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Taking the Incentives Out of War

By Ivan Eland
April 9, 2008


Editor’s Note: To understand the distortions in the U.S. political/media system over the past several decades, one can’t ignore the trillions of dollars poured into what Dwight Eisenhower called the “military-industrial complex.”

Over the years, that “defense” spending has spilled over into think tanks, media outlets and the care and feeding of politicians – and as the Independent Institute’s Ivan Eland argues in this guest essay, it has led the nation into disasters like the Iraq War:

During the early days of the Clinton administration, Colin Powell, then chairman of the Joint Chiefs of Staff, cringed when Madeleine Albright implied that because the United States had such a big, beautiful military, it should be willing to use it promiscuously overseas.

After the debacle in Iraq, the growing group of those who desire a more restrained foreign policy—liberals, conservatives, libertarians and independents—should still be cringing.

Thus, the problematical hyperactive U.S. foreign policy did not arise with President George W. Bush, but has existed through Democratic and Republican administrations since Harry S Truman was president.

Although George W. Bush was especially gullible and incompetent in attempting his armed, nation-building fiasco in Iraq, the hyperactivity in U.S. foreign affairs is mainly structural.

In other words, pressures exist within what President Dwight Eisenhower called “the military industrial complex” to liberally employ the military overseas to justify the purchase of large amounts of expensive military hardware made primarily here at home.

Most of the U.S. defense industry is made up of ostensibly private companies, with either no or only small amounts of commercial business, that essentially have become wards of the state.

This dedicated defense industry works in collusion with the military services, to inflate threats to justify the need to buy questionable weapons, and with congressional representatives, to make the taxpayers pay the bill for those unneeded arms.

In fact, when the big defense contractors choose subcontractors, they do not do so on the basis of getting the best subsystem for the best price (as is done in the commercial marketplace), but to spread the subcontracts over as many states and congressional districts as possible, to widen the political support for the weapons program.

Therefore, it becomes almost politically impossible to kill a weapon system, even if its cost has become exorbitant, its performance has been poor, its schedule has slipped, or world events have made it irrelevant.

A recently publicized, egregious example of this much larger endemic problem is the effort by Lockheed Martin to modify existing helicopters (EH-101s) with new state-of-the-art communications and defense systems to create VH-71s, a fleet of 28 helicopters to carry the president on short trips to and from Air Force One, his Boeing 747 jumbo-jet command plane.

The Navy, procuring the new helicopter for the White House, has had to halt the helicopter program in an attempt to rescue it. According to the Washington Post, the program’s costs have almost doubled from $6.1 billion in 2005 to $11.2 billion today, and the schedule has slipped significantly.

Such cost, schedule, or performance slippage is common in defense programs, because little competition—the foundation of the commercial marketplace—exists at the prime contract or subcontract level in the defense industry.

In addition, companies will purposefully bid with an excessively low price (“buy in”) to get the contract, and then count on the likelihood that they can charge the Defense Department big bucks when it comes in with changes to the very specific military requirements—which it inevitably does.

In the case of the VH-71, Lockheed Martin has alleged that the Navy has added 1,900 requirements since the initial contract was signed. (The Navy denies this number, but does not deny that the requirements have become so demanding that the entire EH-101 aircraft has had to be completely redesigned to create a VH-71.)

Thus, then-Secretary of Defense Donald Rumsfeld’s comparison of the grossly inefficient U.S. defense industry with Soviet central planning was entirely appropriate—both being competition-free zones.

Although Eisenhower, a former general, first warned of the “military industrial complex” (which really should have been called the “military-industrial-congressional complex”), Harry Truman actually invented it.

Up through World War II, the United States had no dedicated defense industry. Whenever a war arose, civilian factories converted to military production and then reconverted to commercial production once the war had ended.

But Truman created the first dedicated defense industry in U.S. history, by giving steady defense business to “private” companies during peacetime.

Thus, it was no coincidence that unlike the periods following all previous wars—including the first few years of the Cold War subsequent to World War II—the United States did not demobilize its military after the Korean War. Thus was born the first large peacetime military in more than 175 years of U.S. history.

Even during the nuclear standoff between the superpowers during the Cold War, pressures to use the historically large U.S. forces in brushfire areas proved too intense to resist. So accompanying the atypically large peacetime military following the Korean War was an untraditional interventionist U.S. foreign policy.

Such facts should alarm those traditional conservatives who advocate a more restrained U.S. foreign policy but who are silent when anyone mentions cutting the defense budget.

But if the Albright temptation is to be stamped out, cutting the massive base defense budget of well over $500 billion a year (not counting the annual costs of the wars in Iraq and Afghanistan), and the offensive power projection weapons contained therein, is a must.

But how can the defense budget be cut if all those defense companies are lobbying their senators and congressman for more of the largesse?

Harry Truman’s legacy must be modified. A dedicated defense industry must be eradicated. The walls around the defense industry that impede competition must be pulled down so that firms with mainly commercial business can compete for defense contracts.

The first step in this process would be to insist that the armed services ease their unique and overly rigorous requirements at the subcontract level. In other words, the U.S. military should be forced to use commercially available parts—or such parts that can be easily modified to military requirements—in their weapon systems.

Thus, in a “back to the future” move, subcontractors—like the entire war production machinery used to do in the old days—would be able to move in and out of defense production as military threats to the United States wax and wane.

If subcontractors could move freely from commercial to weapons production and back, less pressure would arise to keep the defense budget high during times of low threat (for example: at present, terrorism doesn’t require much money to fight).

With lower defense budgets and a more modest and defensively oriented military, the Albright temptation to intervene excessively around the world would also be reduced.

Ivan Eland is Director of the Center on Peace & Liberty at The Independent Institute. Dr. Eland has spent 15 years working for Congress on national security issues, including stints as an investigator for the House Foreign Affairs Committee and Principal Defense Analyst at the Congressional Budget Office. His books include The Empire Has No Clothes: U.S. Foreign Policy Exposed, and Putting “Defense” Back into U.S. Defense Policy.

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