Life in the USSA

Last week, the Washington Post ran an excellent three-part series on the growing national security state. The series, written by Dana Priest and William M. Arkin, was titled “Top Secret America,” and the articles were titled “A Hidden World, Growing Beyond Control,” “National Security, Inc.,” and “The Secrets Next Door.” This series, said the Post‘s editors, was based on two years of reporting. As good reporters, they focused mainly on the facts. Those facts themselves are pretty scary.

The reporters didn’t draw any big conclusions from the facts. Yet, the whole series is an excellent illustration of two of the main themes in the life work of the late economist Friedrich Hayek, who shared the Nobel Prize in economics in 1974. One theme, which he emphasized in his 1944 book, The Road to Serfdom, is that when government grows and takes on more power over our lives, it threatens our freedom. The second theme is that central planning of an economy doesn’t work. Although Hayek never applied his insights about central economic planning to central anti-terrorism planning, the reasoning, as we shall see, is the same. So is the bottom line: It doesn’t work.

First, some of the striking facts from the Post‘s series, in the authors’ words:

“* Some 1,271 government organizations and 1,931 private companies work on programs related to counterterrorism, homeland security, and intelligence in about 10,000 locations across the United States.

* An estimated 854,000 people, nearly 1.5 times as many people as live in Washington, D.C., hold top-secret security clearances.

* In Washington and the surrounding area, 33 building complexes for top-secret intelligence work are under construction or have been built since September 2001. Together they occupy the equivalent of almost three Pentagons or 22 U.S. Capitol buildings – about 17 million square feet of space.

* Many security and intelligence agencies do the same work, creating redundancy and waste. For example, 51 federal organizations and military commands, operating in 15 U.S. cities, track the flow of money to and from terrorist networks.

* Analysts who make sense of documents and conversations obtained by foreign and domestic spying share their judgment by publishing 50,000 intelligence reports each year – a volume so large that many are routinely ignored.”

Many of the organizations they refer to gather data. According to the report, the super-secret National Security Agency (NSA), the granddaddy of them all, collects and analyzes, in a single day, “1.7 billion e-mails, phone calls, and other types of communications.” Are we to believe that none of those are e-mails or phone calls made by or to us? And given the secret nature of these activities, how would we ever find out? We do know, not from the Post story, but from an October 2008 investigative report by ABC News, that the NSA has admitted listening in on phone-sex conversations between people in the American military and their loved ones. One disappointment I had with the Post story, by the way, is that it had virtually zero information about the content of the data that these government agencies collect.

Also, how long will it be before some police agency, whether at the federal, state, or local level, uses this information to go after Americans living here? We now have two U.S. presidents in a row – Bush II and Obama – who have claimed the right to kill Americans abroad without a trial or even a hearing. Incidentally, it was the same Dana Priest who revealed that, although she buried this little detail in the article. We know that former Secretary of State Madeleine Albright stated that the deaths of 500,000 Iraqi children, as a result of the U.N. sanctions of the 1990s, were “worth it.” I’m not claiming that 500,000 was the actual number; it was probably substantially lower. My point is that she believed that 500,000 innocent lives was a price that was worth paying. What’s also shocking about the interview with Albright was how little shock many Americans felt about her statement. She didn’t make the claim on some obscure Web site that no one saw, but on 60 Minutes, one of the premier news shows in America at the time. Yet there was no outcry calling for her resignation. A major U.S. government official calmly accepts the death of hundreds of thousands of innocent people, so is it hard to believe that some other government official or one of Albright’s successors would take the next step of killing a handful of resident Americans, especially those thought to be terrorists?

So, the United States is well on its way to being the Orwellian surveillance society and maybe even on its way to being a society in which the government carries out secret murders. And here’s the irony. The alleged goal of all this surveillance is not being achieved. Here’s where the Post‘s series was strongest. It makes the point that this national security behemoth doesn’t seem to be working. Here are four choice excerpts from the first installment, “A Hidden World, Growing Beyond Control”:

“When Maj. Gen. John M. Custer was the director of intelligence at U.S. Central Command, he grew angry at how little helpful information came out of the NCTC. In 2007, he visited its director at the time, retired Vice Adm. John Scott Redd, to tell him so. ‘I told him that after 41/2 years, this organization had never produced one shred of information that helped me prosecute three wars!’ he said loudly, leaning over the table during an interview.”


“The overload of hourly, daily, weekly, monthly, and annual reports is actually counterproductive, say people who receive them. Some policymakers and senior officials don’t dare delve into the backup clogging their computers. They rely instead on personal briefers, and those briefers usually rely on their own agency’s analysis, re-creating the very problem identified as a main cause of the failure to thwart the attacks: a lack of information-sharing.”


“Last fall, U.S. Army Maj. Nidal Malik Hasan allegedly opened fire at Fort Hood, Texas, killing 13 people and wounding 30. In the days after the shootings, information emerged about Hasan’s increasingly strange behavior at Walter Reed Army Medical Center, where he had trained as a psychiatrist and warned commanders that they should allow Muslims to leave the Army or risk ‘adverse events.’ He had also exchanged e-mails with a well-known radical cleric in Yemen being monitored by U.S. intelligence.

“But none of this reached the one organization charged with handling counterintelligence investigations within the Army. Just 25 miles up the road from Walter Reed, the Army’s 902nd Military Intelligence Group had been doing little to search the ranks for potential threats. Instead, the 902’s commander had decided to turn the unit’s attention to assessing general terrorist affiliations in the United States, even though the Department of Homeland Security and the FBI’s 106 Joint Terrorism Task Forces were already doing this work in great depth.

“The 902nd, working on a program the commander named RITA, for Radical Islamic Threat to the Army, had quietly been gathering information on Hezbollah, Iranian Republican Guard, and al-Qaeda student organizations in the United States. The assessment ‘didn’t tell us anything we didn’t know already,’ said the Army’s senior counterintelligence officer at the Pentagon.”

And finally:

“These were all clues to what would happen when a Nigerian named Umar Farouk Abdulmutallab left Yemen and eventually boarded a plane in Amsterdam bound for Detroit. But nobody put them together because, as officials would testify later, the system had gotten so big that the lines of responsibility had become hopelessly blurred.”

None of this would have come as a surprise to Friedrich Hayek. Here’s what I wrote about the issue in 2004, in a piece titled “Maybe Clarke and Rice Are Both Right,” well before I wrote for

“Central economic planning can’t work, explained Hayek, because no small number of people at the top, however brilliant or informed, can aggregate all the trillions of pieces of data needed to plan an economy well. The main information that matters in real time is what Hayek called ‘knowledge of particular circumstances of time and place’ and this information is necessarily decentralized: it exists only fleetingly in the minds of millions of people. Forbid people from acting on their information, argued Hayek, and the information won’t be used. That, plus lack of incentives, is why crops rotted while waiting for railway cars and why the wrong sizes and types of steel were produced regularly in the Soviet economy. In a free-market economy, by contrast, people have both the incentive and the ability to use their information. For instance, the shipper who earns his living by using otherwise empty or half-filled journeys of tramp steamers is performing a useful function based on special fleeting knowledge not known to others.

Hayek’s argument applies whether the good being produced is food, steel, or internal security. In fact, in her testimony before the 9/11 Commission, Dr. Rice explained the problems with centralization eloquently:

”‘You have thousands of pieces of information … and you have to depend to a certain degree on the intelligence agencies to tell you what is actually relevant, what is actually based on sound sources, what is speculative.'” 

Sure, Condoleezza Rice was trying to duck responsibility for the fact that 9/11 happened on her watch. Bureaucrats do that. But that doesn’t mean it was her responsibility. There were two ways of preventing 9/11 or at least mitigating the horrible results. The first, as Ron Paul, Robert Pape, and Ivan Eland have stated, would have been for the U.S. government to have quit muscling in on other countries’ affairs. The way to mitigate the consequences, given that the U.S. government did intervene and make the terrorists hopping mad, was for private citizens to defend themselves. As I pointed out in that same article, one of the few good things that happened on that horrible September 11 was the heroic action of the passengers on United Flight 93, who didn’t just sit passively by but, instead, acted to defend themselves. And isn’t it interesting that both times someone did slip through the government’s porous security net – the shoe bomber and the underpants bomber – it was other passengers, acting on their “knowledge of particular circumstances of time and place,” who stopped them. Yet the U.S. government has not learned the Hayekian lessons from 9/11, from Richard Reid, the shoe bomber, and from the underpants bomber.

If you think of freedom as our birthright, then the government is selling our birthright for a mess of pottage – and we aren’t even getting the pottage. That is, we aren’t even getting security.

But some people are getting the pottage in the form of economic benefits. That is, some people are making out financially from this huge government expenditure on the national security state. In the second installment of the series, “National Security Inc.,” Priest and Arkin detail the fact that much of the spending, even by the CIA, is on private contractors. These contractors then have an incentive to lobby the government to keep up the spending.

Unfortunately, Jeremy Scahill of The Nation takes a “yawn, wake me when it’s over” attitude to the Post series. He makes a few good points. First, there really isn’t much in the series that hadn’t already been revealed in some way by more-radical journalists such as Tim Shorrock and Marcy Wheeler. Second, the Post‘s authors’ use of the word “misdeeds” to describe some people’s horrific treatment of their fellow humans is disgusting. Still, I see it as progress that the Post even ran the series. Maybe that’s my glass-third-full way of looking at the world.

But, more important, how relevant is it that some of these horrible actions are carried out by private contractors rather than by government officials? Scahill, Shorrock, and Wheeler all seem upset that private contractors are so involved. I’m upset that anyone is involved. If the burgeoning national security state were composed solely of government officials who spent their careers snooping on their fellow Americans and occasionally torturing people, would you say, “Oh, this is no big deal”? I wouldn’t.

Copyright © 2010 by David R. Henderson. Requests for permission to reprint should be directed to the author or

Author: David R. Henderson

David R. Henderson is a research fellow with the Hoover Institution and an emeritus professor of economics in the Graduate School of Business and Public Policy at the Naval Postgraduate School. He is author of The Joy of Freedom: An Economist’s Odyssey and co-author, with Charles L. Hooper, of Making Great Decisions in Business and Life(Chicago Park Press). His latest book is The Concise Encyclopedia of Economics (Liberty Fund, 2008). He has appeared on The O’Reilly Factor, the Jim Lehrer Newshour, CNN, MSNBC, RT, Fox Business Channel, and C-SPAN. He has had over 100 articles published in Fortune, the Wall Street Journal, Red Herring, Barron’s, National Review, Reason, the Los Angeles Times, USA Today, The Hill, and the Christian Science Monitor. He has also testified before the House Ways and Means Committee, the Senate Armed Services Committee, and the Senate Committee on Labor and Human Resources. He blogs at