id=article data-initial-article={settings:{x-powered-by:true,etag:weak,env:production,query parser:extended,subdomain offset:2,trust proxy:true,views:/opt/gaia/server/views,jsonp callback name:callback,view cache:true,view engine:jsx},resourceType:dailybeast2/components/pages/article,authors:[{bio:lt;pgt;Daveed Gartenstein-Ross is a senior fellow at the Foundation for Defense of Democracies and the chief executive officer of Valens Global, a consulting firm that focuses on violent non-state actors. An adjunct assistant professor in Georgetown University's security studies program, he holds a PhD in world politics from the Catholic University of;brgt;\nlt;/pgt;\n,id:/etc/authors/d/daveed-gartenstein-ross,image:{placeholder:true,sizes:{w1_h1_large:,default:,w1_h1_medium:}},name:Daveed Gartenstein-Ross,url:,userNames:{twitter:DaveedGR},externalAuthor:false}],body:[{resourceType:dailybeast2/components/text,textIsRich:true,text:lt;pgt;Every European who flies frequently knows the airport in Zaventem, has spent time in the ticketing area that was strewn with blood, limbs, broken glass, battered luggage and other;/pgt;,id:/content/dailybeast/articles/2016/03/24/operation-hemorrhage-the-terror-plans-to-wreck-the-west-s-economy/jcr:content/body/text0},{resourceType:dailybeast2/components/text,textIsRich:true,text:lt;pgt;It was another attack on aviation that pulled the United States into the conflict sometimes known as the "global war on terror" in the first place. Since then, airports and airplanes have remained a constant target for Islamic militants, with travelers being encumbered by new batches of security measures after each new attack or;/pgt;,id:/content/dailybeast/articles/2016/03/24/operation-hemorrhage-the-terror-plans-to-wreck-the-west-s-economy/jcr:content/body/text1},{resourceType:dailybeast2/components/text,textIsRich:true,text:lt;pgt;After the ex-con Richard Reid managed to sneak a bomb aboard a transatlantic flight in December 2001, but failed to detonate the explosives, American passengers were forced to start removing their shoes on their way through security. After British authorities foiled a 2006 plot in which terrorists lt;a target=\_blank\ href=\\gt;planned to bring liquid explosives hidden in sports drink bottles aboard multiple transatlantic flightslt;/agt;, authorities strictly limited the quantity of liquids passengers were allowed to carry. When Umar Farouk Abdulmutallab snuck explosives hidden in his underwear onto a flight on Christmas Day 2009, he ushered in full-body scans and intrusive;/pgt;\n,id:/content/dailybeast/articles/2016/03/24/operation-hemorrhage-the-terror-plans-to-wreck-the-west-s-economy/jcr:content/body/text2},{size:[300,250],resourceType:googleAd,adCount:1},{resourceType:dailybeast2/components/text,textIsRich:true,text:lt;pgt;Those are the misses. There have been hits, too. In August 2004, two female Chechen suicide bombers, so-called "black widows," destroyed two domestic Russian flights. In January 2011, a lt;a target=\_blank\ href=\\gt;suicide bomber struck Moscow's Domodedovo airportlt;/agt; in an attack that looked almost identical to the one that rocked the airport in Brussels: The bomber struck just outside the security cordon, where the airport is transformed from a "soft" target to a "hard" one. Just months ago, the self-proclaimed Islamic State (ISIS)--the perpetrator of the Brussels attacks--lt;a target=\_blank\ href=\\gt;destroyed a Russian passenger jet flying out of Egypt's Sinailt;/agt;, killing 224;brgt;\nlt;/pgt;\n,id:/content/dailybeast/articles/2016/03/24/operation-hemorrhage-the-terror-plans-to-wreck-the-west-s-economy/jcr:content/body/text3},{resourceType:dailybeast2/components/text,textIsRich:true,text:lt;pgt;The targeting of airports and airplanes has been so frequent that in lighter times--back when the terrorists seemed so much worse at what they do--some pundits openly mocked their continuing return to airplanes and airports. In lt;a href=\\ target=\_blank\gt;one representative discussionlt;/agt; from early 2010, a well-known commentator described jihadists as having a "sort of schoolboy fixation" with;/pgt;,id:/content/dailybeast/articles/2016/03/24/operation-hemorrhage-the-terror-plans-to-wreck-the-west-s-economy/jcr:content/body/text4},{resourceType:dailybeast2/components/text,textIsRich:true,text:lt;pgt;But the reason for this targeting, of course, is neither mysterious nor quixotic, and it's one the jihadists have explained for themselves. Following the November Paris attacks, lt;a href=\\ target=\_blank\gt;ISIS released an infographiclt;/agt; boasting that its slaughter on the streets of Paris would force Belgium "to strengthen its security measures ... which will cost them tens of millions of dollars." Moreover, the group claimed, "the intensified security measures and the general state of unease will cost Europe in general and France in specific tends of billions of dollars due to the resulting decrease in tourism, delayed flights, and restrictions on freedom of movement and travel between European countries."lt;/pgt;,id:/content/dailybeast/articles/2016/03/24/operation-hemorrhage-the-terror-plans-to-wreck-the-west-s-economy/jcr:content/body/text5},{resourceType:dailybeast2/components/text,textIsRich:true,text:lt;pgt;And that was lt;igt;beforelt;/igt; the group successfully attacked the Brussels airport, despite those costly new security;/pgt;,id:/content/dailybeast/articles/2016/03/24/operation-hemorrhage-the-terror-plans-to-wreck-the-west-s-economy/jcr:content/body/text6},{resourceType:dailybeast2/components/text,textIsRich:true,text:lt;pgt;Even before 9/11, jihadists saw bleeding the American economy as the surest path to defeating their "far enemy." When Osama bin Laden declared war against the "Jews and crusaders" in 1996, he emphasized that jihadist strikes should be coupled with an economic boycott by Saudi women. Otherwise, the Muslims would be sending their enemy money, "which is the foundation of wars and armies."lt;/pgt;,id:/content/dailybeast/articles/2016/03/24/operation-hemorrhage-the-terror-plans-to-wreck-the-west-s-economy/jcr:content/body/text7},{resourceType:dailybeast2/components/text,textIsRich:true,text:lt;pgt;Indeed, when bin Laden first had the opportunity to publicly explain what the 9/11 attacks had accomplished, in an October 2001 interview with Al Jazeera journalist Taysir Allouni, he emphasized the costs that the attacks imposed on the United States. "According to their own admissions, the share of the losses on the Wall Street market reached 16 percent," he said. "The gross amount that is traded in that market reaches $4 trillion. So if we multiply 16 percent with $4 trillion to find out the loss that affected the stocks, it reaches $640 billion of losses." He told Allouni that the economic effect was even greater due to building and construction losses and missed work, so that the damage inflicted was "no less than $1 trillion by the lowest estimate."lt;/pgt;,id:/content/dailybeast/articles/2016/03/24/operation-hemorrhage-the-terror-plans-to-wreck-the-west-s-economy/jcr:content/body/text8},{desktopWidth:400,desktopHeight:225,offsetTop:6,type:dailybeast2/teads,toggle:on,jcr:primaryType:nt:unstructured,resourceType:teads,needWrapper:false},{resourceType:dailybeast2/components/text,textIsRich:true,text:lt;pgt;In his October 2004 address to the American people, dramatically delivered just before that year's elections, bin Laden noted that the 9/11 attacks cost al Qaeda only a fraction of the damage inflicted upon the United States. "Al Qaeda spent $500,000 on the event," he said, "while America in the incident and its aftermath lost--according to the lowest estimates--more than $500 billion, meaning that every dollar of al Qaeda defeated a million dollars."lt;/pgt;\n,id:/content/dailybeast/articles/2016/03/24/operation-hemorrhage-the-terror-plans-to-wreck-the-west-s-economy/jcr:content/body/text9},{resourceType:dailybeast2/components/text,textIsRich:true,text:lt;pgt;Al Qaeda fit the wars the United States had become embroiled in after 9/11 into its economic schema. In that same video, bin Laden explained how his movement sought to suck the United States and its allies into draining wars in the Muslim world. The mujahedin "bled Russia for ten years, until it went bankrupt," bin Laden said, and they would now do the same to the United;/pgt;,id:/content/dailybeast/articles/2016/03/24/operation-hemorrhage-the-terror-plans-to-wreck-the-west-s-economy/jcr:content/body/text10},{resourceType:dailybeast2/components/text,textIsRich:true,text:lt;pgt;Just prior to 2011, there was a brief period when jihadism appeared to be in decline. Al Qaeda in Iraq, the group that later became ISIS, had all but met with defeat at the hands of the United States and local Sunni uprisings. Successful attacks were few and far;/pgt;,id:/content/dailybeast/articles/2016/03/24/operation-hemorrhage-the-terror-plans-to-wreck-the-west-s-economy/jcr:content/body/text11},{resourceType:dailybeast2/components/inlineimage,alt:People gather at a memorial for victims of attacks in Brussels on Wednesday, March 23, 2016. Belgian authorities were searching Wednesday for a top suspect in the country#x27;s deadliest attacks in decades, as the European Union#x27;s capital awoke under guard and with limited public transport after scores were killed and injured in bombings on the Brussels airport and a subway station. (AP Photo/Valentin Bianchi),caption:,credits:[Valentin Bianchi/AP],description:People gather at a memorial for victims of attacks in Brussels on Wednesday, March 23, 2016. Belgian authorities were searching Wednesday for a top suspect in the country#x27;s deadliest attacks in decades, as the European Union#x27;s capital awoke under guard and with limited public transport after scores were killed and injured in bombings on the Brussels airport and a subway station. (AP Photo/Valentin Bianchi),href:,id:/content/dailybeast/articles/2016/03/24/operation-hemorrhage-the-terror-plans-to-wreck-the-west-s-economy/jcr:content/body/inlineimage,placeholder:false,sizes:{w16_h9_xlarger:,w8_h5_large:,w4_h3_medium:,w5_h6_large:,w3_h2_medium:,decorate_stream.wide:,medium:,default:,thumbnail:,w3_h2_large:,w4_h3_large_nocrop:,w3_h5_large:,w4_h3_large:,w16_h9_larger:,w1_h2_large:,w16_h9_medium:,w1_h1_medium:,w3_h2_small:,w2_h1_large:},title:160323-gartenstein-belgium-embed-1},{resourceType:dailybeast2/components/text,textIsRich:true,text:lt;pgt;Representative of those dark times for jihadists, Al Qaeda in the Arabian Peninsula released a special issue of its online magazine lt;igt;Inspirelt;/igt; celebrating a terrorist attack that claimed no victims. In October 2010, lt;a href=\\ target=\_blank\gt;jihadists were able to sneak bombs hidden in printer cartridges onto two cargo planeslt;/agt;. Due to strong intelligence efforts, authorities disabled both bombs before they were set to explode, but the group drew satisfaction from merely getting them aboard the;/pgt;,id:/content/dailybeast/articles/2016/03/24/operation-hemorrhage-the-terror-plans-to-wreck-the-west-s-economy/jcr:content/body/text12},{resourceType:dailybeast2/components/text,textIsRich:true,text:lt;pgt;"Two Nokia phones, $150 each, two HP printers, $300 each, plus shipping, transportation and other miscellaneous expenses add up to a total bill of $4,200. That is all what Operation Hemorrhage cost us," the lead article in that special issue of lt;igt;Inspirelt;/igt; boasted. "On the other hand this supposedly 'foiled plot', as some of our enemies would like to call [it], will without a doubt cost America and other Western countries billions of dollars in new security measures." The magazine warned that future attacks will be "smaller, but more frequent"--an approach that "some may refer to as the strategy of a thousand cuts."lt;/pgt;,id:/content/dailybeast/articles/2016/03/24/operation-hemorrhage-the-terror-plans-to-wreck-the-west-s-economy/jcr:content/body/text13},{resourceType:dailybeast2/components/text,textIsRich:true,text:lt;pgt;The radical cleric Anwar Al Awlaki, writing in lt;igt;Inspirelt;/igt;, explained the dilemma that he saw gripping al Qaeda's foes. "You either spend billions of dollars to inspect each and every package in the world," he wrote, "or you do nothing and we keep trying again."lt;/pgt;\n,id:/content/dailybeast/articles/2016/03/24/operation-hemorrhage-the-terror-plans-to-wreck-the-west-s-economy/jcr:content/body/text14},{offsetTop:6,articleIndexes:1,3,type:dailybeast2/newsletter,toggle:on,jcr:primaryType:nt:unstructured,resourceType:newsletter},{resourceType:dailybeast2/components/text,textIsRich:true,text:lt;pgt;Even in those days when the terrorist threat loomed so much smaller, the point was not a bad one. Security is expensive, and driving up costs is one way jihadists aim to wear down Western;/pgt;,id:/content/dailybeast/articles/2016/03/24/operation-hemorrhage-the-terror-plans-to-wreck-the-west-s-economy/jcr:content/body/text15},{resourceType:dailybeast2/components/text,textIsRich:true,text:lt;pgt;Unfortunately, al Qaeda's envisioned world of smaller but more frequent attacks proved unnecessary for the jihadists. Less than two months after the special issue of lt;igt;Inspirelt;/igt; appeared that celebrated an at best half-successful attack, the revolutionary events that we then knew as the Arab Spring sent shockwaves through the Middle East and North;/pgt;\n,id:/content/dailybeast/articles/2016/03/24/operation-hemorrhage-the-terror-plans-to-wreck-the-west-s-economy/jcr:content/body/text16},{resourceType:dailybeast2/components/text,textIsRich:true,text:lt;pgt;This instability would help jihadism reach the current heights to which it has ascended, where the attacks are not only more frequent but larger. Unfortunately, the United States--blinded at the time by lt;a href=\\ target=\_blank\gt;the misguided belief that revolutions in the Arab world would devastate the jihadist movementlt;/agt;--pursued policies that hastened the region's instability. The damages wrought by these policies are still not fully appreciated. lt;/pgt;,id:/content/dailybeast/articles/2016/03/24/operation-hemorrhage-the-terror-plans-to-wreck-the-west-s-economy/jcr:content/body/text17},{resourceType:dailybeast2/components/text,textIsRich:true,text:lt;pgt;The silver lining to the jihadist economic strategy is that they, too, are economically vulnerable. The damage inflicted on ISIS's "state" by coalition bombings and other pressures lt;a target=\_blank\ href=\\gt;forced the group to slice its fighters' salaries at the beginning of this yearlt;/agt;. But as al Qaeda watches its flashier jihadist rival carry out gruesome attacks on Western targets and get bombarded in return, lt;a target=\_blank\ href=\\gt;it discerns further proof of the wisdom of its strategy of attritionlt;/agt;.lt;brgt;\nlt;/pgt;\n,id:/content/dailybeast/articles/2016/03/24/operation-hemorrhage-the-terror-plans-to-wreck-the-west-s-economy/jcr:content/body/text18},{resourceType:dailybeast2/components/text,textIsRich:true,text:lt;pgt;As it watches these two sets of foes exhaust each other, al Qaeda believes that its comparative patience will pay off. It believes that its own time will;/pgt;\n,id:/content/dailybeast/articles/2016/03/24/operation-hemorrhage-the-terror-plans-to-wreck-the-west-s-economy/jcr:content/body/text19},{resourceType:dailybeast2/components/pullquote,quote:Security is expensive, and driving up costs is one way jihadists aim to wear down Western economies.,id:/content/dailybeast/articles/2016/03/24/operation-hemorrhage-the-terror-plans-to-wreck-the-west-s-economy/jcr:content/body/pullquote,quoteName:pullquote,quotePath:/content/dailybeast/articles/2016/03/24/operation-hemorrhage-the-terror-plans-to-wreck-the-west-s-economy.html}],dek:The Western economy is a key underlying target in attacks like the one that the Islamic State perpetrated in Brussels.,description:The Western economy is a key underlying target in attacks like the one that the Islamic State perpetrated in Brussels.,external:false,hideByline:false,id:/content/dailybeast/articles/2016/03/24/operation-hemorrhage-the-terror-plans-to-wreck-the-west-s-economy,image:{alt:,caption:,credits:[Reuters],description:A forensic police prepares outside the terminal at Brussels international airport following bomb attacks in Brussels metro and Belgium#x27;s International airport of Zaventem, Belgium, March 23, 2016.,href:,id:/content/dailybeast/articles/2016/03/24/operation-hemorrhage-the-terror-plans-to-wreck-the-west-s-economy/jcr:content/image,placeholder:false,sizes:{w16_h9_xlarger:,w8_h5_large:,w4_h3_medium:,w5_h6_large:,w3_h2_medium:,decorate_stream.wide:,medium:,default:,thumbnail:,w3_h2_large:,w4_h3_large_nocrop:,w3_h5_large:,w4_h3_large:,w16_h9_larger:,w1_h2_large:,w16_h9_medium:,w1_h1_medium:,w3_h2_small:,w2_h1_large:},title:160323-gartenstein-brussels-tease},longTitle:Operation Hemorrhage: The Terror Plans to Wreck the West's 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China doesnt understand the unpredictability of a dynamic economy, Edmund Phelps, winner of the 2006 Nobel prize for economics, told CNBCs Squawk Box.

Phelps said he sympathized with Chinese policymakers who have had to deal with rapid changes in the worlds second-largest economy in recent years, having been accustomed to rapid expansion in the past two decades.

An economy thats full of dynamism and people using their imagination and their creativity, such an economy is not predictable, said Phelps, who is currently the director of the Center on Capitalism and Society at Columbia University.

Nobody knows exactly in what directions the economy is going to be moving and how fast its going to be getting there. And this is something the Chinese are totally unfamiliar with, he said.

Barring whatever next year's presidential administration might have in store, all signs show that the economic expansion should stay the course -- at least for the next two years.

"It's not going to be gangbusters, but it's certainly not going to be a recession," said Wells Fargo global economist Jay Bryson, PhD

It's impossible to predict how, for example, a Donald Trump presidency might affect the US economy, or a major turnaround in the congressional makeup.

"At this point it's a wild guess, and it's not in there," he said of his economic forecast. With optimism, Dr. Bryson gave his best projections for the global economy, zeroing in on the United States and Northeast Pennsylvania during the Economic Outlook Breakfast on Wednesday, a joint effort by t7he Greater Scranton Chamber of Commerce and the Greater Wilkes-Barre Chamber of Commerce held at the Four Points by Sheraton hotel in Scranton.

Consumer spending, which makes up about two-thirds of the gross domestic product, increased by a healthy 2.5 percent to 3 percent from last year, he said. That's helping to prop up the economy, which as a whole has been growing about 2 percent to 2.5 percent annually.

"If that continues to grow, the economy's not going back into a recession," Dr. Bryson said.

His forecast rings true with at least one other economist.

As long as consumers keep spending, it's pretty hard to take the economy down, said Scott Hoyt, senior director of consumer economics for Moody's Analytics, a consulting firm near Philadelphia. "When we're adding as many jobs as we are, and the unemployment keeps falling, there's certainly no reason for consumers not to keep spending," he said.

Declining exports stand to apply serious drag on the domestic economy, Dr. Bryson said.

Oil and gas exports could boost margins, but capital goods like factory equipment are the United States' biggest export, and overseas customers simply aren't buying.

Well on the rebound from economic recession, the United States is insulated from financial woes wracking other nations like China, where booming growth has slowed significantly, and Greece, where a hulking debt crisis has been kicked down the road, at least for a while.

Health care, construction and education don't rely on the international markets, and they make up a huge portion of the US economy. Global unrest could affect manufacturing, but it makes up only 15 percent of the domestic economy.

Isolated crises, for example Tuesday's terrorist attack in Brussels, Belgium, or the November attacks in Paris, aren't likely to affect the global economy, Dr. Bryson said. On the other hand, Mr. Hoyt with Moody's said that widespread terrorism or a new war could bring economic instability.

"It's possible to come up with dark scenarios that, you know, could take things down," he said. "Left to its own devices, I don't think there's any reason for recession in the next two, three years. But external shocks, as we've learned, are always possible."

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Then One/WIRED

For all of its regulatory and political challenges, many things remain attractive about the on-demand economy--that is, the collection of companies, from Uber to Instacart, built around workforces summoned with a tap in an app. The bar for entry to work is lower. The work itself is flexible: workers choose their hours; can work for competitors; and are their own bosses (or at least that’s the promise). And in spite of the legal gray area in which many on-demand companies continue to operate, the market has spoken. Consumer demand, and a willingness among individuals to join a growing pool of cheap and flexible labor, shows on-demand is here to stay.

Or is it?

The demise of a few companies does not signal the end of the on-demand idea.

A slew of startups designed to deliver instant gratification are struggling. Last year, on-demand home cleaning company Homejoy shut down. Grocery delivery service Instacart recently cut wages for couriers, and on-demand valet parkings startups Zirx and Luxe reportedly have shifted away from an on-demand model to emphasize a subscription-based service. (Luxe’s backers dispute this characterization.) Food delivery business SpoonRocket shuttered this week after reportedly failing to raise money or attract a buyer.

As the tales of woe pile up, it’s tempting to argue we may be reaching the limits of an on-demand economy. Companies seem unable to make ends meet. And in an increasingly risk-averse investment environment--where funding doesn’t flow as freely and shareholders scrutinizing profit margins can be easily spooked--the financial strain could lead some companies to fold.

But the demise of a few companies does not signal the end of the on-demand idea. As in many other industries, the on-demand economy is experiencing growing pains. Investors and economists remain optimistic that the best businesses will endure. Those that reach a careful balance of time, money, and value of service for a critical number of people will, experts say, stick around.

On-Demand Schadenfreude

The pleasure taken in mocking the on-demand economy’s excesses and struggles is a subgenre of schadenfreude unto itself. "San Francisco tech culture is focused on solving one problem," goes one infamous tweet that rocketed through the ranks of the tech-fatigued Twitterati. "What is my mother no longer doing for me?"

"Entitlement is a straight line pointing heavenward," declared a New York Magazine piece covering the rise of on-demand laundry apps. Medium's Lauren Smiley put it more bluntly: "The on-demand world isn't about sharing at all. It's about being served. This is an economy of shut-ins."

We're still seeing the effects of experimentation in a relatively immature industry. Arun Sundararajan, New York University professor

And sure, some of this cynicism makes sense in a world where the smartphone has become a broker for services big and small--or downright facile, depending on how you choose to view it. Today, you can summon your own personal chauffeur, butler, chef, florist, bartender, or fashion consultant via app. It’s a whole world of "Uber for X" startups that are based, the fear seems to be, on the often trivial whims of some (likely young, white, male) tech founder. So it’s understandable that many people would delight in seeing that approach show signs of weakness.

But Arun Sundararajan, a professor at New York University's school of business, disagrees that the on-demand economy on the whole is facing a reckoning. "I haven't seen the failure of any particular company point to the lack of viability of the space in general," he says. Rather, he says, we're still seeing the effects of experimentation in a relatively immature industry--akin to some of the earlier flameouts of the first dot-com boom. Every era seems to be stuck with its Webvan, its Kozmo, its

Sundararajan says proclaiming the demise of the on-demand idea overlooks the many ways on-demand businesses can be configured, from how prices are set to whether they hire independent contractors or official employees. Companies are still figuring out what works. Some will rise, some will fall. What the on-demand economy creates as a whole, he says, is the possibility of a more decentralized labor force, which consumers are increasingly coming to expect. "A lot of economic activity down the road is going to flow through platforms that have a mix of centralized and decentralized labor," Sundararajan says.

Take, for example, the tech giant that spurred so much investor excitement over the premise of the on-demand economy in the first place. Uber is now the world's most highly valued startup at $62.5 billion. What Uber accomplished, according to Enrico Moretti, a labor economist at UC Berkeley, is a much better way of matching demand and supply. I can stand on a corner hoping that a cab driver passes by, or I can open my app and call an Uber or Lyft driver, Moretti says. That's a lot of value added, and it's efficient. Whether those specific companies ultimately succeed, the demand for what they offer is strong. Consumers see value in being able to travel that way. So long as that’s the case, someone will likely figure out how to let someone summon a ride with a smartphone.

Survival of the Fittest

OK, so what about the rest of the on-demand economy, all the other services accessible via phone?

Because the nature of on-demand necessitates a high volume of transactions on low margins, yes, some experiments will fail. Plus, on-demand businesses have much slimmer margins than, say, software businesses, says Ryan Sarver, an investor at Redpoint Ventures who sits on the board at Luxe. "You have less room for error," Sarver says. And it may be much easier for such on-demand businesses to get into the red when mistakes happen.

Sarver says his firm looks at several factors in deciding whether or not a venture is worth investing in, including market size, user experience, and the prospects of delivering a product different enough from what already exists at a price people are willing to pay.