The Business of War Part 1: The mighty defence industry

When a war is being planned by a government, you can bet the bottom line that arms manufacturers are there supporting it because war is where they make their money.

And as big as the war industry has become, so too is the taboo of speaking about it. Very few media organisations question the economic links between the companies that make money from war, and the decision to launch it.

As Dwight D. Eisenhower (the US President after WW2) announced during his farewell address to the nation: “We must guard against the acquisition of unwarranted influence, sought or unsought, by the military-industrial complex.” By “military-industrial complex,” he meant the size and influence of the businesses of war.

Although not solely a US phenomenon, the issue is certainly most applicable there. Simply put, the United States government spends about US$750bn every year on defence (war and national security) – about the same as the rest of the world combined.

This figure goes up and down depending on who is in government, and obviously whether the US is at war. But regardless of the circumstances, the Department of Defence gets a minimum annual budget of about $550bn.

The main companies that benefit from this defence spending are largely American – Boeing, Lockheed Martin, Northrop Grumman, General Dynamics and Raytheon. The only foreign company that comes close in revenue is BAE Systems from Britain.

The products they make include aircraft, ships, vehicles, weapons and electronic systems. The services include providing logistics, training, technical and communications support.

Inconveniently for those on the receiving end of war, 3.5 million Americans depend on defence spending for employment (including bureaucrats, armed forces and private employees).

The industry has a large presence in almost every state in the US, making it a large driver of the national economy.

Naturally, politicians in these states are very reluctant to vote for any cuts to defence spending if it means more unemployment in the short-term, and thereby making it harder to be re-elected (even though studies have shown cuts in defence spending would create proportionately more jobs in the long-term in other sectors).

Europe also feels the employment and military burden. Last week in France, the CEO of Airbus warned that if European governments were not going to fund US$8bn of a US$17bn cost overrun of the A400M military-transport plane project, he was going to end it, along with the 40,000 jobs that depend on it.

For the US though, it’s not just direct spending that sends taxpayer money to the arms companies. Half of the United States’ foreign aid budget (a term you might think means helping poor countries) actually goes to these arms companies who in turn supply America’s allies with equipment.

For instance, just before Christmas, President Obama signed into law $3bn in military aid every year to Israel (the largest recipient), 75 percent of which must be spent on US arms companies. A similar arrangement is in place with Egypt.

Foreign aid is not included in the defence budget. In fact, from all sources (including $30-120bn for interest on debt from previous wars) the US currently spends about US$1 trillion on military-related purposes every year (up 70% since 2002).

In a country where big business, politicians and regular folk are always calling out for ‘small government’ (meaning government spending should be minimal, and the market/business should be left to deal with the country’s needs), the taxpayer is permanently overspending to prop up these businesses.

There is certainly a case for supporting a weapons industry to help provide national security, or for a just and legal war.

However, the hypocrisy of ‘small government’ is alarming, and the size of America’s spending is unnecessary.

On top of the financial cost, the unfortunate reality is that the industry fundamentally needs war to survive – a concept that only exists on TV for Westerners, but destroys societies in many parts of the world.

As Eisenhower (himself a former Army General) later said in his speech, “Only an alert and knowledgeable citizenry can compel the proper meshing of the huge industrial and military machinery of defence with our peaceful methods and goals so that security and liberty may prosper together”.

In Part 2 tomorrow, we look at how private business profits not from making weapons, but from using them. These are the professional soldiers, formerly known as mercenaries, who now make a living working for private military companies.

By The Casual Truth