Then you set back and watch when the death count gets higher
You hide in your mansion as young people's blood
Flows out of their bodies and is buried in the mud.
- "Masters of War", Bob Dylan, 1963
War is a racket. It always has been. It is possibly the oldest,
easily the most profitable, surely the most vicious...It is the only
one in which the profits are reckoned in dollars and the losses in lives.
- "War Is A Racket", General Smedley Butler, 1935
Memorial Day is supposed to be a time for remembering our soldiers who have died fighting in wars. While we pay respect to the memory of these men and women who volunteered to serve their country and sacrificed their lives, let's also remember the segment of our society which actually profits from war - the defense contractors. These corporations have appeared to be largely recession-proof, continuing to post profits and pay out bonuses to their executives, although some are now beginning to lay off their non-executive workers.
Bob Dylan called them "masters of war" in his 1963 song, but Smedley Butler called them racketeers nearly thirty years earlier. Butler spent 33 years in the U.S. Marines, earning the Medal of Honor twice and rising to the rank of Major General before retiring in 1931 as the most decorated Marine at that time. After leaving the Marines, he became extremely critical of companies which profited from selling to the military, as well as those which he believed persuaded our government to use the Marines to stabilize countries for the purposes of business investments. In his 1935 book "War Is A Racket", he detailed how the profits of companies such as DuPont, Bethlehem Steel, and Anaconda Copper increased an average of 200 percent during World War I, and proposed paying "the officers and the directors and the high-powered executives of our armament factories...the same wage as the lads in the trenches get."
In 1961 another retired general, Dwight Eisenhower, gave his farewell address as President and explained how the relationship between the military and corporations had changed: "Until the latest of our world conflicts, the United States had no armaments industry. American makers of plowshares could, with time and as required, make swords as well. But we can no longer risk emergency improvisation of national defense. We have been compelled to create a permanent armaments industry of vast proportions." Eisenhower went on to warn us that, "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."
Today, Eisenhower's "permanent armaments industry" is so well ensconced that it apparently doesn't have to worry about minor things like obeying the law. The nonprofit Project On Government Oversight (POGO) maintains a Federal Contractor Misconduct Database showing companies which continue to win government contracts despite their histories of misconduct, including contract fraud and environmental, ethics, and labor violations. It should come as no surprise that the top 9 companies on the current list, sorted by amount of federal dollars, are defense contractors: Lockheed Martin, Boeing, Northrop Grumman, General Dynamics, Raytheon, L-3 Communications, United Technologies, BAE, and SAIC. Lockheed Martin is in first place, receiving over $38 billion in federal dollars during fiscal year 2009 despite 50 reported instances of misconduct since 1995. Their reported profit for that period was $3 billion. Of these 9 defense contractors, the one with the smallest number of violations is L-3, with 6; they made $901 million in profit on $7 billion of FY2009 federal contracts.
One reason, perhaps, that our government is reluctant to punish these corporations is the jobs they're supposed to provide as a form of military Keynesianism. John Maynard Keynes was a British economist who proposed using government spending to stimulate demand during times of high unemployment. The application of his policies in both FDR's New Deal and the military spending of World War II is widely believed to have pulled the U.S. economy out of the Great Depression of the 1930s. Following that war, government spending in the form of contracts to military suppliers (now euphemistically renamed "defense contractors") was seen as a way to continue job creation and prevent the return of a depression. The recent use of stimulus packages to counter our current recession has been called a return to Keynesian economics, but defense contracts have represented a system of permanent stimulus spending since the 1940s.
Unfortunately for the employees of those defense contractors, the continuation of two active wars and large Department of Defense budgets may no longer translate into job stability. A recent article in The Hill reports that some of the same profitable defense contractors in the POGO list are now laying off large numbers of employees. Lockheed Martin's Mission Systems & Sensors (MS2) division recently reduced its workforce by about 972 employees through a combination of voluntary packages and involuntary layoffs; a spokesman said they needed to "size its workforce to meet projected workload and remove redundancies." Raytheon says it needs to lay off 225 workers in Arizona to "achieve the right mix of talent to remain competitive in the marketplace." BAE is laying off 610 workers in Ohio and 373 in Tennessee because the "major spike" in military contracts due to the wars in Iraq and Afghanistan "has now passed and we are adjusting our workforce levels." The L-3 Communications division in impoverished Camden, NJ announced a layoff of 65 workers in April "to make our products and services more affordable in today's competitive environment."
However, the Hill article also quotes David Berteau of the Center for Strategic and International Studies, who points to another reason behind these layoffs; "defense companies, responsible to their stockholders, must keep profits high enough to compete for capital as they anticipate reductions in the defense budget." It's not that these corporations are at risk of not turning a profit; it's that the profits must be "high enough" to satisfy investors on Wall Street, even if that means cutting jobs at a time when the federal government, which provides the money for those profits, is trying to create jobs to bring the country out of recession.
These jobs being cut are some of the relatively few remaining for skilled workers such as scientists and engineers that are somewhat immune to overseas outsourcing. Most defense contracts require employees to hold security clearances, which are only available to U.S. citizens.
This Memorial Day, as we honor the patriotic sacrifices of our soldiers during times of war, perhaps we need to begin demanding some patriotic sacrifices by the executives of our defense contractors. Have they started looking in the mirror to see if they can "remove redundancies", or considered reducing their multimillion dollar compensation packages to make their companies' products "more affordable"? If they're not willing to do so, then perhaps taxpayers should begin questioning why their money is used to subsidize for-profit corporations which are no longer willing to hold up their end of the bargain by providing stable jobs for the middle class. The public rage at "government bailouts" of banks and auto makers could pale compared to what should be an even larger rage at the decades-old government subsidy of the defense industry. It's time to look closely at "too big to fail" corporations like Lockheed Martin and Northrop Grumman and consider either breaking them up into smaller, less powerful companies or nationalizing them so that the taxpayers can purchase what the military truly needs at cost, without paying the additional cost of executive bonuses, profits to Wall Street investors, and layoffs aimed at keeping those profits as high as possible.
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