In the words of the great economist and engineer Seymour Melman, we live in a “permanent war economy.” Since the end of World War II, the federal government has spent more than half its tax dollars on past, current and future military operations. It is the largest single sustaining activity of the government. Melman pointed out 25 years ago that, at the time, the Pentagon was paying for 37,000 industrial firms, which oversaw over 100,000 subcontractors. Then and now, Pentagon contracts come with 1) guaranteed profits (because the products are typically sold before they are produced); 2) institutionalized cost-escalation (cost overruns are business-as-usual); and 3) products that are neither goods nor services the citizenry produces and consumes. Balance sheet calculations are not relevant to weapons manufacturers and military corporations. The Pentagon is not playing by the economic rules of producing goods, selling them for a profit, then using the profit for further investment and production. The managers at the Pentagon know their financial capital – American’s taxes – is a cash cow waiting to be milked.
Or should we say bilked? American’s hand over their hard-earned dollars to the deciders in Washington who protect the permanent war economy. The military industrial complex has tentacle that spread throughout the Congressional districts in the country. Military installations, private contractors and weapons manufacturers employ people to build cluster bombs, unnecessary war planes, naval destroyers, the next generation of nuclear weapons, “kill vehicles” for space missiles, and more efficient spy satellites. Congress continues to appropriate funds to create weapons systems that range from being obsolete, to those having no hope of ever functioning, to those promising to kill more efficiently, to those promising to allow the U.S. to be the “Masters of Space” through military domination by space-based weapons.
This work often provides union jobs and health benefits (both of which are “endangered species” in America) and the false hope of job security. Local communities defend the jobs (if not the corporations) when there is a threat of loss, knowing that America has few other industrial jobs, and the service sector doesn’t provide the same standard of living.
Meanwhile, military contractors’ CEO compensation is unregulated and obscene. The door revolves between the halls of Congress and the military industrial complex’s “private sector” boardrooms. [Question: If a CEO’s compensation comes primarily from the taxpayers of America, can it still be stated that he works for the “private” sector?] It’s a sweet deal as long as Americans stay afraid of an enemy, there is minimal oversight of cost overruns or failed weapons systems, and questions of ethics, morality, and effective foreign policy are ignored.
Lax oversight is a tired, old issue. Melman reported twenty-five years ago that in 1978, the Pentagon’s top management misplaced, lost track of, or misappropriated $30 billion in one of its “auxiliary operations.” News of the missing funds got almost no public or media notice. There was no public outcry. Fast forward to $100 billion lost by Paul Bremer in the early months of the war in Iraq. Again, the loss of this obscene amount received little media attention and no public outcry. Meanwhile, those of us who bear witness to the plight of the homeless people in our communities, who join the growing numbers of citizens without health insurance, who watch our elderly friends make choices between food and medicine to stay alive, who watch the states struggle to cut basic support from our vulnerable neighbors… faithfully make the lists (with no small amount of outrage) to educate our neighbors about what we could have done with that $100 billion Paul Bremer chose to toss to the winds.
The Democrats in Congress have begun oversight hearings on some aspects of the abuse of federal dollars by military contractors since we invaded Iraq. Unfortunately, their response to President Bush’s next appropriation to continue the occupation of Iraq is to recommend $5 billion more than the $93 billion requested! 
A project the Democrats will not investigate is also one of the clearest examples of continued funding of a failed system. President Bush deployed the missile “defense” system in Alaska and California in spite of the fact that the series of ($100 million each) tests prove they don’t work! There is controversy about whether Boeing misled Congress in its report about the actual results of testing the “kill vehicle” component of the system, and recently questions emerged about whether the oversight report by the General Accounting Office is completely credible. Nevertheless, the systems and the infrastructure are in place to keep the research, development, and production dollars flowing for the next two decades – effectiveness be damned! The current estimates say this system will cost $250 billion over twenty years.
A recent Military Industrial Complex scandal appeared in the media in December 2006 criticizing – of all groups – the U.S. Coast Guard! It’s modernization program called Deepwater has been called “a mistake of colossal proportions, with …billions in cost overruns, suspended programs and ships that are downright unsafe to be at sea…” The contractor is a joint venture between Lockheed Martin and Northrup Grumman, two of the most profitable military corporations in the world. (Robert Stevens, the CEO of Lockheed Martin was compensated $15.7 million in 2006). The estimated $17 billion cost of Deepwater ballooned to $24 billion, and “not one of the 24 ships, 12 lanes and eight unmanned vehicles that were supposed to have been delivered by now is available for service.” In editorializing about this fiasco, our local newspaper reported that the private contractors routinely ignored or overruled the concerns of Coast Guard engineers; that the Coast Guard did not seek help from Congress for oversight fearing they would lose funding; “but the biggest error was ceding almost total control of this vital national security effort to the companies that make money from it.”
The corruption and depletion of our resources – indeed our souls – must come to an end. Time is long overdue to engage the conversation about how to move from a permanent war economy to a permanent peace economy. Seymour Melman’s 2003 article “In the Grip of a Permanent War Economy” clarifies this reality (http://www.swans.com/library/art9/melman01.html). He then tells the story of the New York City Transit Authority effort to spend between $3 billion to $4 billion on subway cars. City government put out a request for bids and not a single American company responded. The industrial base in this country no longer manufactures what is needed to maintain, improve, or build our infrastructure. Instead, the city contracted with companies in Japan and Canada to build its subway cars. Melman estimated that such a contract could have generated, directly and indirectly, about 32,000 jobs in the U.S. Imagine an American production facility and labor force that could deliver six new subway cars each week, 300 subway cars each year, replacing in 20 year cycles the 6,000 rail car fleet of the New York subway system. Why can’t that happen here in the U.S.A.?
Another story: A shipyard in the town of Ringkobing, Denmark went broke in 1999. Vestas Wind Systems, a private company, moved in and converted the facilities to make windmills. In April of 2001, Business Week Online reported that the company had doubled its initial workforce, and that all the shipyard workers had become employed making windmills. Vestas leads a cluster of companies that have made Denmark, with a population of 5 million people, the world’s top producer and exporter of windmills. Wind industry supplies about 13 percent of Denmark’s power, and in 2001 controlled about 50 percent of the $4.5 billion global wind market. The company sees that wind is gaining ground over other renewable sources, and may very well become the green power of choice for the 21st Century.
It is possible to create industries, here on our own soil, that build something other than weapons. Other countries can figure out how to make consumer goods that serve the greater community, keep their workforce productive, and work to prevent global warming. The U.S. can surely do the same.
It is time for us in the peace and justice communities, in our religious and spiritual communities, in our workplaces, on the streets of our neighborhoods, and walking through the halls of Congress to demand to put an end to the permanent war corporate welfare state. It is time that we build an industrial base in our country that rebuilds our physical infrastructure (roads, bridges, public transportation, schools), pays a living wage, and provides for the health and welfare of our citizens. Time is long overdue to convert from a war economy to a peace economy. Read Seymour Melman. His research will help show the way.
Mary Beth Sullivan is a social worker in Maine working as a community organizer with homeless people. She also serves as the administrative assistant for the Global Network Against Weapons Nuclear Power
 See http://www.faireconomy.org/reports/2006/ExecutiveExcess2006.pdf for the Institute for Policy Study’s 13th Annual CEO’s Compensation Survey titled “Defense and Oil Executives Cash in on Conflict.” It notes that since 9/11, the average pay for the 34 top military contractors has increased from $3.6 million to $7.2 million. While the average army private makes $25,000/year, the average military contractor CEO makes $7.7 million.
 As I am editing, the news flash of the day tells me the Democrat’s are proposing to increase the
appropriation by another $25 billion!