Agricultural Extortion and Terrorism

Single bottles of wine from La Romanée-Conti, the legendary vineyard of Burgundy, sell for upwards of $10,000. In 2010 the owner received a threat, the vineyard would be poisoned unless the owner paid one million euro. When the owner didn’t pay a map was delivered that identified several vines that had already been poisoned by drill and syringe. The French don’t want to talk about this and for good reason, agricultural extortion is very easy and they fear copycats.

I have thought about this issue on and off for many years beginning with the Chilean grape scare of 1989. In that scare an anonymous caller to the US Embassy in Chile announced that Chilean fruit had been injected with cyanide. The FDA found two grapes with evidence of cyanide poisoning. Exports of fruit from Chile were temporarily banned, millions of pounds of fruit were destroyed and the Chilean fruit industry lost millions of dollars.  Many people now think the call was a hoax and the FDA evidence mistaken but either way the point was demonstrated, it’s easy to create millions of dollars worth of damage.

A few other lesser known cases are even more concerning. In 1996, for example, the police were tipped off that liquid fat at a Wisconsin rendering plant had been contaminated doing some $250 million dollars worth of damage. The criminal probably would never have been caught had not more threatening letters and further contamination followed. Eventually a competitor was charged with the crime.

It would be easy to do billions of dollars worth of damage to crops and animals with little risk of being caught. As the Chilean case indicates, even a hoax can damage. Fortunately, criminals usually aren’t very smart. The vine poisoner mentioned earlier, for example, was caught trying to collect the money. A little bit of economics would have taught him that you can make lots of money from agricultural extortion without ever having to collect from the victim (and no, I am not saying how although it won’t be a mystery to most readers of this blog). Of course, a terrorist doesn’t even have to collect damages to succeed–just a bit of mad cow or corn rust and we are in trouble (and those aren’t even the biggest threats.)

I worry that this one of those dangers that is so threatening we are afraid to worry about it.


Of course, somebody making a big bet in the markets that would pay off in the case of a hoax is also going to attract the attention of authorities (especially somebody who had no track record of making such trades). It's certainly easier than trying to collect blackmail payments, but it's not exactly foolproof. Terrorism is another matter, but there are so many soft targets that would cause great disruption that terrorists, nonetheless, never seem to try to attack--is this stupid on their part? Or are they savvy about P.R. and understand what kinds of attack do, and do not, appeal to their 'customers' (the governments and supporters they depend on).

Isn't a wire transfer to an account in the Cayman's much safer?

Isn't extortion just a manifestaton of bargaining under the "Coase-theorem"? ;-)

I suspect terrorists just wouldn't see any glory in attacking soft targets, with enough self inflicted brainwashing you can convince yourselves that blowing up a bus full of soldiers is just like being a real warrior, but poisoning crops is harder to pass off. Notably, actual partisans, guerrillas and the like, do spend a lot of time performing sabotage, as well as violent terrorism. It's the groups with more nebulous aims that stick to direct violence.

Actual partisans have tangible political goals. Terrorists just want to make political statements. ("It's not about the money, it's about sending a message.")

The CIA used to put cement powder in baby formula to create problems in Cuba. The ease with which these things can be done is evidence that the al Qaeda threat is manufactured in order to get Americans to accept tyranny.

We've replaced the confusing 5 color Terror Threat Level with the simpler 3 level indicator: Panic, Panicker, and Panickest.

Please seek out the definition of "non sequitur". I recommend wikipedia.

I would have bet against a sentence beginning "Gabe, please seek ____" ending like that

I've developed a new useful metric for thinking about al Qaeda.

Whenever you hear about al Qaeda in a news article, replace all mentions of al Qaeda with the word 'Anonymous'. If the sentence suddenly seems preposterous ("Egyptian authorities arrest brother of second command of Anonymous in Egypt") then you know how to judge the veracity and intentions of the author/underlying news piece.

Alex, this is about the Chile's poisoned grapes case. You can read this paper
written by Eduardo Engel and published in Jo. of Economic Policy Reform (2000). Eduardo, a Chilean economist, is now professor at Yale U. In his paper he was interested in some non-traditional instruments of protectionism but he briefly explains the three main hypothesis about why TWO grapes became such a serious issue (the total loss to Chilean producers was at least $300 millions). One was Californian growers attempting to protect their interest and a second FDA negligence, but there are good reasons to argue that they were not the true causes (the annual timing of Californian and Chilean grapes and soft tree fruits differs so they don't compete directly, and despite the many weaknesses of FDA one has to assume that FDA officials were idiots to do what they did). The third cause was political extortion to force Pinochet to call the presidential election later in 1989 as established in the transitional provisions of the 1980 Constitution (there had been a referendum on Pinochet in October 1988 but he got only 44% of the vote so he had to call an election to have a new president by March 11th, 1990).
At that time I was not living in Chile, but I was in Santiago putting together a study of the prospects of the Chilean economy after Pinochet, including those of its booming agriculture. From the meetings I had during my visit I concluded that it was a clear case of political extortion. Your post refers only to extortion by competitors and perhaps enraged individuals and groups, but there is also the serious problem of extortion by government officials and their cronies. If you look at what is going on in your country you will see a lot of political extortion by officials at all levels of government (for example, today in Wisconsin, some officials are engaged in extortion to mobilize support for their unions).

"non-traditional instruments of protectionism"

I love economists!!!

My favorite is economics euphemism is "Cluster of Errors." Here's one I just made up that could be the name for risk analysis "Situation Normal Allowing For Uncertainties."

Sorry Andrew but those were my words to simplify Eduardo's idea of how to measure protectionism. My words are not in his paper.

They should be. I wonder if governments are tacitly tolerant of this kind of thing. Sometimes it's hard to tell.

The fact that soft targets in the US haven't been hit is the best sign that the terrorism threat is overblown and that everything we've done to fight it has been mostly waste.

Or it's a sign that our efforts to fight them there have paid off tremendously. If you knew anything about terrorism, you'd know they go for the most bang for their limited resources. They want to cause billions in damage and widespread fear, not millions in damage and isolated fear.

The grape scare stopped people from eating some grapes. It didn't make them fearful of every bite of food they took.

The Tylenol scare stopped people from buying one drug in one form of delivery for a short period of time.

The terrorist attacks on 9/11 hurt air travel for more than a year, and caused billions in damage. The bombing of the UN compound in Iraq sent them packing permanently.

You're deeply confused about what "terrorism" is.

Homer: “Not a bear in sight. The Bear Patrol is working like a charm!”
Lisa: “By your logic, I could claim that this rock keeps tigers away.”
Homer is confused: “Hmm; how does it work?”
Lisa: “It doesn’t work; it’s just a stupid rock!”
Homer: “Uh-huh.”
Lisa: “… but I don’t see any tigers around, do you?”
Homer, after a moment’s thought: “Lisa, I want to buy your rock…”

Let's posit something simple: hitting a soft target can't be prevented. No matter how many resources are committed, any terrorist organization worth being afraid of could easily hit a soft target, that is why they are called soft targets. Isreal has the best security apparatus in the free world and they have soft targets hit all the time.

The best conclusion is that they aren't trying to hit soft targets, and if they are its in a poorly done way we need not fear.

Or maybe the best conclusion is that the USA is, demographically, extremely hostile terrain for terrorism (real terrorists need sympathetic population to survive among and to hide from their enemies). There is no place like Chechnya or Sri Lanka in the USA, where substantial, regionally concentrated population would be alienated from the country rulers up to the degree that it actually supported violent actions against them. No equivalent of IRA or ETA, with vertical structure and

Therefore, any potential acts of terror in the USA must be pulled by individuals and/or very small cells. (History of actual terror corresponds to that prediction.) Individuals and small cells usually do not achieve any great successes. They got lucky on 9/11, but terror expert David Kilcullen actually argues that American military reaction to 9/11 was, at least economically, much more destructive to the USA than loss of the towers.

Three words: Ku Klux Klan.

What you say is true about foreign terrorist organizations. But we've had several domestic terrorist organizations in the US that have caused tremendous death and damage; and the KKK long survived by having sympathizers in the power structure of rural white states.

Why don't you "posit" why Al Qaeda attacked US and allied targets more than a dozen times during the 1990s, and all that STOPPED after we attacked Afghanistan and Iraq.

They ran to these places to kill Americans, and that's where they died by the thousands.

Yes, we've got plenty of soft points, but that's a necessary, not a sufficient condition for a terrorist attack. It also has to be meaningful. Terrorism is the inculcation of FEAR to achieve their objectives. Hitting some shopping malls would arouse some fear for a few days, just like all the other mass killings. And all their operatives would be killed in the attack. Low bang, high cost. To be effective, they'd have to keep all Americans out of all shopping malls for a year.

Contrary to popular belief, there is not a long enlistment line for terrorists. In Iraq, most of the enemy we killed were insurgents, some of whom used unlawful or terrorist-like tactics.

The targets of terrorism are the survivors, not the victims. Once you grasp that point, you'll realize your mistake.

Yep, selling weapons to Iran in exchange for hostages and some cash for the Contra's sure helped keep the Sandinista's from conquering the US. Thank goodness for sound policies paying off tremendously.

Who is the bigger threat, the terrorists or the chicken littles who oscillate between being completely oblivious to what our vulnerabilties are and the sky falling. We weren't more vulnerable on 9/12/01 than we were on 9/10/01, in fact, we were quantifiably less vulnerable by 20 or so terrorists. We are of course slightly more vulnerable now than we were 10 years ago as the democratization of destructive capability marches on.

I love your point "less vulnerable by 20 or so terrorists." It's fully consistent with Gordon Tullock's assessment of the deterrent power of the death penalty.

It may not be the biggest effect, but it's the one we absolutely know with no uncertainty.

i would argue some small amount of uncertainty, but i largely take your point: often when criminals/terrorists are captured/killed others rise to take their place

Yes, but they may not be as effective. For example, no one could really replace Admiral Yamamoto in the Second World War, though someone obviously got the rank and the uniform.

If Taliban or Iraqi insurgents lose a veteran commander, they may not have human resources to replace him adequately.

We have 13,000 murders a year, and execute about 100 per year, with execution delayed by years.

We don't HAVE a death penalty.

100 executions per year is a death penalty; those people are dead and were penalized. Your complaint is that we don't have a murder-deterring death penalty -- this is called wishful thinking.

If death penalties were effective deterrents, then the states who execute the most should have some measurable reduction in capital offenses. Do VA and TX, for example, have measurably fewer murders?

Using the same logic, any state without a death penalty, especially those bordering death-penalty states, should see at least a measurable increase, or possibly even be overrun with murderers. Same for countries without death penalties, which is practically ALL the civilized ones. They should have more capital offenses than the US.

Do the numbers support the claim that death penalties succeed as deterrents, or do I just not understand the definition of "deterrent"?

If, however, death penalties perform a valuable function, such as vengeance for the families of the victims' families, reduced incarceration costs over life sentences, or religious justification, then by all means continue with them... but at least have the courage to understand that's what you're doing?

How dense can you possibly be?

If the probability of being caught, convicted, and executed is less than 1%, it's not going to be an effective deterrent, especially when the punishment and the crime are separated by years or decades.

We don't execute enough people, even in Texas, to recognize any deterrent value if it does exist.

I'm not saying the death penalty is effective. I'm saying we don't have enough of a death penalty for you or anyone else to say it isn't effective. I'm making a statistical and economic argument, not a moral or political argument.

But you've already made up your mind so there's no sense talking to you.

The death penalty is indisputably a deterrent to murder. If we punished murder by the death penalty vs if we legalized murder, I am sure you would find that the death penalty to be quite a strong deterrent.

When you say "the death penalty is not a deterrent", what you mean is "the death penalty is not any more effective than long prison sentences".

Re SteveX:

East Asian countries retain death penalties, and I would definitely call them civilized. No one can seriously claim that Singapore or Japan are primitive barbarian societies.

Specifically, Singapore is very persistent in executing practically all condemned, and it seems to have some effect.

But Singapore is also a small island and a city state, and the limited area in itself may be very effective in investigation of crimes and in search of suspects. The USA, on the other hand, is enormously large and the trace of any particular John Doe may well vanish in days.

Marian Kechlibar

I didn't mean to imply Japan and Singapore weren't "civilized". I intentionally used the term "practically ALL", and I should've clarified "civilized" as excluding totalitarian regimes. Sorry for the confusion.

VerdicalDriver: "The death penalty is indisputably a deterrent to murder."

Then why aren't there lower measurable differences in the murder rates between death-penalty states, and non-death-penalty states? If it's a deterrent, what effect could it possibly be having? Mike has his opinion that there aren't enough executions to make a significant measurable sample. Politicians tell me I'm safer because of them, but can't (or won't) answer the same question (other than the ludicrous populist distraction that illegal immigration is to blame).

The UK abolished the death penalty 60 years ago, amid an outcry from opponents that murder would be rampant and no one would be safe. That hasn't been the case. And remember, for hundreds of years, the UK and other European countries conducted many, many very public and graphic executions to send the message of consequence to the masses. If watching someone being hung, drawn and quartered with rusty implements wasn't a deterrent, I'm not sure what would be. After all those centuries of trying, they all gave up on the idea as a waste of effort, and have far lower murder than us.

Dear SteveX, the history of abolishment of the capital punishment in the UK is very well documented on the webpage, which is definitely worth reading. Execution of Derek Bentley played a large role in turning the upper British classes against the death penalty. Anyway, for the last 20 years of hanging, the rules for applying the death penalty went to be so strange (you had to be hanged for shooting someone, but stabbing to death was not a capital offense), that the entire system was unworkable and impractical. The logic, or "logic", with which the Home Office granted clemencies, only added to the chaos.

BTW: I am an opponent of the death penalty, with possible exception for mass-murdering tyrants like Stalin or Gaddafi, where no reasonable doubt about their evilness exists. In everyday civic life, I just do not trust the judiciary enough to let them decide whether someone should live or die.

BTW Hung, drawn and quartered was only reserved for high treason, and the punishment was very infrequent, occurring several times per century. Vast majority of English people would not witness such execution in their lives; and as for deterrance, most of the nobles conspiring against the Crown would probably hope to pull a successful coup anyway. Again, I refer to the page I linked above, it is a well-researched and (morbidly) fascinating reading.

How many policemen and firemen did we lose on 9/11? What did their loss do to our vulnerability?

When we lost 4000 soldiers, did that make us more vulnerable or did we have thousands more to take their places?

The 50,000 insurgents and terrorist we killed or jailed in Iraq didn't make the situation more safe than it otherwise would have been?

Allowing murder and oppression to continue, as long as it's somewhere else, is your idea of security?

From Mike: "How dense can you possibly be?" and "But you’ve already made up your mind so there’s no sense talking to you."

Well actually, I was responding to Karl's post, not yours, and yes, I might very well have been dense enough to misinterpret it. I took Karl to be saying that for you to claim "we don’t have a murder-deterring death penalty" was "wishful thinking" on your part. In other words, yes the death penalty is a deterrent. If that is incorrect Karl, I apologize.

My response was challenging Karl's assertion, not yours.

Just out of curiosity, if we both come to understand each other's points eventually, will that make us equally dense? ;-)

I meant to reply to Karl but hit the wrong button Steve. Small screen on my phone. Friendly fire.

But I did include a response to your point - despite a relatively large number of executions in some states, it's still a minuscule proportion of murders and too long delayed.

From a simple Gary Becker type model, if the probability of being caught, convicted, and punished is low, there is little deterrent value. It doesn't mean the punishment isn't effective. It MIGHT just mean the punishment isn't administered in sufficiently effective doses.

I think history has provided us plenty of examples where the death penalty, when generously applied, is an effective deterrent to a lot of behaviors (among them, murder). There's no requirement that a punishment be just to be an effective deterrent. Again, I'm not making a moral argument for or against the death penalty - just a statistical and economic argument. There is insufficient variation in the number of executions per murder, so the standard error is too high to get significant statistics.

And people who have been executed will never murder anyone else ever again.


No problem, no harm on foul... and thanks for acknowledging the mistake. At worst, I just thought you might be having a frustrating day.



Allowing murder and oppression to happen other places is indeed my idea of security. It is also demonstrably the idea of security of the US government through many different administrations. As an obvious example, Mubarrak was our ally for many years, and under his regime in Egypt, plenty of people were oppressed and murdered. Or, to take another tack, China is oppressing and murdering people from time to time, and yet we somehow find it in our interests not to try to intervene, because the cost would be extremely high, while the oppression and murder in China costs us little or nothing.

Intervening in every dark corner of the world where evil may lurk is not a path to security, it's a path to bankruptcy and ruin.

Albatross, I'm perfectly content with an argument that some battles are not worth the cost, and each must be weighed against the likelihood of success. But there are certainly areas of oppression and murder where the likelihood of success is high and the costs are relatively low. For those, I pay it gladly.

The opponents of the current wars do what every opponent of every proposal always does: trump up the costs and downplay the benefits. Many of the costs (as in Stiglitz' book) are double-counted and exaggerated, and many of the benefits are immeasurable. The world gained FAR more by deposing the regimes of Germany and Japan in WWII than merely maintaining our survival and liberty. We created two large, productive, and peaceful democracies out of two destructive and dysfunctional totalitarian states. These were nations which had never known functional democracies before.

The Soviet Union wasn't worth attacking, but it certainly was worth opposing. Hundreds of millions of people in Eastern Europe agree with me.

My main point was countering the ridiculous and offensive suggestion that we were "20 terrorists safer" after 9/11. We were clearly caught off guard and were highly vulnerable. It's surprising that Al Qaeda had no plans for a follow-on attack, but perhaps those plans were thwarted. Bin Laden may have misjudged our willingness to invade Afghanistan.

If Iraq and Afghanistan are peaceful democracies in 50 years, would you say it was worth the cost? I do, and I had a gut full of debris from a roadside IED to prove it.

Another interesting case was the Irish pork crisis of 2008

Cause the wrong oil being put in a rendering plant machine

Costs €100 million

It would be easy to do billions of dollars worth of damage to crops and animals with little risk of being caught

My guess is that the scale of agricultural markets is so mindbogglingly huge that billions of dollars of damage means about as much to the overall agricultural market as 3,000 deaths does to the overall population of the US -- i.e. the psychological effects are going to be bigger than the practical effects.

Also, for the case of very high-priced luxury goods, you can do a lot of dollars' worth of damage but affect very few actual people's lives in a serious way. And most people won't get that "there but for the grace of God go I" feel that they get from bombing a cafe, because they might go to cafes, but most don't own super-high-priced vineyards or even drink their wines.

This is interesting because I just finished reading the quasi-dystopian "The Windup Girl" by Paolo Bacigalupi. It takes place in a future of very scarce hydrocarbons and a world recovering from an intense competitive war between the worlds agriscience firms who used engineered diseases to destroy the worlds food. The firms and countries live just a bare step ahead of the constantly mutating and engineered diseases which demolish each new strain of food after a few plantings. Poor countries are at the mercy of corporations who sell sterile strains of rice and soy.

It is one of the most fascinating novels I've read in a while and was considered one of the better books of the past few years by many mainstream outlets, a considerable achievement for a piece of "genre" fiction.

hi,thank you very much

You should read the Stuxnet article in the current issue of Vanity Fair.

I was just thinking about this the other day. Think about how many billions of dollars we spend, how much more uncomfortable we make air travel, because one guy had a non-functional bomb in his underwear?

Now, imagine a single terrorist attack the U.S. food supply. He gets a job at a McDonald's, puts something bad but slow acting in the burgers... McDonald's drive-through gets thousands of customers a day, a bunch of people gets sick. No one even needs to die, just some tummy aches. The guy sends a message to the media, claiming to be part of a conspiracy of thousands, in all the farming and food and grocery industries who are poising the food.

Now, imagine what happens. Whoever at fast food that day and ends up with a stomach ache is going to be rushing to the hospital to get themselves checked out. Even though it is one guy, there will be reports of incidents all around the country, because it would take months to investigate and determine which is actually an act of terror and which is some non-related digestive problem. Not only that, people are freaked out about terrorists working in their supermarkets, food factories, etc.. It would create a mass national panic.

And, in the meantime, people would be demanding that all food workers need to have FBI background checks, people would be calling for a national food safety agency, and for strict controls on every aspect of the food industry. Think of the TSA, but a TSA that regulates a low-cost good that each and every one of us needs every day. Think of the economic devastation that one single person could cause to the entire U.S., without even killing a single person.

Really, it isn't the terrorists who are a threat... it is the type of politics, where if a politician reacts to something in a sane and rational matter, they will be attacked by their opponents and a hysterical media for "not doing enough"... so every politician freaks out and over-reacts about the tiniest problems. The U.S. deals with terrorism like a guy trying to kill the mosquito on his arm with a shotgun.

Most of the world is not hardened, and not really possible to harden, against attack. That includes agriculture, the food supply more generally, roads, power lines, gas mains, water supplies, oil pipelines, the internet, and thousands upon thousands of other things. There's simply no way to plate the whole world with armor and place a security guard on everything someone might decide to wreck.

Fortunately, there's usually not all that much interest in wrecking most of those targets. If a terrorist decides to try to spread corn rust or hoof-and-mouth disease, I suspect this achieves the goal of causing us and the world harm, but not the goal of winning converts to the terrorist's cause, or making a grand statement, or feeling like he's striking a blow against the Great Satan, or impressing his friends, or whatever. Corn rust? Seriously, who's even going to pay attention? CNN will devote 15 seconds to that story before moving on to the more interesting question of whether Britney will suffer a wardrobe malfunction at her next public appearance.

If someone wants to try extortion, he exposes himself to a significant risk of getting caught, and also faces the problem, for contagious problems, that whoever pays him off is providing a public good, not a private one. And a lot of this kind of attack looks a lot more plausible on paper than it turns out to be in practice, which is why the most effective terrorist attacks seem to be relatively low-tech shooting people or blowing stuff up. When you don't have a scriptwriter on your side, your 20-part subtle Xanatos Gambit plot comes apart when the ex-microbiology-grad-student who was growing your anthrax spores dies of a mysterious pneumonia-like illness, your second-in-command gets drunk and brags to a bar full of strangers about every detail of your unstoppable plot, your "genius hacker" who was supposed to take down the power system and post your manifesto (with a demand for ONE MILLION DOLLARS!) is stuck on the phone with tech support trying to get his internet back up on the day of the attack, and half your attack team shows up at the *wrong goddamn nuclear plant* on the day of the attack, gets turned away by the security guard, and wanders home in confusion.

Your comment, sir, gets one "like" from me.

If it's so easy why isn't it done more often? "Criminals are dumb" doesn't cut it, in my opinion. There's been enough time and there are enough criminals that some smart ones would likely have thought of this by now.



We don't know how often:

a. People have tried to do this as a terrorist attack, but the attack failed because it's harder than it looks. (This also goes for people trying to light their shoes, underpants, or whatever else on fire).

b. People have done this as a terrorist attack, but nobody quite works out what happened--some people get food poisoning or get bad-tasting wine or something, it's hard to tell from background noise. (I gather this happened with that Japanese cult that eventually nerve-gassed the Tokyo subway--they kept attempting biological attacks which succeeded only in sending some small number of people to the doctor, not in causing any kind of widespread panic.)

c. People have done this as an extortion technique, didn't get paid, and didn't manage to carry out the attack (or it looked like background noise).

d. People did the attack, got the money, and everyone stayed quiet.

It's possible that all four of these have happened many times, and we've simply never heard of it. A huge, devastating attack would show up (though it might still look like random noise), but small-scale attacks or marginally-effective ones wouldn't have.

As a little extra evidence that this is possible, what if the anthrax attacks had been mailed to non-famous people, without the threatening letters, in mid-2000--say they'd looked like junk mail or something. Imagine we'd had three times as many people killed, because the exposed people didn't get treated and the letters weren't decontaminated, but they weren't famous people and were spread out across the country.

Would we ever even have heard of it? Or would there have been 30 or so cases of some weird pneumonia thing that nobody ever quite figured out? Even if one or two cases had been correctly diagnosed, would the attack part have been figured out? Or would there be some CDC guys sitting around scratching their heads to this day, wondering how the hell a couple cases of inhalation anthrax had happened in Ottomwa, Iowa and Springfield, Missouri?

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