Magazine article Security Management

Is the Free Market Best for Homeland Security?

Magazine article Security Management

Is the Free Market Best for Homeland Security?

Article excerpt

Does the free market work when it comes to private-sector homeland security? That's the question put on the table in a new report by the Congressional Budget Office (CBO).

The report does not answer the question but lays out the reasons why business might not at first provide adequate security and the ways in which the government might induce better behavior. For example, it notes that businesses only have the incentive to secure their own assets, not to protect society at large.

"If the disparity between private costs and social costs is significant, the result is that private firms have insufficient incentive to meet social objectives," the paper says.

Closing the gap between private and social interests may require tweaking national policies, according to the report, which discusses three broad strategies.

One policy would establish new rules or incentives to force industry to face the full costs of possible losses.

A second would use programs to "socialize the costs of security" by having the government and taxpayers implement or finance security measures for businesses. A third set of programs would educate the private sector with information on the risk of attacks, potential losses, and opportunities to mitigate losses. …

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