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The Military-Industrial Complex Will Be Just Fine Without Afghanistan
Full disclosure: I have money in a Northrop Grumman retirement fund.
WAR STORIES
The Military-Industrial Complex Will Be Just Fine Without Afghanistan
Defense contractors made a lot less money than you’d think from the 20-year war.
BY FRED KAPLAN
AUG 19, 2021 2:09 PM
A widely retweeted article this week in the Intercept claims that the 20-year Afghanistan war, far from being a failure, was an “extraordinary success” for the top five U.S. defense contractors.
The article calculates that if you had invested an evenly divided $10,000 in those companies’ stocks on Sept. 18, 2001, the date President George W. Bush signed the Authorization for the Use of Military Force, those shares would be worth $97,795 today. By contrast, if you’d put the same money in an S&P 500 index fund, you’d have only $61,612. So the big five defense corporations outperformed the stock market by 56 percent.
This is spurious, to say the least. Yes, there is a military-industrial complex, and yes, defense companies have performed better than many (but far from all) other sectors of the economy since the century began. But the growth of the five largest companies—Boeing, Raytheon, Lockheed Martin, Northrop Grumman, and General Dynamics—has had almost nothing to do with Afghanistan.
{snip}
In other words, if the United States had never gone to war in Afghanistan, the profit sheets of these companies would be pretty much unchanged.
{snip}
Over the 20-year war, the U.S. supplied the Afghan military with a total of $83 billion in supplies and weapons. That comes to a little more than $4 billion a year on average—a small fraction of the total U.S. defense budget.
If it were otherwise, we should see a precipitous decline in defense stocks as the U.S. war in Afghanistan has screeched to a halt. But an article in this week’s Barron’s argues that the withdrawal will benefit defense stocks. The fall of Kabul to the Taliban will mean less stability in the region, which will increase demand for “intelligence, surveillance, and reconnaissance missions” as well as “unmanned systems, missiles, and satellite capabilities.” That’s where the major contractors are primed for growth. They’ve had very little to do with combat in Afghanistan, but they may play a role in what President Joe Biden has called “over-the-horizon” surveillance and targeting in the future (i.e., gathering intelligence and launching air or missile strikes from hundreds of miles away).
The war in Afghanistan was a misguided morass in many ways. But it’s an ideological cliché—and a mistaken one, at that—to suggest that the military-industrial complex had anything to do with it.
The Military-Industrial Complex Will Be Just Fine Without Afghanistan
Defense contractors made a lot less money than you’d think from the 20-year war.
BY FRED KAPLAN
AUG 19, 2021 2:09 PM
A widely retweeted article this week in the Intercept claims that the 20-year Afghanistan war, far from being a failure, was an “extraordinary success” for the top five U.S. defense contractors.
The article calculates that if you had invested an evenly divided $10,000 in those companies’ stocks on Sept. 18, 2001, the date President George W. Bush signed the Authorization for the Use of Military Force, those shares would be worth $97,795 today. By contrast, if you’d put the same money in an S&P 500 index fund, you’d have only $61,612. So the big five defense corporations outperformed the stock market by 56 percent.
This is spurious, to say the least. Yes, there is a military-industrial complex, and yes, defense companies have performed better than many (but far from all) other sectors of the economy since the century began. But the growth of the five largest companies—Boeing, Raytheon, Lockheed Martin, Northrop Grumman, and General Dynamics—has had almost nothing to do with Afghanistan.
{snip}
In other words, if the United States had never gone to war in Afghanistan, the profit sheets of these companies would be pretty much unchanged.
{snip}
Over the 20-year war, the U.S. supplied the Afghan military with a total of $83 billion in supplies and weapons. That comes to a little more than $4 billion a year on average—a small fraction of the total U.S. defense budget.
If it were otherwise, we should see a precipitous decline in defense stocks as the U.S. war in Afghanistan has screeched to a halt. But an article in this week’s Barron’s argues that the withdrawal will benefit defense stocks. The fall of Kabul to the Taliban will mean less stability in the region, which will increase demand for “intelligence, surveillance, and reconnaissance missions” as well as “unmanned systems, missiles, and satellite capabilities.” That’s where the major contractors are primed for growth. They’ve had very little to do with combat in Afghanistan, but they may play a role in what President Joe Biden has called “over-the-horizon” surveillance and targeting in the future (i.e., gathering intelligence and launching air or missile strikes from hundreds of miles away).
The war in Afghanistan was a misguided morass in many ways. But it’s an ideological cliché—and a mistaken one, at that—to suggest that the military-industrial complex had anything to do with it.
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