Saturday, June 21, 2008

Buy Defence Goods From Allies When they are Better Products

Family Security Matters (engaging American families in our Nation’s security) HERE:

"Exclusive: Tanker Bid Show Weakness of US Policy" by William R Hawkins:

Those who want to base national security on academic economic theories should be aware that Adam Smith carved out an exception for defense industries. On the topic of the Navigation Acts, the centerpiece of British mercantile policy, Smith wrote in The Wealth of Nations that the "defense of Great Britain depends very much upon the number of its sailors and shipping. The act of navigation, therefore, very properly endeavors to give the sailors and shipping of Great Britain the monopoly of the trade of their own country." He approved of paying bounties for the production of naval stores in the American colonies so the empire would be less dependent on the importation of strategic goods from foreign sources. Smith believed, "It is of importance that the kingdom depends as little as possible upon its neighbors for the manufactures necessary for its defense."

This is extracted on a piece in which the author is opposed to the buying of aircraft designs from Europe rather than from a US defence supplier domestically.

Adam Smith’s defence of the UK Navigation Acts was occasioned by Britain’s 18th-century vulnerability to interdiction by foreign powers of its sea routes upon which it depended for international trade and supplies. On the Continent, the other European powers had contiguous land borders that they defended with their standing armies, which were also the ‘last word’ of the ‘Emperor’ in domestic governance.

Defence was the ‘first duty of the sovereign’ (WN V.i.a.1: 699) and in general ‘defence is of much more importance than opulence’, (WN IV.ii.30: 464-5) for without secure defence barbarian neighbours may be tempted to invade and end a country’s opulence.

Government is a monopsony buyer of defence goods and such firms engage in powerful lobbying of politicians to secure large defence contracts, even when technologically superior equipment and platforms are available from allies at better prices.

Britain built its 74-gun warships for the Royal Navy, though naval officers and men knew that the French version of the 74-gun warship was considered superior to British build vessels using local timber from British vessels and a domestic designs. When the chance arose to capture a French 74-gun ship there was a trade-off between the amount of damage a British ship was willing to inflict to secure their surrender and the amount of damage that would render the French ship unseaworthy as a prize of war for adoption as a British war ship into the order of battle.

As prize of war, French ships were highly valued by the Admiralty and were also highly regarded by British sailors for their sea worthiness and their fighting capabilities. In order to rub the French noses in their losses of their 74-gun ships, the Royal Navy kept their French names and inserted ‘HMS’ in front of them, hence, the British order of battle at sea listed many French names among the British built ships throughout the Nelson's navy.

A gory statistic was that many more British sailors were drowned in British warships foundering in storms than were killed in action against enemy ships.

The purchase by the US of some air tankers – the object of the complaints discussed by William Hawkins (now there is a venerable name from British Naval History!) in his article – is from a friendly NATO power, they are regarded as a better buy, and would be more efficient at maintaining US war planes in action for longer than the US version. The French order hardly dents US defence expenditure to make it anywhere near ‘dependent’ upon a ‘foreign’ supplier.

In Smiths’ day neighbours like Holland, France and Spain were recent ‘clear and present dangers’ to Britain. Today's France, Germany, Italy and Britain hardly qualify for that status, or for treatment under the equivalent of the Cromwell’s Navigation Acts(long ago repealed by Britain).

Allies in defence may safely trade in defence goods. The US opposition lobbying against them is a case of pure mercantile policy, to which Adam Smith would not have been sympathetic. That's not just good policy, it is also good political economy, the name by which Adam Smith knew his economics though long ago dropped by modern economists.


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