New York Times - Economy

Economic View: The U.S. Still Leans on the Military-Industrial Complex

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.

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.

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, ordered 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.

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