New York Times illustration
From Terrorbusters Inc. by Louis Uchitelle and John Markoff, New York Times, 17 October 2004:
Corporate America is spending heavily for protection. Private-sector outlays for antiterrorism measures and to guard against other forms of violence may now be as much as $40 billion to $50 billion a year, or two or three times higher than the annual rate before 9/11, according to estimates compiled by CQ Homeland Security, a daily Internet newsletter published by Congressional Quarterly. The federal government's contribution has also passed the $40 billion mark, double what it was before 9/11. As the spending soars, domestic security seems poised to become a significant factor in the overall economy, much the way military spending was during the cold war.
....If protecting one's employees is not adequate incentive to buy such products, there is also the insurance lure. Congress mandated in 2002 that insurance companies offer businesses protection against liability and property loss from terrorism.
"Anything you do to mitigate a terrorist attack on your property has a favorable impact on the premiums,'' said Robert P. Hartwig, chief economist of the Insurance Information Institute. He estimated that premium payments for this coverage now totaled at least $10 billion a year. "You make the workplace environment safer," he said, "and at the same time you serve your own interest by reducing your insurance cost.''
Government spending on domestic security is also huge, and growing fast. Federal outlays reached $41 billion during the just-ended fiscal year, up from $33 billion in fiscal 2003 and $21 billion in the year that ended days after 9/11, according to the Congressional Budget Office. (Those figures do not include spending by the Department of Homeland Security on activities unrelated to fighting terrorism.)
There may be a lot more on the way. If Congress goes along with President Bush's budget proposals, the federal contribution will rise nearly 15 percent, to $47 billion, in the current fiscal year, and that on top of the more than $7 billion that state and local governments have added from their own pockets since 9/11 for more police and fire department protection, Census Bureau data show.
"The need for homeland security, given the terrorist threat, is like a transaction cost,'' said Douglas Holtz-Eakin, the director of the Congressional Budget Office. "So was the cold war spending. Anytime you have a transaction cost on a large-enough scale, you lower the return on productive investment and reduce to some extent economic performance. So as a nation, we have a clear incentive to keep the homeland security transaction cost as low as possible.''
As the overall cost approaches $100 billion, domestic security is beginning to take on the characteristics of military spending in the early years of the cold war. Just as an open-ended fear of Communism drove that spending surge, the open-ended terrorist threat is driving today's spending on domestic security.
Gravity's Rainbow, p. 105:
Don't forget the real business of the War is buying and selling. The murdering and the violence are self-policing, and can be entrusted to non-professionals.
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