The CSI on Glorietta 2; RDX, C4, etc; and the economics of speculation and terror risk mitigation

As of midnight last night, government blast forensics experts still could not conclude whether the explosion in Glorietta 2 which killed 10 and injured more than 100 others Friday was that of a bomb. Although traces of RDX (Research Department X), which constitutes 90% of the plastic explosive C4 were detected from the debris, it was pointed out that this has pharmacological uses (among them as a rat poison). Thus the speculation continues unabated as to the perpetrators, their motives, and the final effects.

The admonition against speculation came a bit late, because by then many had formed their own conclusions. Also, the right to speculate is an inalienable human right, the exercise of which is a matter of survival in a situation where the supply curve for truth and information, especially from official sources, hardlly ever satisfies public demand. In any case, speculation has not yet been declared an exclusive privilege of the executive. “Don’t speculate too soon,” the Venable national security adviser was advising. (So when is speculation timely?) Not so soon after, the security adviser was peddling his speculative take that ‘terrorists’ were on a fund-raising enterprise and that the blast was a simple demonstration of potential for the benefit of benefactors.

Having read and heard the reports, speculative and otherwise, in the past 36 hours, I was beginning to fear I would have nothing left to speculate on, as the ‘facts’ came in trickles. On second thought, I concluded, that would never happen, because I bet, even after the official reports are issued, classified, disseminated, and regurgitated, many of us would still be speculating on which facts were suppressed, how and which observations were ‘doctored’, and how the final and official versions of the truth were spun. In fact, even before the Glorietta incident, many of us were in the midst of speculating on the NBN and the Malacanang and House bribes.

(A broad aside: I suspect the speculation industry is one of the large emerging contributors to the national economic output. But being mostly in the informal sector, the value therefrom might not be reflected in official estimates. Maybe if these did, we might be growing at more than 10% annually. Or, conversely and more plausibly, our unrecognized and underpaid statisticians might have included such output but forgot to warn us, which explains our disbelief).

The output of the speculation industry is siginificant because of the abovementioned market conditions. On the supply (sellers) side, there’s a large pool of unemployed and underpaid/employed and self-proclaimed analysts/pundits who think they are bright, or at least brighter than those offering official truths. Thus, the supply curve is almost flat and also hardly distinguishable from the X-axis. This explains why, notwithstanding the large demand, the marginal price is close to zero in equilibrium. If you can think graphically, you’ll agree that the price-quantity product would still be a significant part of GDP.

(Another broad aside: some of the buyers are also self-generators, meaning they supply their own demand. If they are full of themselves they offer their excess supply to the informal and formal markets; otherwise they find time to appreciate the speculation and insights of others in the market. Most buyers, I suspect, are of the passive/voyeuristic kind (the gotum), experiencing gratification without ever thinking how to use the information to introduce changes in their lives and society at large. In the market I describe, the sellers are called speculators, the incident speculated on is called speculatum, and the elements or parts of the speculatum are speculatees, whose motives, means, opportunities and ideologies are the subject of the speculation or speculating; and the master of the speculatees is called the sputum).

The market conditions I describe are real and I am led to conclude that this type of speculation never creates a bubble that will burst or explode in our faces. In sharp contrast to speculation in commodity markets, where speculators have been known to lose their shirts and underwear, the players in our kind of speculation have nothing to lose: one is always better off speculating than having to swallow the shit our government excretes.

The economics of terror risk mitigation

What if the incident was indeed Islamic or rightwing or leftwing terrorism? I assert that the latter two are more reasonable and more predictable without rigorous discussion and proof. Let me tackle the first. These guys and girls are not so bright and we can probably treat the events they perpetrate as random acts impervious to benefit-cost analysis on their part, especially when some of them don’t value their own lives. Suicide bombers, unfortunately, are part of the equation and the amorphous inequalities we have to confront. So what then? I contend that the reasonable thing to do is to take the risk as part of life and mitigate the risk rationally. There is a large bodega of economics literature which shows that people don’t really behave reasonably, much less rationally. This is why, in the face of a large set of risks, our prioritization in terms of costs and benefits, leaves much to be desired. We always confront a large set of dangers to our well-being and we need to think of priorities soberly. Yes, terrorism is a real threat. But there are other graver threats the mitigation of which costs less. Think about poverty and environmental problems. We should allocate resources and attention guided by the facts, I hope.

Let me also point out that the risks from terrorism are inequitably distributed. On the side of victims, these are mostly urban and upper class, while the costs of mitigation, I suspect, are borne by taxpayers at large. You think that’s fair? To the extent that mall operators enhance security, well and good, as that cost will inevitably be passed on to shoppers.

The CSI on G2, RDX, C4 etcetera

I can only hope that the forensics experts are professionals, especially after observing that NCR police office director Geary Barias has maintained an open mind after premature disclosures. He has refused to jump to conclusions, though he is privately entitled to his own speculations. I have yet to see or hear of any systematic data gathering insofar as eyewitness accounts (a good collection is provided in Manolo Quezon’s blog) is concerned. Also, in a competent CSI, investigators are supposed to re-enact the incident. Including a time/space account of where the fatalities and other casualties were.

Were the dead properly autopsied? Have all the injured been interviewed? Have all the footages been examined?

Barias has said that he still could not rule out an accidental gaseous explosion as the blast has been determined as coming from the basement. What did the basement house? He said there was sewage ‘grease’. He could have meant waste oil and solid waste sludge. Have his investigators interviewed people in charge of the solid waste management system in the mall? I have not closed my mind to a methane-based explosion, more consistent with the footage I’ve seen. Likely I will be proven wrong. But I reserve and assert my right to speculate.