US spends at least $80bn a year on intelligence alone, which is more than the defence budgets of all but a handful of countries.

June 7, 2013 5:53 pm

Data intelligence complex is the real story

By Edward Luce in Washington

More than half a century ago, Dwight D. Eisenhower warned Americans of the dangers posed by the country’s growing “military-industrial complex” – a phrase that entered instantly into everyday language. “The total influence – economic, political, even spiritual – is felt in every city, every state house, every office of the federal government,” the outgoing Republican president said. “We must be alert to the … danger that public policy could itself become the captive of a scientific technological elite.” Ike was chiefly warning about the power of the Pentagon and the big defence companies that had grown up around it. Today his prescience would be applied to America’s vast army of federally-employed data analysts and the hundreds of software companies they employ. The US spends at least $80bn a year on intelligence alone, which is more than the defence budgets of all but a handful of countries.Every day, 854,000 US civil servants, military personnel and private contractors are scanned into high-security government offices to do intelligence work, according to the Washington Post’s 2011 “Top Secret America” report. Up to 55,000 of these work for the National Security Agency, the vast eavesdropping centre that collects “metadata” on billions of US domestic telephone calls. Most are data analysts. Distributed across an archipelago of high security federal buildings in Virginia, Maryland and Washington DC, they toil anonymously in might be labelled America’s data-intelligence complex. The tools and abilities are exponentially different to anything that Eisenhower could have imagined. In his day spies would tap individual phones.

Today algorithmic search engines can sift through billions of phone recordsa minute. Yet the concerns Eisenhower raised in 1961 are just as relevant today. “We must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military industrial complex,” he said. “The potential for the disastrous rise of misplaced power exists and will persist.”

In a strictly legal sense, the constraints on today’s data-intelligence complex are far tougher than anything that existed during the Cold War. Under John F. Kennedy, who succeeded Ike as president, the Central Intelligence Agency began to reveal its almost comically extensive powers – best remembered for its attempt after the “Bay of Pigs” fiasco to assassinate Fidel Castro with an exploding cigar. It also conducted routine surveillance of suspected domestic American subversives, which covered a wide net from pot-smoking hippies to bomb-planting student terrorists. The Federal Bureau of Investigation was even worse. The agency’s legendary and almost pathologically paranoid chief, J. Edgar Hoover, was even tapping Kennedy’s phone calls without the White House’s knowledge, as well as figures like Martin Luther King. Compared to today’s suburban office blocks of closely-monitored government computer nerds, the CIA and FBI were freelancing gun slingers.

“The total influence – economic, political, even spiritual – is felt in every city, every state house, every office of the federal government”

– Dwight D. Eisenhower

It took the Watergate scandal and the resignation of Richard Nixon in 1975 for Congress to attempt belatedly to rein in what Frank Church, the senator from Idaho, called the “rogue elephants” at the CIA and FBI. TheChurch committee hearings, and the subsequent mid-1970s legislation, put extensive curbs on the two agencies and banned foreign assassinations. Court orders would be required to tap anyone’s phone. The Fourth Amendment, which guarantees citizens freedom from arbitrary government search and seizure, was updated to the age of the telephone. And there the laws remained until the terror attacks of 9/11.

The 2001 Patriot Act changed everything. Suddenly all kinds of snooping were not just necessary – they could even be nation-saving. Very little thought was put into legal constraint on the supercharged meta-surveillance state that was instantly brought into being. “After 9/11, when we decided to attack violent extremism, we did what we so often do in this country,” said Dennis Blair, the former Director of National Intelligence. “The attitude was, if it is worth doing, it is probably worth overdoing.”

Between 2001 and 2006, the NSA tapped thousands of US phones without a court order. The outcry that followed the New York Times’ 2006 revelation of extensive “warrantless wiretapping” led to an amendment of the Patriot Act that required it to first get a judge’s approval. Nobody thought it could cover the “metadata” of billions of calls. Yet, if the principal methods of intelligence in Eisenhower’s day were still human, today they are systematic and abstract. It is as if Google was a branch of government.

In theory it should be easy to match up the metadata from an individual’s phone records – whom they call, how often, and whom the people they call – with their name, Social Security number and other private records. In practice there are legal constraints on what government analysts can do with the data. The same apparently applies to the email data that the NSA taps directly from nine internet companies, including Microsoft and Google – the so called Prism programme. No such limits exist on the FBI, which can monitor anyone it likes without a court approval by issuing so-called “national security letters”.

Nobody, including those in charge of the US government’s dozens of different counter-intelligence operations, has a full grasp of its extent or implications. It is humanly impossible for any government official to read all the intelligence reports each agency produces every day from the billions of pieces of data caught in its dragnet. Given how hard it was for the Internal Revenue Service, with 106,000 employees*, to monitor what a few agents were doing in a regional office in Ohio – they were targeting groups affiliated to the Tea Party – most Americans are unlikely to have much confidence that the surveillance state is adequately monitored. Yet the snooper state is only likely to grow.

For the time being – and foreseeable future – US public opinion will continue to be more jittery about terrorism than it is of any dilution of its own civil liberties. In just the same way that social media companies rely on the often unwitting data striptease of their customers, so the data-intelligence complex rests on the acquiescence of US public opinion. “Our toil, resources and livelihood are all involved; so is the very structure of our society,” said Eisenhower. Today, the military-industrial complex is alive and well. But the real story is about its post-9/11 data-intelligence arm.

Unknown's avatarAbout bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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