Markets and Security Infrastructure

The Council on Foreign Relations has issued a report that has a stark warning for the White House. The authors say a dangerous precedent was set in the 2002 administration strategy, and it has therefore failed to establish a viable domestic (Homeland) security infrastructure:

The White House and Congress wrongly presume that market mechanisms on their own will provide sufficient incentives to provide the necessary level of security in the absence of decisive federal leadership and involvement. Security and safety are public goods whose provision is a core responsibility of government at all levels.

The report’s suggestion for a better path forward seem to be fairly straightforward. I mean when you include the phrase “as required by law” in your recommendations, you can hardly say anyone in government will be surprised to hear them:

  • Quickly complete, as required by law, a national list of priorities for critical infrastructure. It is simply unacceptable that a list to guide federal spending and agency efforts does not yet exist.
  • The White House and Congress need to stop talking about improving information sharing and hold government officials accountable for actually doing so. There is legitimate frustration among corporate security officers that talking with federal agencies is always a one-way street—companies generously give and barely receive.
  • The Department of Homeland Security (DHS) must strengthen the quality and experience of its personnel. One solution is for Congress to authorize the creation of a personnel exchange program that would allow industry experts and managers to take a leave of absence from their companies to serve in government while DHS employees work for companies in critical sectors.
  • Congress and the administration should work closely with the private sector to establish security standards and implement and enforce regulations, especially in the chemical and transportation sectors where industry is seeking standards and regulations.
  • Congress should establish targeted tax incentives to promote investments and rapid adoption of measures that will improve the resiliency of the highest risk industries.

“Stop talking about improving information sharing” is a funny and ironic point that belies a larger problem with the Bush administration. With a reputation for acting as though they are above or just craftily rewriting the laws to suit their purposes (e.g. Guantanamo) does Bush’s inner-circle of advisors think that their “free-market” approach to security has been effective anywhere in the world? Here is the write-up in the Wall Street Journal from 2003 regarding Iraq:

The Bush administration has drafted sweeping plans to remake Iraq’s economy in the U.S. image. Hoping to establish a free-market economy in Iraq following the fall of Saddam Hussein, the U.S. is calling for the privatization of state-owned industries such as parts of the oil sector, forming a stock market complete with electronic trading and fundamental tax reform.

Execution of the plan — which is expected to be complicated and possibly contentious — will fall largely to private American contractors working alongside a smaller team of U.S. officials. The initial plans are laid out in a confidential 100-page U.S. contracting document titled “Moving The Iraqi Economy From Recovery to Sustainable Growth.” The consulting work could be valued at as much as $70 million for the first year.


For many conservatives, Iraq is now the test case for whether the U.S. can engender American-style free-market capitalism within the Arab world. In a February address, President Bush spoke of “a new Arab charter that champions internal reform, greater political participation, economic openness and free trade.” A new regime in Iraq, he said, “would serve as a dramatic and inspiring example of freedom for other nations in the region.”

Test case? It’s interesting to note that the article concludes with a warning from experts with real-world experience rebuilding Eastern Europe after the fall of the USSR: “rapid privatization of state-run enterprises led to sharp disruptions in jobs and services, as well as rampant corruption”.

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