IAAM: Business is A’Boomin!

Brad Pitt
(Inglourious Basterds)

Inglourious-Basterds_lThe business of war has its ebbs and flows and right now it certainly is flowing.

For awhile the military industrial complex was a bit concerned. Withdrawal of troops from Iraq and Afghanistan coupled with the effects of the “fiscal cliff” and sequestration meant significant cuts to the US Department of Defense. Most of the big players were readying layoff notices by the thousands. But with Senator John “not a country I don’t want to attack or invade” McCain leading the charge companies tabled the pink slips. The White House simply said be patient and don’t add to the unemployment rate.

When most people think of the military industrial complex such companies as United Technologies, Northrup Grummon, Raytheon, General Dynamics and Boeing come to mind. The producers of artillery, electronics, missiles, ships and aircraft, the weapons of war, are the most obvious.

An inside look at the biggest of these, Lockheed Martin (LMT), is warranted. The annual report for 2014 declared sales of $45.6 billion. Considering the average arms sales for Lockheed was 78% of total sales one could say that LMT has a big vested interest in war.

Would it, however, surprise you to learn that honey like crap attracts flying insects. In this instance, the largest military budget in the world, the United States, has attracted not just the major arms dealers but also every ancillary product that makes war possible.

A brief list, the obvious:

  • Hummers and Humvees-AM General
  • Light all-terrain vehicles-Oshkosh
  • Heavy trucks-Ford

The not so obvious:

  • Communications-Verizon
  • Uniforms-Marlow White
  • Gloves-Damascus
  • Eyewear-Oakley

With the apparent downsizing of the military the question was raised what to do with all the implements. For awhile, again led by McCain and associates, much was sold or given to the so-called freedom fighters of Libya, Egypt, Yemen and Syria.

When it was found that all this weaponry and support paraphernalia was ending up in enemy hands, especially ISIS, the strategy changed.

Police forces in the United States from the smallest town to the largest city found themselves the recipients of discarded hardware, machine guns to ATVs.

Many Mideast war vets have concluded that Officer O’Toole in Mesa is better armed and more body armor than the vets were during the Gulf War.

Of course, if war stock has been depleted and the need has arisen, then it’s time to rearm.

Over the past year we have watched with shock, the military industrial complex with glee, as hot spot after hot spot has flared up. From the Ukraine to Iraq, Syria to Yemen we are redeploying, rearming and giving aid.

In addition, both Russia and China are flexing their muscles as assertiveness is starting to become the reaction to the US military strategy which seems to know no restraint. After all, the rationale goes; we are at war with terror.

Just recently the US House of Representatives approved a $3.8 trillion budget blueprint that included $20 billion extra in war funds, meaning the arming of so-called freedom fighters. The White House called this budget “draconian”. How could we defend ourselves with such a measly budget they asked? They wanted $51 billion in war funds. Of course, off the radar screen was a little known passage of a resolution to send legal aid to the Ukraine where we deposed the elected President. Perhaps the Ukrainian dollar amount will only reach a few billion dollars a trifling in the total military picture.

Whether it’s rearming the military around the world for the conflicts ahead or changing the face of the police force in our own shores, the military industrial pie is getting bigger and bigger. That puts a smile on the faces of those who benefit from war for a living.

That’s because


Written by
With his passion for economics Bill Tatro has been entertaining audiences on the radio and in seminars for decades. Bill is an economist that provides weekly paid content to subscribers, and offers a free daily "lite" version as well.