The Business Of War – Too Big To Fail?



When it comes to spending federal tax dollars, the biggest piece of the pie goes to fund the U.S. military. Bigger than all of the Bank bailouts, bigger than the Fannie Mae – Freddie Mac bailouts, bigger than FHA’s 34 billion dollar deficit, bigger than the auto industry bailouts, bigger than any other “too big to fail” entity, COMBINED. If there is anything in this nation that is “too big to fail” it must be the business of “defending” the nation.

Federal Budget Discretionary Spending – chart courtesy of National Priorities Project, Inc.

But how much of this is really “defense” and how much of it is related to our modern policy of geo-political intervention?

If we are going to start wars or enter existing wars, I’d like to see us plan to win them instead of dragging them out endlessly. Personally I think that one of the great travesties of our modern age is the way that we’ve stopped winning wars, and instead concentrate on operating them as open ended geo-political businesses. We send our country’s bravest and finest into wars that they are not allowed to win, facing enemies that they are often not allowed to even shoot at. This isn’t as much a defense of the nation as it is old fashioned “gun-boat diplomacy“.

President Dwight Eisenhower was prophetic in his farewell speech to the nation, when he said:

“In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists, and will persist.”

It would appear from the chart shown above, that this is exactly what has happened. And not only has this so called military-industrial-complex grown, it is now consuming 58% of all federal discretionary spending. In short, the M-I-C has become the biggest government subsidized “business” in the United States. And now that major cuts in it’s budget are looming, everyone is crying that this is a calamity that must be avoided.

Don’t get me wrong. I support a strong defense, but where does defense spending legitimately end? I do agree that President Ronald Reagan used a strong military build up to force the Soviet Union into capitulation in the late 1980’s. But we had more money back then, and basically were able to out-spend the soviets. Once the cold-war was won, what were we to do with our vast military industrial complex? Bush I, Bill Clinton, Bush II and now president Obama have all seen the need to start or continue various military actions around the world, in response to various perceived geo-political situations.

When you have a large military presence, there seems to be some overriding need to find a place to use it. As a result we’ve seen one “justifiable” military action after another, with little benefit to the US as a result. If we are going to have a military as our largest industrial employer, we need to see some bang for our buck. Funding endless wars such as Afghanistan, with no political will to win, is keeping the military in business, but at a horrible cost in US lives, with virtually nothing to show for it.

Is war too big a business to be allowed to fail? © Oleg_Zabielin – Fotolia.com

The Iraq war, many claimed, was supposedly to get oil. But did we get any of it? Donald Trump famously argued that we did not know how to take advantage of our wars to get some of the spoils for ourselves. I suppose he was right.
But at the end of the day, we did keep the military-employment and contractor machine busy, which in and of itself adds to jobs in the US.

Now we stand at the edge of the fiscal cliff, and no one is yelling about the fallout more than the military industrial complex. I don’t have to link to any reports of how many defense and military related jobs will be lost if those cuts in defense spending take place. They will. The housing market will definitely suffer in areas that are most dependent on military activity. So will local businesses located near military installations.

Franklin Roosevelt, it is thought by many, actually knew about, and allowed the Japanese attack on Pearl Harbor in December of 1941, as a way to get the U.S. into WWII, which effectively ended the great depression. World War brought big business and manufacturing which ignited an economy that had been struggling with depression for over a decade. A recession quickly followed the end of that war, in 1945.

Many, if not most of our recessions in the 20th century have come after a war ended. Major recessions occurred after WWI, WWII, Korea, Vietnam, and the end of the cold war in 1988. War, whether justified or not, results in more employment and manufacturing in the U.S.

I don’t doubt that the looming cuts in defense spending will have a drastic impact on our economy, at least in the short term, and yes it might put us back into a recession. From the perspective of the defense industry, one of the nations largest employers, the business of war is too big and too important to our economy to be allowed to fail.

Donna S. Robinson is a real estate investor, author and the wife of a US Army veteran. Follow her on twitter at donnaconsults. Her latest book, Basics Of Real Estate Investing is now available on Amazon.