JOBS FOR ALL COALITION P.O.
Box 96, Lynbrook, NY 11563
SENSE 8 October 1995
AND JOBS FOR ALL
Melman, Professor Emeritus of Industrial Engineering,
Columbia University, Chairman of the National Commission for Economic
Conversion and Disarmament, and Advisory Board, National Jobs
for All Coalition.
Though the late Seymour Melman wrote this piece
some time ago, his view that our expansive military budget has
had malign effects on our industrial base, including the
neglect of infrastructure, is unfortunately more pertinent than
also his later piece. [Ed.]
The end of the Cold War gives the United States
an unprecedented opportunity to build a new foundation for international
security and to redirect billions of defense dollars to neglected
domestic needs. This "peace dividend" could contribute
to the goal of JOBS FOR ALL in a vigorous peacetime economy.
The powerful military-industrial complex spawned by nearly a
half century of Cold War has convinced Congress to maintain military
forces with “the ability, in concert with regional allies,
to win two nearly simultaneous major regional conflicts.”
Thus, despite a budgetary deficit that is used to justify cuts
in domestic spending, our government holds onto levels of military
spending comparable to average Cold War years and in excess of
“the combined spending ot the world’s next 10 largest
military establishments.” President Clinton, moving away
from his original commitment to craft a defense budget scaled
to the reduced military threat, has proposed instead to increase
weapons procurement by almost 50 percent over 1996 levels by the
year 2001. Because millions of jobs, the economic health of whole
communities, and entire sectors of our economy have come to depend
on military spending, the power of the military-industrial complex
persists in the post-Cold War era.
It is not too late to "do the right thing." First,
we need to understand how the Cold War and massive military spending
have undermined our civilian economy. Second, we must recognize
how Economic Conversion can revitalize our productive capacity.
Only then will we get behind the drive for economic conversion
that can give us disarmament, good jobs, and a higher standard
The Cold War and U.S. Economic Decay
The Cold War has bled our civilian economy by preempting capital
resources, taking the lion's share of top scientific talent as
well as federal research and development (R & D) funds, and
appropriating government funds that would otherwise have been
available for the development of our infrastructure.
Preempting capital resources: Between 1947 and
1991, the military enterprise used $8.7 trillion of U.S. resources
(1982 dollars), more than the money value of the nation's entire
stock of civilian industrial plant, equipment, and infrastructure.
Since 1952, the annual American military budget has been greater
than the after-tax profits of all U.S. corporations. High levels
of military procurement for nearly 50 years have created widespread
dependency on weapon systems production among key manufacturing
sectors. The wasteful production practices encouraged by cost-plus
military contracts are the very antithesis of what was long a
strength of U.S. industry, namely using well-paid, highly skilled
workers to produce innovative products and to develop new production
technologies to offset rising wages.
The easy, high profits of military manufacturing (along with
an often overvalued dollar and tax incentives for companies that
transfer their operations overseas) encouraged U.S. manufacturers
to abandon civilian markets. Since attractive imported goods keep
our shops well stocked, the effect of sacrificing investment in
the U.S. civilian economy in favor of the military economy escapes
attention. Yet for manufacturing as a whole, as an example, imports
represented 2.7 million jobs in 1990. In attributing the causes
for the much-noted loss of good, civilian jobs in manufacturing,
we often fail to count the Cold War economy.
While the United States was squandering its resources on the
Cold War and becoming a military economy, many of its allies were
making the domestic investments that would lead to superior productivity
and competitive strength. For example, in 1988, the United States
put $50 into the military for every $100 of new civilian assets.
But our chief economic rivals, Germany and Japan, invested $18
and $4, respectively. Of the total military spending by the U.S.
and its allies, 55 percent is paid for by the American taxpayer,
and only 45 percent is spent by all other members of NATO, plus
Australia, Japan, and South Korea. The total population of these
18 countries is more than double that of the United States, and
their combined output is 60 percent greater.
R&D takeover: During nearly 50 years of Cold
War, the federal government became the single largest funder of
R&D in the U.S. economy. By the late 1980s two-thirds of federal
R&D spending was utilized by the Department of Defense, primarily
for its applied industrial research on weaponry and allied equipment.
Germany and Japan spend a larger fraction of output for nonmilitary
R & D than does the United States, and Japan probably spends
a greater absolute amount as well.
Infrastructure neglect: The massive preemption
of capital for the military has had the further effect of depleting
the whole infrastructure of the society, especially during the
Reagan era. Military spending currently consumes almost half of
the federal budget available for "discretionary spending."
The decay of housing, schools, streets, parks, drinking water,
medical facilities, bridges, highways, and railroads has restricted
the growth of productivity. There can be no enduring industrial
excellence in a sea of infrastructure depletion. Here, too, our
allies were building their civilian economies while we shouldered
the Cold War. Japan, for example, invested in its infrastructure
at 20 times the rate of the United States in recent years and
as a consequence of this and a higher rate of investment in productive
capital, achieved six times the U.S. rate of productivity growth.
Such investment in infrastructure has been shown to be a powerful
influence on economic growth.
Economic Conversion: the Key to Disarmament and Jobs
The key to breaking the military stranglehold on our economy
is a comprehensive program of economic conversion that emphasizes
planning for alternative production before cuts and layoffs occur.
Replacing the economic stimulus of military spending also requires
investment to open up alternative markets for defense contractors
and civilian firms and promote sustainable economic growth.
A vigorous nationwide effort for demilitarization and economic
conversion would create a net increase in civilian jobs
providing that cuts in military expenditures were transferred
to the civilian economy. The estimated annual shortfall in outlays
for all aspects of U.S. infrastructure amounts to about $165 billion.
If $165 billion were transferred from the military to education,
transportation, environment, housing, health care, civilian R&D,
etc., 3.95 million (direct and indirect) military-based jobs would
disappear. But 5.11 million new civilian-based jobs would be created--for
a net gain of 750,000 new jobs. If an additional annual $80 billion,
raised by restoring 1980 tax levels on the super rich, were spent
on conversion, an additional 2.5 million jobs could be created.
Essentials of conversion: Economic conversion
has three essential components. It must be ordered by law, planned,
and undertaken locally in each defense factory, laboratory, and
The cornerstone of the comprehensive conversion law proposed
in Congress by the late Ted Weiss (D-NY) is this provision: “There
shall be established at every defense facility employing at least
100 persons an Alternative Use Committee composed of not less
than eight members with equal representation of the facility’s
management and labor.” This composition gives weight to
members whose self-interest is tied to long-term production competence
rather than short-term financial maneuvers that yield quick profit
but degrade the production competence of an industry. To date,
Congress has not acted on this comprehensive conversion bill.
However, the President could order such local conversion planning
by Executive Order.
Planning is necessary because industry must select new products,
estimate their market, retrain employees, alter the organization
of production, and redesign plant facilities. Military bases are
convertible to industrial parks, schools, hospitals, airports,
recreational facilities, etc. In military laboratories, the scientific
staffs must match their knowledge with society's technological
needs like renewable energy resources and pollution prevention.
The firsthand knowledge of defense establishment employees is
essential for conversion. Thus, conversion must be done locally;
no remote central office can possess the necessary knowledge of
people, facilities, and surroundings.
What can converted factories produce? Factories,
bases, and research facilities that are converted to civilian
work can--for a start--address the long list of consumer and capital
goods that have solid markets in the U.S. but are now imported.
To be sure, this requires doing as well or better than foreign
producers. Converted factories can produce advanced designs of
every sort of machinery and consumer goods: machine tools, electric
locomotives, farm machinery, oil field equipment, and consumer
electronics, to name just some. Modernizing infrastructure will
require construction machinery and capital goods of many kinds.
Electrification of U.S. railroads has been proposed as one of
the particularly desirable peace dividend projects. This 20-year
task, costing over $100 billion, will require construction of
entirely new industries for producing and maintaining equipment
that is not currently being designed, developed, or produced in
the United States.
Change in federal policy: All this requires
a marked change in the federal government's policy--from favoring
the war economy to favoring productive, life-serving investments
of every sort. Priority in the use of funds freed from military
production should be given to initiatives to restore urban communities,
meet human needs, such as child-care, and provide ecologically-sound
transportation and energy. To acquire the courage to break with
their economic dependency on the Pentagon, employees, their communities
and Congressional representatives need blueprint-ready conversion
plans that define an economic future for their factories, bases,
and laboratories. This required rethinking and redirection of
government spending should be part of a full-employment agenda
of employment creation, retraining, relocation assistance, and
income support during the period of transition for all workers
who are affected by economic restructuring.
Economic Conversion and the Jobs for All Coalition
Unaware of the job-destroying results of militarism and of the
promise of economic conversion, the public may well regard disarmament
as adversary rather than ally of full employment. To the contrary,
a large peace dividend plan could set in motion a wave of new
employment in useful work. Organizations that are leading the
drive toward disarmament and economic conversion, like the National
Commission for Economic Conversion and Disarmament, the Long Island
Alliance for Peaceful Alternatives, and New York Metropolitan
Peace Action participated in the founding of the National JOBS
FOR ALL Coalition and are a vital component of the struggle for
1. New York Times, D2, Sept. 14, 1995.
2. Center for Defense Information. (1995). "Threats to American
Goals and Interests: When Is Military Response Necessary? The
Defense Monitor 24 (4): 1-8.
3. NewYork Times, February 25, 1992.
4. Center for Defense Information, 1995.
5. David Alan Aschauer), Public Investment and Private Sector
Growth. Washington, D.C.: Economic Policy Institute, 1990.
Collins, Sheila D., Helen Lachs Ginsburg, and
Gertrude Schaffner Goldberg (1994). Jobs for All. New
York: The Apex Press.
Melman, Seymour (October, 1993). What Else
Is There to Do?-- Neglected Prospects for Major Job Creation in
U.S. Manufacturing. A Report to the National Commission for
Economic Conversion and Disarmament. Washington, DC: National
Commission for Economic Conversion and Disarmament.
___________.(1992). Rebuilding America:
A New Economic Plan for the 1990s. Open Magazine Pamphlet
Series #21. Westfield, NJ
__________. (1985). The Permanent War Economy. New York:
Simon & Schuster.
___________________Editor: June Zaccone, Economics
(Emer.), Hofstra University
The National Jobs for All Coalition is a project of the
Council on International and Public Affairs