TCS Daily

Markets Reward Eco-Terror. So Let's Fix Them.

By James D. Miller - August 28, 2003 12:00 AM

Eco-terrorists recently torched an auto dealership to protest big American cars. Unless intelligently countered, such economic terrorism might succeed in furthering the terrorists' environmental crusade.


Giving in to terrorists encourages them. Unfortunately, markets automatically respond to eco-terrorism by doing exactly what the terrorists want. If, for example, SUV dealerships were subject to a significant risk of arson, their insurance rates would rise, which would in turn raise the price of SUVs and therefore result in Americans driving fewer big cars.


We need to change economic cause and effect to stop the market from rewarding environmental terrorism. I propose that the government fully compensate individuals and businesses for all losses caused by eco-terrorists. The money for this compensation should come from the Environmental Protection Agency's business oversight budget or from selling federal land to mining companies. Under either financing plan, eco-terrorism wouldn't increase the price of goods the terrorists dislike, but rather would cause the government to act in ways they detest.


True, my terrorism compensation plan might cause eco-terrorists to disguise their attacks and, for example, make arson look like an accidental fire. One of the goals of eco-terrorism, however, is to use the media to promote their agenda. If they couldn't take credit for their destruction, they would have less incentive to destroy. Furthermore, if the insurance markets didn't discover that accidental fires were really targeted attacks then the eco-terrorists wouldn't cause a rise in insurance prices and so wouldn't affect American consumption patterns.


Since businesses would now benefit from perceived eco-terrorism, my compensation plan unfortunately creates incentives for some corporations to engage in attacks and disguise them as eco-terrorism. But a properly set up victims' compensation plan would create only slight incentives for firms to engage in such disguised attacks. For example, if the victims' compensation comes from selling off federal land, then the land should be auctioned so the winner pays about what the land is worth and doesn't get a significant benefit from the transaction. If the victims' compensation comes from the EPA enforcement budget, then it should slightly reduce all types of environmental enforcement so no one industry significantly benefits from the diminished budget.


Private Americans could use their charitable donations to deter eco-terrorism. When eco-terrorists openly strike, Americans could make targeted donations to organizations that counter radical environmentalism. Indeed, charities which conduct activities such as protecting property rights against environmental restriction should solicit contributions in the name of eco-terrorists.


If they desired, the press could also help fight environmental terrorism. In response to the torching of the auto dealership a city councilman said to the press "We don't disagree with the need to improve fuel efficiency," then added, "but vandalism doesn't get the message across." Well, actually it does, since his statement about "needing" to improve fuel efficiency obviously got some coverage. The press clearly has to report on which type of organizations take responsibility for terrorist acts. But they shouldn't, however, transmit the terrorist's talking points while covering the carnage. The greatest difficulty with competing in the marketplace of ideas is getting attention from the press. Terrorism shouldn't give anyone a media edge.


My wife and I recently adopted a dog named Oscar who, though usually sweet, has some very bad habits such as trying to aggressively smell or eat (we're not sure which) our now terrified cat. The worst thing we could possibly do is give Oscar a treat right after he terrorizes our cat. The natural workings of the market, unfortunately, do reward terrorists for their destruction by giving them media attention and raising the price of goods they dislike. America should therefore counter the normally wonderfully-working marketplace to prevent it from rewarding environmental terrorists.


James D. Miller writes The Game Theorist column for TCS and is the author of Game Theory at Work.


TCS Daily Archives