O’Hanlon: Real Defense Spending Must Always Increase
Michael O’Hanlon had a somewhat curious op-ed earlier this week arguing against the idea that we can hold the defense budget constant in inflation-adjusted terms. You might expect such an argument to involve some strategic assessment of the threats facing the nation, but as Benjamin Friedman observes he just punts on what these capabilities are for. Instead, he asserts that for “the Defense Department to merely tread water, a good rule of thumb is that its inflation-adjusted budget must grow about 2 percent a year (roughly $10 billion annually, each and every year.”
I think there’s a grain of truth to this with regard to personnel. Real wages increase over time, so unless the military wants to lose out in labor market competition with other agencies, it needs its real wages to increase as well.
That said, this is a perfectly general phenomenon. The CIA and the State Department and the guys who regulate banks all face the same issue. So there’s still a need to make an argument for spending increases that takes some real account of tradeoffs. There are costs to spending more money.
Then there’s the whole rest of the defense budget. Many organizations have been able to offset rising labor costs by taking advantage of technological improvements. For example, almost every organization employs fewer secretaries and typists than it once did. Instead, we have more (and cheaper!) email, voice mail, online calendars, cell phones, etc. to help keep track of what’s going on. The Department of Defense has not been very good at taking advantage of technological improvements to reduce equipment costs. Instead, the tendency has been to design new generations of ships and planes that are vastly more expensive than their predecessors. But this is not a general phenomenon. Labor costs grow for the military because they grow for everyone. But the real price of lots of other things falls. Not just computers, but also things like cars:
I think there’s a good case to be made not that defense budgets need to rise because equipment gets more expensive, but that equipment gets more expensive because defense budgets rise. A more budget-constrained military would pose different incentives to contractors, and I bet they’d be able to find ways to start building more cost-effective systems.
Or to take a related example, if you read Peter Singer’s Wired for War it’s clear that there are large cost savings to be achieved by relying more on remotely operated “drones” and less on planes with human pilots. But the services have been resistant to this change out of a mix of machismo and traditionalism. The experience of actually engaging in warfare has, as Singer details, began to spur changes. And there’s good reason to believe that more change would happen if it were necessary.
20 Responses to “O’Hanlon: Real Defense Spending Must Always Increase”
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June 12th, 2009 at 8:41 am
The Air Force Academy has just graduated its first regular class of drone pilots.
To argue that they should have done this last decade is to argue that the iPhone should have been released then too and is nonsensical on its face.
Coulda Woulda Shoulda is what you hear from those with neither responsibility nor talent for innovation.
June 12th, 2009 at 8:43 am
Hey Matt,
Not to hijack the thread here, but could you comment on the implications of the different scenarios of who wins in today’s elections in Iran? (it’s already the afternoon there, voting ends in about 4 hours).
Thanks!
June 12th, 2009 at 8:51 am
Military spending is welfare for Republicans. We spend as much as the rest of the world combined. A rational budget would involve deciding what you actually need to do and then figure out the most efficient way to do it. Instead it’s all about shoveling taxpayer money to the rich.
We should take the right-wingers at their word on the evils of socialist spending and slash useless military spending.
June 12th, 2009 at 8:51 am
“Can” meaning “can’t” right?
June 12th, 2009 at 8:52 am
Oh wait, he’s arguing AGAINST the idea that we can. Haven’t had my coffee yet.
June 12th, 2009 at 8:59 am
Then there’s the fact that we presently spend MAGNITUDES more on defense than any other country, or even any alliance of countries, in the world.
Michael O’Hanlon is the Welfare Queen of the military-industrial complex.
June 12th, 2009 at 9:16 am
The experience of actually engaging in warfare has, as Singer details, began to spur changes. And there’s good reason to believe that more change would happen if it were necessary.
Which is a good reason to put the defense department on “idle” as much as possible, rather than buying new aircraft carriers for some hypothetical/wished-for war with China, or whoever, that won’t even be happening hypothetically until 2045. Even if you believe something like that will happen, there’s just no reason to be locking ourselves into soon-to-be obsolete equipment now.
Instead, cut the defense budget by 50-75%, focus the remainder on personnel and proven, cost-effective weapons, then spend all the savings on economic infrastructure (transportation, communications, energy), education, and basic science research.
June 12th, 2009 at 9:23 am
Good ol’ Matt. Instead of critiquing the defense budget on the merits, perhaps as an expression of our morally dubious and economically self-defeating imperial fantasies, he opts for a process explanation, focusing on technology and a gripping cost analogy involving new cars. I guess doing that makes him a Thoughtful Young Progressive, while doing the former would make him an Angry Unserious Liberal. Carry on!
June 12th, 2009 at 9:26 am
That’s the kind of insight we come to Yglesias for!
June 12th, 2009 at 9:30 am
A neocon criticizes another neocon for not being futuristic enough. More drones!
June 12th, 2009 at 9:34 am
The CPI for cars is a very misleading piece of data.
It is what it would cost to buy a 1975 vintage car today.
But you can not buy a 1975 vintage car today and even if you could it would not be allowed on the roads.
What you can buy is a current vintage car that has the improved features of today’s cars — seat belts, pollution control, better brakes, AM-FM radio with a tape deck and a disk player, etc., etc..
From 1975 to 2008 the CPI for autos rose from 100 to 212–
what your chart shows.
But the actual transaction price of a car rose from 100 in 1975 to 471 in 2008.
So by claiming the pentagon can actually spend less in real terms on a new cars is a misuse of the CPI for autos.
June 12th, 2009 at 10:14 am
There is plenty of hardware which is cheaper, in real terms, than it was 20 years ago. This is true of virtually all electronics and many appliances.
June 12th, 2009 at 10:21 am
I don’t quite understand Spencer’s point — elaborate, please? The difference between the CPI and a transaction price is…. what, exactly? And how does it change the comparison?
Of course, nobody who wanted a new car in 2009 would want to buy a car built in 1975 that was somehow time-capsuled — even at a precisely-comparable price today, to what it cost in 1975.
I thought the point of the comparison was that the extra features we take for granted today are the product of technologies that, if we’d HAD them in 1975, would have been prohibitively expensive if they’d even been invented — and yet now, they not only don’t add much to the price of the car, they reduce cost even in relative terms: Car companies spent lots on less efficient processes in 1975 than the same processes (carbon paper?) costs today. It’s not clear to me how using a ‘transaction cost’ alters the comparison to Pentagon spending.
Not to mention considering the relative cost of technological advances, e.g., what the tv camera that shows you what you’re backing into better than a rear view mirror would have cost in 1975. If a tv camera by the rear bumper saves even one little kid a year….
Then again, you don’t “need” a tv camera if you are properly careful as a driver, and even if you’re not, what’s inadequate about the (also post-1975) back up signal? As a friend of mine likes to point out, contemporary technology enables us to do cheaply and more efficiently what we didn’t used to have to do at all. A tv camera for the rear bumper seems like a reasonable place to draw the line… but why? Isn’t it worth it, to save one little kid’s life? Better technology is just better — and the price generally drops, especially compared with increased capability.
Applied to the Pentagon, that kind of comparison just MIGHT give us a lever to pry open what our real interests are: I’m all for risking expensive technology rather than lives, e.g., drones — but I thought MY’s point was to question whether the technology is actually MORE expensive when you stop building aircraft around pilots. Wouldn’t it be less expensive — and more efficiently effective?
It’s not just the pilot/drone, robot warrior thing, either: why DO we have four services with a single mission? (Or is there some OTHER purpose for each branch of the military, besides defending We, the People?) Canada has a single armed force, which has no problem deciding when to buy boats and when to buy planes and when to buy tanks, without always answering ‘one of each’.
Multiply that by four (Army, Navy, Air Force, Marines) and there are all kinds of questions that aren’t being asked.
June 12th, 2009 at 10:26 am
> But the services have been resistant to this change
> out of a mix of machismo and traditionalism
I enjoy your writing Matt but you truly need to go out and work in the real world for a few years. After you finish an assignment as teachers aide in an inner city school, perhaps you could go work in a manufacturing environment as an engineering assistant, production supervisor, or (most critically) assistant maintenance supervisor. Then you might start to understand why people with real-world experience doing difficult things under difficult circumstances are not always quite so excited about every latest whiz-bang technology or new-new-thing that comes along as you and Ezra Klein tend to be. In the real world salesmen’s promises are more often broken than kept, things don’t work, and there are unintended consequences to every technology decision. Newer is NOT automatically equal to better.
June 12th, 2009 at 10:59 am
The hedonic adjustment is partly responsible for the decline in inflation in car prices. Don’t know how responsible; prices do seem to have stabilized somewhat.
June 12th, 2009 at 1:08 pm
The “lower-cost drone” argument is often made, but it has not materialized yet. It costs more to deploy a Predator drone and buy its required satellite time than it is to equip light aircraft with sensor packages, albeit with an endurance trade off. Looking to future UCAV systems, the expensive parts are the sensors and the precision manufacturing required to build a stealth airframe, not an ejection seat and a few screens. And given the software stability problems during F-22 development, I wonder how many drones will be lost without the option to manually reset the computers.
June 12th, 2009 at 2:01 pm
> And given the software stability problems during F-22
> development, I wonder how many drones will be lost without
> the option to manually reset the computers.
You could ask the US Border Patrol: they lost their first (and so far only) Global Hawk that way, at a cost equal to about 100 Cessna 182s, due to a problem that a human pilot could have solved in about 30 seconds.
June 13th, 2009 at 3:01 am
Only if you want to spend tons of money on buying more drones, and then still not be able to do the full range of missions (I have yet to see a drone that can do proper Air Superiority).
To be honest, too, drones are only good when the ability to strike back at them is negligible. They are vulnerable to jamming, as well.
It can’t really be helped in many of these programs. Top-level war machinery has gotten significantly more expensive to produce and develop over the years (and particularly since the beginnings of the RMA back in the 1970s and 1980s), and it’s even more expensive when you don’t buy en masse, like what Congress did with the F-22s (where they kept cutting the purchase number, driving the unit costs sky-high).
Only if you want to pay less for quality, much of the time. We could, for example, just keep buying re-fitted F-16s – but eventually, we’d run smack-dab into the next generation fighter developed and sold by (probably) a Russian company, like Suhkoi.
June 13th, 2009 at 3:06 am
Oops! Posted too soon. Well, I’ll continue-
A rational look at what we “need” to do (as in, what our current priorities and commitments are) would probably result in an increase in military funding.
What makes you so certain that equipment will be obsolete so soon? Take the F-16, for example. It was originally designed back in the 1970s, and has been retro-fitted since – and it still one of the best fighters in the air (aside from its fifth-generation replacements, like the F-22 and F-35), 30 years after the fact.
It takes a long time to build this type of stuff, too – you can’t just sit on your ass until a major war starts, then decide “Hey, I think I need Equipment X” and like magic, equipment X starts to roll off the production lines.
June 13th, 2009 at 4:45 am
Wouldn’t this logic apply to all government programs? Shouldn’t most government programs be held at the level of inflation?