Homeland official foresees security embedded in 'fabric of society'

The Bush administration plans to provide "embedded economic incentives" to encourage the private sector to do its part in securing the nation's critical infrastructures, a top homeland security official said Wednesday.

"The whole aspect of security will become embedded in our economy," Deputy Homeland Security Secretary Gordon England told industry leaders during a conference at the Chamber of Commerce.

England, who formerly served as secretary of the Navy and was an executive vice president of General Dynamics, predicted that companies eventually will adjust to the "era of terrorism" in much the same way that they have adjusted to "the era of environmentalism."

"Just as our society is now more environmentally conscious, security measures will, over time, likely become embedded in the fabric of our society," England said. "Security will be ... part of the cost of doing business, and it will make some businesses more desirable than others in terms of investors and employees and insurance."

England said the Homeland Security Department will play a key role in promoting that type of security-conscious society. "Our preferred approach is to use embedded economic incentives as a stimulant to encourage homeland security measures," he said.

The department also will help private companies, local government agencies and emergency-response officials develop methodologies for assessing threats and vulnerabilities and obtain the most effective counter-terrorism technologies, according to England.

He said administration officials have had "some preliminary discussions" about the regulatory aspects of security but that he favors "as little regulation as possible."

"I don't know what that approach will be, frankly," he said. "Personally, my view would be that ... I would like to rely on embedded economic incentives but work with the regulatory agencies where necessary."

A government-industry partnership would be more attractive to industry than new regulations, according to Bruce Josten, the chamber's executive vice president for government affairs.

"We believe that the partnership model is better than regulatory approaches because it imposes less transaction costs, it is far more flexible and adaptable, and it potentially allows companies to leverage outside resources and contain other security costs," Josten said. "But the jury is still out, and there are doubters on Capitol Hill and in the policy community."

The president's National Infrastructure Advisory Commission also favors market incentives for critical infrastructure protection, according to Richard Davidson, the panel's chairman.

"We strongly believe that additional government regulation of critical infrastructure companies needs to be avoided," Davidson said. "Instead, we should rely on market forces. It just makes good business sense to protect the country's infrastructure."

But Davidson said some new regulations might be needed for critical infrastructure sectors that "really don't have the economic motivation" to provide adequate protections. "We will be performing a study to assess the impact of focused regulations on security programs within the various groups," he said.