The T-Word

In this era of the much-dreamt “One Economic World”, brought to us by globalization, we are as integrated as we are being disintegrated. The force applied to pull close, and that to blow apart, feels the same.

A bunch of students travel across oceans for the first time to a picturesque country on an exchange program of cultures. Indeed, the ties are getting stronger. A bunch of parents never heard from their kids again after a series of bomb attacks in the picturesque country that welcomed them. Now it’s time to use the T-word. Within 7 months of the year 2016, France, India, Indonesia, Turkey, Israel, US, Pakistan, Egypt, Somalia, and Afghanistan have all lost numerous lives in several terrorist incidents including shootouts, car bombs, melee attacks, and suicide bombers.

Terrorism is an old enemy of humanity. Scientific attempts have been made to unravel and restrain it. Before we move on to how scholars have tackled the question, let us first define terrorism. According to Enders and Sandler, “Terrorism is the premeditated use or threat of use of extra-normal violence or brutality by subnational groups to obtain a political, religious, or ideological objective through intimidation of a huge audience, usually not directly involved with the policy making that the terrorists seek to influence”. Next, why do people become terrorists? Or what makes them? In this context, a book by Alan Krueger, a Princeton professor of economics and public policy, is worth discussing. His research counters the popular belief that terrorism breeds in poverty and lack of education. With use and examination of raw data from various sources, Krueger establishes that an average terrorist (or suspect) hails from middle-or-higher class households, is highly educated, professionally employed, and originates from a country deprived of civil liberties (classic example – Osama Bin Laden). The book does a riveting analysis of biographical information on operatives from the likes of Hezbollah, and concludes that “poverty has little to do with terrorism”, and that lack of political freedoms is the root-cause of terrorism. Both of these though can been attacked on their logic as they have confused correlation with causation.

The science of economics has been used to do a profiling of a lone wolf terrorist as well. Just as forensic psychologists gather characteristics of the crime to formulate an offender profile, Phillips and Pohl used the expected utility analysis to build an economic profile of a terrorist. They split up the lone wolf terrorist breed as risk-averse and risk-seeking types. The risk-averse lone wolf is one who does not spend much of his time in doing the illegitimate (is not a specialist), and is more likely to be involved in legitimate political activism. He will space his terrorist activities in time and geographic location to remain within the “pockets” that provide him expected marginal returns in excess of those given by legitimate activities, and will continue to do so until the marginal benefit equals marginal cost. As soon as he catches the attention of law enforcement or press, he goes underground for a long period. A risk-seeking terrorist is the polar opposite. Each type tries to maximize his fatalities, just like a normal individual tries to maximize his wealth. The math-prodigy from Harvard University (aka Unabomber) Theodore Kaczynski and Austrian racist Franz Fuchs are ideals of risk-seeking and risk-averse (respectively) lone wolves illustrated by the authors in their paper.

Macro-economic theory is famously applied to dig into the essence of terrorism often. Investigators from time-to-time have worked with complex data and computations to bring out the significance of the dismal science underlying the illegitimate activity, and what implications it has for all the markets in economies. It is compelling to note that the effects and outcomes can be different on developed and developing countries. Another way to put it, small developing and developed countries such as Spain, and Greece take more time to recover and get hit severely by terror attacks than a nation like France, which has been victimized more often. The foreign direct investment loss that Greece, a tourism industry dependent nation faced was a lot more than France did. Needless to say, big nations have financial resources and expertise to revive that small ones don’t. In low and middle-income countries, it has been tested that terror incidents are followed by low growth, high inflation, low government spending, and less foreign direct investment.  However, when it comes to effects on stock markets, economists at big banks have recently concluded that the impact is modest.

A monumental takeaway from past actions and studies is that terrorism is highly innovation driven. When fierce measures took place to resist hijackings, terrorists began to bomb embassies. And when, embassies got all the security attention, terrorists waited for officials to clear ground and then murdered them. Similarly, metal detectors were purported to be an astounding success until inflammable liquids in bottles or shoe bombs did the killing. In many cases, military retaliations haven’t been as successful as the retaliating country liked to believe (as in case of Israel almost 2 decades ago). Killing terrorists, destroying their camps-infrastructure-communication network can have a medium term effect but not a sustained one.

 Then what might stop them?

1)     Being one step ahead of them when it comes to recognizing a technological advancement that can be potentially used, and thus, be combatted. 

2)     Tracking their resources and restraining them. For example, freezing assets and financial resources.

3)     More cooperation and transnational alliances.

As also recommended by most notable men in the field, the above are policy implications to be considered and be worked on.

 Aditi Mehrotra