America's misplaced militarization of high technology

Robert Kuttner

January 29, 1991|By Robert Kuttner

SINCE America began developing the stunningly effective, ultra-high-technology Patriot and Tomahawk missiles, America's hold on global consumer electronics production has shrunk from 70 percent to just 5 percent of world markets. How can American technology be so advanced in the military realm and so retarded commercially?

The answer has to do with America's priorities. Where military supremacy is the goal, the government has spared no expense. But where research and deRobertKuttnervelopment aimed at commercial prowess are concerned, not only is there less public subsidy, the entire exercise is considered illegitimate. Commercial advantage is supposed to be determined by "free markets" untainted by government liaison.

Of course, our free-world allies (who are also our commercial rivals) don't buy this view of the world. Their governments are actively involved in helping their firms create commercial advantage. Their trade and industrial -- and their financial -- policies are also aimed at economic rather than military supremacy.

In this respect, the Persian Gulf war is the continuation of a serious imbalance in American national goals, as well as an imbalance in the international sharing of burdens: While we provide military protectorate, our allies tend their economies.

Even worse, both the United States and its allies are quite comfortable with this division of roles. The Germans and Japanese, with their ugly militarist pasts, are delighted with their postwar roles as born-again pacifists and commercial virtuosos. Their constitutions, imposed half a century ago by American occupation, prohibit them from sending troops (though evidently not from sending chemicals or machine tools -- but that's another story). And America, despite its diminished circumstances, is all too pleased to be the Last Great Superpower.

Despite the United Nations resolutions and the paper coalition arrayed against Saddam, this is primarily our grand strategy and our war. If the issue of an early shooting war versus stepped-up sanctions had been put to an open vote -- rather than having been resolved by Secretary of State James Baker's weeks of one-on-one arm-twisting -- most of our allies would have voted to continue sanctions. But Baker prevailed. To invert the proverb, he who gets to call the tune gets to pay the piper -- and pay we will.

Even so, it is instructive to inquire why the remarkable engineering prowess that builds Patriots, Tomahawks, Wild Weasels and Stealths doesn't spill over into high-definition television sets, laptop computers or Walkmans. The reasons are complex.

One reason is that military technology keeps getting more rarefied. Two generations ago, a great deal of technology produced by World War II did help engender commercial leadership. It was no great trick to convert the Air Force's first jet transport -- subsidized as it was by tax dollars -- into the first Boeing 707.

But the technology that permits a missile to climb down an air chute or an F-117 to evade radar has limited civilian application. And today much of the military's most advanced technology is too highly classified to be allowed to freely spill over. The military establishment's supercomputers that design nuclear weapons can beat any computer the Japanese sell. But in many cases the government considers them literally too sensitive to be allowed on the commercial market.

Moreover, when Pentagon officials correctly insist that if we lose the whole semiconductor industry to commercial rivals there will be no American producers left to manufacture the innards for those splendid missiles, they quickly become accused of hawking generic "industrial policy" -- an ideological no-no. Craig Fields, the brilliant director of the Defense Advanced Research Projects Agency, lost his job last year for precisely this heresy.

Finally, the militarization of high tech, in response to American national priorities, creates an unfortunate technical subculture largely antithetical to the requirements of commercial success. Most military contracts are let on a cost-plus basis: Get the thing to fly, and hang the expense.

Barring extreme overruns, there is monopoly on both sides of the transaction -- one buyer (the Pentagon) and one seller (the prime contractor). This is not exactly an optimal condition for efficient production. Indeed, in the world of military production, the contractor maximizes his income by maximizing his unit cost. By contrast, commercial life is a turbulent sea of potentially infinite competition, in which you maximize profit by expanding markets and reducing unit costs. Sony does not prosper by making $600 toilet seats.

After all, even the Soviet Union, hardly a hotbed of efficient production, was able to build Scud missiles that can intermittently penetrate American technology. It did this by throwing money and engineers at the problem, despite its terminal incompetence at serving consumer markets.

American high tech has a less extreme case of the same disease -- and for the same reason: excessive militarization. That is partly why the Japanese are eating our lunch.

Even if we eventually whip Saddam Hussein, who surely deserves to be whipped, historians will regard the early 1990s as a moment when America took its eye off the ball. With the demise of the Cold War, there was a brief window in which to share global responsibility for keeping the peace and to redirect our attention to a lagging commercial economy.

We have, instead, foolishly launched a second era of militarized Pax Americana. As we watch the devastating effects of this war, we will continue to do so on Japanese televisions.

Robert Kuttner writes regularly on economic matters.

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