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05/28/2006

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Xenophon

Now if only the UN, or a new, more practical organization, would start using PMCs in humanitarian operations.

Arun Khanna

In the current environment on college campuses nationwide towards ROTC cadets and military recruiters, it would be very helpful if an open letter signed by famous economists of both parties documented how many dollars a U.S. military personnel in Afghanistan and Iraq earns compared to a private security contractor. Undergraduate students should know that individual Americans of their own age are paying a price in blood and dollars for the U.S.

spencer

You state that private security would be better at airports. But this is a point that can be checked as we now have records of both -- govt since 9/11 and private before 9/11.

The evidence seems to suggest there is not much difference between govt and private airport security.

Do you have evidence to the contrary?

Bernard Yomtov

private companies are forced to compete against each other for the Iraq and other security business. Competition induces companies to screen their employees and fire the bad apples since the Pentagon will stop using companies that supply ineffective personnel, or personnel that brings bad publicity because of an excessive use of force and other misbehavior.

This is a common type of bad libertarian argument. The form is simple. Identify one out of many competing incentives and argue that this will prevent bad behavior, or encourage good behavior, while ignoring the posibiltiy that it may well be outweighed by other incentives.

The Pentagon has multiple considerations in choosing contractors - cost, number and experience of personnel, speed of deployment, etc. The notion that "making sure the company sees to it that its employees comply with law in Iraq" will be a priority is simply not convincing. It is little more than an assertion.

Notice also that the comparison with private security forces in Israel or the US or elsewhere is irrelevant. This sort of private personnel operates domestically, hence is subject to ordinary domestic criminal law. The problem in Iraq, as both Posner and Becker recognize, is that jurisdiction over mercenaries is unclear.

doug

Several comments/points

1. You guys both missed one of the chief benefits to the administration of contracting out -- nobody knows how many private employees have died or been injured, so they don't count in the body count. Yet, this is a benefit more for the administration politically than for the country as a whole.

2. Not sure I see a parallel between a security guard in the lobby at your local 5-star hotel & contract employees paid 50K to drive a truck in Iraq, but I'll think about it...

3. A far cheaper economic strategy for short-term troops is a draft. There are good positive externalities here as well, as it would connect everyday Americans with the foreign policy of America. Now there is a bit of a prisoner's dilemma, as we can support war, and just pass the bill off to future generations w/ debt. We don't have to give up anything.

4. Clearly, the market for contracts in Iraq is fraught w/ massive amounts of fraud and is far from a perfect market -- see Haliburton. Especially given the long line of corruption scandals involving defense contracts and the current ruling party (Delay, Cunninghan, etc. etc. etc.). When bribery is so easy and rampant, there is no reason to think that contracts are awarded on a competitive basis. We have seen that defense contractors innovate by paying for golfing trips to Scotland, getting hotel rooms & hookers at the Watergate hotel, countless dinners at Signatures, buying yachts for Congressman, and/or hiding the bribery by simple ruses such as overpaying for Congressmen's houses. In stark contrast, I don't know of any instances of military generals engaging in the same kind of behavior. The contractors' innovations do not come in the form of a free lunch, however. If they are paying for hookers at Watergate (ala Brent Wilkes), it usually means that they are not paying for something else, and that something is usually the services they are to have contracted out for. I find it rather mysterious that both of you completely discounted corruption as though it didn't exist. The problem is incentives. If I'm a utility maximizing government official, I might be able to increase my utility by taking bribes, which are often difficult to see. The contractor, who has thus won the contract on a non-competitive basis, now has an incentive to slouch on the contract. Hence, contractors have a much larger incentive to cheat than say, a military unit who receives orders to do a certain project, say, drive a truck accross Iraq, who faces a court-martial if they disobey and whose salary is set.

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