The Market for War and Peace: An Economic Perspective on the Privatized Military Industry
Garcia, Tomas M.
- The recent rise of the privatized military industry represents a marked departure from the classical face of warfare in both its structural organization and deployment. This thesis seeks to analyze and lay out the intricacies of the sector with a specific intent to examine the operations of Privatized Military Firms (PMFs) from an economic perspective. Employment of PMFs by United States governmental ... read moreagencies often overlooks the incentives shaping firm choices, resulting in potentially higher net costs to taxpayers than if the functions in question had not been outsourced. I begin with a brief overview of privatized warfare, establishing a typology within which to frame subsequent inquiries. Then, I explore the lack of competitiveness present in today's PMF contracting process, before turning to the dynamism, and subsequent inefficiencies, resulting from a project-based, asset-light PMF corporate structure. Finally, I investigate the failure of U.S. governmental agencies to take into account transaction-cost economics when conducting cost-benefit analyses comparing a PMF employee to their public counterpart. I argue that incorporation of economic drivers into the conversation surrounding the privatized military industry could shape regulation of the field in the future, ensuring that the government can better outsource security in both an efficient and effective manner.read less