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Friday, September 21, 2007

Privatization of Military Services

"Timothy K. Hsia is an Army infantry captain on his second deployment to Iraq":

Iraq needs contractors, by Timothy K. Hsia, Commentary, LA Times: From the time a soldier wakes up until he goes to sleep, he interacts with civilian contractors. Most of the focus has been on personal security detachments, or PSDs -- the bodyguards, like Blackwater. But by some estimates there are as many of 180,000 contractors, and PSDs make up only a small fraction of them. The majority of the jobs are service support for the troops and are filled by non-Americans. The effect of these civilians in the Iraq war has yet to be fully examined, and the legacy of their role will affect how our nation fights its future wars.

The trash being sifted and sorted ... is ... by civilians working for Toifor Co. When [a soldier] walks to the ... recreation facilities, he is greeted by more civilians who run the gym. As he leaves the gym, he can see civilians stacking up the bottled water. When the soldier turns in his laundry, it is to an East Asian civilian... When he enters the dining facility, he is greeted by Ugandan security guards who work for EOD Technology. These Ugandans make roughly $1,000 a month, meager by U.S. standards but considered a small fortune in their country. They also provide security at the forward operating bases -- the largest camps -- because there is not enough U.S. military manpower to do so.

While preparing for a mission, the soldier can expect technicians from General Dynamics or other major defense contracting companies aiding Army soldiers in the upkeep and maintenance of essential equipment. He can expect his Iraqi interpreter to work for a contractor... In addition, many Filipino drivers are responsible for ensuring that most of the heavy equipment ... reach their destinations after they're unloaded in Kuwait. ...

The majority of all this civilian activity usually goes unnoticed on the bases by soldiers and even more so by U.S. taxpayers, who generally think their taxes only support the military forces. After the Vietnam War, most of the combat-support duties were transferred from full-time soldiers to National Guard and Reserve units. But today that structure has been undercut as civilians have taken over those jobs. And these civilian contractors in the non-security roles are only a degree away from what we have historically called mercenaries. They may not be carrying weapons, but they nonetheless assist, equip, sustain and maintain the military force in Iraq.

This war has demonstrated that there are not enough soldiers to equip and sustain a deployed force continuously for multiple years and deployments. Although the Defense Department has not released any official census on the total number of contractors, some reports have indicated that contractors already outnumber soldiers.

The revolution in military affairs envisaged by Donald H. Rumsfeld ... has occurred. The military can deploy with fewer soldiers and still achieve the administration's goals. Implicit in this revolution, though, is the reality that civilian contractors have come to take a significant, vital and cloaked role in the country's prosecution of a war in which Americans are fooled by the actual numbers required to carry out a war.

The Romans found mercenaries to be a quick-fix solution. However, a temporary fix became a more permanent force that the Romans used when they found their own legions had become too expensive -- economically and politically. Let us hope that the United States does not follow the fate of the Roman Empire in this regard.

The idea is that privatization will lead to efficiency gains. However, without effective oversight and competition, factors generally in short supply in war zones, it's not clear that the private contractors are less wasteful than the military. I think we've all heard the stories about problems with the work some contractors have done, charges of cronyism, and the like. In addition, the difference in salary between, say, a soldier trained to recalibrate a complicated piece of machinery and a private contractor doing the same job can be large. The private contractor must be paid a substantial risk premium to work in a war zone - think of some of the salary offers for work in Iraq - while a soldier does not. This also undercuts any saving from privatization (though it may say something about how well soldiers are compensated for the jobs we ask them to do). In some cases, as described above, cheap foreign labor has avoided this problem, but that is not always possible.

I am not opposed to the government purchasing goods and services from the private sector when there are clear advantages to doing so and when the tasks are sufficiently distant from combat. It's kind of dumb, for example, for the government to make its own pens, pencils, and paper instead of buying them from private sector firms. But war zones are areas where, by their very nature, the standard rules break down. We can't expect the ordinary laws of economics to apply in a war zone and discipline firms as though they were small wheat farmers operating in purely competitive textbook markets. Who do you turn to for redress if the materials you used to build something turn out to be inferior? Who will enforce contract law if a private firm underpays local labor it hires as part of its support function for the military? Who will make sure these firms don't take advantage of the locals or, perhaps, vice-versa? Even when locals aren't involved in any way, conditions surrounding the war make it so that there's little chance of private sector discipline from free entry and vigorous competition.

As we've seen with the PSDs, discipline is needed and the military, with its laws and codes built up over time is much better suited to the task (though by no means perfect itself). Somebody has to provide discipline and accountability, to make sure that rules of conduct are followed and people behave as honorably as possible under the circumstances. There is a role for the private provision of support for the military, but within war zones the military should maintain control when there is any question a all about the ability of the private sector to achieve a superior outcome, a condition that may be hard to meet.

Finally, as the article notes when essential services are privatized and both US and foreign firms are employed to carry out the tasks, if care is not taken in the reporting, then descriptions of the number of people needed to support the war will be misleading. The same is true for death and injuries. If care is not taken in reporting, these numbers will give a misleading view of the human cost of the war. It would be best if we didn't have to count at all, now or ever, but when we do we should accurately reflect the full costs of our actions.

    Posted by on Friday, September 21, 2007 at 02:52 AM in Economics, Iraq and Afghanistan, Regulation | Permalink  TrackBack (0)  Comments (33)


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