In 1969, John Kenneth Galbraith penned a piece for the New
York Times, titled The Big Defense Firms
Are Really Public Firms and Should be Nationalized, arguing, among other things, that it was folly for defense
contractors to claim that they were private corporations. Such claims made a
mockery of free enterprise.
Nearly 40 years hence, Charlie Cray and Lee Drutman have
resurrected and energized Galbraith�s argument in their work, titled Corporations and the Public Purpose:
Restoring the Balance (Seattle Journal for Social Justice, Winter 2005).
They make an exceptionally compelling case for putting the defense industrial
base (DIB) into the direct service of the American public through a form of
nationalization: federal chartering.
�Converting the companies to publicly-controlled, nonprofit
status would introduce a key change: it would reduce the entities� impetus for
aggressive lobbying and campaign contributions. Chartering the defense
contractors at the federal level would in effect allow Congress to ban such
activities outright, thereby controlling an industry that is now a driving
force rather than a servant of foreign policy objectives. As public firms, they
would certainly continue to participate in the policy fora designed to
determine the nation�s national security and defense technology needs, but the
profit-driven impetus to control the process in order to best serve corporate
shareholders would be eliminated. Thus, by turning defense and security firms
into full public corporations, we would replace the criteria by which their
performance is judged from quarterly earnings targets to criteria that is more
consistent with the national interest.�
If Cray and Drutman�s notion seems radical, it�s only thanks
to a fanciful story telling by those who move back and forth through the
revolving, and always open, doors of the national security apparatus that link
the Department of Defense, the US Congress, and the players who dot the DIB
landscape. Apologists for the DIB have always distorted the importance of the
defense industry to the nation's security, particularly after the demise of the
Soviet Union. They really believe that their industry should get special recognition
for producing the goods and services used to wage war. To sell that concept,
they've made sure that the difference between contractor and uniformed
government employee is completely blurred. With that, it's impossible to know
who is protecting the balance sheet and who is protecting the US Constitution.
In short, they've sold the public good.
There's a lot of evidence to show that the DIB is not
functioning in the nation's best interest. Two interesting studies stand out.
An April 2005 report by the Government Accountability Office. titled Defense Logistics, took a hard look at
the system that supplies US troops in Iraq and concluded that it needed repair.
The pipeline failed to deliver basic supplies, such as MRE rations, in a timely
manner. Another from the National Defense University (see below) indicated that
defense isn�t reaping broad benefits from information technology. That does not
bode well for the push to network centric warfare.
The inability of the Pentagon to account for billions in
missing funds here at home and in Iraq, ongoing criminal investigations spread
across the entire national security landscape, and sensational resignations,
arrests and convictions are unprecedented in US history. There is more here
than just a few �bad apples.� It is a systemic problem made worse by the
absence of leadership at the highest levels. There is self-interest, to be
sure, but that is different from leadership. The American public is rapidly
discovering that those running the show in the national security machinery
aren't necessarily interested in what's best for them or the USA.
Competition? Show Me the Data!
According to a formula that measures market concentration,
the Herfindahl-Hirschman Index, the DIB is not a competitive industry. At a
recent Center for Strategic and International Studies panel discussion on the
DIB (csis.org), one participant warned that the myth of competition in the DIB
might be exposed. �Some federal agencies use this index [Herfindahl-Hirschman
Index] to establish guidelines for when you have to start worrying about the
absence of competition. Competition is supposed to be a hallmark of the
acquisition system that we�ve had since the end of World War II, but with only
two big firms -- which is the case for some categories of military equipment
provided by our industrial base -- there is little competition in the
traditional sense. In fact, this situation -- two firms that divide market
share -- has a name: duopoly. Not monopoly, but duopoly -- and it�s pretty tough
to brand duopoly circumstances fierce competition.�
The American public is led to believe that the DIB is
unmatched in the broad applications of information technology. Not quite. An
astonishing report by the National Defense University titled Bringing Defense into the Information
Economy (David Gompert and Paul Bracken, March 2006) indicates that the
Pentagon and its minions are still trying to figure out how to get into the
information age. �One thing is clear [that] the phenomenon of increasing capability
at declining cost now common in retail, financial services, telecommunications
and other sectors remains uncommon in defense.� To that, DIB apologists retort
that the defense industry is different. But Gompert and Bracken will not buy
into the party line.
�Defense is different is a self-fulfilling excuse that
perpetuates poor price-performance and deprives national defense of the
benefits of larger, faster, more dynamic, and more inventive IT markets. It
condones expensive adaptation and integration services. Moreover, by
exaggerating the difficulty of applying IT to defense, this hypothesis
legitimizes the ceding of government responsibility. It implies that the
challenge of managing, adapting, and integrating IT into military capabilities
is so daunting for DOD that it must be left to defense contractors . . ."
Protecting the Status Quo: The Voice of the DIB
the Defense Industry (National Defense -- July 2006, ndia.org), written by
Larry Farrell, president of the National Defense Industrial Association, is
representative of the defense industry's world-view. Farrell, a retired US Air
Force Lieutenant General, doesn�t believe the American people understand the
importance of his industry to national security. He thinks that the defense
industry needs to get out there and tell its story because � . . . it will be
critically important with the coming resource crunch, when the Defense
Department will have to justify acquisitions and force structure costs against
calls for reallocation of resources to other national needs.� Okay, fair
enough. But what kind of story will the American public get?
He divines that the first thoughts that come to the public
mind when asked about the DIB are $600 toilet seats, $400 hammers (actually
they were $450 a piece), war profiteering, Eisenhower�s oft cited
military-industrial complex thesis, scandals, and reports critical of the DIB.
Naturally, Farrell blames the media for faulty reporting on the $600 toilet
seats and $450 hammers.
The NDIA president takes the reader back to World War I and
proclaims that �the only things we took to war [in WWI] that were truly
American made were the Springfield rifles and our fighting spirits.� Huh?
It is true that US artillery pieces appeared late in the
conflict and that the US had to buy aircraft and other weaponry from the
British and French. The US Navy fought in WWI, at least according to the US
Army and Navy historical offices. In 1916, American-made Navy destroyers, six
of them, were escorting British cargo ships to protect the Brits from German
submarine attacks. A US Navy admiral, William Sims, convinced the British
Admiralty to change its ship formations to a convoy pattern. In the end, 37 US
destroyers participated in the effort significantly reducing cargo losses to
the German U-Boats.
American made ships -- one produced by Newport News
Shipbuilding, the USS Fanning (DD 37)
-- and the other by William Cramp & Sons, the USS Nicholson (DD 52), sunk a U-Boat in 1917. And, in quite a feat
of industrial production, 1,200 American-made M1917 Browning machine guns were
used late in WWI.
It�s worth noting an event of latter day that was putting
some strain on the US Army in 1916. The US Army had its attention focused on
the Mexican border. The American public was more concerned about securing the
Mexican border from the likes of Pancho Villa (his attack on Columbus, NM,
killed 25 Americans) than war in Europe. At the height of the Mexican Campaign,
some 150,000 national guard troops were deployed along the US and Mexico border
with another 8,000 US Army infantry led by General John Pershing.
In the editorial, Farrell attempts mightily to challenge the
stigma of war profiteering, but his argument about the tough �allocation of
resources� ends in language that is precisely that of a war profiteer hunting
for profits in the midst of resource scarcity. This argument -- focused as it
is on the corporate interest, ignores the lifetime care costs for the some
18,356 wounded in Afghanistan and Iraq (and, one supposes, hundreds more
wounded during Special Operations and intelligence activities all over the
globe). The pay raises, increases in housing allowances and medical benefits
over the past few years, for those in the military that matter most, are paltry
compared with the bonuses, stock options and salary increases received by DIB
leaders, and their partners throughout the national security machinery.
Finally, the American public doesn't hear too much about the
Lockheed Martin contracts to upgrade Chinese air traffic control systems. �We
Never Forget Who We Work For,� says Lockheed. Boeing recently deployed the Sea
Based X-Band radar system that's floating off the coast of Hawaii. The platform
for that technological marvel was built by Vyborg Shipping, a Russian firm. Is
it really North Korea the missile defense people are interested in, or is it
the Russian arsenal?
Will the story the defense industry provides be the complete
or redacted version?
Full Spectrum Corruption
According to Cray and Drutman, �The growth of private
military firms and corporate intelligence contractors in the past decade has
created additional profit-making pressures on national security policymaking
processes. Interlocking relationships exist between the largest defense
contractors and the Pentagon -- including corporate representation on key
defense planning boards, and the regular passage of Pentagon and industry
personnel through the proverbial revolving door; that is, to the private sector
companies that they formerly oversaw.
"The result is a steady stream of abusive contracting
practices and a potentially dangerous distortion of American national security
objectives. Another result of defense contractors� influence over Congress and
defense policy boards is a long-term commitment to the development of high-tech
weapons systems that only specific contractors are able to produce. These
weapons systems arguably have little to do with preventing acts of terrorism --
one of the nation�s current greatest security concerns.�
The interlocking relationships
referred to by Cray and Lutman have led to spectacular levels of corruption.
Convictions, resignations, investigations and ethically challenged actions
plague the national security machinery. More bad news from the expanding Randy
�Duke� Cunningham investigation is likely to further rock the decrepit system.
Some of the more troubling public
cases include William H. Swanson, chairman and CEO of Raytheon, who lifted
major portions of his book Unwritten
Rules from another author. He was censored and had his paycheck cut by the
Raytheon Board of Directors. Randy �Duke� Cunningham, former US congressman and
chairman of the US House Intelligence Subcommittee, is serving an 8.4-year
sentence in federal prison for fraud and taking bribes. Rep. Jerry Lewis, the
chairman of the US House Appropriations Committee, is under investigation by
the FBI. Porter Goss, former US congressman and CIA director is also the
subject of an FBI investigation. In May 2006, Reuters reported that the FBI was
investigating allegations that four-star USAF Generals Michael Moseley and John
Jumper helped to steer a Thunderbird contract (the USAF equivalent of the US
Navy's Blue Angels stunt flying team) to a friend, retired USAF General Hal
Hornburg, who once commanded the Thunderbirds.
is an invaluable tool for tracking the activities of the players in the DIB.
The group reported on what, perhaps, is more frightening than the explosion of
corruption in the US national security arena: the commercialization of the
uniformed military services to the point where distinguishing between corporate
operative and uniformed government employee is impossible.
�One of Raytheon's more secretive
subsidiaries is E-Systems, whose major clients have historically been the CIA
and other spy agencies like the National Security Agency and the National
Reconnaissance Office. An unnamed congressional aide once told the Washington
Post that the company was 'virtually indistinguishable' from the agencies it
serves. Congress will ask for a briefing from E- Systems and the (CIA) program
manager shows up, the aide is quoted as saying. 'Sometimes he gives the
briefing. They're interchangeable.''
What is the US Military? What is being
Ultimately, the entire national security apparatus is going
to have to make some decisions. Is it country before agency? Is it profit
before country? Is it the US Congress saying �no� to campaign contributions?
P.W. Singer, who monitors the DIB for the Brookings
Institution, put the issue in perspective. �The final dilemma raised by the
extensive use of private contractors involves the future of the military
itself. The armed services have long seen themselves as engaged in a unique
profession, set apart from the rest of civilian society, which they are
entrusted with securing. The introduction of private military firms, and their
recruiting from within the military itself, challenges that uniqueness and the
military professional identity. Its monopoly on certain activities is being
encroached on by the regular civilian marketplace.�
On Singer's latter point, the civilian and active duty US
military leadership is aggressively encouraging the commercial marketplace to
take on more military functions. That tactic is being pursued not just for cost
savings (dubious as those might be), but also to avoid public oversight and the
fallout that would come from being accountable for improprieties ranging from
over-billing to the developing of torture techniques.
And what about the status of the USA, its people and its
infrastructure that the national security apparatus is supposed to be
defending? A day may come when there is not much worth fighting for. The FBI
reports that violent crime increased in 2005 to its highest rate in 15 years.
The American Society of Civil Engineers says it will take almost $2 trillion to
repair water systems, roads, schools and electrical grids. Nobel Laureate Joe
Stiglitz says the total costs of the current Iraq War will cost another $2
trillion. The Catholic Conference for Human Development indicates that 37
million Americans live in poverty. The US Census Bureau reports that 45 million
Americans can't afford health insurance. On top of that, add a trillion dollars
to fully repair hurricane-damaged New Orleans, Louisiana, and cover the costs
of neighboring state governments as they absorb hundreds of thousands of
displaced Americans from New Orleans. Federal debt and personal debt are at
record levels. The homefront is decaying.
Public good, and the ideals it is based on, must trump
private greed. If not, what's the point of this Republic?
John Stanton is a
Virginia-based writer specializing in political and national security matters.
His latest book is "A Power But Not Super." Reach him at firstname.lastname@example.org.