On Defense Spending and Shadow WelfareThis is what happens when you take away the relationship between performance and accountability. It's why companies fail when they get too large, and it's why government should be kept on a check rein by those they supposedly 'serve.'
Posted by Ann Barnhardt - October 23, AD 2012 8:22 PM MST
It's amazing the things you can learn in a life if you just shut your piehole and listen. People ask me frequently, "How do you know all of this stuff?" This website is nothing more than the fruit of a life of near silence, which is required for listening, both auricularly and in the form of reading, which is the purest form of listening.
People look at the now-dead First American Republic's defense spending budget and despair. The amount of money being spent is massive and implies a massive federal income tax as a pure necessity in order to maintain any level of defense preparedness.
I have some good news (for a change) with regards to the issue of defense spending, and you all need to listen up because this will be another HUGE point to remember for after the collapse and war when you are rebuilding or building a new nation from scratch.
The major defense contractors spend at least ten times, and probably closer to twenty times what is actually needed on every project and contract. This is done with the full knowledge and at the command of the federal government.
The massive overspending is on man-hours. Major defense contractors such as Lockheed Martin, Boeing, Northrop Grumann, General Dynamics and Raytheon, in addition to supplying and developing technology for the military, are also massive middle-class shadow welfare projects. The top 25 US Defense companies directly employ roughly two million people. The top 5 US defense companies directly employ 550,000 people. Directly. This doesn't count the subcontractors to these companies.
These companies, as they operate today, have at least TEN LEVELS of largely unnecessary, redundant and even detrimental "management" between the scientists and engineers who are actually doing productive work and the actual upper management of the company. Further, these ten levels of "management" are each low six-figure positions. We're not talking ten levels of redundant janitorial staff at $12.00 per hour. We're talking TEN LAYERS of $100k-$250k positions.
And these people do basically nothing that is genuinely productive. In fact, they slow down the process of genuine development and productivity, hamstringing and bogging-down the work of the actual engineers and computer scientists who, ironically, dwell at the absolute BOTTOM of the corporate structure.
Because of this massive bloat in man-hours and horrifically reduced productivity, .gov is billed AT LEAST ten times, and it may be closer to twenty times, what it should be billed by these defense contractors to achieve the same results and innovation.
But before you pick up your torches and pitchforks, please understand that this is exactly what .gov WANTS. Like I said, this is all a massive middle-class shadow welfare system. The .gov explicitly drove these defense contractors into these uber-bloated management regimes in order to provide middle-class jobs. The sub-urbs of the Denver metro area and all other cities which have a sizable defense industry presence, are filled with these defense "management" employees. In other words, these are people who are totally dependent on .gov for their paychecks, and whose jobs are completely, totally unnecessary and have a negative net impact on productivity. Yay. Go America.
Defense is not the only area in the economy where these massive shadow welfare paradigms exist. As Warren Pollock pointed out in one of our YouTube conversations, almost all of the so-called "compliance" positions in the financial services and banking sectors are completely unnecessary and counter-productive. It could also be argued, and argued very, very well that around 97% of the accounting industry is also a .gov shadow welfare project revolving around nothing but the payment of federal income taxes, which shouldn't even exist in the first place. And finally, we should all understand that most of the health insurance industry is nothing but a .gov shadow welfare matrix. Health insurance should be catastrophic coverage only, and thus have an extremely small and streamlined back office labor requirement.
Why? Why did .gov do this? Because almost all of the true manufacturing jobs in the United States have been sent overseas. We MAKE very, very little actual, physical stuff here relative to population and consumption. This economy is now almost entirely a SERVICE economy. Sixty years ago all of the people who are today working in "management" in these defense companies and the other government-created shadow welfare paradigms were working in manufacturing, some in management, and some in actual fabrication.
From what I have heard, there are massive numbers of people working in these defense company management positions getting paid six-figure salaries who literally could not boil water or make themselves a peanut butter and jelly sandwich if their lives depended on it, and thus should be working on a low-skill assembly line somewhere, not browbeating Ph.D. engineers. I personally know that a large number of the people working in the financial services "compliance" regimes struggle to keep from drooling on their desks and when provoked have been known to throw their own poop.
The government created this shadow-welfare economy in order to replace all of the REAL manufacturing jobs that it consciously and willfully exported to China.
So, when it comes time to rebuild and establish a Department of War (not "Department of Defense") in the new Nation, these defense contractors will need to be told in no uncertain terms that there should be no more than three levels of management between the CEO and the engineer, and any contracts should payout as such. The only reason the defense contractors are creating these ridiculous management matrices is because the money is flowing from .gov to do it. Take away the money and the corporations will streamline almost overnight. Management levels 2-8 will suddenly, miraculously, almost as if in an epiphany, be recognized as non-essential. In doing this, you will be able to maintain technological and military dominance for a mere fraction of the cost. The talent is here. It can be done. The .mil thing isn't the impossibly large money-suck that it appears to be when you understand that the outflows to contractors are inflated by a factor of twenty.
Further, in the new Nation, whatever it is, you guys are going to have to start MAKING STUFF HERE AGAIN. Everything. Steel, electronics, textiles, furniture, vehicles, everything. Establish import tariffs which will generate revenue for the government and put Chinese slave labor behind the eight ball relative to domestic employment, productivity and manufacturing. The people who are currently employed in all of the shadow welfare industries I just mentioned will need jobs. Those jobs will be MANUFACTURING jobs.
23 October 2012
The costs of government: It'll make you sick
Reposted in full from our favorite spitfire: