One Man’s Waste Is Another Man’s Bonanza
By Robert Higgs | Thursday September 1, 2011 at 9:33 AM PDT
In a recently released report, the Commission on Wartime Contracting concludes that waste and fraud have consumed at least $31 billion and perhaps as much as $60 billion of the $190 billion or so that the U.S. government has expended in grants and contracts with private individuals and companies for work in Iraq and Afghanistan since fiscal 2002. According to an article in the Richmond Times-Dispatch, “The report faults poor decision making, vague requirements and a lack of training as the chief causes and says that the waste and fraud could have been avoided with better oversight and safeguards.”
To which I am inclined to respond, not bloody likely.
Think about it: $30 billion is a helluva lot of money. At my current rate of earning, I will have to work more than 300,000 years to earn this amount—and it’s entirely possible that I will not last that long. Of course, what is called “fraud and waste” is not a sum of money that simply evaporated in the hot desert sun. Aside from the small amount literally lost, every dollar of this sum ended up in someone’s pocket.
The report tells us that the contractor workforce has sometimes included as many as 260,000 persons. Let us err on the side of a probably unwarranted presumption of innocence and suppose that only 10 percent of them are outright crooks. We have, then, 26,000 crooks pocketing an increment of at least $31 billion, or approximately $1.2 million per crooked contract worker.
Are we supposed to believe that 26,000 civilians in the contracting corps have reaped not only their already handsome, legally contracted compensation, but enough additional loot to make each of them a millionaire on top of that compensation, and nobody noticed until now? Are we simply to attribute this massive amount of misspent taxpayer money to “poor decision making, vague requirements, and a lack of training” without asking, But who got the dough?
The report’s all-too-typical way of looking at the matter may satisfy you, especially if you are given to belief in fairy tales. I am more inclined to view this whole business as not so much a mass of incompetence (though there is undoubtedly plenty of that, too) as a deliberate ongoing embezzlement on the grandest scale.
Back in the 1930s, the legendary Marine General Smedley Butler, having spent his military career running errands for U.S. banks and other companies in various parts of the world, concluded that war is not what most people take it to be:
War is a racket. It always has been. It is possibly the oldest, easily the most profitable, surely the most vicious. It is the only one international in scope. It is the only one in which the profits are reckoned in dollars and the losses in lives. A racket is best described, I believe, as something that is not what it seems to the majority of the people. Only a small “inside” group knows what it is about. It is conducted for the benefit of the very few, at the expense of the very many. Out of war a few people make huge fortunes.
Can anyone say with a straight face that he was wrong, or that the same conclusion cannot be reached today?
Tags: Afghanistan, Budget and Tax Policy, Corporatism, Corruption, Defense, Imperialism, Iraq, Middle East, Military, Politics, The State, War 
Dr. Higgs
While to contractor hearing was being televised on C-Span 2, Washington Journal had a segment with Lewis Morris, the Inspector General of HHS. His office has ferreted out more than $18 billion over the past couple of years. It sounds impressive. The thing that amazes me that the system is so ripe for this sort of thing. I wanted to call and ask why we couldn’t devise a system that could prevent this sort of thing at the front end. You’d think HHS would be asking why it is so easy for someone to defraud and why those who defraud don’t seem particularly worried about getting caught. I also wanted to ask how much fraudulent activity is just sailing by without notice.
Phil Dillon | Sep 1, 2011 | Reply
If you took out waste, fraud, and abuse, you’d have removed 95 percent of government.
Tim | Sep 1, 2011 | Reply
What the article fails to note is that if you take Dr. Higgs’ estimates a step further you find that $30 billion over 10 years divided amongst 26,000 “crooks” works out to $120,000 per person per year. And if there were twice as many “crooks” in the system, then the “fraud and waste” would amount to a measly $60,00 per year per individual. An amount that would barely cover signing bonuses for working in the most dangerous place on earth.
Steve | Sep 2, 2011 | Reply
your tax dollars at work so macho men can play.
lawrece fitton | Sep 2, 2011 | Reply
Smedley Butler the last true American hero.
derfel cadarn | Sep 2, 2011 | Reply
That’s nothing. On September 10th, 2001, Rumsfeld announced that the Pentagon couldn’t account for $2,300,000,000,000.00 (2.3 TRILLION). Sadly, according to the Department of the Army — which, at the time, was headed by former Enron exec Thomas White — because of what happened on 9/11, they couldn’t release a financial statement for 2001 because of “the loss of financial-management personnel sustained during the Sept. 11 terrorist attack.”
Frank | Sep 2, 2011 | Reply
The distinction between fraud and negligence is essentially one of degree. The one fades into the other.
But while fraud benefits the fraudster, negligence merely allows someone else to perpetrate (and profit from) the fraud.
Either way, it comes back to “who gets the money?”
N. Joseph Potts | Sep 3, 2011 | Reply
I think the key distinction is between waste and fraud. It is relatively easy for small numbers of beuracrats or private contractors to waste billions. Just pay Afgani farmers not to grow opium as a start, bribe Afgani warlords not to co-operate with the Taliban, etc. That kind of fraud is more difficult as the author points out.
steve | Sep 3, 2011 | Reply
Why is it again that cuts to “defense” should be off the table when we spend almost as much as the rest of the world combined on defense and there is so much waste?
Patriot1776 | Sep 7, 2011 | Reply
OMG – I can’t believe someone actually remembered that famous Rumsfeld speech on 9/10/2001 – Everyone forgot about it, of course, after the events of the next day, I didn’t.
Then . . . there’s building 7 – which collapsed but no plane hit it – and that building contained soooo much information from various “secret” government organizations and black ops CIA stuff including money, gold, etc. That too, just disappeared off the face of the earth.
Something is amiss for sure.
Marcie | Sep 8, 2011 | Reply