Foreign Policy, Ep. 5: What is the Military Industrial Complex?

Foreign Policy (playlist): Check out our full playlist of videos with professors Chris Coyne and Abby Hall Blanco at hayekandchill.com.
How Foreign Policy Changes Domestic Policy (Article): Sheldon Richman on the Boomerang Theory, addressing Chris and Abby’s “Perfecting Tyranny” article. 
War Sucks, What Is It Good For? (Learn Liberty video): Peter Jaworski on war as a fundamentally illiberal act. 
When Should the US Invade Other Countries? (Learn Liberty video): Debate between Bryan Caplan and Jan Ting on US intervention. 

>> In 1961 President Eisenhower gave a farewell speech in which he warned the nation about what he called the Military Industrial Complex. It sounds scary like something out of a conspiracy theory or Sci-fi movie. But what exactly what President Eisenhower afraid of. What is the Military Industrial Complex?
It refers to the close relationship between military leaders, government legislatures, bureaucrats and private contractors, all of whom have a stake in our national defense. Under our current system, the US government has a monopoly on defense on the national level, meaning that they are the only provider of defense to US citizens.
You can’t start a private army to compete with it. But that doesn’t mean private companies aren’t involved. The government purchases military equipment and services from private firms, including uniforms, vehicles, weapons and more. In order to secure defense contracts from the US government, these companies must navigate a massive administrative bureaucracy.
Because this is difficult, most private firms can’t successfully compete for these contracts. Instead, a small number of companies who have close relationships with government officials and specialize knowledge of the process tend to win most of the contracts and these contracts are quite lucrative. The US defense budget is massive, by far the biggest in the world.
In 2015, the US budgeted almost 6 hundred billion dollars for defense. And defense contractors that provide the government with military equipment and services naturally want to secure as much of this budget as possible. They do this by spending significant amounts of money to gain access to politicians and bureaucrats.
And to influence their decisions. The strong ties defense contractors develop with politicians and bureaucrats lead to what is known as the revolving door where people hop from jobs a private firms to jobs in government and vice versa. This dynamic only tightens the relationship that private firms have with government.
And allows them to take advantage of these connections. This messy entanglement has two important implications. First, crucial decisions about war are not necessarily made by dispassionate politicians comparing the costs and benefits of military action. Both government and private business are active participants in the defense sector. And each attempts to influence and shape the behaviors of the other.
When you are manufacturing and profiting from military equipment. You stand to benefit greatly from an interventionist firm policy. If you persuade policy makers many of whom are your friends and former colleagues to pursue military action. It’s more business for you this can result in wars with people shipped off to fight and die without making the nation any safer.
Second, the government’s defense budget is fought over by the many firms looking to secure military contracts. If I’m a manufacturer of tanks, it’s in my best interest to try to get the government to spend as much of its defense dollars as possible on tanks. Even if this is obviously a poor defense strategy.
Private defense seek to grab as much of the military budget as quickly as possible, with little regard for the broader, external costs of their behavior. Yet their lobbying efforts still shape the decisions made by government officials. Together, these effects of the military industrial complex shape the incentives facing both private and government actors in the defense industry.
This means that rather than only considering the public interest, military decisions are influenced by special interest in the private sector, which can have disastrous consequences.