defense contrators

An email exchange with a defense contractor (or is he on the government end of defense contracts?) on my LRC piece.

He's light blue. The rest is me.

First let me apologize for taking so long to respond.

A different piece I wrote was published last week at Mises.org and got a HUGE response, so I've been swamped.

But I also moved your message to the end of my queue because I knew it would require care and thought.

B.K. Marcus thank you for - Straw Men & Ham Sandwiches

I found it enlightening.

You're welcome and thank you for the kind comment.

One Question: you say

"This capitalism, political capitalism (which we pro-capitalists sometimes call mercantilism, corporatism, state capitalism, crony capitalism, or even fascism), is something we and the anti-capitalists can agree on: it is the exploitation of the productive class by a parasitic class. We might even surprise them with our sample list of parasites: defense contractors, the banking cartel, the steel industry, big agribusiness, Halliburton ... "

I do not understand why you include defense contractors. Having worked in defense all my career, I perceive them to be a disadvantaged lot, struggling under the thumb of a monopoly customer with an anti-profit bias, competing intensely with each other, sometimes going bankrupt.

Also, the people I work with have been some of our nation's the finest minds.That's why our weapons are the world's best.

So where is the privilege?

"A vital element in keeping the peace is our military establishment.... [but] 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."

-- General-turned-President Dwight D. Eisenhower, 1961,
three days before leaving office

I will confess that defense contractors are so readily thought of as privileged industry that it never occurred to me I'd have to defend their inclusion in my short list. Even Eisenhower -- certainly a friend of the US military -- was suspicious of the industry's political influence.

But of course "the established wisdom" doesn't count as an argument (and in fact the "Argument By Authority" is another well-known fallacy), so I'll try to address the status of the defense industry from scratch.

In my LRC article, I say, "The economic means to wealth involves convincing people to voluntarily part with what you want more by offering them what they want more." You will acknowledge, I trust, that this does not describe any industry supported or subsidized by tax dollars. Neither does it describe any industry or firm whose profit position is positively affected by restrictive legislation -- tariffs, licensing laws, or outright bans.

Even if we believe that the military monopoly is necessary and justified, we can't include military expenditures in the category of the free-market economy, any more than we can claim that we have a free market in courts or police services.

But you ask "where is the privilege?" -- implying that you reject my description of the alternative: "The political means to wealth involves the organized use or threat of violence..."

You might argue that the politicians, "civil servants," and lobbyists are pursuing the political means, but that defense contractors themselves are only providing goods and services and are in no way participating in the network of ever-growing coercion that is the Welfare/Warfare State.

I'm sure you won't deny that there is lobbying, favor-seeking, and general political manipulation on the part of some defense contractors. Your point must be that not all defense contractors are involved in these clearly political means. If that's your claim, then you'll want to argue for a third category, neither free-market private sector, nor coercive political sector, but something that is itself private and peaceful while accepting the coercively acquired funds of the military monopsony (the technical term for "monopoly customer").

Is this your argument? That peaceful, non-lobbying defense contractors may not be a free-market phenomenon, but neither are they political privilege-seekers?

I will continue to think about this.

Thanks for your letter.

laissez faire,
bk
http://bkMarcus.com/blog/