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)