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July 30, 2003

On Knowin' When to Fold 'em

Complaints about DARPA's plan to open a market for ideas futures and commodities futures can be reduced into three basic categories:

1. It's a dead pool, and morbid, so it's too tasteless to mention much less use.

2. It's an online gambling scheme, and therefore tacky.

3. We don't trust the markets. Markets are eeeeeeeeevilllllTm

As for number 1, so's your life insurance and car insurance. If you are too frail to handle the idea that other people (including insurance companies, your own company's pension manager, the Social Security Administration and Department of Treasury) are right now contemplating the time of your death, then you probably are too frail to live. Please just die now, and let the rest of us reap the ensuing windfall.

As for number 2, well, the New York Stock Exchange, when you trade on line, is an online futures market. Therefore, it's online gambling. Ummm, doesn't the government encourage that type of thing, regulate it and enjoy tax revenues from it? And since when is gambling a big deal? Oh yeah, since Bill Bennett did it. That's right. We all hate gambling now...

As for number 3. . . well I can't help you there. Either you accept the fact that markets, in the aggregate are generally rational actors, or you deny it. Just like you can accept or deny the existence of gravity, the wet nature of water, or the body's requirement for oxygen. If you accept it, good on ya. If you don't accept it, well, you don't have to, but your non-acceptance of the fact doesn't make it any less true.

So how's the media reading this controversy?

Eli Lehrer talks more lucidly than I do about this concept over at National Review Online. He likes it.

The BBC, taking its usual reasoned, well thought out stance, just as it always does with anything American, reports on DARPA's now-scuttled futures market as an online gambling scheme here. This article is worth noting because it cites Tom Daschle as saying that the futures market would provide an incentive for terror attacks -- as if Big Brother wouldn't be on anybody who made suspicious transactions. That was part of the point, Mr. Daschle -- one would hope to see some wanker try to take advantage of it. The market would serve a dual purpose - if nobody in the market was a bad actor, the market generally might be a predictor of terror activity, based on its aggregate information. If somebody in particular was a bad actor, their patterns would stick out. Hundreds of folks at the SEC do just such market analyses on the stock markets all the time, in order to detect suspicious patterns that reflect "inside trading."

Salon, taking a break from routine Bush bashing, follows the Beeb's lede, noting that DARPA's plan was simply an online gambling plan. No word yet on whether Jake Tapper finds NYSE to be a "cacophonous off-track betting scheme"; or the CBOT to be an "agrarian gambling consortium whose mother dresses it funny."

The Unfiskable Woman, Mo Dowd calls the idea "boneheaded", an "online futures dead pool" -- so it must be a good idea. Clearly, she got the talking points memo from Terry McAuliffe. No word yet on whether Ms. Dowd has life insurance, car insurance or homeowner's insurance, those other tacky dead pools. Oddly enough, this has inspired to me start an online dead pool, to gamble on when she'll be fired from the NY Times for her patent dishonesty...

Posted by Blackavar at July 30, 2003 11:36 AM | TrackBack
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