Simmons on military expenditures in theory and practice

Returning to themes I discussed in two previous posts, The Necessity of Military Inefficiency and Terrorism: the Perfect Enemy, here are some words from Randy Simmons:

Providing more than optimal amounts [of public goods] will be encouraged by certain citizens who place higher values on having more of particular public goods, not because they enjoy consuming the goods, but because they supply resources purchased by the government to provide the goods. National defense offers the most conspicuous and costly example of the vested interest of suppliers—the armed forces, labor and management in defense industries, stockholders, and those who worry greatly about some foreign power. These citizens gain substantially by having larger defense budgets. Furthermore, they have the advantage of superior political resources for enacting larger budgets. As the suppliers of defense they can shape the demand curve for their own services to a considerable degree—a power not often granted not obtained by private suppliers operating in private markets. Further, the coalition of interest groups, the Pentagon, and Congressional committees—what journalists and political scientists call an “iron triangle”—is able to inflate budgets and allow cost overruns that nearly defy the imagination. A nine-dollar hammer costing the government hundreds of dollars is only one of many dramatic examples of outrageous defense billing. But more important than shocking technical inefficiencies are the welfare losses, losses that go beyond the legalities of pricing and contract oversight to fundamental decisions about how much is enough defense.

Misallocation through excessive expenditures on defense is hardly the only form of waste; others include misallocation in the mix of defense programs and resources. Given pressures for increased expenditures, we should anticipate that too many people will be hired, and that they will have time on their hands. We should also expect what every veteran knows and laments—that personnel skills will not be neatly matched with job requirements. Although a powerful tendency exists to spend more on “hardware” than on salaries, positions will be upgraded and oversupplied. We have one-fifth the forces of World War II, for example, but we have many more generals. …

From Beyond Politics, pp. 117-118.


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