generally give a pretty damn fine indication of what a given company will do in the future Ã¢€“ because each person’s little slice of expertise becomes part of the greater whole.
The “market” for intelligence works, such as it does, opposite of the stock market. A guy who knows one important bit often can’t effectively share it with another guy in another agency who knows another important bit Ã¢€“ and so two plus two ends up equaling something quite less than four. Those who simply have good hunches generally aren’t intel pros, and therefore aren’t given much credence by the government. And so hidden knowledge remains hidden, and good guesses go unheeded. Then people die.
Now that is a truly grotesque system, yet that’s how the intelligence world has operated for approximately ever.
Would investors put their money on the line if there weren’t any profits to be made? Of course not. Yet today, we ask our military and intelligence professionals to risk their reputations and careers, working mostly in the dark, with zero extra incentive.
Hat tip to Megan McArdle, who’s a bit more skeptical but who also has some valuable comments. And she has a point with her opener:
How can you create a market based on catastrophic loss of life, some are screaming. To them I say: ask MetLife.