Quotulatiousness

August 4, 2012

The tribal and political divisions of Afghanistan

Filed under: Asia, Military, Politics — Tags: , , , , , — Nicholas @ 09:31

A brief primer from Strategy Page on the volatile mix of tribal rivalries that makes Afghanistan such a difficult place to conduct business (or military operations):

The war against the Taliban is increasingly just another chapter in the centuries old conflict between the Pushtun and non-Pushtun tribes of Afghanistan. President Karzai and his allies are from Pushtun tribes that have long been rivals to the tribes that form the core of Taliban leadership and manpower. All this is made worse by the fact that the non-Pushtun Afghans (Tajiks, Hazara and Uzbek), who comprise 60 percent of the population, do not want to lose the increased power (more in proportion to their size of the population) they obtained once democracy was installed in 2002. While Pushtuns are 40 percent of the population, Tajiks are 24 percent, Hazara ten percent, Uzbek 9 percent and various other non-Pushtun minorities the rest. This struggle between Pushtuns and the rest has defined Afghanistan since its creation three centuries ago. The Pushtun are not happy with the recent revisions that gave the majority more power. For Pushtuns, that is just not right. The Taliban are seen as major players in the fight to right this wrong, and for many Pushtuns that makes up for a lot of the evil the Taliban does.

This tribal animosity played a role in the American reaction to Pakistan closing its border to NATO truck traffic last November. The U.S. played hardball with the Pakistanis and shifted truck traffic to the more expensive northern route. This was great for the non-Pushtuns up north, who got a lot more lucrative trucking business. It was a disaster for the mainly Pushtun trucking companies in the south, and the Taliban who extorted “protection money” from the truckers to avoid being attacked. Aware of all that, NATO traffic is not returning to its pre-November levels, and may be reduced still more if the Taliban become more troublesome because their cash flow has increased.

[. . .]

Afghanistan is different to the extent that it has a more violent (than the norm) tribal culture and heavy resistance to anti-corruption efforts. Most Afghans who reach a leadership position consider corruption (demanding bribes and stealing government funds) a right and stealing something of an obligation to make his family/clan/tribe stronger and better able to survive. Many Afghans have noted that countries with less corruption are more prosperous and peaceful, but this anti-corruption faction is still a minority. Corruption continues to be a major problem in Afghanistan and it will get worse when most foreign troops leave in 2014. At that point, the anti-corruption activists will be at more personal risk, as will auditors and other monitors of how foreign aid is spent.

Many (if not most) Pushtuns, and nearly all non-Pushtuns, are hostile to the Taliban and their alien radical Islamic ways. Aside from the lifestyle restrictions, Afghans don’t like the Taliban demand that Afghans put religion before tribal and family obligations and, worst of all, strive for Islamic world conquest. Most Afghans see the Taliban as a bunch of intolerant fanatics who like to execute (often by beheading or bombs) those who oppose them. The Taliban leadership has been aware of these attitudes for years and has tried to restrain its frontline fighters. But this has been difficult, as Pushtun teenagers with guns are prone to bullying less well-armed civilians, especially if they are from another tribe. Ancient cultural habits are hard to break.

July 18, 2012

Who Exploits You More: Capitalists or Cronies?

Filed under: Business, Government, Liberty, Politics — Tags: , , , , — Nicholas @ 09:48

July 15, 2012

What’s a waste of $180 million among politicians?

Filed under: Cancon, Government, Politics — Tags: , , , — Nicholas @ 00:09

Rex Murphy explains just why Ontarians are so justifiably cynical about politics and politicians:

Add all these up and I think we have a good notion of why politics are so little regarded, why so many politicians are abused or scorned and why public life holds so little invitation for those of delicate moral scruple, or a functioning conscience.

But now I’d like to add one particular item to that list: the Dalton McGuinty campaign’s decision to cancel an already-in-progress, contract-guaranteed gas-fired electricity plant outside Mississauga, Ont. It was cancelled, according to the current Ontario Energy Minister’s own words, by the Liberal campaign during the last election. (Everyone who is either sentient or not an absolute Liberal partisan — and pardon the redundancy — realizes that happened because opposition to the plant threatened a Liberal seat or two in the election.)

The cost of that “campaign” choice is now acknowledged to be $180-million.

Now if even a million of the amount had gone into some private pocket, or a bank account of someone close to the Ontario Liberals, the scandal would be nuclear. But because the money is merely wasted — because the whole $180-million just got thrown away, effectively doled out just for partisan advantage — people don’t quite reach white-hot anger.

But something else may be going on. People’s contempt for actions of this sort may be so deep that for a while it remains unspoken. Arrogance and self-interest on this level leaves most normal people speechless. They resign themselves to the sleaziness and corruption of the game. They learn to quietly despise politics. At that point, in a democracy, all are losers. And make no error: It was the Ontario Liberals this time, but once in power, every party, from the Tories to the Greens, is capable of acting in the same way.

July 13, 2012

Questioning the accuracy of official Chinese economic figures

Filed under: Business, China, Economics, Government — Tags: , , , — Nicholas @ 09:50

Yes, we’ve heard this several times before, and for good reason:

China’s relatively mild slowdown in the second quarter has reignited a controversy about whether its official statistics can be trusted.

Chinese growth edged down to 7.6 per cent in the second quarter from 8.1 per cent in the first quarter, and analysts said the momentum in June, from stronger bank lending to rising investment, pointed to a rebound in the second half of the year.

But rather than delivering reassurance, the numbers instead provoked questions about whether the reality is worse than the government is letting on.

Economists with Barclays noted that a deceleration in industrial production was consistent with 7.0-7.3 per cent growth. Analysts at Capital Economics said that the true figure was probably closer to 7.0 per cent.

[. . .]

Doubts about Chinese data have a fine pedigree. Li Keqiang, who is widely expected to succeed Wen Jiabao later this year as premier, confided to U.S. officials in 2007 that gross domestic product was “man made” and “for reference only”, according to a diplomatic cable published by WikiLeaks.

Earlier posts on the Chinese economy are here.

July 11, 2012

Mexicans not willing to suffer increasing death toll to support American war on drugs

Filed under: Americas, Government, Law, USA — Tags: , , , , — Nicholas @ 11:03

Jacob Sullum on the recent election result as a sign of repudiation for American drug policy:

Early last year, when the death toll from Mexican President Felipe Calderon’s crackdown on the cartels stood at 35,000 or so, Michele Leonhart, head of the U.S. Drug Enforcement Administration, told reporters in Cancun “the unfortunate level of violence is a sign of success in the fight against drugs.” The results of last week’s presidential election, in which the candidate of Calderon’s National Action Party (PAN) finished a distant third, suggest Mexican voters are no longer buying that counterintuitive argument, if they ever did.

Even if “the fight against drugs” were winnable, it would be an outrageous imposition. Why should Mexicans tolerate murder and mayhem on an appalling scale (more than 50,000 deaths since Calderon launched his assault in December 2006), not to mention the rampant corruption associated with prohibition, all in the name of stopping Americans from obtaining psychoactive substances that their government has arbitrarily decreed they should not consume? That sort of arrogant expectation is becoming increasingly untenable.

Mexico’s incoming president, Enrique Pena Nieto of the Institutional Revolutionary Party (PRI), has promised continued cooperation with U.S. drug warriors. But during the campaign, he and the other two leading candidates all said controlling violence, as opposed to seizing drugs or arresting traffickers, would be their top law enforcement priority. Pena Nieto has reiterated that commitment since the election, saying his success should be measured by the homicide rate.

Crony Capitalism: the issue that unites the Tea Party and the Occupy movement

Filed under: Business, Government, Liberty, Politics — Tags: , , , , , — Nicholas @ 09:17

Matthew Mitchell at the Mercatus Center:

Despite the ideological miles that separate them, activists in the Tea Party and Occupy Wall Street movements agree on one thing: both condemn the recent bailouts of wealthy and well-connected banks. To the Tea Partiers, these bailouts were an unwarranted federal intrusion into the free market; to the Occupiers, they were a taxpayer-financed gift to the wealthy executives whose malfeasance brought on the financial crisis.[1] To both, the bailouts smacked of cronyism.

The financial bailouts of 2008 were but one example in a long list of privileges that governments occasionally bestow upon particular firms or particular industries. At various times and places, these privileges have included (among other things) monopoly status, favorable regulations, subsidies, bailouts, loan guarantees, targeted tax breaks, protection from foreign competition, and noncompetitive contracts. Whatever its guise, government-granted privilege is an extraordinarily destructive force. It misdirects resources, impedes genuine economic progress, breeds corruption, and undermines the legitimacy of both the government and the private sector.

[. . .]

… regulations can be especially useful to firms if they give the appearance of being anti-business or somehow pro-consumer. Regulations are often supported by strange bedfellows. Bruce Yandle of Clemson University has studied the phenomenon extensively:

The pages of history are full of episodes best explained by a theory of regulation I call “bootleggers and Baptists.” Bootleggers … support Sunday closing laws that shut down all the local bars and liquor stores. Baptists support the same laws and lobby vigorously for them. Both parties gain, while the regulators are content because the law is easy to administer.[25]

The moralizing arguments are often front and center in regulatory policy debates, while the narrow interests that stand to benefit from certain regulations are much less conspicuous.

July 5, 2012

The failed state league table

Filed under: Africa, Government — Tags: , , , , , , — Nicholas @ 08:51

This is a list you never want your country (or your neighbours) to appear on: the “top ten” failed states.

For the fifth year in a row, Somalia is ranked as the most failed failed state on the planet. This ranking was made by The Fund for Peace and Foreign Policy Magazine. Over the last decade, it’s become popular for think tanks, risk management firms and intelligence agencies to compile lists of “failed states.” This is what unstable countries, prone to rebellion and civil disorder, are called these days. What they all have in common is a lack of “civil society” (rule of, and respect for, law), and lots of corruption. The two sort of go together. Somalia consistently comes in first on most of these failed state lists. This year the top ten list of failed states (from worst to less worse) was Somalia, Congo Democratic Republic, Sudan, Chad, Zimbabwe, Afghanistan, Pakistan, Guinea, Cote d’Ivoire and the Central African Republic.

Not surprisingly, the best example of a failed state has long been Somalia, and that’s largely because the concept of the “nation of Somalia” is a very recent development (the 1960s). It never caught on, which is a common feature of failed states. Same could be said for the Palestinians. Sudan is accused of being a failed state, but it isn’t in the same league with Somalia. Sudan has had central government of sorts, on and off, for thousands of years. Not so Somalia.

Another common problem in failed states is a large number of ethnic groups. This is a common curse throughout Africa, which why the majority of the worst failed states are there. Europe, and much of Asia, have managed to get past this tribalism, although that has not always resulted in a civil society. It usually takes the establishment of a functioning democracy to make that happen. This tribalism has kept most African nations from making a lot of economic or political progress. The top five failed states are all African. Somalia is also unique in that it is one of those rare African nations that is not ethnically diverse. Instead, Somalia suffers from tribal animosities and severe warlordism (basically successful gangsters who establish temporary control over an area).

June 30, 2012

Writing the UN’s epitaph in advance

Filed under: Bureaucracy, Cancon, Politics — Tags: , , — Nicholas @ 11:10

Conrad Black on the increasingly useless United Nations (although he urges reform instead of abandonment):

For the past 45 years the United Nations has become steadily over-populated by poor states, failed states, petty despotisms and militant Muslim counties chiefly preoccupied in diplomatic matters with the harassment and denigration of Israel. Most of the agencies have become sink-holes of patronage and corruption for poor countries paying themselves with the contributions of rich countries and polemically biting the hands that feed them.

It has become a source of payola windfalls for corrupt agency officials as well as a substitute for theatre and psychiatry for many of the world’s most disreputable regimes. Muammar Gadaffi’s Libya was elected to the chair of the Human Rights Commission (precursor of the present Human Rights Council), and the whole hierarchy of the UN was implicated in the scandalous misappropriation of many millions of oil dollars supposedly destined for humanitarian purposes in Iraq. The chief humanitarian beneficiaries were Saddam Hussein and crooked UN officials. Many of the peace-keeping missions are staffed by unqualified soldiers from very poor countries, which rent themselves out to the warring factions for cash; and thereby increase, rather than control, local violence.

Unfortunately, Canada was, for most of the UN’s history, far too indulgent of it. First, as a victorious ally and charter member, it was part of the Anglo-American governing consensus. Then, after Lodge gave Pearson the Suez peacekeeper idea (and Pearson forgot that it wasn’t his originally), the foreign policy establishment in Ottawa began to view the UN as a way for Canada to distinguish itself from the U.S. at little cost, and to allow itself, with a modest foreign aid budget, to pander to Third World countries without seriously annoying our traditional allies. This gradually developed into the Chrétien government’s endorsement of “soft power,” a phrase originated by former U.S. president Bill Clinton’s national security adviser Joe Nye, which was a soft alternative to the use of American military might. It is a concept that has any validity only when there is a hard power option, which Canada did not possess. As practised by this country, soft power was a fraud, it was just more softness.

[. . .]

Undoubtedly, there will be those in Canada who decry the Harper government’s comparative friendliness with Israel and call for appeasement of Pillay and her foaming claque. What we should do instead is lead agitation for a massive transformation of the United Nations — back to the defence of Eleanor Roosevelt’s Universal Declaration on Human Rights (which is not subject to Shariah law or any other such barbarities), jettison the antiquated Security Council and propose a variable system of voting in the General Assembly, where votes are accorded to countries and groupings of countries according to a combination of their population, economic strength and objectively assessed respect for human rights.

Canada is well placed to organize the support for such measures by the countries that pay most of the UN’s bills. This would be a much more appropriate stance for Canada, now that it has been so unjustly pilloried by the anthill of bigotry of a Human Rights Council, than continued reverence for this citadel of hypocrisy. The United Nations is both a mad cow and a sacred cow; it is in desperate need of radical reform.

June 29, 2012

From Maoism to Kleptocracy in one generation

Filed under: Business, China, Economics, Government — Tags: , , , — Nicholas @ 08:14

China’s economic growth has been one of the wonders of the modern world, as one of the poorest nations has pulled itself well up the economic tables over just the last twenty years. What it has not done, however, is replace the communist leadership with democratically elected leaders. What has happened is that switching from a pure command economy to a freer economy has created fantastic opportunities for graft and corruption. Opportunities which have been grasped eagerly by party leaders and their friends and family:

As I set out in The Fall of the Communist Dynasty, and a HT to John Hempton’s piece within which he contends that the entire Chinese economy is a Kleptocracy , this week we have news from Citron Research who reports that Evergrande Real Estate Group Ltd is ‘a deception on a grande scale’ .

Citron quote ;-

‘Evergrande who ranks among the top 5 Chinese property companies. Our analysis and primary research reveal that: 1] Evergrande is insolvent; and 2] Evergrande will be severely challenged from a liquidity perspective. The Company’s management has applied at least 6 accounting shenanigans to mask Evergrande’s insolvency. Our research indicates that a total write-­down of RMB 71bn is required and Evergrande’s pro forma equity is negative 36bn.’

What sparked Citrons interest in Evergrande was the mail order doctorate the chairman claimed from the University of West Alabama, a small college 230 miles north of New Orleans with 2300 on-campus students. Evergrande’s is one of the top 5 players in the Chinese property market that fell for its 8th consecutive month in May. My experience with these types of matters is that small things can be excellent markers to greater problems. Small examples of dishonesty in one area of life are often reflected in larger undiscovered examples in other areas of a person’s life.

[. . .]

Zoomlion has an interesting business model, it is similar in many of ways to Caterpillar, except whereas Caterpillar report falling sales, Zoomlion reports astounding sales growth with a fivefold increase in revenue since 2007. Zoomlion customers sometimes buy ten concrete mixers when they planned to initially by one or two. They have a perverse incentive to buy more than they need because these concrete trucks are purchased via finance packages supplied by Zoomlion.

Then the machines can be garaged and used as collateral to borrow further funds from other lenders. Zoomlion continues to grow while cement sales have plunged. In May, cement output increased 4.3 per cent YoY, down from 19.2 per cent recorded last year. Zoomlion’s new debt of $22.5B buys roughly 900,000 trucks which could produce enough concrete (at six loads a day) to build over thirty Great Pyramids of Giza a day.

[. . .]

All revolutions have class and economic matters at their core. Ironically, the difference in a future Chinese collapse is that the expropriators in China in this cycle have been the Communist Party political class. The CCP have become the Kleptopreneur bourgeoisie who have expropriated from China’s proletariat (the industrial working class), via corruption and theft from the state and state owned enterprises. The Ka-Ching Dynasty is responsible for the greatest looting of a nation in history.

Marx wrote that modern bourgeois society (Capitalism) has conjured up such gigantic means of production and of exchange, that it is like the sorcerer who is no longer able to control the powers of the nether world whom he has called up by his spells (Karl Marx)

The CCP ‘sorcerers’ have summoned up a political and economic nether world that is so systemically corrupted it is in the process of spiralling into same revolutionary physics that destroyed the original Chinese merchant bourgeoisie that Mao overthrew.

Earlier posts on China’s economy are here. H/T to Cory Doctorow for the link.

June 27, 2012

John Kay on the evils of rent-seeking

Filed under: Economics, Germany, Government, Politics — Tags: , , , , — Nicholas @ 08:08

Broadly speaking, wealth can be accumulated in two distinctly different ways. It can be earned through hard work, innovation, and competition, or it can be extracted from the public by use of coercive methods, corruption, and misappropriation:

Whatever the true extent of the Mubarak family fortune, it stands in stark contrast to the lot of most Egyptians. Gross domestic product per capita in Egypt is a mere $2,500. In western Europe and North America GDP per capita is about $40,000, yet the capacities of Egypt’s intellectual and entrepreneurial elite are the rival of any state in the world.

The real damage imposed by men such as Mr Mubarak is not the money they might have stolen. The tragedy is that the system that enables them to steal it destroys opportunities for others to generate wealth — not only for themselves but for the whole population.

The price of requiring a potential Mark Zuckerberg or Mr Gates to pay a $100 bribe to each of 10 officials before he can establish his new business is not the $1,000 creamed off by corrupt bureaucrats. It is the far greater one of lost businesses that never came into being because the licensing process that makes such corruption possible was not navigated. In the meantime, people who might be successful entrepreneurs choose instead to seek political power. If business is endlessly frustrating and politics endlessly rewarding, the career choice for able and enterprising people is obvious.

Institutions are the key influence on economic prosperity — West Germany did not outperform East Germany because of its excellent monetary policies. And, as Daron Acemoglou and James Robinson point out in their book, Why Nations Fail, a critical feature of successful economic institutions is that they limit the scope for what these authors call “extractive activity” — others have described it as predation or rent-seeking — which appropriates the wealth created by other people.

June 13, 2012

When is a bribe appropriate?

Filed under: Britain, Bureaucracy, Business, Law, Russia — Tags: , , , , — Nicholas @ 09:59

The British government is trying to crack down on bribery, which on the surface seems like a good thing to do: but will it cripple British businesses in third world countries?

We used to draw a distinct line between what was acceptable business conduct here at home and what we did abroad with Johnny Foreigner.

Inviting Bertie from your major customer to Henley or the Derby, or waving Cup Final and Olympic tickets in his face was entirely acceptable. Slipping him £500 for an order was bribery and both illegal and immoral.

But what you did abroad was an entirely different matter: bribery was until very recently tax deductible.

[. . .]

This is of course very different from the system of old. Which was, essentially, that soft soaping someone with experiences and days out was just absolutely fine while any mention at all of cash was not just legally but also socially verboten.

At home, in Britain, that was. Having worked in some pretty odd and even rough places I’ve done my share of bribing people, but even so I would be profoundly shocked if I was asked for a bung in Blighty. But the system also most definitely facilitated the payment of bribes to Johnny Foreigner.

At one point, working in Russia, I needed to get cheap railway prices out of the Russian railroads to make the numbers on a metals shipment add up. The only way known to do this was to make a deal with the North Koreans who had special state-set prices on said railways. Which is how I found myself inside the N. Korean embassy in Moscow handing over $10,000 in crisp notes to their KGB-style guy after the successful conclusion of the shipment.

Yes, of course, it’s terribly naughty subverting the employees of a communist dictatorship, but the reaction here at home was the most interesting. When I made gentle enquiries to the taxman as to how I might account for this transaction, hinting gently at first, he finally pointed out that since I’d paid the bribe in a foreign currency to a foreign chap that was just fine. Just list it as a business expense and it was tax deductible.

April 24, 2012

Corruption in Afghanistan reaches new heights

Filed under: Asia, Government, Middle East, Military — Tags: , , , , — Nicholas @ 08:33

From Strategy Page:

A major obstacle to improving security in Iraq and Afghanistan was not equipment, training or leadership, but corruption. No matter how well led, trained and equipped the troops were, if they could be bought they were worse than useless. But the corruption went beyond the troops themselves. Government officials had to be carefully monitored to prevent the money for equipment, training and pay from being stolen before it got to the troops. More fundamentally, corruption was the reason Iraq, Afghanistan and so many other nations are poor and full of unhappy, and often violent, people. Corruption is why these places are chaotic and so often in the news. Corruption is the major cause of Islamic terrorism. Corruption does not get the recognition it deserves.

But in Afghanistan corruption has recently risen to new heights; literally. Several recent attacks in Kabul have made use of unfinished high-rise buildings, where terrorists used the height advantage to do more damage. American advisors noted that there were a lot of unfinished tall buildings in Kabul, and many had apparently been abandoned. The Americans asked the local government who owned these high-rise structures and was told that the government didn’t know. Kabul has undergone a construction boom in the last decade, and many of the builders (or their backers) didn’t bother with getting construction permits. If the cops or officials came around asking questions they were offered a bribe, or a death threat, or both. Inquisitive journalists were handled the same way.

April 14, 2012

The fall of the House of Bossi?

Filed under: Europe, Italy, Politics — Tags: , , , , — Nicholas @ 11:59

BBC News has a profile of Umberto Bossi, who recently had to resign as head of the political party he founded, Italy’s Northern League:

… Mr Bossi made one of his charismatic, raucous and fiery speeches, declaring in essence that northern Italians were no longer going to kow-tow to Rome’s greedy politicians and to pay their taxes to enable lazy southern Italians to live on public welfare.

One of his famous phrases was “Roma ladrona” meaning “Thieving Romans!”

It was all pretty provocative stuff, and had strongly racist undertones.

The League mocks the accents and the origins of Southerners whom they derisively call “terroni”. I suppose “ignorant peasant” would be the nearest English translation.

[. . .]

Sixteen years later it turns out that Umberto Bossi has apparently been dipping into the public trough, even more deeply than the Roman politicians he was so critical of when he founded his separatist party, and set up the phantom north Italian state he dubbed “Padania” – meaning the country of the river Po.

In 2004 Mr Bossi suffered a stroke which left him with impaired speech, but failed to quench his political ambitions or his vulgar public manners.

He frequently uses swear words in public to smear anyone he does not like and often gives the finger in front of TV cameras to make his message even more clear.

[. . .]

According to court documents, Mr Bossi’s wife bought no fewer than 11 houses and apartments with Northern League party funds.

Mr Bossi himself had his own house done up with public money and his son Renzo — nicknamed by his father the Trout, who in fact does have a somewhat fish-like expression — also had access to apparently unlimited cash to indulge in his taste for fast cars.

The party even paid for the Trout’s speeding tickets, not to mention medical expenses. The 23-year-old has now been forced to resign from his sinecure as a regional government official, which brought him 12,000 euros (£10,000, $16,000) a month.

March 24, 2012

The state of Pakistan: grim and getting grimmer

Filed under: Asia, Books, Economics, Education — Tags: , , — Nicholas @ 10:00

Robert Fulford in the National Post, examines the evidence presented in Ahmed Rashid’s book, Pakistan on the Brink: The Future of America, Pakistan and Afghanistan:

In rich, persuasive detail, Rashid describes corrupt leaders and a despairing population, an army that obeys orders only when it wants to, a stagnant economy, disastrous relations with neighbouring countries — and above all, a persistent national tendency, exemplified by Zardari, to blame others when anything goes wrong. Americans are often seen to be at fault, and sometimes Israelis. India is considered permanently blameworthy.

Half of school-age Pakistanis don’t attend school. At the state’s founding in 1947, 52% of the citizens were literate; in 65 years that number has been raised to 57%. In the last 20 years, Rashid notes, Pakistan has not developed a single new industry or cultivated a new crop. On the level of imagination, it has died or lapsed into a coma.

Politicians and military officers take turns forcing each other out of power; that’s the only system of regime change that operates, and it does nothing to eliminate corruption.

Rashid makes it clear that Pakistan’s core problem is as much a moral as a political failure, a matter of shirked duties, profound dishonesty and rancid hatreds that encourage murder. Reforms don’t happen, he believes, because neither political, nor military leaders have the courage, will and intelligence to carry them out.

February 16, 2012

The economics of the military-industrial complex

Filed under: Bureaucracy, Economics, Government, Military, Technology, USA, Weapons — Tags: , , , , , , — Nicholas @ 08:57

Eisenhower was right: the military-industrial complex has the US government tight within its grip, and there’s no easy fix. Strategy Page has a useful overview:

For decades the U.S. Armed Forces has been having problems with rapidly growing (much greater than inflation) costs of weapons. Congress passes laws to try and cope and the laws are ignored. One example is the laws calling for accurate life-cycle costs (for development, manufacturer, and maintenance of weapons over their entire service life). A recent study found out that, despite laws calling for accuracy and consistency in these numbers, most manufacturers manipulated the data to make their systems look less expensive than they actually were. The Department of Defense is increasingly taking extreme measures in the face of this corruption and cancelling more and more very expensive systems. But the manufacturers continue to use smoke and mirrors to get new projects started and failed ones funded.

New weapons get approved because of another form of procurement corruption, the Low Ball Bid. Last year the U.S. Air Force demanded that defense contractors stop low balling, which in practice means submitting unrealistically low bids for new weapons (to make it easier for Congress to get things started) and then coming back for more and more money as “unforeseen problems” appear and costs keep escalating and delivery is delayed. Currently, procurement projects are about a third over budget and most items are late as well. Procurement of weapons and major equipment make up about a third of the defense budget. While this is expected to decline over the next decade, as defense budgets shrink, the problem also extends to upgrades and refurbishment of existing equipment.

The most intractable problem is the decades old contractor practice of deliberately making an unreasonably low estimate of cost when proposing a design. The military goes along with this, in the interest of getting Congress to approve the money. Since Congress has a short memory the military does not take much heat for this never ending “low ball” planning process.

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