Monday, November 13, 2006
Privatizing the Department of Defense: A Proposal
From the November-December issue of the Hastings Center Report
BY DANIEL CALLAHAN

For the past few years I have spent a good deal of time arguing with economic conservatives about the value of market theory and practices for health care. I am dubious about the utility of the market and far more impressed with the universal health care systems of Europe. The Nobel laureate Kenneth Arrow contended many years ago that health care was not a promising arena for market theory, and market practices in the United States have not generated robust health or economic outcomes. Nonetheless, economic conservatives continue to press their case. The market, they say, has two distinct values: it can enhance our choices in health care, and it will force us to consider the cost of the care we want, which is currently obscured by third-party payments. They also dislike "big government" and "socialized medicine." Consumer-driven health care is their moral ideal.

Actually, there is a far better target for market enthusiasts than health care. It is the Department of Defense. No one has ever talked of a "socialized Department of Defense," which it surely is, nor objected to it on the grounds that it exemplifies big government in a most flagrant way. Why that has not been noticed mystifies me. But it is surely - as even conservatives might concede - bloated, inefficient, reckless about costs, and the ne plus ultra of bureaucracy.

I have a proposal. Why not privatize national defense, bringing to bear on the Pentagon all the virtues the market supposedly could bring to health care? First, if we should have a choice about the kind of health care want simply because people have different needs and desires, that principle should surely apply to national defense. We do not all want the same kind of security. Some of us want more high-tech planes and ships and antimissile systems, others more feet on the ground. Some of us like massive arsenals of nuclear weapons, while others have a taste for biological toxins or poison gas. Second, if we had more choice about the kind of defense we want, we would surely think about the cost and be willing to pay for our preferences. As it now stands we hardly have to give a thought to the defense budget because the money is just one more item of taxation - money out of our pockets, but not in a way that encourages prudent spending.

But how could we have both choice and cost control? The most straightforward method would be a voucher system. The government, or our employer, would give us money to buy whatever kind of defense we fancied. That would take care of what economists call the demand side. As for the supply side, a number of commercial plans would be set up to sell us the defense we personally want, knitted together by the government in a form of managed competition.

I want to stress that this proposal is not meant as a direct response to our military problems in Iraq. They have been brilliantly and efficiently managed, even if there has been a little muttering here and there. However, a really good market system in defense would have allowed us to hire our own inspectors prior to the war and to buy our own kind of military campaign once it was under way - and a few of us would probably have chosen an invasion of Venezuela, Canada, or Monaco instead of Iraq.

I have failed so far to mention the most important feature of all - our right to purchase outright, or buy time shares of, the various competing armies and navies. I could have my apartment house surrounded by my own tanks, artillery, and troops. I don't have that kind of choice now, which is what you get from a socialized Department of Defense.

What about pacifists and other simpering people who just don't like war and violence? They are a headache for any free country. I would not give them a voucher at all, understanding that they would be "free riders," their lives protected by the economic sacrifices of the rest of us. That gesture would surely be compassionate conservatism at its best.

A final thought. One objection to consumer-driven health care is that it will be hard for many if not most people to gain the information they need to make informed choices. Similarly, who among us is competent to pick good defense purchases? Not to worry: score cards, evidence-based defense data, and information technology can tell us all we need to know.

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