Are defense firms really public firms?

In 1969 John Kenneth Galbraith penned a piece for the New York Times titled The Big Defense Firms Are Really Public Firms and Should be Nationalized arguing, among other things, that it was folly for defense contractors to claim that they were private corporations. Such claims made a mockery of free enterprise.

 

Competition is supposed to be a hallmark of the acquisition system that we’ve had since the end of World War II, but with only two big firms–which is the case for some categories of military equipment provided by our industrial base–there is little competition in the traditional sense. In fact, this situation-two firms that divide market share-has a name: duopoly. Not monopoly, but duopoly-and it’s pretty tough to brand duopoly circumstances fierce competition…

 

The American public is led to believe that the DIB [defense industrial base] is unmatched in the broad applications of information technology. Not quite. An astonishing report by the National Defense University titled Bringing Defense into the Information Economy (David Gompert and Paul Bracken–March 2006) indicates that the Pentagon and its minions are still trying to figure out how to get into the information age. “One thing is clear [that] the phenomenon of increasing capability at declining cost now common in retail, financial services, telecommunications and other sectors remains uncommon in defense.” To that, DIB apologists retort that the defense industry is different. But Gompert and Bracken will not buy into the party line.

 

“Defense is different is a self-fulfilling excuse that perpetuates poor price-performance and deprives national defense of the benefits of larger, faster, more dynamic, and more inventive IT markets. It condones expensive adaptation and integration services. Moreover, by exaggerating the difficulty of applying IT to defense, this hypothesis legitimizes the ceding of government responsibility. It implies that the challenge of managing, adapting, and integrating IT into military capabilities is so daunting for DOD that it must be left to defense contractors”

That was from a CounterPunch article from 2006. Interesting to hear about the difficulty of doing IT back in 2006, and I could think of nothing that would make for slower transition to new technologies than fully nationalizing the defense industry.