Pentagon Buys Into Tragedy

The Pentagon at least deserves credit for thinking inventively in coming up with a new way to spot terrorists before they strike.

Its Defense Advanced Research Projects Agency (DARPA) was due to launch a project Friday that would have tried to forecast major political events in the world by tapping inside knowledge within the business community through a government-run speculative financial market.

Here's how it would have worked (before an uproar in Congress forced the Defense Department to kill it): Up to 10,000 investors would have been invited to buy contracts that would have paid out money based on the outcome of a range of speculative political events.

This "policy analysis market," as DARPA called it, was based on the theory that someone somewhere in business may know something about a political development that US spies and diplomats might be missing.

DARPA was right in its theory, but it failed to forecast the moral problem in having public servants encourage capitalists to profit by investing in forecasts of tragedies befalling Americans - with the hypothetical tragedies selected by government.

Private markets can do that, and do so already by tracking political events to decide where to place investments. But government shouldn't be in that business.

Much of that information already is available, often for sale. DARPA's plan revealed that the government's intelligence agencies need more resources to match the secretive tactics of terrorists. Now that Congress has made its point, it can calmly ask what more it can do to help.