Weapons That Didn’t Work Out
by reader ilsm
The Campaign to Preserve Pentagon Waste is in High Gear:
From Forbes, Defense Advocate Loren Thompson:
How To Waste $100 Billion: Weapons That Didn’t Work Out
One of the most unsettling facets of federal finance is the way the government devalues past investments. The political system is so focused on the next budget — and the next election — that it ignores sunk costs. Thus, every program termination is considered “savings,” without regard to the money that was spent to get the project in question to its current state.”
“This fiscal myopia is especially pronounced in the defense budget, where the government makes most of its capital investments. Cancellation of weapons systems that have been in development for a decade or longer is typically greeted as evidence that policymakers have made “hard choices” and had the courage to stand up to the “military-industrial complex.” The fact that previous administrations may have spent billions of dollars trying to satisfy a valid military requirement is barely mentioned — as is the fact that future administrations will have to spend additional money starting over on a replacement project.
Thompson is not an economist. More here.
What Thompson is advocating is to continue throwing good money after bad, which is poor economics; decisions on future “investments” need to be made on the performance of the project and the continued need for the projects’ performance. Neither are evident in the “defense” cuts that do indeed go against the jobs and PAC funding of the “military-industrial complex.”
For example, the F-35 should be killed based on failed tests, over runs delays and dangerous outcomes in several critical safety issues.
Walking away from the $50B is a problem for Thompson, but it will free up nearly $1000B in the next 20 years for uses that work, and benefit the US.
The “don’t throw good money after bad argument” was made in “Of Mice and Economics Dan Seligman, Forbes Magazine, Aug 28 1998 (Dan here…Also see Naked Capitalism US Wars are far from over)
When I teach sunk cost to accounting and business students I always quote my grandmother:
“Don’t throw good money after bad.”
Grandma was a very shrewd managerial accountant.
The “don’t throw good money after bad” concept implies an objective yardstick for good and bad. I often wonder what proponents of government spending might imagine such a yardstick to be. Discounted sentiment flow analysis perhaps?
Easy poppies…plenty of articles from respected sources that present criteria with which you could agree or differ should you want to actually add to the thread. discounted sentiment flow analysis doesn’t appear to one of them.
I truly would be interested in checking out an article which clarifies an objective criterion for the goodness/badness of a particular gov’t investment. I’ve honestly only ever come across subjective measurements paraded as objective. Any recommendations?
Remember how the Japanese “Zero” was a huge surprise and that the German V-2 gave everyone “Brown Pants”? Also remember the various conferences in the 1920’s that were supposed to limit arms races?
Waste is what you get when you have to have weapons of war. Science and Technology don’t stand still. It is one hell of a delima for the powers that be to invest the proper amount to stay at least even and not be surprised again. Much above my pay grade.
The surprise 70 years ago was the scrap iron sold at good profit came back in the form of giant lance torpedoes. And the Japanese were not an inferior race. MacArthur’s hubris refuesed to stock the Bataan penninsula and the US lost through starvation and lack of ammunition. The Army Air Corps in the Phillipines was largely shot up on the ground and the P-40’s had no anti-freeze to cool their engines in the tropic heat, some supply officer in San Francisco thinking that it “don’t freeze in Manila”.
Halsey had Lexington doing evasive maneuver coming back from delivering fighters to Wake Island and Yorktoen was on a similar mission.
Today, the US is selling F-35 technology to “allies”. How will that come back.
If the US needs the F-35 then it needs to work!
If the US needs to protect Latvia with the European Phased Adaptive Approach (star wars) the missiles in the silos in Czech republic need to work and be cued by operating command structures, not to say the Iranians have a missile to shoot at Latvia.
The US spends half the worlds war money and is building shoddy technology in many tech areas. None of it works nor are the sellers productive.
The Sukhoi folks are designing an airplane with specs similar to the F-22. They don’t have an engine that is half as good as the shoddy Pratt and Whitney thing, and their buyers include the Indian AF which at spending millions to US billions have shown the USAF as not so hot.
The next surprise is that an enemy will go around all the high tech military industrial complex jobs program stuff……
The answer I see is design for real threats not the next Midway and not deploy things solely to keep Lockheed Martin’s bottomline “healthy”.
Of the battleships “sunk” at Pearl Harbor all but 2 were refitted and used to advantage later in the war. The Japanese mistook sinking a ship in port with actually sinking a ship.
A lot of military industrial complex waste has been “sold” by pop history from 70 years ago.
Here is alink to the article: http://www4.ncsu.edu/~sgallen/Of%20mice%20and%20economics.pdf
A yardstick for good and bad investment, won’t come as long as there are experts like Thompson and those over at Joint Chiefs.
Their yardstick is the health of the “defense industry”, measured not by success in weapons but in their bottom line, even profitable with junk that overruns an average of 40% is late and fails most tests.
The F-35 has been criticized roundly by the DoD test community, but the yardstick is keep making them so the inept don’t go bankrupt. Congress is buying more this year, with no concern for the failures and several safety related problems yet to be fixed. The F-22 which is much more mature has a problem with poisoning its life cupport oxygen.
Other yardsticks have been suggested such as doing “knowledge” based system engineering, both GAO and several retired acquisition managers, and also testing the stuff, which is often not busdgeted for because the money ahs gone to overruns.
Military expenditures should be most harshly tested as they take resources away from good use to build maginot lines………………