THE BLOG
12/18/2008 05:12 am ET | Updated May 25, 2011

Industrial Base

Thought you'd heard every conceivable reason for a Detroit bailout? Think again. From an op-ed by retired General Wesley Clark:

"Some economists question the wisdom of Washington's intervening to help the Big Three, arguing that the automakers should pay the price for their own mistakes or that the market will correct itself. But we must act: aiding the American automobile industry is not only an economic imperative, but also a national security imperative."

So once again, the specter of national security raises its ugly head for the justification of a questionable government action. Clark goes on to cite the success of the Humvee, that four-wheeled star of the Gulf War, as an example of how GM's innovation helps drive national security. But a close look at some examples closer in time tells a very different story. Nearly all of the designs for the latest generation of armored vehicles are taken from original plans by overseas companies. General Clark is right that American civilian auto production didn't have to divert much capacity to meet the need for new MRAPs -- the sad truth is, the Big Three could have done so even if they wanted to, because their product lines are too clunky and not agile enough to meet that kind of short-range demand.

The hard truth of the matter is that truly innovative ideas, which could be "game-changers" on the battlefield, have been AWOL from Detroit's methods of operation for some time now. Clark goes on in his op-ed to harp on the need for new hybrid powerplants and electrical generation capability in the next generation of military vehicles, while conveniently ignoring the fact that nearly all of the innovative work in this field right now is being done outside of the United States. The general seems to believe that a focused military investment in this area will bring a huge leap forward -- but it's been decades since we've seen a major leap forward in technology that was led by military investment. These days, the reverse is usually true -- civilian technology bounds forward while military capabilities struggle to keep up. The average avionics suite in military aircraft these days is state of the art -- for 1995-2000. Army vehicles are now getting the ability to see moving maps and send text messages to one another in real time -- about four years after the average suburbanite could do it.

What Clark's rhetoric is really about is Joe Biden's infamous four-letter word: J-O-B-S. It's an open secret that every year, the defense budget becomes less about getting the most capable equipment into servicemembers' hands, and more about protecting the job base in as many congressional districts as possible. The viability of a defense program is no longer determined by its ability to produce a product on time and in budget, but by how many states it can be spread across to ensure viability. The hysteria over the recent award (later revoked) of the Air Force's new tanker to EADS Aerospace is a great case in point -- while some of the arguments over confusion on requirements and design was well-founded, other arguments were nakedly protectionist in design and had nothing to do with the capabilities of the aircraft itself.

So how do we fix that problem? A step in the right direction would be to take action to open our contracting and competition process to foreign companies, and tap into the growing brainpower of the largest expansion of the middle class in history -- the one currently underway in India and China. This may sound crazy, but it would dovetail nicely with diplomatic and military efforts currently underway to make both of those nations responsible stakeholders in the global economic system. Coupling this outreach with enhanced transparency and accountability requirements in government contracting would have two powerful impacts: it would be a giant step towards reforming the bloated and serpentine procurement bureaucracy, and it would be a powerful push towards transparency in areas like labor standards and subcontractor quality for these foreign companies.

There are certainly some powerful economic arguments for a bailout of the Big Three. But national security is simply not one of them. In order to tap the best ideas and processes, the whole world must become our industrial base.

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