The 2008 Copenhagen Consensus has just been released and its panel of top economists has declared the global fight against terrorism an unwise investment.

The post-9/11 world has increased counter-terrorism spending by $70billion annually, with the U.S contributing the lion's share to this cause. This has been accompanied by a significant reduction in the number of attacks, but casualties from said terrorist attacks have risen. The Wall Street Journal reports that a 34% drop in terrorist attacks has been accompanied with a rise in deaths, from 420 to 487 casualties annually.

What explains this inverse relationship? Terrorists have long been labeled "irrational," but they seem to have little trouble calculating costs and benefits. Rather than waste their time with minor attacks that may be thwarted by the heightened security, they save their money and time for big attacks; read more casualties.

Since a larger cost per attack is more traceable, the Copenhagen report says interrupting terrorist-funding would be the cheapest and most effective way to reduce trans-national terrorism. A slight increase in the amount given to build modern, secure communication and finance networks in less developed countries would provide better results than any equivalent investment in additional military capability.

And, by beginning to get at the kinds of economic exclusion from lack of access to banking, property rights, organizational forms, and identity devices that plagues some 4.5 billion people, according to Hernando de Soto, that same small investment would continue giving back for generations.