Defense contractors- a world full of politics, corruption, and incompetence

Arms manufacturers are capable of making weapons that help win wars- but surprisingly enough, their customers don’t care about that.  The root of the problem is with political leaders- their interests tend to lie in buying votes.  As well, the skillset of getting elected does not overlap with the skillset of choosing competent military leaders.

As a result, the world’s richest nations often purchase weapons without any realistic testing and later discover that they do not work.  The Patriot missile defence system likely did not shoot down any Scud missiles from Iraq.  Worse still, they likely increased overall casualties as stray Patriot interceptor missiles hit civilian apartments (see page 9 of “Evaluating Weapons: Sorting the Good from the Bad“).

From an investing perspective, the history of corruption is interesting as it stretches back for decades.  During the Vietnam war, the US Army’s ordinance bureau intentionally sabotaged the M16 rifle with ammunition that would cause the rifle to jam more frequently (see page 3).  Since then, abuses have continued despite exposure in mainstream media.  Chuck Spinney was on the cover of a 1983 TIME magazine; the 1998 TV movie Pentagon Wars explained issues with the Bradley Fighting Vehicle (clip).  This suggests to me that the corruption in the US is fairly resilient, entrenched, and will likely continue to grow at a slow pace.

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