Military industrial complex
- 50 years ago that Dwight D. Eisenhower (Ike) warned us about the Military Industrial Complex - but people have forgotten (or were miseducated) on the intent and meaning of the speech
- The warning was: when government (Congress) colludes with a special interests, they create an Iron Triangle - a corrupt collusion where multiple parts of the system conspire to help each other. against the publics interests
- Since then the military has become about 1/3rd or 1/4th the size it was back then (population or % of GDP)
- Since then the Poverty Industrial Complex was created, and grew social programs to be 8x higher than they were back then, with no significant reductions in poverty (by their accounting), and a political party (or two) that dedicates themselves to growing these systems, no matter the burdens put on the common men (taxpayers)
If Ike were alive today, the same speech is more valid today than it was back then — just replace Military Contractors colluding with politicians to create problems for them to solve, with Poverty Contractors, doing the same with Social Programs. In both cases, we should measure their successes no by how many people they can claim are in poverty (or wars that need to be fought), but how many they can get out of poverty (or avoid by diplomatic means).
It was 50 years ago that Dwight D. Eisenhower (Ike) warned us about the "Military Industrial Complex".
You hear the phrase in the media or in many political conversation, but what does it really mean?
The concept is pretty easy, it is when government (Congress) colludes with a special interest (defense contractors), in order to support a bureaucracy (the Military/Pentagon). The bureaucracy of course gives favors/contracts to the special interest group, who pays off the congressman with money or votes, which give the bureaucracy bigger budgets. They all work together, knowing that their personal rewards depend on them keeping the money rolling in to the others. It is what is known as an Iron Triangle (1). The concept wasn't new when Ike spoke about it in 1961 either, Ralph Pulitzer (yes, the Pulitzer Prize guy) talked about it at the post WWI Paris Peace Conference (1919). And I'm sure that kind of corrupt collusion goes back to the ancient Greeks, if not Cavemen.
To learn about anything, I like to go to the source. What did the speech actually say? It's a brilliant speech and I recommend you read it in it's entirety (2). But I'll paraphrase it for brevity,
To hear teachers and the media today, you'd think his point was that we should decimate the military, become isolationists, and avoid wars. Yet his actual point was that while we need to keep vigilant in national defense and keep a large standing army, and use that army to promote liberty. But we also need to watch-dog against two things:
- [A] That the greedy congressman don't succumb to special interest and spend our money poorly buying votes. (Break the iron triangle). And resist the temptation to throw money at every program just because it sounds sound good.
- [B] that we don't resort to borrowing so much from our future, even for needed programs of the day, that we borrow so much from our future that we bankrupt our own growth and harm our grandchildren.
In 1961, we had about 3 Million active duty armed forces (183M population) (3). Today we have about 1.4M (303M pop), despite being involved in more global conflicts. So things got a lot better, not worse. A population adjusted graph for the size of our military would look like the following (or a little softer difference if you threw in reserves):
- 1961: *********** *********** *********** *********** **********
- 2011: *********** *****
How about dollars spent? He was warning about that as well as just influence(3). Well, in 1961 we were spending about 47% of total federal government spending on military spending, today it 18.6%. (Or as a percent of GDP it went from ≍10% to ≍5%). Again, trends got a lot better, even with the up-surge in Iraq & Afghanistan. The graph would look like:
- 1961: *********** *********** *********** *********** *********
- 2011: *********** *********
If we used his quote that 'military & security spending in 1961 exceeded corporate profits', and compared then to today, you see a similar result. Back then military spending (leaving out local and police/security) was about $42B, versus $54.2B in corporate profits (almost 1:1). Today, we spent $708.2B on the military compared to $1,500B+ in Corporate profits (1:2), or about 1/2 the size.
Other things got a lot better too. The biggest concern Ike was warning about was that in 1961 was the "unwarranted influence" of a very few companies getting all the defense contracts. Back then ≍70% of those contracts were single source (no open bid) contracts (political cronyism). Today, most contracts are open bid, and distributed to more secondary contractors and dispersed across the country. Making it harder and less rewarding for a few congressmen to game the system. Even how much of the military budget was procurement (the part most manipulable by politicians), dropped from ≍40% of the total defense budget in 1961, to ≍31% today.
So when it comes to the military industrial complex, we either had little to fear, or we were able to control this problem just fine (since every aspect has gotten better, relative to our economy).
The bigger problem
However, while the military industrial complex got a lot smaller, the primary thing he was warning against (deficit spending, debt, political corruption/collusion) all got worse. Deficit spending went from 4.4% of total spending to about 33% today (≍8 times worse). See the graph to get an idea of the problem:
- 1961: ****
- 2011: *********** *********** *********** ***
Well if all his warnings came to pass (deficit spending, borrowing from our future, throwing money at every good sounding cause), and it wasn't the Military Industrial Complex that caused it, then what was the cause?
Turns out the politicians displaced the Military Industrial Complex with a much better thing for them: the Poverty Industrial Complex.
the Poverty Industrial Complex
While Military Spending (as a percent of GDP) halved, spending overall tripled (from about $11K to $29K/household in inflation adjusted dollars). Since 1970 (when these programs really started kicking in), government spending went up 10 times faster than median incomes (5). Where did all the money go? Federal Social Program Spending went from (6) -- that's not even counting welfare, or state and local contributions which would make it bigger.
- 1961: ***********
- 2011: *********** *********** *********** ***********
Why can't we control spending on social programs? Remember the Iron Triangle? It applies to the poverty industrial complex as well: Congress colludes with a special interest, in order to support a bureaucracy (Social Security, Medicare, Medicaid, Welfare, etc), which then rewards the special interests and congress.
Remember the problem Ike warned against with no-bid contracts? Social programs are even worse: they're directly administrated/controlled by the agencies and politicians that finance them (without any competition, and little oversight and accountability). Most social programs are not open bid contracts but single source government monopolies, with rampant fraud and cronyism going on.
Turns out there's a vested interest in not fixing the problems, or the money might go away. My wife was a social worker for 6 years, and I not only helped during that time, but have been involved in other programs as well. We can list dozens of issues: including punishing any whistleblowers that draw attention to said problems.
There's a lot of negative feedback loops built in. Like if they don't spend all their money in a year, it might get cut the next year: so they not only don't have incentives to save or control waste and fraud, they have incentives to look the other way and build policies that encourage it (so that in following years, their budgets have to get bigger to address the "problems").
Now if the programs were successful at combatting poverty or making lives better, we could certainly make the arguments that the returns were worth the costs. So how did they actually perform?
While overall total federal spending on social programs has grown tenfold or more, from consuming a few percent to significantly over half the entire budget and on track to consume the entire budget by 2049 (if you ignore interest on the debt it created otherwise it's much sooner). So we've spent conservative $10 trillion on the war on poverty since the mid 60's (just medicaid and welfare, if you throw in all the other programs it's likely around ≍$37 trillion+), and yet we have roughly the same 14% poor as when we started (7). Click the graph if you want to see the trend. Things were getting better, then we poured more money in the 60's, and they flattened out. There became a monetary incentive to NOT fix the problem.
Ike warned us
Remember when Ike warned not to chase every pipe-dream? This is what he meant. We could give every poor family today almost $1,000,000 for what we poured into helping the poor already, and yet we can't show any trends towards success?
The proponents claim it could have been a lot worse without these programs, but there's no evidence of that (it was trending better before we discouraged work, and rewarded the wrong behaviors). Economists rationally point out that the burdens on society caused by financing these programs seems to have put or kept as many people into the poor house, as it has ever helped out. If you throw a fuckton of money into something and get no measurable returns, the question is shouldn't you reassess either the problem or your so called solution?
So why do we still do it?
Even for daring to talk about cutting only the growth rate on some of these social programs causes many to go into apoplectic fits. And this is on something modest like a Paul Ryan plan which doesn't have a single year where the money going into the programs would be less than today (it only limits the public sector growth rate to the same as private sector). There's such a collusion between federal legislators, and the media, and the special interests, that we can't even question if there are ways to improve the processes at all, without demagogues labeling them bigots, racists, classist and genocidal maniacs, and showing ads with them throwing elderly or indigent off of cliffs.
This is the new McCarthyism, which brings us full circle back to Ike's time.
Ike gave us the warning about the military industrial complex in the context of McCarthyism and the attacks on anyone that wanted to cut a military budget. And just like last time, Hollywood and the Media are enthusiastically on the side of disinformation and intolerance. The only thing that changed was what they wanted to see other people's money spent on.
We have little to fear of the military industrial complex because our culture is fundamentally opposed to war. It's not like the west has the deep rooted Asian Martial Arts History, where we take pride in being fully prepared for every eventuality. The west likes to cut spending, or at least cap growth on the military whenever possible. If history is our guide, we often over-cut and are too reluctant to combat genocidal dictators and despots (until after millions of lives are lost). North Korea, Pakistan, Iran have shown that we've given up completely on nuclear non-proliferation and at this point, it's just a matter of time before some crazy with a nuke pushes a button. Yet, a significant part of our population still goes crazy over daring to spend $9.9 billion on ballistic missile defense -- as Iran is putting their long range, soon to be nuclear tipped, missiles in Venezuela. While anyone is personally smeared if they dare questioning any part of the $2,767B that isn't part of defense spending (especially if you want to touch the poverty industrial complex).
Why? Because our culture sure is a bunch of suckers for a good sob story. We throw money at every bum with a down-on-their-luck story: even knowing that most of them are false. You can show people the hourly wage for working a pity corner often exceeds real minimum wage jobs (earning potential of about $200/day or ≍$50K/year, tax free). Or that the baseline of what we call poverty is greater than the middle class in most of the world. We pay people to stay poor, instead of helping them up. We still have it in our nature to help those that are less fortunate than ourselves And often lose perspective. Enough of us not only want to give not only from our own paychecks, but from everyone else's as well, that we perpetuate the problem we claim to want to fix. At some point the fix for a lazy kid, or adult, isn't more money: but a kick in the ass.
When you read Ike's actual words, instead of the ones taught in school and through the media, you walk away a lot smarter, realizing that he was a fiscally responsible conservative. Heck, today, he'd probably be a Tea Partier. The first part of his speech is about defending U.S. interests (and expanding liberty) which sounds a lot like the Bush Doctrines on Global terror and promoting democracy. And the last part of the speech was a warning against rampant spending like the Obama doctrine (spend, spend, spend, and blame your predecessors or the situation).
So while Ike was brilliant and warned against the exact problem we had as a culture, he missed on which sector would cause the biggest issue. If Ike was leaving office and giving his farewell speech today, which do you think he'd warn against more? The military or poverty industrial complex?
- (1) http://en.wikipedia.org/wiki/Iron_triangle_(US_politics)
- (2) http://en.wikisource.org/wiki/Eisenhower%27s_farewell_address
- (3) http://en.wikipedia.org/wiki/Military_budget_of_the_United_States
- (4) http://www.gpoaccess.gov/usbudget/fy11/pdf/hist.pdf (page 337, 343)
- 1961 = 42.4B of 90.6B total (47%), 2011 = 732B of 3,931.4B (18.6%)
- 1961 deficit was= $4B of 90.6B total (4.4%) , 2011 = 1,321.7 of 3,931B is debt (33%)
- (5) http://www.heritage.org/budgetchartbook/growth-federal-spending
- (6) http://www.heritage.org/budgetchartbook/defense-entitlement-spending
- (7) http://www.npc.umich.edu/poverty/,http://www.census.gov/hhes/www/poverty/poverty.html, http://en.wikipedia.org/wiki/Poverty_in_the_United_States
- (8) http://www.areppim.com/stats/stats_corp_surplusxprofxtax_us.htmhttp://comptroller.defense.gov/defbudget/fy2012/FY2012_Budget_Request_Overview_Book.pdf
- Income inequality, vanishing middle class, and other scams
I'm not against government social programs, or for eliminating them. I'm against wasting the public's money irresponsibly on negatively incentivized and poorly administrated federal social programs. I'd like to see many more programs administrated at more local levels (state), I'm for measuring and incentivizing performance, for introducing competition, demanding results, and for capping growth. While I'm often accused of wanting to starve our old or poor people, the truth is I just want to control the growth of these programs and ensure these programs don't make more poor people than we started -- and that they're giving us a good value for our dollar: which they currently are not.
written 2011.05.30 edited 2015.12.17