with toxic or infectious agents come to mind. While potentially very damaging in the short run, these types of attacks—except perhaps the last—could reasonably be envisioned to show rapid recovery.
Other direct economic consequences include the costs of rebuilding what has been damaged or destroyed. Depending on the scope and success of attacks, these costs can be very significant. The full cost of replacing the World Trade Center (including compensation for survivors) and the damaged portion of the Pentagon will be enormous, as would be the costs of replacing destroyed dams or severely damaged electric power systems. Once capital resources are raised and put to work, however, reconstruction projects take on the same stimulating significance for the economy that public works projects often do.
Assessment of the indirect economic consequences of terrorist attacks is a more complicated matter, in part because of the great diversity of possible targets. The overall economic losses generated by the September 11 attacks, while evidently severe, are difficult to establish, all the more so because the national economy had already entered a downturn. But in general, economic dislocations from discrete terrorist activities should be expected to obey the laws of routinization—however slowly in some cases—as people in the affected parts of the economy gradually return to their normally preferred lines of activity and expenditure.
Another indirect economic effect of national trauma is the process of capitalizing on public crisis for private gain. The plea on the part of airline companies for relief is not exactly a case in point, because the losses they suffered after September 11 were genuine; nevertheless, the possibilities of turning relief into gain are always present. The need to gird up for all aspects of counterterrorism will inevitably set off a scramble for government contracts in parts of the economy. This pattern was observable in past wartime situations: It persisted throughout the Cold War and it is likely to reappear during the coming years.
Prevention in particular looms as an extremely costly enterprise. Preventive measures may be sought at three points in the terrorist process: (1) at the source—that is, by seeking out and destroying terrorists where they live; (2) at the end of the line, by erecting defenses and hardening all known or conceivable targets; and (3) along the way, between source and event, by controlling movements of people and weapons at national borders and other points of entry.
The at-the-source alternative is attractive because, if successful, it prevents all sorts of terrorism. On the other hand, intelligence and military operations of this sort are very costly and constitute a significant drain on the nation’s resources; it is also impossible to assure that eradication efforts will ever approach anything like completeness, given the secrecy and mobility of terrorists and their networks. In addition, even if eradicated, terrorist activities and organizations can regrow.
The attractiveness of the along-the-way strategy is similar, in that it intercepts persons with a possible diversity of purposes. But in this case as well, both