Re: Someone at the Pentagon read Shockwave Rider over the weekend
On Tuesday, July 29, 2003, at 11:49 AM, Trei, Peter wrote:
Tim May[SMTP:timcmay@got.net]
On Tuesday, July 29, 2003, at 09:26 AM, Bill Stewart wrote:
Also, NYT Article was http://www.nytimes.com/2003/07/29/politics/29TERR.html?th
But it sounds like they've chickened out, because various people freaked about the implications. (And they only got as far as it being "an incentive to commit terrorism", without getting to "a funding method for terrorism" or to "Assassination Politics".)
Not to mention the obvious problems with letting government agents bid on things like when various unwanted foreign leaders would be assassinated.
Over on Dave Farber's IP list, it's been pointed out that there is a pre-existing, live, real-money market in futures on these types of events. Go over to www.tradesports.com, and click on 'Current Events' under 'Trading Catagories' on the left. Drill down and you'll find things like 'WMDs will be found in Iraq on or before Sept 31', the value of which has dropped from 80 to 25 over the last few months.
Yes, a bunch of "ideas futures" markets have existed for nearly a decade. An acquaintance of mine, Robin Hanson, was actively promoting such things in the late 80s and may have been involved in some of the Extropians-type markets which arose a few years later (I recollect several efforts with varying degrees of success). And several years ago some companies actually tried to built real markets around these kinds of predictions. Maybe one of them is the "contract company" (pun intended) on this latest DARPA fantasy. The problem is not with the idea of using markets and bets and Bayesian logic to help do "price discovery" on things like when the Athlon-64 will actually reach consumers, or when the new King of Jordan will be whacked, and so on. The problem is, rather, with _government_ establishing a monopoly on such things while putting suckers like Jim Bell in jail basically for espousing such ideas. And, as I noted, there are significant problems with government employees in a betting pool (gee, aren't even office baseball pools technically illegal? Haven't they prosecuted some people for this? Yep, they have) where they also have control over the outcome. Jim Bell used this as a payoff mechanism for assassinations ("Alice bets $1000 that Paul Wolfowitz will be murdered with his family on August 10, 2003")...the same logic applies to the government's dead pool. --Tim May "That government is best which governs not at all." --Henry David Thoreau
Tim May wrote:
Yes, a bunch of "ideas futures" markets have existed for nearly a decade. An acquaintance of mine, Robin Hanson, was actively promoting such things in the late 80s and may have been involved in some of the Extropians-type markets which arose a few years later (I recollect several efforts with varying degrees of success).
Yes, Robin Hanson worked on DARPA's PAM program. Here's his e-mail about it in May 2003: ----- http://www.mail-archive.com/armchair@gmu.edu/msg03309.html DARPA markets on MidEast
On Tuesday, July 29, 2003, at 04:20 PM, John Young wrote:
Tim May wrote:
Yes, a bunch of "ideas futures" markets have existed for nearly a decade. An acquaintance of mine, Robin Hanson, was actively promoting such things in the late 80s and may have been involved in some of the Extropians-type markets which arose a few years later (I recollect several efforts with varying degrees of success).
Yes, Robin Hanson worked on DARPA's PAM program. Here's his e-mail about it in May 2003:
Too bad, as he should have seen the shitstorm which would materialize as soon as this actually reached the public radar screen. Now that's gone public and been deep-sixed less than 24 hours later, it will likely be the end of this particular thing. An official, above-board version is likely to be ipso facto illegal for the same reason office baseball pools are illegal: illegal gambling. If the Pentagon can run a betting pool for its employees on when some event will happen, office workers can bet on the outcome of the World Series, and anyone can bet on the numbers revealed by the Mob. --Tim May
At 15:13 2003-07-29 -0700, Tim May wrote:
On Tuesday, July 29, 2003, at 04:20 PM, John Young wrote:
Tim May wrote:
Yes, a bunch of "ideas futures" markets have existed for nearly a decade. An acquaintance of mine, Robin Hanson, was actively promoting such things in the late 80s and may have been involved in some of the Extropians-type markets which arose a few years later (I recollect several efforts with varying degrees of success).
Yes, Robin Hanson worked on DARPA's PAM program. Here's his e-mail about it in May 2003:
Too bad, as he should have seen the shitstorm which would materialize as soon as this actually reached the public radar screen. Now that's gone public and been deep-sixed less than 24 hours later, it will likely be the end of this particular thing.
An official, above-board version is likely to be ipso facto illegal for the same reason office baseball pools are illegal: illegal gambling. If the Pentagon can run a betting pool for its employees on when some event will happen, office workers can bet on the outcome of the World Series, and anyone can bet on the numbers revealed by the Mob.
I believe DARPA sought and received an opinion letter from the SEC and DoJ regarding this venture which provided that, being the government, they were "immune" from prosecution for violation of gambling and unregistered securities violations. You are correct, however, that should the DoD venture have gone forward there would have been quite an uproar from domestic and international gaming companies questioning the authority to grant this sort of dispensation to the Feds. Fo example, the WTO (World Trade Organisation) this week granted Antigua and Barbuda the right to a hearing over its long-standing complaint against the United States, which has restricted the right of US citizens to gamble online - a major lifeline for the Caribbean jurisdiction's economy. http://www.tax-news.com/asp/story/story.asp?storyname=12733 steve "The most dangerous man to any government is the man who is able to think things out for himself, without regard to the prevailing superstitions and taboos. Almost inevitably he comes to the conclusion that the government he lives under is dishonest, insane, and intolerable." --H. L. Mencken
On Tue, 29 Jul 2003, Steve Schear wrote:
I believe DARPA sought and received an opinion letter from the SEC and DoJ regarding this venture which provided that, being the government, they were "immune" from prosecution for violation of gambling and unregistered securities violations.
Evidence please... -- ____________________________________________________________________ We are all interested in the future for that is where you and I are going to spend the rest of our lives. Criswell, "Plan 9 from Outer Space" ravage@ssz.com jchoate@open-forge.org www.ssz.com www.open-forge.org --------------------------------------------------------------------
At 16:20 2003-07-29 -0700, John Young wrote:
Tim May wrote:
Yes, a bunch of "ideas futures" markets have existed for nearly a decade. An acquaintance of mine, Robin Hanson, was actively promoting such things in the late 80s and may have been involved in some of the Extropians-type markets which arose a few years later (I recollect several efforts with varying degrees of success).
Yes, Robin Hanson worked on DARPA's PAM program. Here's his e-mail about it in May 2003:
Looks like Robin may have to concentrate on a commercial venture if he wants to see his ideas put into practice. steve we do not win the terrorism battle / with exclusion of liberties / an un-elected president / with a brand new atrocity / make way for war time opportunists / corporate interests and their proxies / exploitation of a tragedy / to serve their ideologies / corporate military complex / continues to abuse the world / death weapons for despots / sold by the red, white and blue -- Moral Crux, Stocks and Bombs
On Tuesday, July 29, 2003, at 03:24 PM, Steve Schear wrote:
At 16:20 2003-07-29 -0700, John Young wrote:
Tim May wrote:
Yes, a bunch of "ideas futures" markets have existed for nearly a decade. An acquaintance of mine, Robin Hanson, was actively promoting such things in the late 80s and may have been involved in some of the Extropians-type markets which arose a few years later (I recollect several efforts with varying degrees of success).
Yes, Robin Hanson worked on DARPA's PAM program. Here's his e-mail about it in May 2003:
Looks like Robin may have to concentrate on a commercial venture if he wants to see his ideas put into practice.
And use an offshore nexus, and good anonymity and digital cash tools...just as predicted many years ago. Doing this aboveboard, and doing it with the collusion of the actors who can alter the outcome, is asking for trouble: * violation of gambling laws...as I said in other articles, betting on the death of the King of Jordan is not different from betting on the winner of the World Series. * distortion of markets by players who see more benefit in adjusting the expectations than in spending some relatively small amount of money (If "Chances that weapons of mass destruction being found in Iraq by Nov. 1" is being de-rated, in a relatively thin market of a few dozen players, then someone with an interest in altering the odds can probably do so with relatively little money...especially if the money is from a Black Budget and comes from money taken at gunpoint from taxpayers.) (I can't resist mentioning that I was able to massively distort/sabotage the market in reputations that the Extropian list experimented with in 1993. I did this by buying "play money" (extro-dollars or whatever they were called) from other players in an out-of-band transaction. A mere $20 in U.S. money gave me a huge amount of additional spending money in this reputation market. Naturally, my reputation rose. Likewise, if Paul Wolfowitz wants the market to assess a "grave danger" that Norway is financing terrorism, he can use out-of-band methods to get a bunch of "ringers" (cut-outs, co-conspirators) to start bidding up the market. As the penalty for not guessing correctly is not clear until the outcome, and inasmuch as the money is provided by agencies, the opportunities for mischief are obvious.) * Insider trading. Letting government employees benefit from their inside information is like letting IBM or Intel employees engage in a wagering system based on KNOWLEDGE THEY ACTUALLY HAVE. (Not that insider trading is unknown in commodity or stock markets, including futures markets. But these markets have traditionally been heavily regulated and insider trading is forbidden, at least nominally. In the case of this DARPA market, the players are by definition the insiders, with various amounts of very non-public information about plans and contingincies. "Duh.") And so on. So many attacks on this system. Anyway, there _already_ are very real, hard to manipulate markets in information. We call them markets. Markets for real estate, for corn, for copper, etc. If a lot of residents of Jordan think a collapse is coming, real estate prices in Amman will fall. If a lot of technologists think a return to copper wiring is coming, copper prices will rise. And so on. Betting on contrived propositions with relatively small amounts of money ("toy systems") and/or with play money is not very interesting. --Tim May
On Tue, 29 Jul 2003, Tim May wrote:
Anyway, there _already_ are very real, hard to manipulate markets in information. We call them markets. Markets for real estate, for corn, for copper, etc. If a lot of residents of Jordan think a collapse is coming, real estate prices in Amman will fall. If a lot of technologists think a return to copper wiring is coming, copper prices will rise. And so on.
As usual, talking out of both sides of the pie hole. First sentence about 'hard to manipulate' and the next examples of how real world markets aren't hard to manipulate at all. I'd like to see some evidence on your example of Amman, Jordan for example. It's easy to make smoke, much harder to collect the wood. Life is not economics, it can't be understood in strictly economic terms. -- ____________________________________________________________________ We are all interested in the future for that is where you and I are going to spend the rest of our lives. Criswell, "Plan 9 from Outer Space" ravage@ssz.com jchoate@open-forge.org www.ssz.com www.open-forge.org --------------------------------------------------------------------
At 04:17 PM 07/29/2003 -0700, Tim May wrote:
Doing this aboveboard, and doing it with the collusion of the actors who can alter the outcome, is asking for trouble: * violation of gambling laws...as I said in other articles, betting on the death of the King of Jordan is not different from betting on the winner of the World Series.
One of the similarities is that, aside from there being government anti-gambling laws that might forbid both, the Baseball Leagues have rules against members (both players and owners) gambling on the results - is John Poindexter the next Pete Rose? Also, various administration statements came out about how they were going to limit the bets to token amounts, e.g. $100, which might prevent funding of terrorist groups (including Ollie North projects as well as Al Qaeda projects, if in fact the two weren't connected), -- but those limits contradict one of the arguments the Pentagon and its supporters were making about valid uses for this market, which is companies insuring their business activities by betting on terrorist events, similarly to the way they hedge currencies.
At 12:21 2003-07-29 -0700, Tim May wrote:
The problem is not with the idea of using markets and bets and Bayesian logic to help do "price discovery" on things like when the Athlon-64 will actually reach consumers, or when the new King of Jordan will be whacked, and so on. The problem is, rather, with _government_ establishing a monopoly on such things while putting suckers like Jim Bell in jail basically for espousing such ideas.
And, as I noted, there are significant problems with government employees in a betting pool (gee, aren't even office baseball pools technically illegal? Haven't they prosecuted some people for this? Yep, they have) where they also have control over the outcome. Jim Bell used this as a payoff mechanism for assassinations ("Alice bets $1000 that Paul Wolfowitz will be murdered with his family on August 10, 2003")...the same logic applies to the government's dead pool.
The ideal securities market is one which does a good job of allocating capital in the economy. This function is enabled by "market efficiency", the situation where the market price of each security accurately reflects the risk and return in its future. The primary function of regulation and policy is to foster market efficiency, hence we must evaluate the impact of insider trading upon market efficiency. Insider trading is often equated with market manipulation, yet the two phenomena are completely different. Manipulation is intrinsically about making market prices move away from their fair values; manipulators reduce market efficiency. Insider trading brings prices closer to their fair values; insiders enhance market efficiency. In traditional markets, insider trading appears unfair, especially to speculators outside a company who face difficult competition in the form of inside traders. Individual speculators and fund managers alike face inferior returns when markets are more efficient owing to the actions of inside traders. This does not, in itself, imply that insider trading is harmful. Insider trading clearly hurts individual and institutional speculators, but the interests of the economy and the interests of these professional traders are not congruent. Indeed, inside traders competing with professional traders is not unlike foreign goods competing on the domestic market -- the economy at large benefits even though one class of economic agents suffers. steve "A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves money from the Public Treasury. From that moment on, the majority always votes for the candidate promising the most benefits from the Public Treasury with the result that a democracy always collapses over loose fiscal policy always followed by dictatorship." --Alexander Fraser Tyler
On 2003-08-07, Steve Schear uttered:
Insider trading brings prices closer to their fair values; insiders enhance market efficiency.
Precisely. In terms of the efficient market hypothesis, all arbitrage possibilities will usually have been exploited by others, so the only consistent way to get a net win is to bring new information into the market. Nowadays insiders can do that, so they win. But the only reason they have their fresh information is that corporations do not give out the details of their work as they unveil, before individual decision makers can easily interfere with their knowledge of the aggregates. Hence, the free market actually encourages full disclosure, in the exact form the No Logo -- or whathaveyou -- anti-globalisation folks want. In the free market, full disclosure boils down to shareholders disliking insider trading, which ought to be a powerful incentive to any management. What the anti-capitalist people do not seem to get is that the *real* problem originates with SEC oversight and its international counterparts, and not with the private market. It's tragic, really. The market usually tends to more democracy and openness than democracy itself, yet the people raving about the necessity of democratic decision making always push for more oversight. While doing so, they hurt their own interests, and ours too. That's just stupid, plain and simple. -- Sampo Syreeni, aka decoy - mailto:decoy@iki.fi, tel:+358-50-5756111 student/math+cs/helsinki university, http://www.iki.fi/~decoy/front openpgp: 050985C2/025E D175 ABE5 027C 9494 EEB0 E090 8BA9 0509 85C2
participants (6)
-
Bill Stewart -
Jim Choate -
John Young -
Sampo Syreeni -
Steve Schear -
Tim May