Archive for July, 2006

Blogs covered the news that the Forest Gate raid was down to the unsuppported word of a man with an IQ of 69 quite copiously. But there is more to the problem than just bad sources, Sir Ian Blair and the ACPO grandstanding for their new political role, or whatever. Simply, they have lost the plot regarding how intelligence works. Compare and contrast this report from the LA Times on how the Jordanian secret service tracked down al-Zarqawi.

In April, when Zarqawi showed up in a highly publicized online propaganda video boasting of his group’s prowess, Jordanian analysts scrutinized the surrounding scenery as well as his blustery talk.

The tape confirmed suspicions that Zarqawi was in the Yousifiya area, a volatile insurgent stronghold south of Baghdad, which became the focus of U.S. and Jordanian intelligence efforts, Burjaq said. Throughout the spring, U.S. military officials, too, were publicly identifying the area south of Baghdad as a likely Zarqawi stronghold.

“At a certain stage, more intelligence [resources] were being devoted to Yousifiya,” Burjaq said, noting that Jordan’s familiarity with the region and intelligence networks played a key role in monitoring Zarqawi’s movements there.

“It’s not an easy area to get in and out of.”

The two Jordanian officials declined to confirm whether they had turned any of Zarqawi’s followers against him.

But Dahabi noted, “Some of the people I arrest, I recruit. Some of those who were in my jails helped me to carry out operations.”

“Sources,” Burjaq said. “To us, this is the tool.”

Once it became clear that the Yousifiya information was accurate, the Jordanians became more confident of their sources. Then when information was received about Zarqawi being in the Baqubah area, northeast of Baghdad, they were confident of that as well.

“We started to locate him and the Americans started to locate him,” Burjaq said.

Several sources, including a U.S. counter-terrorism official, credited both U.S. and Jordanian intelligence with developing information that led to the targeted hit on Zarqawi and subsequent raids at other locations.

“At a certain point, some of the sources connected,” Dahabi said.

What the two Jordanian spooks are describing is a classic method of investigation. Note that they didn’t begin by looking for people who might be able to say, just like that, where he was. Rather, they identified the area to look in and began collecting background information, specifically, information that they could check. Checking reduces the number of leads to follow up, and it also provides more information about which sources are trustworthy. And in the process of checking, more background information is available, which further refines where to look. Eventually one reaches the point at which the number of possibilities is small enough to round up the usual suspects.

In the UK, this ought to be familiar, as it’s precisely the approach General Sir Frank Kitson codified in the 1960s. The crucial advantage is that it minimises the possible wrongness at each point. If you post huge rewards, seek tip-offs on where “a chemical vest” might be, then act on everything you receive, not only will you not be able to cope with the data-dump, but your activities running after the false positives are likely to have consequences. Hence Kitson’s insistence on the importance of background information – it can be of lower quality than operational information without causing fiascos – and checkable information, which even if falsified leaves you with a net gain of information (i.e. that Curt Weldon’s sources cannot be relied on, or that the enemy is unlikely to be found in area Y, or Mr. Z can be eliminated from the inquiry).

Now compare, for example, this. You might also want to read this Ken Silverstein report on the intelligence effort before the war with Iraq.

“They say everyone else was wrong,” said this former official, “but we conditioned them to be wrong. We spend [tens of billions of dollars per year] on signals intelligence and when we reach a conclusion, the people who spend less than that tend to believe us. They weren’t wrong, they chose to believe us. The British, Germans, and Italians don’t have all those overhead assets, so they rely on us. Historically they have been well-served, so they believe us when we tell them the earth is round. The French have their own assets—and guess what? They didn’t go with us.

According to IEEE Spectrum, the Holmdel Laboratory, the centre of Bell Labs in their heroic age, is probably going to be knocked down. The structure was once home to the world’s best privately-run research organisation, with some 6,000 scientists and engineers and a library second to none. The work carried out there included the development of

the transistor, the laser, the solar cell, the light-emitting diode, the charge-coupled device, fiber optics, satellite communications, touch-tone dialing, cell phones, modems, microwave communications, local area networks, UNIX, C, and C++..

Southampton University would probably dispute the fibre claim, as they invented the process of making the cables industrially (indeed, the original equipment was lost in a fire last year), but anyway. This was where it all began.

The building was nothing if not suited to this role. The V&A’s big Modernism exhibition this year is titled “Designing a New World,” and that was precisely what Bell Labs was doing. So they hired Eero Saarinen to build them this..


No wonder it impressed the hordes of postgraduates it sucked up like a black hole. So, beyond a decent concern for geek heritage and architectural preservation, what am I drivelling on about this for? There was a reason why AT&T could afford to fund all this research, as detailed here. As the monopolist of all the telephones in North America, each and every phone call paid a few cents towards the R&D budget, a revenue stream that could be relied upon as few other businesses.

This brings us to an interesting point. The great Viennese economist and Harvard prof Joseph Schumpeter’s distinctive contribution to economics is his concern for dynamic economics-the standard models usually assume one point in time and no technological change within the model, or else the convention of two moments in time, t-1 and t. Schumpeter argued that the reason there appears to be a long business cycle is that technological progress is not constant, or rather, it’s not evenly distributed even if it advances at a steady average speed. There is a breakthrough, which spawns dozens of new opportunities and leads to a period of prosperity. Then, as the diminishing marginal returns set in, the possibilities are exhausted and the technology becomes more baroque, growth stagnates and inflation rises. Eventually, there is a new discovery.

This is obvious, if not trivial. But the key insight of Schumpeter’s was the implication of this for competition and the theory of the firm. Traditionally, it is assumed that firms compete primarily on price, and that allocative and productive efficiency are maximised in perfect competition. Schumpeter stood this on its head, arguing that innovators are motivated by the possibility of becoming monopolists and making supernormal profits. The necessary check on them was the possibility that someone would discover something sufficiently new to destroy the monopolist. This feedback loop he named the theory of creative destruction, a phrase that has far outrun its initial use – it’s commonly used as a snotty term for classical competition, or even assumed to mean that capitalism requires war. In fact, it means that in principle moving towards perfect competition may actually decrease long-term total factor productivity.

Bell Labs is exhibit A, of course. AT&T’s monopoly profit funded the new electronic future, and the Bell Labs management made a deliberate policy of openness towards the competition, helping (for example) others to learn the technique of transistor manufacturing. It could also hardly be faulted for a lack of enterpreneurship – for example, when it was working on the first communications satellite, it came up with some radical answers to NASA’s unwillingness to provide it with a rocket.

AT&T was firmly committed to carrying Telstar through, but how to get it launched? When V. S. Chernov of the Lebedev Institute in Moscow visited Bell Laboratories in April of 1961, Rudi Kompfner and I asked if we couldn’t get a Soviet booster to launch Telstar.

Eventually, though, those same technologies helped to destroy AT&T. The mothership-the telecoms company that was, after all, the point of all this research activity-showed all the signs of a jealous, conservative, dull monopolist content to sit on its monopoly..

Although electronic switches based on solid-state components had been developed by 1959, AT&T didn’t introduce the first digital switch into the Bell System until 1976. And electronic switching was still being gradually rolled out well into the 1980s, when AT&T’s monopoly on telephone service came to an abrupt end. The much more rapid introduction of digital switches by MCI and Sprint probably contributed to AT&T’s downfall.

And even though Bell Labs and Western Electric developed most of the underlying silicon technology required for the integrated circuit, which eventually became the guts of the electronic central-office switch, AT&T wasn’t in on its creation. The upstarts Fairchild Semiconductor and Texas Instruments, focused as they were on miniaturizing electronics for their military and aerospace customers, led the way instead. Here again, AT&T engineers probably contributed to the lapse by insisting on high-performance discrete components built for 40-year lifetimes in the Bell System. There was no great drive for miniaturization in the system, acknowledged Ian Ross, the president of Bell Labs at the time of the breakup. “The weight of the central offices was not a big concern,” Ross said.

It was government action, in the end, that killed the monopolist. But the point remains. Schumpeter was almost certainly right that a trade-off exists between static and dynamic efficiency, but he could never operationalise the principle. The argument that such-and-such a corporate privilege must be retained in order to promote long-term R&D is as common a self-serving excuse as retailers blaming the weather for poor sales. (National telecoms operators are especially addicted to it.)

Michael “DSM” Smith of the Times reports some detail on the recent action in Afghanistan in which two UKSF members were killed. Worth reading. How would your answer change, though, if you knew that the two companies of 3 Para involved equal roughly 50% of the total infantry force available to the British Army in southern Afghanistan? (Smith has engaged with the point on his blog. I did too, back in December.

It also seems there is a degree of concern about the air support, specifically in support helicopters. It may be remembered that the Government actually wanted to send back RAF Harriers from Afghanistan to the UK until a few weeks before the deployment began, on the bizarre principle that the whole one battalion of infantry would adequately substitute for them and would need no support. Fortunately this was eventually reversed, and the current Harrier squadron is to be relieved later this year by the Navy’s 800 Naval Air Squadron.

There does seem to be a piecemeal reinforcement in progress. Last week, 3 Para and a company of Gurkhas (the only other British infantry there) were joined by a field squadron (like a reinforced infantry company) of the RAF Regiment, who are to take over security for the Kandahar air base so as to relieve the infantry for their own role. The Harrier raid, by the way, appears to have been very vital indeed. AAC Apaches are expensive, RAF Harriers are noisy, but not having to rely on the USAF for your air cover is priceless.