Once you eliminate the implausible corner solutions—the TSA undertakes body cavity searches of every passenger, or security screenings are abolished—a number of consequences follow.
1. The TSA must randomize (play a “mixed strategy,” in game-theoretic parlance). Otherwise, terrorists can predict some of its precautions and evade them. The same principle explains why police vary patrol routes and road blocks. A NYT article today makes clear that the TSA is self-consciously randomizing to keep terrorists off guard.
2. At the social optimum, the number of successful terrorist attacks will be greater than zero. It might be argued that we have had too few successful terrorist attacks over the last few years rather than too many. The question is whether the implicit statistical valuation of life in TSA programs is too high. I suspect that the answer is yes, as is generally the case with airline safety.
3. Profiling is an effective strategy when, as here, terrorists come from a small group of (relatively) easily identifiable people. One suspects that this explains Israel’s success. But profiling places a large portion of the cost of deterrence on a small group, which makes some people morally uneasy.
4. Once the implausible corner-solutions are ruled out, any security policy or threshold will seem arbitrary because you have to draw the line somewhere, which means that it will be easy to point to some permitted activity that is only slightly different from what is forbidden (for example, carrying on 100 ml of liquid rather than 101 ml).
5. As for the “security theater” claim–
a. If ordinary people are fooled into thinking that the TSA is doing more than it is really doing, then at least some potential terrorists will be fooled as well, and so will be deterred from engaging in airplane-terrorism.
b. Ordinary people will also fly more often, which means that one of the goals of terrorists—to terrorize people so that they will pressure their government to make concessions to terrorists—will have failed.