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[bryant]

Various and sundry commentators have been making alarmed noises about the new DARPA-organized political stock market.

There are a few rational objections. Someone over at CalPundit noted that the system may be very gamable by people who want to conceal the possibility of their own terrorist activity. Kevin Drum notes that there’s the possibility of pissing off allies who would prefer that we not enable a market for futures based on negative events occurring in their country.

On the other hand, I’ve got to look askance at the people who are complaining about the immorality of betting on tragedy. You may not have noticed, but the New York Stock Exchange trades stock in real companies. Those companies employ real people. Every time someone sells a stock short, they’re betting that something bad will happen to those people — something that may cause salary reductions or layoffs.

“Oh, but that’s not a matter of life or death.”

No. Not usually. But sometimes it is. And any way you cut it, it’s still bad things happening to good people.

Comments

Or, it's a government-funded hit list

[dtm]

Let's say that you're rich and want political figure XYZ assassinated. Let's say that you're willing to finance an operation to do this.

So, using the options market, you place a $Q (where Q is large) bet that figure XYZ will not be assassinated. Someone bets against you, said political figure is in fact assassinated, and you pay up. The person who bet against you could be the assassin, a representative of the assassins' organization, or some middleman who takes a small percentage in exchange for washing the money through other third parties.

And you, the assassination financeer, have done all of your financial dealings completely in the public eye, on a government-sanctioned market, and have (at first glance) completely clean hands.

The idea of using bets that condition X will not occur as a way to fund someone to make condition X occur is not at all new; in fact, the idea of using it to fund political assassinations has been explored before.