Who Stands To Profit From Another War?

Good Sam Club 500

Dan Froomkin eyes defense contractors:

Now, with U.S. forces literally blowing through tens of millions of dollars of munitions a day, the industry is not just counting on vast spending to replenish inventory, but hoping for a new era of reliance on supremely expensive military hardware.

“To the extent we can shift away from relying on troops and rely more heavily on equipment — that could present an opportunity,” Jack Ablin, chief investment officer at BMO Private Bank, whose $66 billion portfolio includes Northrop Grumman Corp. and Boeing Co. shares, told Bloomberg.

Defense contractor stocks have far exceeded the performance of the broader market. A Bloomberg index of four of the largest Pentagon contractors rose 19 percent this year, compared to 2.2 percent for the S&P 500.

The pricey F-22 made its combat debut this week:

[T]he F-22 is extremely expensive to operate and difficult to maintain. In 2013 the Raptor cost the Air Force about $68,000 per hour to operate once maintenance and other factors are added in, according to documents provided by the Center for Defense Information.

Daniel Altman wonders “whether the arms industry put its thumb on the scale”:

Even a short involvement in Syria will be exceedingly profitable; the first round of air strikes this week reportedly cost $79 million, more than India’s mission to Mars. To “train and equip appropriately vetted elements of the Syrian opposition,” as the amendment voted on by the House states, could cost much more, perhaps as much as $500 million.

So the arms industry had a lot on the line in Roll Call Vote 507. In the end, it passed easily. But those who voted for the amendment may have been much more beholden to the industry than those who did not. On average, the “Yea” voters had received more than $36,000 in contributions from the defense sector during the last campaign cycle, according to the Center for Responsive Politics. The “Nay” voters had taken only about $22,000.

Relatedly, Tom Z. Collina questions the utility of our vast nuclear arsenal:

As the New York Times reported on Sept. 22, the United States plans to spend about $355 billion on nuclear weapons over the next 10 years, and up to $1 trillion over 30 years. As they say in Washington, that’s real money. Yet these weapons play essentially no role in responding to today’s highest-priority threats. U.S. nuclear weapons did not keep Russia from taking Crimea. They did not stop the Islamic State from rampaging through Iraq and Syria. And Ebola? Yeah, right.

A quarter-century after the Cold War, spending this much money on nuclear weapons is simply not justified. But even if it was, the harsh reality is that the country does not have the cash to pay the tab.

(Photo: An F-22 Raptor. By Jason Smith/Getty Images)