[ExI] Feel Safer Now?

[Amara Graps]

The news at Boing Boing today that the US federal government thinks that
1 in 300 US residents are terrorists:

http://www.boingboing.net/2008/03/13/1-in-300-us-resident.html

"September 2007 report by the Inspector General of the Department of
Justice, which reported that the Terrorist Screening Center had over
700,000 names in its database as of April 2007, and that the list was
growing by an average of over 20,000 records per month.As of today, the
list stands at approximately 917,000 names."

reminded me how scarily out-of-control and out-of-touch with reality is
the Bush administration, with no end in sight (I'm not sure the Congress
after the Fall elections will be any better). Since 1 in 300 of US citizens
are considered terrorists, a good question is how to get all of those
bomb-throwing lunatics locked up? The usual (statist) answer is to throw
more money into the black pot, with the usual source of money being you
and me.

Feel safer now?

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http://www.economist.com/world/international/displaystory.cfm?story_id=10808502

(The study is here:
http://www.copenhagenconsensus.com/Default.aspx?ID=968 )

Anti-terrorist spending
Feel safer now?

Mar 6th 2008
 From The Economist print edition
Most anti-terrorist spending is wasteful, claims a new study

AFTER September 11th 2001, most countries beefed up security at airports
and other vulnerable places. Tough-looking immigration officials no
doubt made passengers feel safer, offsetting the irritation of longer
queues. Yet doing something because it makes people feel good is not
adequate justification. Is money devoted to counter-terrorism well
spent?

What claims to be the first serious study of its costs and benefits, by
economists at the Universities of Texas at Dallas and Alabama*, says no.
It was commissioned by the Copenhagen Consensus, a think-tank that aims
to scrutinise public spending on the world's woes and to ask "should we
be starting from here?"

The authors of the study calculate that worldwide spending on homeland
security has risen since 2001 by between $65 billion (if security is
narrowly defined) and over $200 billion a year (if one includes the Iraq
and Afghan wars). But in either case the benefits are far smaller.

Terrorism, the authors say, has a comparatively small impact on economic
activity, reducing GDP in affected countries by perhaps $17 billion in
2005. So although the number of terrorist attacks has fallen, and fewer
people have been injured, the imputed economic benefits are limited-just
a tenth of the costs.

That does not necessarily mean the extra spending was wasted. The number
of attacks might have been even higher. In 2007 Britain's prime
minister, Gordon Brown, said his country had disrupted 15 al-Qaeda plots
since 2001. Yet so big is counter-terrorism spending and so limited is
terrorism's economic impact that, even if 30 attacks like the London
bombings of July 2005 were prevented each year, the benefits would still
be lower than the costs. The authors conclude that spending is high
because it is an insurance policy against a truly devastating operation
such as a dirty bomb; and because, since terrorism is global, if one
country improves security, so must others.

Terrorists react to incentives. If you tighten airport security, they
hit trains. If you improve security at embassies, they kidnap
businessmen. If you disrupt routine operations, they try deadlier ones.
The authors reckon that, though the number of attacks and injuries has
fallen since 2001, deaths have risen. Anti-terrorist spending displaces,
as well as reduces, terrorism.

To get a sense of what might work better, the authors ask what would
happen if spending were raised by 25%. Not much, they think: spending is
inefficient now and would remain so. To see what might happen if there
were more vigorous military action, they extrapolate from 2002-03, when
America's belligerent response to September 11th was beginning. There
were fewer terrorist attacks, they say, but the balance of costs and
benefits is still poor-between five and eight cents of benefit for every
dollar spent. But international co-operation to disrupt terrorist
finances would be cost-effective, they think, producing $5-15 of
benefits for each $1.

Given the uncertainties of the calculations, such figures can hardly be
a blueprint for radically reordering spending priorities. But they are a
reminder that throwing money at terrorism works no better than throwing
money at anything else, and that some kinds of anti-terrorist spending
are more efficient than others.

* "Transnational Terrorism", by Todd Sandler, Daniel Arce and Walter
Enders. www.copenhagenconsensus.com

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Amara