Comment by qubex | Hacker News Reader

Comment by qubex | Hacker News Reader

Parent Full thread

The production of armaments is a bit of an economic anomaly, to be honest. All businesses, including arms manufacturers, require a constant flow of business in order to cover their fixed costs and remunerate their investors (debt holders and shareholders). If governments only order weapons when they need them to fight a war, then the arms manufacturers would shut form at the end of a conflict and would take ages to “gear up” again when a new conflict arises, stymying response and lessening the deterrence implicit in having a standing army. Consequentially, it actually makes sense (from a strategic point of view) to keep weapons manufacturers “ticking over” with a constant flow of orders even if that just results in growing stockpiles. One of the reasons that profits are di high for weapons manufacturers is that according to the Capital Asset Pricing Model (CAPM) the rush of a government suddenly cutting off orders during peacetime and rendering the company unprofitable and probably bankrupt needs to be offset by high dividends in the here-and-now and with low historic volatility.

Now, I’m not saying I support this, far from it, but that’s (one of) the rationale(s).

When I was growing up my father had an ashtray from his days in the navy, which was made from the bottom of a three inch shell. On the bottom stamped in the metal was '1944', which as a child confused me because I knew my dad was in the navy from 1959-1965, so I asked him. "Let's just say they made A LOT of those in 1944."

That's why there are military surplus stores all over the country. Great stuff to be had -- cheap!

No cheap ones in the Bay Area though :-/

haha was just at Stevens Creek... yep, not cheap.

It seems like it would be a better use of resources to just build up enough of a stockpile that the industry would be able to safely retool into a similar civilian industry, such as railroad locomotives, and then have time to switch back without a loss of combat capability. You'd just have to keep a small industry around for upgrades and maintenance.

Basically what happened in WW2

> then have time to switch back without a loss of combat capability

It's not that easy. You loose knowledge and vendors and people. Going from 0 unit production per year to 10 per year is more difficult than going going from 10 per year to 10000 per year.

That is unfortunately no longer realistic. The skills and supply chains needed to produce high-end military equipment are too different. The production lines have to be kept continuously running or else they would take so long to reestablish that in any serious conflict it would be too late.

The problem isn't that the skills and supply chains are fundamentally different but that supply chains for non-military equipment become globalized if not outright off-shored (often to geopolitical rivals) and therefore cannot be counted on in case of a major geopolitical conflict.

Pre-massive-globalization, we had no problem gearing up for WW2. Our industrial capacity was largely in-house. There were some things like rubber that were off-shore, but generally the industrial toolchain was domestically produced.

Nowadays, many domestic industrial producers rely heavily on these (bloated) military contracts to maintain relevance in a globalized industrial setting where the center of gravity for a lot of heavy industry and tool production has shifted to Asia.

I love international trade and I'm skeptical of military spending (and even more so of military adventurism), but this effect should be kept in mind when making trade policy. The military-industrial complex is keeping alive much of our industrial know-how that would otherwise be entirely be off-shored and retired domestically.

In WWII it was the domestic auto industry that converted over to building tanks. However today most of the domestic auto manufacturing is for foreign companies like Toyota, while our domestic companies largely manufacture overseas or in Mexico now.

It would be amazing if WWIII broke out and we had to call on Tesla to manufacture tanks.

The skills and supply chains are just fundamentally different in crucial areas. A prime example is the specialized techniques for welding together thick hull sections of specialized steel alloys to build a complete submarine. There's no equivalent in civilian industry. If that production capability is ever lost due to a long gap in new submarine orders then it would take many years to reestablish. Institutional knowledge if a fragile thing.

One of the benefits of globalization (and the EU) is that it's to everyone's economic advantage to not have a war between trading nations. This maintains supply, reduces costs, and crazily enough - reduces conflict.

You may lose the ability to make widgets because it's easier/cheaper to buy them from another country, but in theory, you make it up by selling them sprockets, and through the overall economic gains.

They used to do exactly this. Various agricultural and construction equipment manufacturers operated in such a way that they could shift production to tanks at a moment's notice.

If you look at Electric Boat Company (they make our subs), and Newport News Shipyards(carriers), there is a big reason they get refit work etc. Because they would collapse as an industry and it would be impossible to build that kind of staffing/expertise up in short order again.

This fact is supposedly a part of the reason the f35 went to lockheed vs boeing.

It's also half the reason behind the Jones Act. Shipping between US ports must be done with US-made ships with US crews. If it weren't for this, US shipyards wouldn't have enough orders or expertise to stay open, and thus wouldn't be available for military orders in case of war.

And what happens to those stockpiles...do they get smuggled around the world, feeding the arms race?

Some are sold to local law enforcement agencies. Some large cities are better armed that some nation states.

Reply on news.ycombinator.com