Writing in his New York Times Economic Scene column, economist Tyler Cowen says the use of private contractor to accomplish military objectives isn't automatically bad.
It is easy to rail against contractors for holding money above loyalty to country; Halliburton, for instance, has been a target of this criticism. But money isn’t the real issue. Few Americans would join the armed services without pay, and most American weapons are made by the private sector for profit.
Furthermore, privateers, private ships licensed to carry out warfare, helped win the American Revolution and the War of 1812. In World War II, the Flying Tigers, American fighter pilots hired by the government of Chiang Kai-shek, helped defeat the Japanese. Today, many of our allies receive payment, either implicitly or explicitly, to support American efforts. War is, among other things, an economic undertaking, so the profit motive in military affairs isn’t always bad or ignoble.
However, Tyler thinks the use of contractors is a sign of government weakness.
The recent comeback of private contracting suggests that central governments have become weaker again, at least relative to the tasks they are undertaking. Alexander Tabarrok, my colleague (and sometimes co-author) at George Mason University, where he is also a professor of economics, traced the history of private contractors in a study, “The Rise, Fall, and Rise Again of Privateers” (The Independent Review, spring 2007, www.independent.org/publications/tir/article.asp?issueID=49&articleID=631). He showed that public navies and armies began to displace private contractors in the 19th century, as governments became more powerful and better funded.
Today, America no longer has a draft, its military bureaucracy can be inflexible and the public wishes to be insulated from the direct impact of war.
In a way the use of contractors reduces the accountability of government. If George W. Bush had to use only uniformed US military personnel in Iraq then he'd have to implement a draft. But a draft would be so politically unpopular that he might be forced to scale back the US military effort in Iraq or to pull out entirely. Bush is in a weak position and therefore he uses contractors. So it makes sense on a certain level for opponents of the war to oppose the use of contractors.
Security guards, however, are often "mercenaries." A general or top Iraqi official for instance might be guarded by Blackwater employees. The critics have not shown that Blackwater employees misbehave at a higher rate than do U.S. soldiers, so the comparative case against Blackwater -- as opposed to the more general case against the war -- is mostly shrill rhetoric. It is possible to pay Blackwater employees bonuses for good performance rather than just give medals, plus they are on a higher pay scale in the first place. Nonetheless my judgment call is that issues of perception and accountability are important enough in contemporary Iraq that we should be using contractors less in these capacities (as the column indicated), but the temptation to use them is based on more than just sheer political abuse.
Contractors lower the cost of good operations, contractors lower the operational (but not social) cost of bad operations, contractors magnify the costs of mistaken Executive preferences, and contractors can raise new problems of monitoring. If you don't think the first item on this list is at work, there is good reason to cut back on contractors in Iraq.
It is worth noting that soldiers from some other countries that are serving in Iraq are in a sense contractors to the US government. A glance at the list of Multinational Forces In Iraq shows odd entries such as El Salvador, Mongolia, and Kazakhstan. Their presence represents political deals with the United States where they sent forces in exchange for favors or influence or aid. We pay for those forces even if the payments don't come in the form of contracts with private companies.
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