Our 21st century military

Mark Thoma at Economist's View has some trenchant comments on the current professional army and its accompanying hordes of contractors.

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.