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On V Update to Old Ideas: Money Edition

Before last month’s “On V Update to Old Ideas” post, we hadn’t run one in months, but we’ve been collecting links the whole time. Prepare for a bunch of updates, sorted by theme. Today’s theme? Money.

We Don’t Need a Sequester to Waste Money

Secretary of Defense Chuck Hagel warned that if the sequester went through, it would force the military to implement blunt budget cuts, which would waste money and (hypothetically) harm our soldiers in the future. (The go-to argument for anyone defending the military.) He neglected to mention that the Pentagon routinely makes terrible financial decisions. For instance...

...the Army is now literally junking the mine resistant vehicles that it spent billions shipping to Afghanistan instead of shipping them home.   

...the Army is constructing a headquarters building in Afghanistan, costing millions per month, which it plans to leave vacant.

...as it prepares to leave Afghanistan, an Inspector General report found billions of dollars in waste in only three months.

...Air Force officer Dan Ward writes that military contracting is so poorly managed, we don’t even know how bad we are at it.

When the military does contracting this bad, no one wins. Oh, except for defense contractors. They make lots of money. To fix the system, one assumes we need strong civilian leadership to rein in Generals and Admirals. Unfortunately, President Obama nominated military industry executive Deborah Lee James as Secretary of the Air Force. The revolving door between government and contractors continues to spin.

It also turns out that defense spending doesn’t provide the economic benefits many claim. Blogger, professor and zombie aficionado Dan Drezner has a new paper that debunks the idea that American military spending provides economic benefits to the world or America.

And that go-to-defense of military spending, “that it will hurt our men and women in uniform”? Friend of the blog Sven Ortmann delivers a marvelous pieces combining economics and military budgeting which debunks that notion completely. He asks, "How much should the U.S. spend to keep its soldiers safe?" and comes up with a number. For all the economists out there (or conservatives who claim to follow economics), you have to read this.

Contracting Money Influences the Debate

Since the NSA debate has triggered a lot of journalist-on-journalist attacks, we have avoided taking sides or commenting. (If our readers want to know our takes, wait until January...) However, we absolutely agree with Glenn Greenwald when he nailed the press--particularly Face the Nation--for not disclosing the financial self-interest of many pro-NSA commentators to its viewers, like General Michael Hayden, former director of the NSA under President Bush. From Greenwald:

“But worse than the omission of Hayden's NSA history is his current - and almost always unmentioned - financial stake in the very policies he is being invited to defend. Hayden is a partner in the Chertoff Group, a private entity that makes more and more money by increasing the fear levels of the US public and engineering massive government security contracts for their clients. Founded by former Homeland Security secretary Michael Chertoff, it's filled with former national security state officials who exploit their connections in and knowledge of Washington to secure hugely profitable government contracts for their clients."

As we wrote in our coverage of Zero Dark Thirty and Argo, many government officials exaggerate the threat of terrorism. While they sincerely believe in their work, they also have financial interests to do so.

An Update to Doing Aid Right

While this article on “The Matador Network” seems like a Reddit link bait scam, it accurately explains why dropping bombs of free t-shirts and shoes (as TOMS does) is terrible aid policy. The best part about the TOMS story is that I swear my entire business school loves TOMS. Literally, business school students take economics in one class, then give a presentation during communications advocating the TOMS model.

I, (Michael C), say this criticism as a solid moderate. I just think we should do aid/government/business efficiently and effectively. While business has built-in mechanisms for that, aid and government don't. The podcast Tiny Spark had done great work critiquing foreign aid, with a recent episode on Jeffrey Sachs’ Millenium Villages. I’ve advocated before for renewed U.S. foreign aid spending. I still want that, but our government must do it right, using controlled experiments, analyzing data and spreading it liberally.   

Why Does the U.S. Keeps Sending Weapons to Egypt?

Because of defense contractors.

Before Syria replaced Egypt in the news, there was a lot of discussion about U.S. aid to that specific country. For a primer and explanation on why that aid doesn’t make a lot of sense--because most of the money spent on Egypt goes to American defense contractors--listen to this excellent Planet Money episode, then shake your head.

six comments

To go with the Pentagon’s terrible financial decisions, they are also apparently spending billions on new uniforms because the uniforms they spent billions on a few years ago are terrible. It seems like testing the UCP shouldn’t have been that hard…

Havehttp://news.yahoo.com/army-5-billion-waste-094500638—politics.html


Thanks for the link, but it appears to be broken. It has apparently a space at the end and my browser is too stupid to ignore this.


Let’s see if this one works instead.

http://news.yahoo.com/army-5-billion-was..


To change the subject a bit: Michael C., did you ever review Fobbit?


I reached out to the author and the publisher was supposed to send us a copy but never did, so we’re waiting to review it.


Just stopped by to say I enjoy reading your site on my smoke breaks, if only I had longer cigarettes. Keep it up.