Richard Rahn's "How to Find Osama" (The Washington Times)

Sun Aug 15 12:59:11 PDT 2004

The Washington Times
www.washingtontimes.com

How to find Osama
By Richard W. Rahn
Published August 15, 2004

Having just finished reading the report of the September 11 commission, I was
shocked; shocked to learn major U.S. government bureaucracies are
incompetent. Washington being Washington, most of the solutions proposed
revolved around
reorganizing and creating more bureaucracies.

It seems not to have occurred to anyone there are market solutions for many
information problems the intelligence community faces. Two examples follow. The
first is the general problem of economic intelligence, and the second is
using the market to find a particular someone -- Osama bin Laden.

A couple of decades ago, I became aware the CIA was systematically
overstating the size of the Soviet and Eastern European economies, An
article I wrote
about it was published in 1984. My critique, and those of others then, had no
impact. At the end of the Cold War, we indeed found real per capita incomes in
the Soviet Union and Eastern Europe were on average about one-third the CIA
estimates.

The CIA greatly overestimated the size of these countries' civilian economies
because the agency overrelied on the translations of official documents and
periodicals rather than have agents or embassy personnel walk about and see
what goods were available at what price. This is "market research."

Those of us who had spent time in the former communist countries before and
during the economic transition were well aware few goods in the old Soviet
Union actually were available in any quantity at official prices. For
example, the
Soviet press might state the official price of a refrigerator was 100 rubles,
but in fact there were no refrigerators available at that price. With luck, a
Soviet citizen might actually have been able to find a refrigerator on the
black market for 400 rubles.

That there were far fewer goods at much higher prices was well known to many
in the Western press and business community, but the CIA ignored much of this
evidence -- I suspect partly because it would have diminished the perceived
threat.

Intelligence agencies should do much more "contracting out." There are
economic and market research firms operating in virtually every country with
considerable local expertise. For the right price, they could provide the
CIA much
better information, at a far less cost, than it would likely obtain on its own.

Using principles of market economics should not be limited to gathering
economic intelligence, but greatly expanded to gathering information on weapons
systems and terrorists.

At some price, there is almost always someone who will reveal secrets any
government might like to know -- and usually this price is far lower than other
ways of seeking the information.

For instance, after three years and expenditure of many tens of billions of
dollars, we (i.e., the CIA and others) still have not found Osama bin Laden.

A couple of years ago, the U.S. government offered a bounty of $25 million
for his head. Many in Washington believe this shows bounties don't work. In
fact, it shows the price was too low. Suppose we increased the bounty $5
million a
month until he was brought in dead or alive. What do you think would happen?

The reason $25 million has not worked is that getting bin Laden is both
dangerous and expensive, and you would probably need a team to do it. So by the
time you add up your expenses and divide the net amount after taxes among your
team, the risk-reward ratio is not sufficiently attractive.

At some price, getting bin Laden becomes attractive to many reasonably
competent people, and some brave and enterprising soul would get him.

At the moment, $25 million plus $5 million a month since September 11, 2001,
adds up to a bounty of about $200 million. That may sound like a lot of money,
but it only works out less than a dollar for each American, and we have
already spent many times that sum trying to find him.

I expect $200 million is a large enough pot to even induce thousands of
American trial lawyers to start combing the hills of Afghanistan, like gold
prospectors in California in 1849 -- and nothing could be more beneficial
to the U.S.
economy.

Richard W. Rahn is a senior fellow of the Discovery Institute and an adjunct
scholar of the Cato Institute.

--- end forwarded text

-- 
-----------------
R. A. Hettinga <mailto: rah at ibuc.com>
The Internet Bearer Underwriting Corporation <http://www.ibuc.com/>
44 Farquhar Street, Boston, MA 02131 USA
"... however it may deserve respect for its usefulness and antiquity,
[predicting the end of the world] has not been found agreeable to
experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'