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Saturday, September 17, 2005

Base Closures

Feel Protected?

USA Today reported on Thursday, President Bush endorsed the closure of 22 military bases and reconfiguring of 33 others. If I were to think the role of government was to protect my property and me I would not see this as a good thing. I doubt any one really will even if they didn’t think of the government as a protective state. In some cases I think more is better than less. I want what is mine to be protected and keep safe from all who wish it harm or wish it to be there own.

"The Defense Base Closure and Realignment Commission said that this plan would have an annual savings of $4.5 million, instead of the $5.7 million it had originally suggested in May. "
While I am all for saving money that is mine to begin with, I think I might have considered this expense worth while. This amount was already being "forked out", so there would be no real change and that would be just dandy! However, I might have a problem if you decided to tax me to reconfigure those 33 bases. I like my protection to cost me as little as possible, thank you very much.

What I find ironic about this whole thing is, "Congress reluctantly authorized this round of closures only after the White House threatened to veto an entire defense bill if it did not give the Pentagon the go-ahead."

Comments:
Congress has a habit of requiring the military to base certain things in certain places. This limits the ability to reconfigure operations.

One example of a base closing is the plan to close Walter Reed hospital, built about 90 years ago, in its current location. The work done there will be moved to a new Walter Reed which will be co-located with a much larger hospital outside Washington DC. This is very similar to what many private hospitals have done, rebuild and consolidate rather then renovate the older smaller buildings. The alternative, without the permission to close the existing facility, would be to rebuild it there, or live with an outmoded building. Does the current plan seem like a good one?

The initial plan was to consolidate all major submarine maintenance into a single base. In that case the base closing commission decided that it was worth the extra cost to maintain the existing multiple base strategy. The base closing plan is extensively reviewed by each group that looks at it.

There are no P51 fighter squadrons or mounted calvalry bases anymore. As technology has evolved, some older style units are replaced or eliminated.

The Air Force now uses precision guided bombs. This means that one bomber can destroy more targets than an entire wing could destroy before 1970 or so. In fact, it means that one B52 can provide close air support for a large region, which is a radical re-use for a very old platform, but also eliminates the need for quite a large number of traditional fighter aircraft and a corresponding number of pilots.

An F18 fighter costs more to buy, but about half as much to maintain as an F16 and has less down time. Therefore, fewer fighters can do the same job, and require fewer maintenance workers per plane. This permits existing fighter wings to shrink.

How should we allocate resources within the military? Should it be controlled by statute (very hard to change) or should it be controlled by managers responsible for executing the missions of the military within a budget?

Inability to close or shrink bases would be similar to the effect of a law that prohibited large corporations from closing any large factories. This might be convenient for the workers in an existing factory, but how would that affect efficiency and competition? Is this really a valid analogy?
 
The current plan to me seems like a generally bad idea. If I want protection I would want more bases. However, the 33 bases being "redone" are a good idea. I like the idea of bases being upkept and protected themselves. However I don't want to pay for it, but given our government I probably will.
I believe that we should allocate resources to the military because we do require protecting. I think the market can show us if we are effiecently allocating resources or not, and if not them the government can correct it. However the government in office (be it republican or democratic) will "influence" the resources to be over allocated.
I can't see why anyone would want to enacted a law (not sure of what law you speak of that would do this anyway) that keeps a base open indefinitly. The market will tell us if its no longer of any use and should be closed, just as the market will tell us if a business if not producing and is no longer needed in the market. Other wise we are ineffienct and allocating resources where they are not needed.
 
How does "the market" influence military base operations?

The market force I am accustomed to requires that the users of a good or service must choose whether or not to pay for it, and providers whether or not to offer it. If service is bad, we take our business elsewhere. If it has no profit, then we don't offer it.

If a military base is not useful, but the law requires that X troops must be based there, then how can business be taken elsewhere?

In many cases Congress uses military spending as a way to funnel money into their districts. This is classic pork spending. I can recall our town being given a large sum of money that had to be used for straightening curves on roads. A potentially useful thing, but when parts of the road were sliding into the lake, our road crew would have preferred to fix the larger danger. This is a classic example of spending directed by statute, not by the needs or desires of the consumers.

Our military spends quite a lot of money already, some of it quite efficiently. This is partly because there is a large degree of altruism among our troops. Many of them could earn far more on the open market. The contractors that fill in for some of our troops get paid over 10 times what the troops get paid. There is also a fair degree of market force when a commander is given a mission and a limited budget and they they can choose to spend the money carefully. However, if incentives are put in that tend to encourage inefficient spending (use it or lose it budgeting, for example) or even that outright mandate it (funds allocated for a specific project or expense, regardless of the user's perception of need), then some very strange and inefficient choices will be made.

I think that pork barrel spending is a particularly vicious form of externalization of costs.

Can a market governed so heavily by externalized costs operate efficiently? Am I using this term correctly?
 
On the topic of what defense spending is worth:

How can we measure the value of military preparedness? Would it be efficient to use $20million missiles to destroy low value targets? Would it make sense to devlope a $100 billion anti-missile system to defend Loss Angeles? If this were to be market driven, we would need to find a way to allow users to pay for protection by bidding for it, with contractors prepared to offer protection against hazards. This sounds to me like insurance.

A good actuary could figure out what the replacement value (as well as loss of use) of Los Angeles would be, Then figure out the probability of the catastrophe over time. Factor in the probability of success for the defense system. Then try to figure up the cost vs benefit tradeoff of such an investment.

This insurance contractor, would then have to figure up the balance sheet for other hazards (invasion, earthquake, floods, and so on) and allocate resources for those.

In practice, the uncertainties involved are so huge that I have never heard of any insurance company willing to accept that much risk. Observe that New Orleans has suffered several hundred billion dollars of damage, but the insured loss is a fraction of that.

I suspect that military planners may well do some of this sort of estimation, but it is necessarily imprecise. Then they must persuade Congress, which spends our money, not theirs, to do whatever will be done. While we do elect our representatives, we must do so based on their overall record, not any one issue. In short, any economic market forces are badly distorted.

Another factor is that people love to pay to avoid risk using other peole's (federal or state) money. Very often, they will not purchase flood insurance or earthquake insurance for even the value of their home, never mind for their property or those around them. As long as they believe that other people will pay, why should they set aside their own resources?
 
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