Productivity in the Military Industry

Moneybox
A blog about business and economics.
Oct. 23 2012 12:26 PM

Productivity in the Military Industry

As the president pointed out last night, one reason we have fewer ships than we had 100 years ago is that naval technology has changed. An aircraft carrier full of planes can replace a flotilla of older ships for certain purposes while being clearly superior for others. Carrier-based planes, for example, can project power much deeper inland than shore bombardment from battleships.

This brings to mind broader thoughts about the convention of referring to the funding of different public sector initiatives in terms of share of GDP. Many conservatives, for example, are upset that military spending as a share of U.S. GDP is far lower today than it was during the Cold War era. A conventional liberal reply is to note that the objective threat environment is very different. But perhaps a better way of looking at this issue is through the lens of productivity. If you have an industry where productivity advances slower than average then spending as a share of GDP needs to rise to keep quality constant. In education, for example, there's a lot of hype around Kahn Academy and the like but I've never heard a plausible story about how technology is going to substitute for kindergarden teachers. Maybe someday it will (never underestimate the robots) but for the foreseeable future at least maintaining a constant quality of kindergardens is going to require expenditures to rise as a share of GDP.

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In the military sector you see some interesting dynamics. Thanks to technology, we're way better at a task like "make this guy's house explode" than we used to be. First airplanes and then precision munitions and now unnmanned aerial vehicles have made this vastly cheaper and easier than it was in 1912.

But for other kinds of tasks, technology progress hasn't helped much. In particular "boots on the ground" occupation-and-administration of foreign territory suffers from a similar dynamic as kindergarden. People supervising other people is difficult and manpower intensive. If we want to maintain a roughly constant level of boots on the ground operations then spending as a share of the economy has to steadily rise, while if we're content to explode things from afar it can steadily fall.

Which is perhaps a roundabout way of saying that on both the military and civilian sides of the government, I think there's too much talk in D.C. about "budget math" and not enough talk about what specifically we're trying to accomplish and why.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

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