Spending too Much the Wrong Way on the Wrong Things

First, I would like to thank John Mueller for his provocative essay. In the current political context, it is refreshing to read challenging ideas on such a sensitive topic as homeland security and terrorism threats.

Since September 11th, Congress has appropriated nearly $271.5 billion to protect the American homeland from terrorism—roughly $545 per American household. Not surprisingly, outlays have jumped since 9/11—there has been a 246 percent increase from $16.9 billion in FY2001 to at least $58.2 billion in FY2007.

Despite this spectacular increase in spending, the common message on the Hill and from the Administration is that we are not spending enough on homeland security. This view, for instance, is championed here by Clark Kent Ervin, who wrote “the threat of terrorism here at home is not taken seriously and as a result, we are doing far less than we should be doing to combat it.”

I hold a contrary opinion, and agree with John Mueller that as a whole the risk of terrorism has largely been overblown. It is a fact that there are many threats—like driving off the road, falling, drowning or being shot by law enforcement—far more likely to kill an American than any terrorist. I also agree with a statement he made in a recent Reason magazine interview where he explained that “the true costs [of the 9/11 attacks] come mostly from overreaction, not from bombs or deaths themselves. [1] In other words, we are feeling less safe than we probably should be and as a consequence we are over-investing in homeland security.

But that doesn’t tell the whole story. Not only are we over-investing in homeland security, but most times we spend too much money in the wrong way and on the wrong things.

Homeland security is a strategic problem, and like any strategic problem it requires a strategic solution. In matters of strategy, efficient expenditures concentrate limited resources on the most cost-effective initiatives. Not every need is worth funding—or can be funded in a world of limited resources—and the greatest priorities and risks should be addressed first. Unfortunately, today, the logic behind some federal involvement in security seems to be that the mere existence of vulnerability in any given industry or a given area merits funding. That makes it seem that, because all transportation systems, infrastructures, and economic sector have inherent weaknesses, federal intervention must be required everywhere.

In fact, it is perfectly reasonable and even responsible to refuse to implement a specific anti-terrorism measure, not because it has no conceivable benefit, but because the costs are too high compared to the potential benefits. For instance, locking up every Arab-looking person would reduce the potential for terrorism perpetrated by Islamic fundamentalists, but no reasonable person would suggest this approach because the costs (both pecuniary and moral) are too high.

U.S. airline security measures provide a good example of the federal government’s approach to balancing risk. The likelihood of an attack similar to those we suffered on 9/11 has been reduced to roughly zero with simple cockpit barricades, which the airline industry installed at relatively low cost. Yet since then we have spent $34 billion on a system for screening every bag belonging to every airline passenger. If you add to that cost the aggregate opportunity cost, likely in the billions, incurred by passengers for the extra hours at the airport, you end up with a huge bill for an agency which measures its success by having “intercepted seven million prohibited items at airport checkpoints, including just over 600 firearms.” In other words, 99.992 percent of intercepted items are tweezers, breath fresheners and lighters.

Our main problem with security is caused by the unwillingness of lawmakers, law enforcement agencies and security experts to tell the public that sometimes there are no easy answers and that just throwing money at a problem won’t achieve anything. Maybe more importantly, it is their unwillingness to recognize that sometimes we are, on the whole, better off doing nothing than implementing measures that are ineffective.

So what should we do? Or not do? We all agree—or at least should agree—that there is no way to protect everything from every possible mode of attack. In the United States, as with all stationary targets, the attacker has a natural advantage because he gets to choose where and when to strike. The German thrust into Western Europe in World War II is a natural analog: The Wehrmacht simply side-stepped the impressive Maginot Line defenses built by the French. Similarly, terrorists will attack wherever the defenses are weakest.

In this case, as John argues, the cost-effective thing to do might be: instead of trying to protect hundreds of targets, save the money, and then if something happens, use it to fix things. Then we could go after the people who actually did the crime. Unfortunately I doubt this policy could see the daylight in our current political context.

Intelligence gathering and counter-intelligence is definitely the next most cost-effective defense. The idea is to thwart the attackers before the attack is even launched or deploy personnel and equipment exactly where the attack is anticipated. I would argue that, at the federal level, any other form of security measure is a waste of money.

For instance, we know that one of the biggest failures that led to September 11th is the lack of information-sharing between the different levels of government. An important counter-terrorism goal should have been to set in place an efficient system so that such an oversight never happens again. Five years later, scant progress has been made in this area. And the lack of funding is not the issue. Since 9/11 the federal government has sent over $27 billion to state and local governments in the form of grants for preparedness and response which were swiftly invested in everything from hazmat suits to gym memberships.

Returning to the issue of airline security, we know that the main threat to planes today is explosives brought aboard by suicide bombers. We also know that few carry-on bags or passengers are checked for explosives. Yet even if we could check for explosives in carry-on luggage with perfect accuracy, it wouldn’t necessarily be a good idea because of the astonishing cost associated with such a scheme. Instead of spending massive amounts of money to keep bad objects off planes, a more effective measure would try to keep bad people off planes. Again, intelligence is the solution, not prohibiting toothpaste and nail polish in planes.

In the end, I agree with John Mueller that we are probably overestimating the risks we face and that as a consequence we are over-investing in homeland security measures. Yet, I would like to go even further. Bad security is often worse than no security at all. By trying, and failing, to make ourselves more secure, we make ourselves less secure. We make poor tradeoffs, and we are asked to give up a lot in terms of money and freedom in exchange for little or no real benefit. Surely the misplaced perception of security isn’t worth that.