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"It's magical thinking: If we defend against what the terrorists did last time, we'll somehow defend against what they do one time. Of course this doesn't work. We take away guns and bombs, so the terrorists use box cutters. We take away box cutters and corkscrews, and the terrorists hide explosives in their shoes. We screen shoes, they use liquids. We limit liquids, they sew PETN into their underwear. We implement full-body scanners, and they're going to do something else. This is a stupid game; we should stop playing it."

And do away with the restrictions? As much as I dislike dealing with the TSA, some of these rules have made it far more difficult for terrorists to bring down or hijack an airplane. I'm sure I am not the only one who remembers the bad old days when criminals, mentally ill people, non-suicidal terrorists, and political extremists would regularly hijack flights here and abroad. I can't remember the last time it's happened, because now it's nearly impossible for anyone to bring on weapons or get into the cockpit.

I also disagree with his conclusion that people reacted with "fear" to the Christmas day attempt. Most of the reaction I saw was relief and anger.

We certainly have to be safe from past attacks, but Schneier's point is that with the government's strategy, that's all we're safe from. It would be a lot better to use a strategy that defends against all attacks we know to be possible, and not just the ones that have already been tried.
It would be a lot better to use a strategy that defends against all attacks we know to be possible, and not just the ones that have already been tried.

I dont think that's what he's saying either.

Effective security comes way before the departure gate. If that is our main line of defence no amount of security will foil the inevitable.

I think what he is saying is we should look on these as successes; ok a guy got onto a plane with explosives. But it was a desperate move, with little chance of working - and it failed.

Yet actually it succeeded because now the TSA (and others) are running scared again.

It would take a brave politician to turn round and say that this time the system worked. The heightened security meant a desperate mechanism was employed and the "last line of defence" (passengers) were utterly effective.

I phrased my point a little clumsily. What I was trying to say (and what I think we agree Schneier is saying) is that if you know about a type of attack and think that it's a type worth defending against, you shouldn't wait for it to actually happen before you take action.

Abdul Mutallab could have used his butt (or other things, like a prosthesis or a wheelchair) to stash the parts necessary to assemble a relatively reliable bomb. That's a known attack type, but we're not defending against it at the security checkpoints. Now that could be a wise decision based on the fact that checking for it is hard and, as you said, "effective security comes way before the departure gate".

But if some future terrorist carries out this quite-plausible attack and the government then decides that the TSA should start screening for it, it'll mean they learned nothing from the underwear bomber.

Without any suggested strategy that would defend against all possible attacks, though, it's not much of a suggestion. The current strategy may be the best one available. If unreliable two-component powder+syringe underpants bombs are the best option currently available to potential aircraft bombers, then that's definitely something.
The point is that the cost of defending against all possible attacks may very well be too high to be worthwhile. If you argue that this is impossible, consider the extreme case where the cost is equal to our GDP (or an appreciable fraction thereof).
Another thing you're forgetting is peoples new reaction to hijackers. In the bad old days as you called them if you where on a plane that got hijacked people assumed that they had a good chance to make it out alive if they just kept their head down and mouth shut (and on the whole they where right). So crowd control wasn't really a problem and weapon needs where minimal. These days anybody on a hijacked plane will assume they're dead if they don't stop the hijackers and will thus take them down or die trying. This change in attitude makes it dramatically harder to hijack a plane and is probably the main reason for the drop in hijackings.
Preventing people from carrying on well-designed bladed weapons has significantly increased my likelihood of intervening should I see a disturbed individual. A Box cutter at close range can do a lot of scary damage - a cork screw, broken bottle, or other roughly crafted shiv may gash me pretty badly, but I stand a fighting chance at taking my opponent down, particularly if someone else joins in.

One of the reasons for preventing edged weapons on planes is to enhance the performance of the passengers in subduing suspects in unarmed combat.

Agreed. Despite what you see in movies, a guy with a knife (even if he isn't very good with it) can very easily injure an unarmed opponent badly enough that he can't continue to fight.
a cork screw, broken bottle, or other roughly crafted shiv

All of these will cut deeper and do more damage than a box cutter. (maybe not the corkscrew)

Before 9/11, you didn't even need to have a weapon. Often saying that you had a bomb on you would be enough (just like how some robbers only use a note they pass to the teller). People don't do it anymore because they know passengers will fight back after seeing what happened to the hijacked 9/11 flights.
Banks aren't a good example. By policy you can walk and demand money and they'll give it to you. They'll prosecute your ass after the police track you down (which generally doesn't take long).