Monday, November 06, 2006

War Profits and War Politics

Robert Greenwald appeared on Real Time with Bill Maher promoting his new film about war profiteering in the Iraq War. He correctly complained that state-sponsored firms have little oversight from Congress and they often overcharge the government for services rendered. But he paradoxically concluded the key problems are (1) firms only care about profit and (2) the administration is ideologically committed to free markets.

This is not the essential problem. The essential problem is the government, not the companies. The government sets the standards. It pays the bills. It lets some things slide and others not. Just as the consumer determines the range of products at the market, the state determines the quality of war services provided. If the state is really guided chiefly by the best interest in the people, why aren't these substandard companies getting fired?


Tim said...

Shazam, David, you got it right.

But government wouldn't accept responsiblity, and the more I think about it, the more it seems that they really can't reasonably do so.

As I'm coming to see it, government as it stands for us is something like an unfortunate child, dropped on its head one too many times as an infant, with resulting mental damage robbing it of any hope of a coherent mental future.

But that IS sort of the point - government is a massively incoherent entity, composed of hundreds of individuals in the legislative alone, each with different goals, opinions, etc.

You could say that people are probably like that on the inside, too - but the big difference, of course, is that we can't help but share the same genes and fate between our different parts.

Thankfully, humans haven't yet been melded into a perfectly homogenous social creature yet, like honeybees or ants. That'd take some interesting selective pressure...

jeremy h. said...

Mises is on your side:

"It is altogether absurd to hold the armaments industry responsible for the outbreak of the war. The armaments industry has arisen and grown to a considerable size because governments and peoples bent on war demanded weapons. It would be really preposterous to suppose that the nations turned to imperialistic policies as a favor to the ordnance manufacturers. The armaments industry, like every other, arose in order to satisfy a demand. If the nations had preferred other things to bullets and explosives, then the factory-owners would have produced the former instead of the materials of war."

Of course, Eisenhower and myself would disagree.

Anonymous said...

Isn't this "blaming the victim"? It's not the company's fault they overcharge the government, it's the government's fault for tempting the companies. So why is it when consumers take advantage of companies or the government uses their power, they get blamed? Why not ask for some self-restraint from the companies? You can't have it both ways.


David said...

Jason, what are you talking about? Consumers "take advantage" of companies all the time and as long as they don't force their will (through laws or outright violence), I never blame them.

Government forcing people to do something is not trade. Trade is voluntary, government is force. Trade is always beneficial to both parties involved (assuming no lemons problems, but such problems are rare), by definition. Force is not, by definition (if it was, the threat of violence wouldn't be neccessary).

The government continues to buy a substandard product (Jeremy is probably correct in the public choice argument on why they are doing this) in constrast with virtually every private transaction in the country. So instead of blaming the firms for not being angels, why not just demand the government do what every other person in the country does everyday? The government is the consumer thus it is not the victim.

Anonymous said...


Why is it wrong for consumers to use the law to take advantage of companies, but not for companies to use the law to take advantage of comsumers? Companies demanding and exploiting no-bid and exclusive contracts are using force.

As for substandard products and companies, consumers support them too because not everyone makes the best decisions. Consider Walmart which is very substandard in how it treats their employees. They encourage them to exploit government services. How about the credit card companies? They had the bankrupcy laws rewritten in their favor, but do they pull back on the cards they blindly give out?

Or how about the tabacco industry? Turns out their "anti-smoking" ads are encouraging kids to smoke. Was it a fortunate accident for them or was it intentional?

The government has to set the standards because it cannot be trusted by someone who's sole motivation is profit.