This timely and wide-ranging study covers both the economic and the political aspects of defense spending—first by providing a theoretical framework and then by explaining, in a political economy context, the results of decisions to allocate scarce resources to defense. In doing so, the authors provide a comprehensive picture of the interaction between defense spending and the economic and political structure of the United States, complementing their exploration of topical concerns such as SDI with analysis of long-term trends and issues of timeless importance in the defense debate. Because of the politicizing of defense planning and procurement, there have been few significant applications of optimization techniques to high-level defense issues over the past decade. As a result, there has been a rapid decline in the importance of those techniques—historically the focus of books on defense economics. Like its predecessors, this book presents optimization techniques applicable to a wide variety of defense problems, but it also illustrates what happens in actual practice and why defense decisions are often not economically efficient. The authors discuss alternatives for cases when political constraints make efficient solutions unlikely and explore changes in the defense establishment and political structures that would make economically efficient resource allocations a reality.
Preface -- The Economics and Politics of National Defense -- The Dual Nature of Defense -- The Politics of National Defense Spending -- The Economics of Production, Distribution, and Defense -- Making and Controlling the Defense Budget -- Regional Defense Spending -- The Defense Industry -- Preparing for War: The Defense Industrial Base -- Efficient Production of Weapon Systems -- The Growth of Cost: Efficiency Issues -- The Growth of Cost: Other Factors -- International Determinants of Defense Costs -- The Economics of New Strategies -- Star Wars: The Political Economy of Strategic Defense -- Conclusion: Finding Better Solutions