President Dwight D. Eisenhower, “The Chance for Peace,” delivered before the American Society of Newspaper Editors, April 16, 1953:
Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed.
This world in arms in not spending money alone. It is spending the sweat of its laborers, the genius of its scientists, the hopes of its children.
The cost of one modern heavy bomber is this: a modern brick school in more than 30 cities. It is two electric power plants, each serving a town of 60,000 population. It is two fine, fully equipped hospitals. It is some 50 miles of concrete highway. We pay for a single fighter with a half million bushels of wheat. We pay for a single destroyer with new homes that could have housed more than 8,000 people.
This, I repeat, is the best way of life to be found on the road the world has been taking. This is not a way of life at all, in any true sense. Under the cloud of threatening war, it is humanity hanging from a cross of iron.
These plain and cruel truths define the peril and point the hope that come with this spring of 1953.
This is one of those times in the affairs of nations when the gravest choices must be made, if there is to be a turning toward a just and lasting peace. It is a moment that calls upon the governments of the world to speak their intentions with simplicity and with honest.
It calls upon them to answer the questions that stirs the hearts of all sane men: is there no other way the world may live?
Libertarian Counterpoint to “Privatizing Government is Bad Business”
By Arthur Burns
I largely agree with your conclusion that outsourcing government work to private contractors constitutes a waste of federal money due to the inflated prices paid for their goods and services. Private contractors who work with the government milk the treasury for billions every year, as you point out in your article.
The most blatant and egregious example is the often derided yet poorly understood “military industrial complex,” a group of private defense contractors that receive billions in lucrative government deals every year. Major corporations such as Boeing and Halliburton benefit greatly from these government contracts while lesser known defense contractors often rely even more heavily upon government contracts. A particularly notable example is the XE Services company (better known by its former name, Blackwater), which provides private security forces (i.e. mercenary soldiers) to assist with American military efforts in places such as Iraq and Afghanistan. These mercenary soldiers often receive six-figure salaries—several times the amount paid to members of the American military who fight side by side with them. Such a discrepancy is outrageous and wasteful.
Furthermore, multimillion dollar defense contracts are often given to private contractors in a “no bid” process, essentially meaning that the contractors can charge the government as much as they want for their services without needing to compete with other contractors for the job. Imagine if I ran a landscaping business and had “no bid” contracts with my clients. I could charge $100 dollars a week for mowing Mr. Jones’ lawn even though Billy down the street would be willing to do the same job for $30.
Defense contractors spend millions every year in political contributions and lobbying to ensure that they remain in the good graces of lawmakers and that their sweetheart deals keep coming. Thus the problem with private companies receiving government contracts is not so much an inefficiency or failure in the free market as it is a corrupt nexus between the public and private sectors whereby companies favored by the government receive sweetheart deals without needing to compete in a truly free market. While defense contracting is an easy example to discuss, this corrupt connection between the public and private sector extends to many different industries.
The close connection between the government and the financial services industry has been especially apparent in recent years with the Troubled Asset Relief Program, the government backing of Fannie Mae and Freddie Mac and constant efforts by the Federal Reserve to prop up the big banks. With big banks receiving special treatment from the government, the free market is stifled and smaller banks without access to multi-billion dollar guarantees and a free flow of low interest loans from the Federal Reserve simply cannot compete with the “too big to fails.” Losses from bad business decisions are subsidized by the treasury while profits in good times are enjoyed by the bankers. This is hardly a free market system and constitutes crony capitalism at its worst. While the issue of government giving preferential treatment to big banks is more complex than the problem of granting “no bid” contracts to private businesses, they both undermine the free market by going against the principle of healthy competition.
There are many more examples of inefficiency due to the government giving preferential treatment to specific private entities. The recent “Solyndra-gate” scandal is a perfect example. The government provided a poorly run and unprofitable company with half a billion dollars in taxpayer money, only to watch the company fall into bankruptcy shortly thereafter. Massive government spending programs such as Obama’s stimulus bill are bound to allocate resources inefficiently and direct capital towards the Solyndras of the world, while directing it away from viable enterprises. Unfortunately, the misallocation of resources to Solyndra pales in comparison to the trillions of dollars thrown at the banks to keep them afloat when they should have failed as a consequence of their own excessive risk-taking and bad business practices.
Overall, I agree with your premise that the government wastes a lot of money giving deals to private contractors. I see this waste as an extension of the close ties between state and business interests that stifle rather than encourage a free market system. Government-backed private corporations are the antithesis, rather than the embodiment, of free market capitalism.
Arthur Burns studied Political Science at Columbia University and is currently working at an English training school in Jilin City, China.
