Where did all that money go?

Sep 26 JDN 2459484

Since 9/11, the US has spent a staggering $14 trillion on the military, averaging $700 billion per year. Some of this was the routine spending necessary to maintain a large standing army (though it is fair to ask whether we really need our standing army to be quite this large).

But a recent study by the Costs of War Project suggests that a disturbing amount of this money has gone to defense contractors: Somewhere between one-third and one-half, or in other words between $5 and $7 trillion.

This is revenue, not profit; presumably these defense contractors also incurred various costs in materials, labor, and logistics. But even as raw revenue that is an enormous amount of money. Apple, one of the largest corporations in the world, takes in on average about $300 billion per year. Over 20 years, that would be $6 trillion—so, our government has basically spent as much on defense contractors as the entire world spent on Apple products.

Of that $5 to $7 trillion, one-fourth to one-third went to just five corporations. That’s over $2 trillion just to Lockheed Martin, Boeing, General Dynamics, Raytheon, and Northrop Grumman. We pay more each year to Lockheed Martin than we do to the State Department and USAID.

Looking at just profit, each of these corporations appears to make a gross profit margin of about 10%. So we’re looking at something like $200 billion over 20 years—$10 billion per year—just handed over to shareholders.

And what were we buying with this money? Mostly overengineered high-tech military equipment that does little or nothing to actually protect soldiers, win battles, or promote national security. (It certainly didn’t do much to stop the Taliban from retaking control as soon as we left Afghanistan!)

Eisenhower tried to warn us about the military-industrial complex, but we didn’t listen.

Even when the equipment they sell us actually does its job, it still raises some serious questions about whether these are things we ought to be privatizing. As I mentioned in a post on private prisons several years ago, there are really three types of privatization of government functions.

Type 1 is innocuous: There are certain products and services that privatized businesses already provide in the open market and the government also has use for. There’s no reason the government should hesitate to buy wrenches or toothbrushes or hire cleaners or roofers.

Type 3 is the worst: There have been attempts to privatize fundamental government services, such as prisons, police, and the military. This is inherently unjust and undemocratic and must never be allowed. The use of force must never be for profit.

But defense contractors lie in the middle area, type 2: contracting services to specific companies that involve government-specific features such as military weapons. It’s true, there’s not that much difference functionally between a civilian airliner and a bomber plane, so it makes at least some sense that Boeing would be best qualified to produce both. This is not an obviously nonsensical idea. But there are still some very important differences, and I am deeply uneasy with the very concept of private corporations manufacturing weapons.

It’s true, there are some weapons that private companies make for civilians, such as knives and handguns. I think it would be difficult to maintain a free society while banning all such production, and it is literally impossible to ban anything that could potentially be used as a weapon (Wrenches? Kitchen knives? Tree branches!?). But we strictly regulate such production for very good reasons—and we probably don’t go far enough, really.

Moreover, there’s a pretty clear difference in magnitude if not in kind between a corporation making knives or even handguns and a corporation making cruise missiles—let alone nuclear missiles. Even if there is a legitimate overlap in skills and technology between making military weapons and whatever other products a corporation might make for the private market, it might still ultimately be better to nationalize the production of military weapons.

And then there are corporations that essentially do nothing but make military weapons—and we’re back to Lockheed-Martin again. Boeing does in fact make most of the world’s civilian airliners, in addition to making some military aircraft and missiles. But Lockheed-Martin? They pretty much just make fighters and bombers. This isn’t a company with generalized aerospace manufacturing skills that we are calling upon to make fighters in a time of war. This is an entire private, for-profit corporation that exists for the sole purpose of making fighter planes.

I really can’t see much reason not to simply nationalize Lockheed-Martin. They should be a division of the US Air Force or something.

I guess, in theory, the possibility of competing between different military contractors could potentially keep costs down… but, uh, how’s that working out for you? The acquisition costs of the F-35 are expected to run over $400 billion—the cost of the whole program a whopping $1.5 trillion. That doesn’t exactly sound like we’ve been holding costs down through competition.

And there really is something deeply unseemly about the idea of making profits through war. There’s a reason we have that word “profiteering”. Yes, manufacturing weapons has costs, and you should of course pay your workers and material suppliers at fair rates. But do we really want corporations to be making billions of dollars in profits for making machines of death?

But if nationalizing defense contractors or making them into nonprofit institutions seems too radical, I think there’s one very basic law we ought to make: No corporation with government contracts may engage in any form of lobbying. That’s such an obvious conflict of interest, such a clear opening for regulatory capture, that there’s really no excuse for it. If there must be shareholders profiting from war, at the very least they should have absolutely no say in whether we go to war or not.

And yet, we do allow defense contractors to spend on lobbying—and spend they do, tens of millions of dollars every year. Does all this lobbying affect our military budget or our willingness to go to war?

They must think so.