Military industrial complex

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  • 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).

Issue Lie Truth
Military industrial complex

Iron Triangles.

Ike (Eisenhower) warned us about the military industrial complex, and that the military was spending all our money. If it wasn't for the war-hawks, we'd be able to spend enough on social programs to make this a utopia: that's where all of our money has gone! You need to fear the military and military spending! Ike warned about an iron-triangle, where politicians colluded with government and industry to dupe taxpayers out of their money and liberty. Today the poverty industrial complex (Social programs) are over twice as much spending as the military at the federal level (that bigger when you add state and local), and military spending as a fraction of our budget has come way down since Ike. Most of our money is being wasted on poorly administered wealth redistribution failures, and worse run Socialists Medicine, that not only didn't achieve their goals, but made the problems they touched worse.


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,

Because we are rich and powerful, we must create a huge military and use it to defend against, "a hostile ideology, global in scope", "ruthless in purpose", and instead work towards enhancing "liberty, dignity and integrity among peoples and nations". But he also cautioned the lure of subsidizing "unrealistic programs to cure every ill" (in defense, agriculture, medicine, etc.), just because they sound good. "Good judgment seeks balance and progress"... including, "balance between the private and the public economy"... "We annually spend on military security alone more than the net income of all United States corporations." And while this service is needed, the power and money is so great, that "we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex". He went on to talk about rampant borrowing, "We must avoid the impulse to live only for today, plundering for our own ease and convenience the precious resources of tomorrow". "We want democracy to survive for all generations to come, not to become the insolvent phantom of tomorrow."

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, that we bankrupt ourselves and harm our grandchildren (even for needed programs of the day)

Those last two key points are often lies of omission ignored by the left, based teachers and the media, but are the whole point.

So how are we doing? it turns out the Military is not the problem.

Active Duty Troops

In 1961, we had about 3 Million active duty armed forces (183M population) (3). In 2019 we have about 1.3M (327M 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):

Active Service Troop per 100K of population




Adjusted Dollars Spent

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 15%. (Or as a percent of GDP it went from ≍10% to ≍3%). Again, trends got a lot better

Percent of Federal Spending that goes to Military




Relative to Corporate Profits

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).

🗒️ NOTE:
While we more than halved our military (by common sense metrics), Europe was making us bear MORE of the global responsibility. France, Germany, not only reduced their spending, but their global participation even more so. Why pay for their own defense responsibilities if the U.S. is subsidizing them? For example, in Afghanistan, a war Germany and France loudly supported, they managed to send about 4% or 3% of the forces respectively (combined they're nearly 1/2 our population and GDP, but they contributed ≍7% of the resources, and attack us in their media for not doing more). Then they put so many combat restrictions on their troops that Canada and Poland have each contributed far more (despite being far smaller countries/armies/economies). England, being half of their individual sizes, has contributed more than both of them combined. I personally would love to see the need for our military continue to contract, but that needs to be balanced against further global security risks, and others willing to step up. In order for that to happen, Europe needs to take up some of the slack, instead of leaving it all to us (and England), and then whining whenever we don't things exactly the way they want.

Deficit Spending

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:

Deficit Spending (compared to budget)




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.

Poverty Industrial Complex

Poverty is a bit of a misnomer. Not only is poverty measured as income and not wealth (a stupid way to do it). But since nearly half the population is paying virtually no income taxes, and getting subsidized in some way, that means there's more non-poor are getting benefits than actual poor people. Assuming you're naive enough to think that being in the bottom 15-25% of Americans automatically makes you poor. Our poorest quintile has access to better food, clothing, housing, medical services, entertainment and other things than most of our rich did 50 years ago when his speech was written, and is the top 2% of the world. So we'll use the term poor, but it's dishonest.

While Military Spending (as a percent of GDP) halved or more, 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 2.5 to over 10% of GDP, and over half of the federal budget) (6) -- that's not even counting welfare, or state and local contributions which would make it bigger.

Entitlement Spending (compared to budget)




Why can't we control spending on social programs?

  1. 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.
  2. 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.

Of course there's a lot more reasons than just those. But the point is the things Ike was warning about were fixed for Military Contracts, but are endemic to Social Programs.

Negative Incentives

You get what you incentivize, and these programs incentivize poverty and waste:
  • It turns out there's a vested interest in NOT fixing the problems, or the money/votes might go away
  • If you don't spend you budget one year, it'll be cut the next: so they always max out.
  • Problems draw negative attention which are more likely to result in budgets cut than money/resources to fix them.
  • Thus if you get people out of poverty, a client goes away, and that reduces the need for your job. Is it any wonder why poverty stopped getting better once we created bureaucracies to fix it?
My wife was a social worker for 6 years, I was involved then and other times. Drawing attention to problems (even with fixes) was seen as attacking the goose that lays the golden eggs: they didn't want to fix problems because there was too much money in perpetuating them.

From Census Bureau via Cato. The rate of poverty was falling until Government spent $22T fixing it. Since then, it's remained flat. There's good money in wealth redistribution. So they keep raising the standard for what accounts as poor.

In the 20 years before the Johnson's "Unconditional War on Poverty", we dropped the rate of poverty from 30% to below 15%. In the 50+ years since Government took over charity, we've spent $22Trillion, or 6x as much as all our other wars combined. The results? Poverty has remained flat at 12-15%. But before that only 7% of American children were born outside marriage. Now it's 41% -- and that's the single largest contributor to poverty. It doesn't matter if this is incompetence or malice, what matters is government is not a good tool for fixing problems, because doing so incentivizes them to perpetuate them. [1] 14.5%

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. Plans which just cap growth (not even cut anything) are attacked as vicious and cruel.There's collusion between federal legislators, the media, and the special interests, that we can't even question if there are ways to improve the process without demagogues labeling us as bigots, racists, classist and genocidal maniacs, and showing ads with them throwing elderly or indigent off of cliffs.


So what should we learn?

  1. 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.
  2. 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.
  3. 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 the left and uninformed going ballistic, if we want to spend a handful of billions on ballistic missile defenses (while Iran or North Korean are developing those weapons to hit us), yet, they will attack anyone who questions the ≈$3,000B going to social programs.

Why? Because our culture (the left especially) are a bunch of suckers for a good sob story.

  1. We throw money at every bum with a down-on-their-luck story: even knowing that most of them are false.
  2. You can show people the hourly wage for working a pity corner often exceeds real minimum wage jobs
  3. Or that the baseline of what we call poverty is greater than the middle class in most of the world.
  4. We pay people to stay poor, instead of helping them up.
  5. We pay them more if they have out-of-wedlock babies, who will have fewer opportunities for anything but crime.

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 have been 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 -- the antithesis of Obamanomics.

Ike warned against the exact problem we had as a culture, he just 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 the poverty industrial complex?


📚 References

🗒️ NOTE:
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 2019.04.20