The Washington Post on the U.S. Intelligence Industry

The Washington Post has published a phenomenal piece of investigative journalism: a long, detailed, and very interesting expose on the U.S. intelligence industry (overall website; parts 1, 2, and 3; blog; Washington reactions; top 10 revelations; many many many blog comments and reactions; and so on).

It’s a truly excellent piece of investigative journalism. Pity people don’t care much about investigative journalism—or facts in politics, really—anymore.

EDITED TO ADD (7/25): More commentary.

EDITED TO ADD (7/26): Jay Rosen writes:

Last week, it was the Washington Post’s big series, Top Secret America, two years in the making. It reported on the massive security shadowland that has arisen since 09/11. The Post basically showed that there is no accountability, no knowledge at the center of what the system as a whole is doing, and too much “product” to make intelligent use of. We’re wasting billions upon billions of dollars on an intelligence system that does not work. It’s an explosive finding but the explosive reactions haven’t followed, not because the series didn’t do its job, but rather: the job of fixing what is broken would break the system responsible for such fixes.

The mental model on which most investigative journalism is based states that explosive revelations lead to public outcry; elites get the message and reform the system. But what if elites believe that reform is impossible because the problems are too big, the sacrifices too great, the public too distractible? What if cognitive dissonance has been insufficiently accounted for in our theories of how great journalism works…and often fails to work?

EDITED TO ADD (7/27): More.

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Posted on July 23, 2010 at 12:46 PM • 43 Comments

Comments

Stephen Smoogen • July 23, 2010 1:18 PM

People do care about investigative reporting and/or facts.. as long as it confirms their existing world-view :).

On the revelations side.. I found this interesting:

===

9. Hiring contractors is also really expensive for the government, despite the Bush administration’s hopes it would be cheaper than hiring more federal employees. “Contractors made up 29 percent of the workforce in the intelligence agencies but cost the equivalent of 49 percent of their personnel budgets,” the Post says. Defense Secretary Robert Gates said that federal workers are 25 percent cheaper than contractors.

Actually I would say that its more a sign that government workers are underpaid for what they do. I know too many people who found that they could get a nice raise going in/out as a contractor or doing a similar job in corporate than what they were getting as a government employee. And the ‘percs’ that used to attract people like pensions and such are not considered by most new employees as either desirable OR long term viable any more.

theprez98 • July 23, 2010 1:24 PM

Bruce, I seriously hope that you’re joking. This series of articles is not much more than a string of half-useful anecdotes with little or no new revelations. Much of what is published has already been talked about (the expansive nature of the IC since 9/11, growth of contractors, etc.). Even then, they ackowledge these points without any conclusions. I seriously can’t believe it took them two years to write this series; much of it could be accomplished by driving around central Maryland and DC in the course of a few months.

The Columbia Journalism Review wrote an article called “What’s Secret about “Top Secret America?” which details many of the points I am touching on. http://www.cjr.org/campaign_desk/whats_secret_in_top_secret_ame.php

Frank Ch. Eigler • July 23, 2010 1:40 PM

By endorsing silly stuff like the “top 10 revelations” list, Bruce is looking a bit lightweight. Perhaps he should point out what exactly he believes is “phenomenal” about this.

Tony H. • July 23, 2010 1:55 PM

I love the Citrix squeeze toys shaped like hand grenades. Gotta be good in your carry-on bag on the way home from the conference.

Hmmm… I wonder what happens if you have a Top Secret clearance, and are on the no-fly list. Sort of like the cats and buttered toast joke.

Martin Budden • July 23, 2010 1:55 PM

“Pity people don’t care much about investigative journalism — or facts in politics, really — anymore.”

Why do you say this? Plenty of people care.

Chasmosaur • July 23, 2010 2:32 PM

So I grew up in DC, have plenty of friends with security clearances, and even know a few retired spooks. The “revelations” here were kind of tepid for me.

For example – it’s hardly a secret that the NSA has a backlog of things to analyze. That was clearly stated in the wake of 9/11, and for several years thereafter, there were articles discussing how they didn’t have enough Arabic-speaking analysts, which aggravated the problem.

So I don’t see that as terribly investigative – I see it as a LexisNexis search.

And anyone who works in the DHS sphere in DC – as a fed or a contractor – knows fully well that there are turf wars. Always have been, always will be. This isn’t a surprise.

And it’s not that people don’t care much about investigative journalism. It’s what investigative journalism chooses to cover.

This time two years ago, one of the bigger investigative projects until now at the WaPo was….an in-depth, 5-day story on the Chandra Levy story. If we’re keeping count, that’s 2 days more than this story. And those reporters only investigated for one year.

I would love for journalists to do a timely, important piece of investigative journalism. I don’t know how timely this is, or how important.

Albatross • July 23, 2010 3:31 PM

“800,000 people can keep a secret, if 799,999 of them are dead.” – Benjamin Franklin, roughly.

kingsnake • July 23, 2010 4:42 PM

Uram: While 800,000 top secret clearances is way too many, don’t forget that even that level of clearance does not give one access to that level of material without a “need to know” (e.g. my son was TS in MI, but that did not give him the ability to walk into Area 51 and interview aliens).

Clive Robinson • July 23, 2010 5:32 PM

As for 800,000 TS cleared…

Some of them that have been around for a decade or two have noticed that “Top Secret is the new confidential”…

There appears to have been an “over clasification” epidemic since 9/11 and 7/7 on both sides of the puddle and if some commentators are to be believed in many cases it appears to be “to protect the guilty”…

Anon of Ibid • July 23, 2010 5:52 PM

What I think will be much, much more interesting is the supposed upcoming release of a quarter million US diplomatic cables via Wikileaks. That is the place where power talks truth with itself.

Ken Knapp • July 23, 2010 6:12 PM

This is a significant piece of journalism for two reasons in my view. First, it’s the Washington Post (a paper of influence, still) doing the publishing and, second, it’s describing the phenomena holistically; this story is much more than “half-useful anecdotes” offering “nothing new”. Instead, the story is pointing out that an enormously expensive industry and subcultural has arisen in the USA as a result of our government’s actions post 9-11 and that most people outside of Washington D.C. don’t realize just how large and ubiquitous it has become.

Bruce, people do care, but it will take time for this story to digest.

Ted • July 23, 2010 9:52 PM

What seems to be missed in all this is that the size and compartmentalization of the national security state could provide cover for serious plots against political dissidents in the United States or even the United States government itself to unfold totally in the dark. Why should we trust 874,000 people operating in secrecy with virtually unlimited resources to “do the right thing?”

It is almost 47 years since the assassination of JFK in what may well have been a coup d’etat. (See “JFK and the Unspeakable: Why He Died and Why It Matters,” by Jim Douglass.) The current secret government described by Priest and Arkin is the national security state of 1963 on steroids. It is without effective oversight or control. It may be one of the main threats to our democracy.

Congress needs to act to let the sun shine in on this secret apparatus.

Robert • July 24, 2010 1:58 AM

For me the sad part is that this new “spook industry” has absorbed some of the best and brightest Americans and entrapped them. Over 1M highly skilled individuals are no longer involved in commercial product industry, but rather fight for their spot at the government Teat.

When I look at what is wrong with America today, I have to start with the balance of trade and its continual deteriorating spiral. For me, all else is secondary, the main problem, with trade, is that America is no longer producing the differentiated products that the rest of the world must have. So guess what, they don’t buy American and the balance of trade gets worse.

Saddest of all however, is the pervasive attitude that a larger “security” industry will somehow fix the problem. Talk about drinking the koolaid….

Bruce Schneier • July 24, 2010 2:36 AM

“The Columbia Journalism Review wrote an article called ‘What’s Secret about “Top Secret America?’ which details many of the points I am touching on.”

I’ll add that link, but I disagree with it.

DCFusor • July 24, 2010 8:33 AM

As someone who played in that game in the ’70s, the over-classification thing didn’t begin recently at all. It was surely in full swing when I was there.

The big secret is that most of the “secrets” are boring, and at most are that way out of habit (often otherwise known as policy), or to protect some bureaucrat from being exposed as an idiot for wasting money on something obvious.

I really do wonder if the government costs vs contractor costs are correctly stated — total cost of “ownership”, in other words. As a contractor we noted two things — the government perks are expensive indeed compared to what we got, and they sure had a lot of “spare” manpower in sheer quantity compared to the lean way we ran things.

For example, as contractors we had to fund retirement out of current cash flow, and couldn’t shine on that cost as if some general other part of the outfit would pay it, as the government often does.

Look at pensions as a fraction of total DoD costs sometime, it’s an eye opener even before you look at future pension and medical obligations for people currently serving.

The main perk of civil service is that it’s very hard to get fired for anything other than showing up drunk, or diddling children (and sometimes not even then). This attracts a certain type of person. My overall observation is that about 10% of the gov employees do all the real work, and the rest, not so much, other than what it takes to look busy so as to keep punching that meal ticket. This gives them a lot higher cost per effective person-hour as well.

Doug • July 24, 2010 9:17 AM

Bruce, I think you may be confusing disinterest in public affairs and politics with people’s disgust with the media. I stopped reading the Post when they changed from a news organization to opinion shaping. The stories they select, issues they present, facts they select, order of presentation, framing, and even seeming innocuous choice of nouns and verbs all seem calculated to manipulate me, the reader. That disgusts me, and repels me.

CNN, Fox and others are no different. They present a constant stream of editorials disguised as news.

I think you’d see differences in apparent interest if the “issue shapers” reformed themselves and returned to being news organizations.

Harry • July 24, 2010 9:21 PM

The reason for contractors is not that they’re less costly than an employee, it’s that they can be fired. (They still do inherently governmental work.)

Richard Steven Hack • July 24, 2010 9:29 PM

The obvious value of the Post series is that it puts a bunch of facts in one place that a citizen would have to Google for a dozen other places to get.

That said, the criticism that it doesn’t reveal anything “secret” is reasonably valid. A REAL investigative journalism piece would blow the lid off some scandal in the intelligence community – such as the previous stories we’ve heard about where the CIA is running drugs, and the like. It shouldn’t be hard to find any such scandals because the intelligence community is rife with them by definition.

The amusing thing I find about comments from former intelligence officers is that most of them (with some exceptions) are always lauding how “moral” and “ethical” and “competent” their tribe is. How they square that with the major intelligence screw-ups and clearly rancid people involved is baffling.

The fact of the matter is that it takes a certain type of personality to go into intelligence, just as it does law enforcement or the military. You’re not going to join those organizations if you’re someone who is morally or emotionally averse to kicking someone else’ butt. Which says a lot.

It’s like Jack Webb used to produce all these cop shows where the cops were nice, clean-cut , WHITE American young men who always helped little old ladies across the street and NEVER violated anyone’s civil rights. It was complete bull and anybody with any real experience of cops or who even read about the corrupt New York and Los Angeles police forces would know it was. But it was part of the facade that the US media provides to the US electorate that “everything is fine” and “trust your government”.

Whereas the reality is quite different. To find that fact you have to go places on the Internet that are quite different from the Washington Post or the New York Times or CNN.

Richard Steven Hack • July 24, 2010 9:34 PM

Oh, this is hilarious! I turn back from my post above to my Google Reader and what do I find?

Report: NSA, Pentagon officials linked to child porn
http://news.cnet.com/8301-13578_3-20011494-38.html

Quote:

The newspaper said it obtained more than 50 pages of documents revealing that the government workers identified in an internal probe included NSA contractors with top secret clearances, one of whom has fled the country and is believed to be hiding in Libya.

grendelnavy • July 24, 2010 9:55 PM

I was amazed at how much the DHS is getting. As a DOD guy who constantly hears briefs on how we need to reduce the manning levels in the fleet, I wonder how much money that’s wasted there could have been spent on those of us that are forward deployed

fullbirdmusic • July 25, 2010 2:00 AM

Let’s not forget that not all TS-cleared government workers are doing spy work or other nefarious operations Stateside. That’s shortsighted and paranoid.
There are many other operations and missions that still need to be supported by government workers (contractors as well as civil service) abroad in legitimate jobs supporting the armed forces. It’s silly to think that just because someone is TS-cleared that they’ll have access to everything going on in the government that’s classified. Need-to-know is a basic security concept that shouldn’t be ignored and is enforced pretty severely, at least around the military/civil service/contractor folks that I’ve worked with.
I have to admit I was a little pissed about the Post article, because it looked like they just dropped a dime on overseas military commands, posted a Google map on their site, and copied/pasted their Mission Statements. What kind of investigative journalism is that? Everyone who cares to know can find that stuff anywhere – it’s part of the PAO’s standard fare anyway. What makes it special other than putting an entertaining headline on it? Nothing, other than feeding people information they could use against us – even if it’s freely available, they just packaged it in a convenient gift-wrap. I don’t want to sound like a Bush-era fear monger, but it’s a reality that terrorists will use that information against us.

Clive Robinson • July 25, 2010 5:56 AM

@ Robert,

“I have to start with the balance of trade and its continual deteriorating spiral. For me, all else is secondary, the main problem, with trade, is that America is no longer producing the differentiated products that the rest of the world must have.”

Saddly the “balance of trade” has been going wrong since the Thatcher/Regan era. There was this idea pushed that the likes of the UK&US could survive without a manufacturing industry, just a service industry.

The Politicos (nor in some cases the economists telling them) appeared to understand that there are several fundemental differences between the manufacturing industry and service industry over and above that of the simplistic “tangable good” -v- “intangable good” view.

Differentiating manufacturing and service industries is usually muddled by economists and others by looking at the “monitary value” of goods not the processes involved (their “abstraction” is overly simplistic). Which is one reason why I differentiate between real wealth and financial wealth.

If you look at any industry the simplistic view is that they aim is to show a monitary or asset increase over a period of time at or above it’s costs (ie not a loss). In generaly an industry does this by taking in something (a good) and applying energy/work via one or more “processes” to increase it’s monetary value to others now or at some point in the future.

There are two ways you can do this, the first is to add real value (utility) to your own product, the second is add financial value by causing “inflation” of the monetary value by speculation (gambling).

In general manufacturing adds real value / wealth by adding utility as do some service industries. However other service industries such as finance / banking adds monetary value / financial wealth by inflation of price without adding utility (usually by putting in place cost increasing non utility enhancing processes).

A simple way to see the difference is by looking at stee production from ore. In the ground as iron ore it has a very low monetary value, dug out it has a slightly higher value, graded and sorted higher still. At each step a process applies energy/work to make the iron more accessible and thus increase it’s utility by removing “spoil” and making it more available etc thus it’s real value is increased overall.

However parts of this overall process does not add real for instance the process of transportation. That is energy/work is added to move the iron ore etc without transforming it. A cost is added that increases the monetary value but not the real value.

This is an expense that needs to be covered by the rest of the process in some way or removed.

In times past the cost of movment was so high we had mining and refining in the same area and the landscape was quickly changed by spoil heaps, ground water polution etc etc (which is now nolonger socialy, politicaly or legaly acceptable in the US, UK, and most other first world nations).

If you then follow the refined iron ore through the smelting and conversion to steel more energy is applied in the process untill you end up with “stock steel” in various forms that can be used by other industries. In general it has a very high value ($/tonne) when compared to that of iron ore in the ground.

However the price at market of this stock steel is not that at the refinary door, due to financial speculation the price is controlled by “futures” etc where people make contacts to buy or sell at a future date at a particular price. Invariably those promising to sell do not actually have the commodity to sell at the time they agree the contract price (esspecialy true of “naked futures”).

At a cursory glance futures trading appears to be a zero sum game (for every winner there is a loser) but it actually is not. Invariably overall the winners are the traders selling and the losers are the industries buying. Appart from gambaling (on a fairly safe bet) the traders add no real utility to the stock steel in any way (they never see it, touch it, move it, or in some cases own it). All they actually do is increace the “financial value” not the “real value” of the stock steel. That is the monitary value has risen but the utility of the product not one jot. So the futures market is a significant “process cost” both to steel producers and consumers.

So why does the futures market exist? well…

Supposadly it adds stability to both the up stream steel producers and down stream steel consuming manufactures, by enebaling them to know what monetary value they will get, or expend for the steel stock in X months time.

But does the process of futures actually add stability or just cost?

Well at one time it added a small cost to get a known monetary value at quite a time in the future. But that is not true these days, one reason is that the “futures contracts” are now traded as a good in a much shorter time frame to supposadly “hedge” or offset risk. This means that this market takes on or assumes to take on the high risk and as is normal for high risk charge a very high premium. This premium gets reflected back into the steel buying and selling process as a vastly increased cost. Oh and there is an even shorter term market bassed on the monatary differential etc (“spread betting”).

None of these “new markets” add real value to the stock steel, just process cost, inflating it’s monetary value.

Now for betting on risk to be proffitable you need volitility in the short term…

Thus the “new financial markets” have done the exact oposit of what the futures market was originaly supposed to do. To cover the cost of the risk betting the cost of the contract is increased.

Thus it can be seen that these financial markets add faux value by imposing a process with significant cost but no increase in real value.

And the faster the trades happen the higher the volatility the greater the risk and the greater the “financial wealth” can be created inflating the monetary value of stock steel and thus all products made from it…

So if it is an expensive cost why do the steel producers and consumers still pay for the futures market. Put simply it is effectivly a “tied market”. The cost of getting out is currently to expensive for a variety of reasons in first world nations.

However the same is not true for other nations which is something China is busy exploiting. If you control both steel production and consumption in a geographical area then you only have real need of the “tied market” if you have a short fall in production. This does not need to be a single geographical area that is the production and consumption areas can be in different places/nations in the world you just require control. As has been seen in the past control in some parts of the world can be purchased relativly cheaply. Not just by direct bribery of officials but by other means such as subsidized infrastructure development which can be artifficialy manipulated to create a market for the controling entities finished goods, which in turn can be used to create a “tied market”

Another advantage is that there is not “first world” legislation adding “environmental impact cost” or “labour cost” or “Social cost”.

The real trick to retaining control is, as has been seen with the “futures markets” to “keep the cost/pain of getting out to expensive in the short term”.

One way to do this with nations is to treat them like drug addicts hooked on “stuff” that they have to get from you, thus they are “needy and dependent”.

China has quite a history when it comes to control via “drugs” all they are doing is applying the principles of the drug trade to first world nation consumers (as addicts) and third world nation raw materials producers (as poppy/coca growers).

And Japan showed that the easy way to make a first world nation “needy”, it is to marginaly undercut the cost of production in some way. The manufacturing industry in the target nation colapses and disappears. You then ramp up the costs of the items to the first world nation sufficiently far to make a good longterm profit, but not sufficiently far that the first world nation will see the benifit of investing to restart the industry. As can plainly be seen Japan protects it’s rice farmers by importation tarrifs and other legalistive tricks…

However the same game but only more cheaply can be done with the entire “service industry” which is what we are currently seeing.

The rapid reduction in transportation cost aided in alowing tangable goods manufacturing to be “off shored”. Now the rapid reduction in communications costs is allowing services to be “off shored”.

Our own national short sighted ness and slavery to political diatribe is allowing other nations to “hollow out” our own.

As long as we chase the “quick profit”, “short term investment” and “short term view” caused by the “instant fix” view point of politicians and senior business managers we will lose. We get told this as children with the parable of “the tortoise and the hare” and with studying history but our consumerist “greed” and “I want it now” ethics blind us to these lesons in later life.

Joe • July 25, 2010 11:15 PM

@Clive

Wow. That was some post. Not sure how much I could follow since I’m not much of a financial expert. However, your last paragraph I have to agree with on moral grounds. Can’t remember who I’m quoting but “Love of money is the root of all evil.”

herveleger • July 26, 2010 1:41 AM

I love the Citrix squeeze toys shaped like hand grenades. Gotta be good in your carry-on bag on the way home from the conference.

Bruce Schneier • July 26, 2010 3:01 AM

“Bruce, people do care, but it will take time for this story to digest.”

I hope you’re right. It seems to me that — before anyone has a chance to digest the information — there’s another shiny but vapid non-story to distract them.

But maybe I’m just being over cynical this month.

Bruce Schneier • July 26, 2010 3:06 AM

“…it’s describing the phenomena holistically; this story is much more than ‘half-useful anecdotes’ offering ‘nothing new.’ Instead, the story is pointing out that an enormously expensive industry and subcultural has arisen in the USA as a result of our government’s actions post 9-11 and that most people outside of Washington D.C. don’t realize just how large and ubiquitous it has become.”

I agree with this. The story is more than the collection of facts and anecdotes; it’s the coherent picture.

Bruce Schneier • July 26, 2010 3:08 AM

“By endorsing silly stuff like the ‘top 10 revelations’ list, Bruce is looking a bit lightweight.”

Eh. I’m less endorsing it than collecting links. But I realize that most readers won’t read the entire three-part series.

BF Skinner • July 26, 2010 6:55 AM

@Bruce “It seems to me that — before anyone has a chance to digest the information — there’s another shiny but vapid non-story to distract them.”

Like the Wikileaks disclosure of Afghan war reports?

” it’s the coherent picture.”

And looking at that picture I’m reminded about how the DoD goes about maintaining defense programs by spreading the spending around different congressional districts.

Now that we’ve built it. How are those plans for dismantling it once the danger passes coming? Oh there aren’t any plans? That’s odd. Planning for after the end of WWII was well under well before the end of WWII.

@Clive As DCFusor says the overclassification isn’t new. saw it in the 80s and 90s. Most of the time I don’t think it’s to protect the guilty just classifying authorities who are making a coin toss call.

Though I grant you it does happen. People confuse protecting national security with protecting misbehavior of people engaged in protecting national security. And then there are those acts that are ‘technically’ illegal “but not when the President does it.”

Question. Is a world without secrets desirable?

George • July 26, 2010 10:46 AM

This is one reason we have an out-of-control TSA that nobody is willing to touch. When a failure inevitably occurs, it’s all but impossible to identify what failed, let alone do anything to correct it. The one thing the Homeland Security bureaucracy can do with spectacular success is to evade accountability for anything.

But our leaders desperately need to show the terrified public that they’re “Doing Something” in reaction to a terrorist incident. The easiest thing for them to do is to call on the TSA to “heighten security.” The TSA will then do what it does best, and rush something utterly boneheaded into place that hassles every passenger but does nothing to improve security. But effectiveness doesn’t matter. The important thing is that it inconveniences passengers enough to convince (some of) us that the government is “on top of things.” It papers over the unfortunate reality that the bureaucracy that’s supposed to protect us from terrorism is so dysfunctional that it can’t do anything. So the only recourse is to rely on the TSA to pretend that something is being done. And the TSA is nothing more than the visible tip of a large iceberg of bureaucracy that’s otherwise hidden behind veils of secrecy.

That’s the truly sad thing. It’s impossible to find, let alone punish, the bureaucrats who failed. But since someone has to take the blame, the only available option is to punish everyone who chooses to fly.

Michael D • July 26, 2010 12:59 PM

This is exactly the same problem as California’s First-5 debacle – a program which takes billions of dollars in cigarette taxes and spends it on health, education, and self-esteem of children under 5. (Golly, who could be against that?) It is astonishing how many people they hire in the 50 county offices, how much money they spend, to do so little.

Politicians boast about the economic stimulation and job creation of government expansion and government spending at every level. It’s all the same deal. Hiring an army to do almost nothing is not failure, it is success! The opponents of big US government are completely ineffective at making their case these days.

Don • July 26, 2010 3:44 PM

When I was six years old, my dad was a low-level employee at the Pentagon. I got to visit his office one day, and was most impressed by the uniformed couriers traveling the halls on roller skates, and occasionally one on a big tricycle with a little safe.

My dad explained to me that if you needed something delivered quickly, you stamped it “Secret” and one of the roller dudes would deliver it, but if you needed it delivered in a real hurry, you stamped it “Top Secret” and one of the tricycle guys would put it in his little safe and whisk it off to its destination.

That was over 50 years ago, and no new thing then.

bob (the original bob) • July 28, 2010 7:53 AM

The day I heard they were going to create a new uber-bureaucracy to oversee the existing monolithic security organizations, I was incredulous. I could not see then how piling on tons more chaff at the top of a wheatpile that was already 98% chaff was going to help clarify any of the wheat. Nothing I have seen since has done anything to change my opinion away from my initial position.

Re contractors: Contractors may cost more in the short run (I suspect the difference is made up as the pension runs its course, but that takes 40 more years to show up) than civil servants, BUT contractors can be fired at the drop of a hat. I have lost DoD contracting jobs with no warning (beyond the customary 2 weeks) 4 times in the last 20 years, most recently from a company I had been with for just shy of 10 years at the time (the company itself was nice enough to grandfather me into full vesting on the retirement plan which would have normally required 4 more months, and keep me on the medical plan for an extra month).

This means when the wind blows differently, whole organizations can disappear overnight; whereas it is easier to execute civil servants than it is to fire one. I leave it as an exercise for the student to decide which makes a person more likely to stay on their toes and do a good job.

AG • July 29, 2010 11:02 AM

I don’t get why this information is accepted as true. Some probably is, some probably isn’t. What is, what isn’t, and why?

As for bloat, incompetency and such, sure maybe. It exists. Doesn’t mean it doesn’t exist everywhere. But many times to get things done matters/people/organizations have to be downplayed.

@Albatross

Funny Ben Frankline quote redo.

Best way to keep secrets is by telling people a compelling lie. They believe it, so they act as if it is true.

Then, feed it all with layers and layers of disinformation.

Sorry. I must be paranoid with an overactive imagination.

Jimbo in Limbo • July 30, 2010 3:14 PM

The only quote I find the need to counter from the articles:

“…defeating transnational violent extremists.”

The bigger problem might be transnational corporations.

If you tally up the body count and economic destruction by these entities, I don’t think it would be a close contest. Same thing with blue-collar crime versus white-collar crime. The real culprits are getting away with it.

MBA boy (and NOT a banker/trader) • July 30, 2010 8:24 PM

Clive,

as an interested reader but relative layman on security issues, your posts on those topics appear very knowledgeable. On econ and business however, you are on my turf. I haven’t got time for a full breakdown, but here’s a few points:

1) “In general manufacturing adds real value / wealth by adding utility as do some service industries. However other service industries such as finance / banking adds monetary value / financial wealth by inflation of price without adding utility (usually by putting in place cost increasing non utility enhancing processes).”

Firstly, many, many industries “[put] in place cost increasing non utility enhancing processes.”
e.g. 1 when motor manufacturers design vehicles so they need specialist diagnostic kits that approved dealers have but independent mechanics don’t, to try to drive the latter out of business, is that not a “cost increasing non utility enhancing process”? What about when Microsoft changes the format of Word every 1/2 hour like it used to?
e.g. 2 What do you think all those lobbyists do in Parliament? If you think they’re not trying to buy legislation that undermines their competition, I have some seafront property in Warwickshire/Kansas to sell you.

Secondly, this type of pro-manufacturing anti-service industry thinking is responsible for many of the economic woes we currently face. Here’s an example of why: Say you’re a manufacturer. You make a product that takes you an hour and costs you $10. The market will bear a selling price of $30 so your max income is $20/hr profit x 40hrs/wk = $800. Now let’s say that instead of adding ‘real value’ by manufacturing it yourself, you find a supplier who can make them for $18. That’s $8 an hour MORE than it costs you to make it yourself. Why would you ever use them? A: Because it frees up your time. Now you can build a website and sell thousands of them, while still only putting in the same 40 hours. $30-$18 = $12 profit each x 000s = a lot more than the $800 you’d get if you made it yourself. Further, if you could design a better one or find a cheaper supplier you’d make even more, except of course, now you’re no longer a manufacturer, you’re a …a …a oh no! …a service industry. Think about it Clive. Why don’t you make the bricks for your house or your own bath towels or each part for your car? The answer is, because you’ve specialised and you’re a lot better off because of it. The trick is to save while you’re employed and keep your skills up to date so that if you find yourself shoe-ing horses when the car’s been invented you have a cushion while you retrain.

2) “However parts of this overall process does not add real [value] for instance the process of transportation. That is energy/work is added to move the iron ore etc without transforming it. A COST IS ADDED THAT INCREASES THE MONETARY VALUE BUT NOT THE REAL VALUE.”
‘Monetary value’? ‘Real value’? What’s the difference? A pound in your pocket is a pound in your pocket whether you earned it working down a mine or selling computer security advice. It’s all ‘real value’.This isn’t government we’re talking about. Fraud and management laxity aside, if ‘it’ didn’t add real value, it wouldn’t get done. If you can sell your steel for $50 a tonne in Manchester or transport it to Liverpool for $10 a tonne and sell it there for $65, which are you going to do?

3) “At a cursory glance futures trading appears to be a zero sum game (for every winner there is a loser) but it actually is not. Invariably overall the winners are the traders selling and the losers are the industries buying.”
and
“But does the process of futures actually add stability or just cost?”

A) If it just adds cost, why would any industry trade with the traders?

B) What do you mean by ‘winners’? Any company that sells at a loss for too long will eventually go out of business, both futures traders or ‘industries buying’.

C) You are completely missing the enabling functions of the futures market. Consider orange juice. You’re setting up in business and you can be a farmer or a weather forecaster/statistician/trader. You plump for being a farmer. You estimate the next year’s weather, how much you should plant etc and off you go. You’d like a tractor/fertilizer etc., but as it might be a bad year, you need to keep the cash on reserve to see you through the winter, so your productivity is less than it could be. At the end of the year, you sell your whole crop for a price of X. Futures traders starve.

As it happens, you bump into one of these starving traders at the market. You start talking and you mention you predict next year will be the same as this year and thus that you’re income will again be X. It turns out that by foregoing learning to be a farmer, he is a worse farmer than you but was able to become a better weather forecaster/statistician/trader. He thinks it will be a better year and so the two of you discuss an arrangement. He offers a contract to pay X +Y next autumn/fall for the same tonnage you produced this year. What do you do? With a guaranteed contract, you can spend that spare cash on the tractor and save those poor bones of yours AND you’ll have Y extra cash AND, with a guaranteed income, you won’t starve if it’s a bad year so you can buy that tractor/fertilizer and plant even more. Now remember, this offer he’s made you is entirely voluntary. You have no obligation to take it whatsoever, but are you really going to turn down a deal like that? And if the trader has no use for your produce himself but rather contracts with someone else to deliver it to them at the end of the year, does that make any difference to you? You’ll still get your X + Y. Think what’s happened here. You made more money, the trader made more money, the tractor manufacturer made more money, more orange juice was produced so consumers were better off. Really, Clive, the only people who think that’s a bad idea have read too much Guardian and not enough Adam Smith.

Regards,
MBA boy (and once again, NOT a banker/trader!)

66 • August 1, 2010 10:04 AM

The futures market for intelligence favors the few and expensive over the many and cheap. Leaks are expensive and have no business benefits. Now we’ll see a surge in leak prevention contracting and spend more money creating technology to stop other technology. I’m sticking with Top Shelf America and paper & fire.

Martin English • August 2, 2010 2:26 AM

Daniel Ellsberg makes an interesting point in http://www.economist.com/blogs/democracyinamerica/2010/07/daniel_ellsberg_interview

“I would’ve thought that the National Security Agency could penetrate them and keep them from giving anonymity to leakers. We pay an awful lot to the NSA to spy on us—since 9/11—and on other people, and I supposed they were up to the task of denying secure communications to Wikileaks. But the administration’s surprise at these revelations indicates that Julian Assange is delivering to sources what he said he could—anonymity.”

Of course, that doesn’t include manning who basically gave himself up.

anton • August 9, 2010 3:03 AM

@ Clive Robinson
@ MBA Boy

An interesting question to ask is whether the futures traders etc actually take money out of the system or put money back in.

I would have thought most speculators (as opposed to investors) loose money on the stock exchange and only few gain even though the odds on the market are better than those for gambling.

I think one of the points Clive is making, is that the guy with the bigger pool of money (eg a gambling house) tends to win over the little guy trying to make a buck.

Hence anti-trust laws and the like.

A further point is that Government who is supposed to protect the little guy (to foster more economic activity) would rather collect short term cash from lobbyists than for example to launch anti-trust action. Plus these Government bureaucrats are mostly whimps that react excessively to the mainstream media which is more interested in economic growth through any means including useless processes) as it serves mostly the advertising community rather than the community at a whole.

lisa • August 15, 2010 8:20 PM

Giving up or commenting on how it is a mess, etc. is not a solution. It contributes to the problem by listening to people who are not doing, just grand-standing. And as Bruce illustrated, our problems are huge so we need less talking and more doing. As I learned at the largest consulting company in the world, you eat the elephant one bite at a time. You don’t talk about how big the elephant is or how you could change the elephant, or how long it will take to eat the elephant. You take one bite at a time by doing, not talking, I feel.

lisa • August 15, 2010 8:30 PM

As I learned in Israeli training: you don’t need money or authority for security. Another example: A bad cleared man was yakking about a product he is selling that manipulates the real estate market by intentionally distorting the sales price – which used to be called fraud. The bad cleared one detailed others who had gone to jail but his product was better, etc. Well a friend came to Starbucks to give voice to the clearly named Brett on how it is wrong and how he left top secret pcs and note books with contacts in a starbucks unsecured for so long Israelis would have blown the stuff up. Point: when you see bad, get more witnesses and make a big scene in front of the camera and record on your own. Or not. Try for yourself.

zenfoos • August 16, 2010 5:28 PM

For 2 years worth of investigative work there is really not that much here. In my opionion, the article does not get into some of the legitimate rationale for what is construed as waste (make no mistake, some of it is waste as there would be in any large company). These articles are slanted with what i believe are partial truths.

66 • August 16, 2010 7:12 PM

2 people worked on it, so it’s like 4 years total. If the Post puts 100 people on a story for a week it’s like 300 weeks in 1 week, all of which makes for a long week. I’m not sure about the story. The numbers, that’s all I’m sure about and they look bad. Don’t let school get in the way of education kids.

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