TheU.S.Military-IndustrialComplex.pdf

7/25/2018 The U.S. Still Leans on the Military-Industrial Complex – The New York Times

https://www.nytimes.com/2017/09/22/business/economy/military-industrial-complex.html 1/3

ECONOMIC VIEW

The U.S. Still Leans on the
Military-Industrial Complex
By Louis Uchitelle

Sept. 22, 2017

If you want to see what President Trump can do to expand manufacturing in America, look past
his criticism of free trade and the few jobs he may have saved at Carrier. Instead, look at his plans
for the military.

Manufacturing has always relied on public funding in one form or another, and in particular on
outlays for weaponry, even nearly three decades after the end of the Cold War. Roughly 10 percent
of the $2.2 trillion in factory output in the United States goes into the production of weapons sold
mainly to the Defense Department for use by the armed forces.

And the spending shows. The United States, after all, has 10 aircraft carriers in active service
versus just one for China, although China has a bigger manufacturing industry than the United
States. One can argue that China is bent on big increases in weapons production and is still in the
early stages. Whatever the case, America’s weapons production is still far greater than China’s,
while China has burnished its reputation as a manufacturer of civilian goods for export and,
increasingly, for its own citizens.

The United States once went that route. In the summer of 1945, after nearly five years of wartime
rationing, the civilian population of the United States was starved for new cars and appliances,
new clothing and shoes, and new homes and their furnishings. So was the rest of the world, and
American manufacturers prospered by meeting that need as well. Converting factories to civilian
production was a no-brainer and sufficiently profitable to match wartime earnings.

After the Korean War in the early 1950s, however, a somewhat similar conversion back to civilian
production wasn’t as profitable. And companies that considered it in the early 1990s, like General
Dynamics in Groton, Conn., decided to stick with making weapons for the Defense Department.
These companies argued — accurately — that military work was more profitable and, in those
days, generated more jobs.

As weapons production increased, the manufacture of autos and electronics shifted partly or
wholly overseas. So did the production of other civilian products — leaving behind weapons
bought by the Defense Department as an ever bigger share of the nation’s factory output.

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7/25/2018 The U.S. Still Leans on the Military-Industrial Complex – The New York Times

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While President Dwight D. Eisenhower warned of the perils of the “military-industrial complex”
in his farewell address in January 1961, the Vietnam War accentuated this reliance on weapons
production, which became embedded in annual budgets. That may well continue in the years
ahead. In his first budget proposal in May, Mr. Trump called for significant cuts in domestic
spending but roughly a 10 percent increase in military outlays.

Given the history of recent decades, is it any wonder that we now have a president who, at least
in part, equates “making America strong again” with an enhanced military equipped with the
weaponry that an enhanced military requires?

Public money flows to factory owners in many ways — often as a result of the frequent bidding by
municipal governments to persuade a manufacturer to locate a factory in one community rather
than another. These auctions sometimes top $100 million per factory location.

A manufacturer who finally accepts a municipality’s bid collects tax breaks, a gift of land on
which to put a factory and sometimes the cost of building and equipping the factory itself at
taxpayers’ expense. Cities and towns are that eager to have a factory, with its network of nearby
suppliers and its relatively well-paying jobs — relative, that is, to the lower paying retail and
service industry work that is often the alternative for high-school- or even junior-college-
educated men and women.

That outlay of taxpayer money is concentrated in eight sectors of manufacturing, including
ammunition, aircraft, guided missiles, shipbuilding and armored vehicles. Shut down production
in those areas and factory production in America, measured as value added, would shrink 10
percent or more, according to Richard Aboulafia, a vice president of the Teal Group, a defense
consulting firm.

Mr. Aboulafia based his estimate, he said, on an analysis of the Defense Department budget and
export data. Dan Luria, research director of the Michigan Manufacturing Technology Center,
concurred with those figures. To put the matter graphically, factories in the United States churn
out one rifle barrel for every nine auto fenders.

Cutting back on factory production isn’t the direction the Trump administration has been going.
Instead, the promise is that — whatever goods they produce — the Trump era’s factories will be
big employers. But the reality is that modern factories, even when they materialize, are highly
automated, which helps to explain why the manufacturing work force has bumped along at less
than 13 million for nearly a decade, according to the Labor Department, although factory output –
including weapons production — keeps rising smartly.

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7/25/2018 The U.S. Still Leans on the Military-Industrial Complex – The New York Times

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These constraints make me yearn for the good old days just after World War II, when America
seemed to have easier policy choices. Even inexpensive trinkets were manufactured in America,
and my mother, for one, ed her children to stay away from a neighborhood boy whose
parents had bought him a BB gun. Disarmament ran deep in the late 1940s. We didn’t need to
produce weapons, even BB guns, to keep manufacturing afloat. I’m afraid that we do now.

Louis Uchitelle covered economics for The New York Times for more than 20 years. This essay is drawn from his latest
book, “Making It: Why Manufacturing Still Matters,” published in May by the New Press.

A version of this article appears in print on Sept. 24, 2017, on Page BU3 of the New York edition with the headline: The U.S. Still Leans on Military Production