Bruce Schneier <3's TSA

Yesterday, Bruce Schneier wrote a blog post about abolishing the Department of Homeland Security. It was based, in large part, on a CATO report calling for the same citing that

DHS has too many subdivisions in too many disparate fields to operate effectively. Agencies with responsibilities for counterfeiting investigations, border security, disaster preparedness, federal law enforcement training, biological warfare defense, and computer incident response find themselves under the same cabinet official. This arrangement has not enhanced the government's competence. Americans are not safer because the head of DHS is simultaneously responsible for airport security and governmental efforts to counter potential flu epidemics.

Schneier agrees, citing his own writing from 2003:

Our nation may actually be less secure if the Department of Homeland Security eventually takes over the responsibilities of existing agencies. [...] Security is the responsibility of everyone in government. We won't defeat terrorism by finding a single thing that works all the time. We'll defeat terrorism when every little thing works in its own way, and together provides an immune system for our society. Unless the DHS distributes security responsibility even as it centralizes coordination, it won't improve our nation's security.

But Schneier takes issue with CATO's suggestion, later in the above linked report, that the TSA should abolished. Instead, he believes

abolishing the TSA isn't a good idea. Airport security should be rolled back to pre-9/11 levels, but someone is going to have to be in charge of it. Putting the airlines in charge of it doesn't make sense; their incentives are going to be passenger service rather than security. Some government agency either has to hire the screeners and staff the checkpoints, or make and enforce rules for contractor-staffed checkpoints to follow.

It would be very easy, at this point, to attack Schneier on the basis that the TSA is a colossal failure. However, that TSA is not a failure of epic proportions is not what he is arguing. In fact, Schneier himself is the progenitor of the idea that exactly "two things have made flying safer: the reinforcement of cockpit doors, and the fact that passengers know now to resist hijackers". Furthermore, just this week, he penned an article calling the TSA irrelevant. So, let's look at exactly what he did say: that airline security should return to pre-9/11 levels with the government being in charge of it, either directly (government-hired goons staffing the checkpoints) or indirectly (private contractors acting under government regulation). If we hearken back to the pre-9/11 days, we find that his statement is redundant. Prior to 9/11, the government via the FAA was in charge of airline security, and what Schneier is suggesting is exactly how we arrived -- ignoring the reason(s) for the attacks themselves -- at 9/11 in the first place.

Before addressing Schneier's claim that putting the airlines in charge of airport security doesn't make sense, let's start with why his own solution doesn't make sense. First, there is the empirical evidence. As I just pointed out, 9/11 happened on the government's watch. While I agree that airline security should be rolled back to pre-9/11 levels, putting/leaving the government in charge of it is ludicrous, and the reason for that is that the government's interests do not align with that of the traveling public. Ostensibly, both care about flight safety. But in reality, as Schneier himself points out relentlessly, the TSA fails to provide this on any level. Just last month, a Vanity Fair writer explained how Schneier helped him circumvent TSA security to meet Schneier at the gate when his flight arrived. Then there's my own personal experience: after leaving the screening area (without being screened), the TSA demanded that I return because they feared that I may have an explosive device on my person. Why would they usher me back to the most crowed area of the airport if they feared that I had explosives? In reality, the government's interest(s) lie in an ever increasing role in security. This provides, not an actual increase in security, but an ever increasing ability to funnel money to favored contractors and further ratchet up the police state apparatus for the same reason.

The other reason that having the government in charge of airline security doesn't make sense is the same reason that letting the airlines manage their own security does: the profit and loss test. The basic idea is that when a business produces a product that consumers want at a cost that is less than what consumers are willing to pay, then the business profits. If any of these conditions are not met, the business suffers a loss. If the business does not change, then it goes out of business, government intervention notwithstanding.

Let's apply this test to the government's handling of airline security. It is producing a product that consumers want, namely, security. It is producing it at a cost of approximately $8.8 billion per year according to the federal government's 2011 budget. But this is where the profit and loss test ends for the TSA or any government entity. The profit and loss test requires that consumers of a product voluntarily pay or not pay for it. The government is funded via compulsory taxation. Therefore, the government need not concern itself with whether or not it is producing a product that people want or, more importantly, in a way that they want. That the government acts in exactly this way is borne out by reality. The TSA's budget during its first full year of funding in 2003 was $4.8 billion. It's current budget, only 8 years on, is a near 100% increase from that initial budget. This comes despite repeated TSA bungles including sleeping on the job, physically harassing passengers, allowing criminal activity to bypass security, stealing from passengers... the list goes on and on. If the TSA was a private corporation, consumers would have put it out of business almost 10 years ago. Instead, its costs are higher than ever and rising with no end in sight. In fact, the TSA's only measurable goal is total security, something that requires an absolute police state. Despite the desire on the part of the traveling public for total security, I'd wager that none would actually want to pay for it in terms of money or liberty required to implement said police state.

Now we can return to Schneier's claim that putting airline security in the hands of the airlines makes no sense. He believes this because he thinks that the airlines' focus will be on passenger service instead of security. Somebody didn't think through his rationale, completely. Tsk, tsk. Security is part and parcel of the service provided by the airlines. No passenger is going to be concerned about a glass of soda and a bag of peanuts or that he didn't get a blanket and a fluffy pillow if his plane is commandeered or blown up by a terrorist. Not only that, but the loss of a plane costs an airline hugely. There is of course the capital loss of the plane and the fuel, but more than that, if the airline wants to stay in business it's not only going to have to beef up its security, but it is going to have to figure out how to prove to passengers that it had changed its ways so that they'd be willing to fly again. We see then, that the airlines' interests, unlike the government's, align perfectly with the traveling public. In addition, airlines carry insurance for their operations. This means that airlines want their operations to be safe and secure because they don't want their premiums to rise in the event of an accident, and the airlines' insurance companies have every incentive to pressure the airlines to keep their operations safe and secure lest the insurance company have to pay out a multi-million, possibly billion, dollar claim.

"We can't trust the airlines", I hear you scream. "They're greedy capitalists!" Indeed they are, and that's exactly why the system would work. The airlines, unlike the government, cannot just take consumers' money to fund their operations. They must induce consumers to voluntarily give money to them. Thus, the airlines are subject to the profit and loss test described earlier. If the airlines provide too little security, passengers won't be willing to fly. The airlines will have saved some money by skimping on security, but the lack of income will ultimately result in losses. If they provide too much security, either the costs will drive ticket prices to a level that consumers are unwilling to pay, or consumers will find alternate means of travel because they find the security required by the airlines too onerous. In either event, the airlines will again find themselves losing money. In order to make money, the airlines will have to provide enough security to satisfy their passengers' desire for safety and their insurance companies' risk tolerance while not imposing so much security that passengers seek other airlines or other modes of travel entirely to avoid the costs and hassles.

Astonishingly, a self-correcting and self-policing system like this hasn't taken hold. Part of the reason for this is human nature. Humans have demonstrated a surprising inability to correlate events with the likelihood of their occurrence. For example, very few people are concerned about choking to death on their own vomit. However, it turns out that one is 9 times more likely to die by this method than via an act of terrorism. This is a topic that Bruce Schneier has also written about repeatedly. Because of this, people always demand ever more security in the event of some kind of accident or attack. Normally, the costs of these demands would temper them somewhat, but this doesn't happen because of government involvement. This is the other reason that a free market system has not taken hold: the government provides moral hazard. The airlines prefer that the government be involved because by using government provided security and/or standards, responsibility for security failures falls on the government, not the airlines. When something tragic occurs, the airlines can point to the government as the failure. Insurance companies are likewise not terribly worried about having to pay airline claims because the government has proven willing to bail them out. Even consumers are unwitting accomplices in this system because the costs of security have been separated from the cost of a ticket. Instead, these costs are (or would normally be) imposed as taxes, but even if one went looking for them, they would be difficult to find as the government has taken to inflating the currency in order to finance its operations. The increased costs of security are found in the rising prices of everyday items like milk, rent, electricity, and gasoline.

The government's involvement in airline security is not only an abject failure but an impediment to allowing a free(d) market to discover what the people really want when it comes to airline security. Bruce Schneier is a smart guy, and he's one of the TSA's harshest critics. He's written extensively about security and the trade-offs made in its name; he's no stranger to economics, especially when it comes to security. In light of this, I can only conclude from his desire to keep the government involved in airline security that he secretly loves the TSA.

Where's the beef (with capitalism)?

Over at Arm Your Mind for Liberty, a recent article takes issue with capitalism. I read this article with great interest because (I assume) it grew out of a discussion between myself and the author as well as some others regarding capitalism. When I read it, though, I couldn't find that the "beef" is really with capitalism at all. Before going too much further, we should probably start with a (common) definition of capitalism, but I'm not going to attempt to define capitalism in great detail. It seems that if you ask ten different people, you'll get ten different answers about what capitalism means to them as the linked article states:

‘Capitalism’ is a funny word. It means so many different things to so many different people, that it’s become entirely useless as a basis for any kind of rational or constructive communication. [...] Some will mention wage labor, others exploitation and yet others will talk of free trade. But I think the defining feature is the ability to accumulate lots and lots and lots of stuff (capital).

Fair enough. The ability to accumulate lots (and lots and lots) of stuff, or capital, is most assuredly a characteristic of capitalism and, as we will see, the article's main problem with it, so let's focus our attention there. Before we do so, the original article takes a slight detour:

And then, most importantly, [a characteristic of capitalism is] to have a third party protect your ability to control that stuff even when you’re not using it. That third party, of course, is the state (the government). [...] Without this ability to accumulate and have your title to said stuff protected at little to no cost to yourself, things like wage labor, exploitation and managed trade could not happen. These all depend on the power imbalances that stem from the state protecting capitalists’ control of their property.

Whoa, wait just a minute! Now, we're not talking about capitalism any more. We're talking about a state-directed ("managed trade") and state-enforced ("stuff protected at little or no cost to yourself", presumably via taxation on the whole population and "power imbalances" in the form of state-chartered police and enforcement mechanisms) economic system, our current system, what many call crony-capitalism. So, we can already see that the author's problem is not with capitalism, per se, but with crony-capitalism and the state enforcement of it. The author continues by stating that he doesn't "think capitalism would survive without the state".

But we're not talking about capitalism any more. We're talking about the state. The author offers no evidence or theories as to why capitalism cannot or will not exist without a state other than to say, "I don’t think a non-aggressive organization will go to the same lengths as the state to protect property". This is demonstrably false, however:

Just think for a moment about the following:

• Who is responsible for protecting you at most major shopping centers? Ever see a private mall cop? I bet you have.
• How about casinos? Almost all casinos have private armed security.
• What about at the dance club? Ever see a bouncer throw out a belligerent drunk?
• What about at the university? You’d be hard pressed to tell the difference between a public safety officer and a cop. Many universities have private police forces.
• How about warehouses, ports and apartment complexes? It is not uncommon to have private security guards protecting all of those. My apartment complex has its own security.
• Airports used to be entirely protected by private security – and guess what? No one was complaining about being molested. Further, after 9/11, it was the airlines who made real improvements to security by putting in steel cockpit doors and arming the pilots.
• Banks? - Almost all bank cash transfers are dealt with by way of private armored car, and many banks have private armed security as well.

Now I've been drawn into a digression about capitalism on a larger scale. Let's return to the accumulation of stuff in the original article and look at an example provided by the author describing his issue with it: "if someone fences off 1,000 acres of land but consistently uses only 2, I don’t consider that legitimate". This situation draws its basis from the Lockean idea of homesteading, that one becomes an owner of land by "mixing" his labor with it. I'm not going to argue whether fencing 1,000 acres constitutes a mixing of labor. A debate on such a matter is not likely easily resolved.

Instead, what if we arrived at this situation differently, voluntarily? Let's assume two people and call them A and B. Each of them own 501 acres (via legal means, homesteading or otherwise) and farm the entirety of their respective plots. A and B both consume only what they need to survive and sell the rest of their produce into the marketplace. A saves the proceeds from his sales under his mattress while B spends his money on vacations and house keepers and other consumable goods and services. (One has to wonder, at this point, if B has a claim to A's money since storage under A's mattress is not "productive" use in B's mind.) At some point, bad weather conditions befall A and B. A, having saved his money, is able to buy what he needs from the marketplace, but B has nothing. Seeing B's plight, A offers to use some of the rest of his savings to buy 499 acres of B's land. B, needing to feed himself and his family, reluctantly agrees. Now A owns 1,000 acres, and B owns 2. We've arrived at the evil capitalist situation described by the author in the original article, but we've arrived by completely legal and voluntary means.

Let's assume that A, having just bought the land and exhausting much of his savings, does not have the capacity to expand his farming operations into his newly acquired 499 acres. When the weather improves, does B have a legal right to reacquire the land, via homesteading? What if B had kept the land but sold his farming equipment to A to pay for his food? Now that B is incapable of farming his land (and has no reasonable prospects for doing so since he has no farming equipment and no savings with which to buy any), can A also freely acquire B's land under the homesteading principle?

The author of the original article seems to think so: "If someone needed land and had a solid intention to use it to sustain his life, I would support that person in any attempt to homestead a reasonable parcel out of the 1,000 acres". B, in our example, has every "intention to use [the land] to sustain his life" as well as others'. The author goes so far as to suggest that force is an appropriate means to affect this outcome:

In a stateless society, people would be freer to rise up against people who attempt to control more property than they actually use. Acting in concert, great numbers of people could, in the worst case, purchase arms, form a defense force and fight capitalists on a more level playing field. Squatters, worker-owned cooperatives and similar direct actors would take control of more of the capitalists’ property. In the process, their power would be eaten away.

In fact, A has saved B's life as well as his family's, and in return B should have the right to use violent force to take back from A what was voluntarily given/traded (by B himself!) to A? What the author is suggesting is either a clear violation of the non-aggression principle or will require a state, with a legal monopoly on the use of violence, to forcibly give A's land to B.

The only other argument in favor of what the original author is suggesting hinges on the word "reasonable". Perhaps 1,000 acres is an "unreasonable" amount. Much like the hypothetical debate about homesteading to which I alluded earlier, a common definition of what is "reasonable" is not easily resolved. As an example, here are a bunch of pro-gun people on a pro-gun forum disagreeing about what "reasonable" gun laws would look like. At any rate, the example I gave above works with any sized parcel of land. In fact it becomes even more difficult to reason out on a smaller scale. Consider if A and B each owned two acres and A bought 1 acre from B. A is in a much better position to farm an additional 1 acre than he is an additional 499. What if A incrementally continues the process, voluntarily acquiring parcels from C, D, E, etc. in a similar manner? When does the amount of land that A owns become "unreasonable"? Does the situation change if A rents the land back to B, C, D, E, etc.? Who makes that decision and who enforces it? What authority does this entity have when A can show that his property was acquired legally? None, according to the author of the original article: "If a person prospers legitimately, I have no basis to challenge any accumulation of wealth." Wait, what? Does B have a claim to A's legitimate accumulation of wealth (in the form land) or not?

In short, capitalism, true capitalism, is not an economic system that is imposed on anyone. It is an economic system that arises from, or rather is the result of, voluntary interactions in a truly free society. In fact, the economic system proposed in the original article is not only incoherent but, in the author's own words, requires violent enforcement. I suggest that the author's "beef" is not with capitalism but with a free and voluntary society.