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Saturday, October 27, 2007

Private Contractors and War

Tyler Cowen:

To Know Contractors, Know Government, by Tyler Cowen, Economic Scene, NY Times: Allegations of misbehavior by employees of Blackwater USA in the shooting deaths of 17 Iraqis have brought the military’s use of private contractors into question. But whatever the possible sins of the Blackwater firm, the overall problem is not private contracting in itself; ... but rather ... the sins and virtues of their customers, namely their sponsoring governments.

It is easy to rail against contractors for holding money above loyalty to country; Halliburton, for instance, has been a target of this criticism. But... private ships licensed to carry out warfare, helped win the American Revolution and the War of 1812. ... Today, many of our allies receive payment, either implicitly or explicitly, to support American efforts. War is, among other things, an economic undertaking, so the profit motive in military affairs isn’t always bad or ignoble.

When it comes to supplying troops, or protecting high-ranking officials, private military contractors often offer greater flexibility and rapidity of response. The employees, many of whom are former soldiers or operatives, tend to have more experience than current, mostly younger soldiers.

The recent comeback of private contracting suggests that central governments have become weaker again, at least relative to the tasks they are undertaking. Alexander Tabarrok ... traced the history of private contractors in a study, “The Rise, Fall, and Rise Again of Privateers” (The Independent Review, spring 2007 ). He showed that public navies and armies began to displace private contractors in the 19th century, as governments became more powerful and better funded.

Today, America no longer has a draft, its military bureaucracy can be inflexible and the public wishes to be insulated from the direct impact of war. Contractors are a symptom of government weakness, but are not the problem itself. The first Persian Gulf War, which enjoyed greater international support, was not reliant on contractors to nearly the same degree.

Among many Iraqis, Blackwater and other companies have a reputation for getting the job done without much caring about Iraqis who get in the way. But part of the problem may stem from economic incentives. If Blackwater is assigned to protect a top American official, who is later assassinated, Blackwater may lose future business. A private contractor doesn’t have a financial incentive to protect Iraqi citizens, who are not paying customers. Ultimately, this reflects the priorities of the United States military itself. American casualties are carefully recorded and memorialized, but there is no count of Iraqi civilian deaths.

It is harder to recognize when private contractors are being underemployed. During the Rwandan civil war in the 1990s, the United Nations debated using two private contractors, Executive Outcomes or Sandline International, to intervene. The U.N. rejected the notion and instead turned to a poorly trained Zairean police contingent. We’ll never know how private contractors would have fared, but the Zaireans were ineffective; some 800,000 Rwandans were murdered.

Yet the use of contractors is not a free lunch.

Compared with the military, contractors are not subject to direct scrutiny by Congress and they are not covered by international law with the same clarity. Excessive use of private contractors erodes checks and balances, and it substitutes market transactions, controlled by the executive branch, for traditional political mechanisms of accountability. When it comes to Iraq, we’ve yet to see the evidence of a large practical gain...

When private contractors are combined with government troops, the contractors usually can’t do much better than the setting in which they are asked to perform.

When things are going well and the “good guys” are in control, the flexibility and experience of military contractors can make things go even better. But when the environment is hostile and events are spiraling out of control, the incentives of private contractors may lead to many mistakes.

Note that a serious issue for Blackwater — the allegations about needless deaths of innocent civilians — has also been an issue for United States government forces from the beginning of the conflict.

Most of all, contractors are appealing when a victory is possible in relatively quick order. The potential accountability problems won’t linger for long; conversely, few contractors will look good when a conflict runs on for years.

Currently, the chances of establishing a stable Iraqi government appear quite low. ... If so, we should be cutting back on private contractors, as the critics are suggesting, because there is no desirable end in sight. Of course, those same reasons suggest troop cutbacks as well.

In the next conflict, however, the temptation to use contractors may again be strong. What if private contractors offer a real chance of making a positive difference? ...

Private contractors may not respect virtue for its own sake, but like most businesses, they will respect the wishes of their most powerful customers, in this case governments. What is wrong with Blackwater may, most of all, mirror what is wrong with Uncle Sam.

    Posted by on Saturday, October 27, 2007 at 05:04 PM in Economics, Iraq and Afghanistan, Market Failure | Permalink  TrackBack (0)  Comments (56)


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