Earlier this month the US Department of Defense (DOD) canceled a $10 billion Joint Enterprise Defense Infrastructure (JEDI) contract awarded to Microsoft in 2019. The goal of the contract was to modernize the Department’s IT operations using cloud computing.
The JEDI cancellation occurred following a lawsuit from Amazon after the company was denied the contract. Amazon alleges that they were rejected because the Department of Defense was pressured by then President Donald Trump to “screw Amazon.” The motivation for this move, it was claimed, was driven by Trump’s personal animus for then-CEO Jeff Bezos, who also owns The Washington Post.
Amazon claims insider sources responsible for the book Holding The Line: Inside Trump’s Pentagon with Secretary Mattis provide evidence for Trump’s direct intent to “screw Amazon,” but you need not trust another book published by Washington insiders for this story. Trump’s personal problems with Bezos, valid or not, are extremely public. Tweets targeted at Bezos’ include:
“The @washingtonpost, which loses a fortune, is owned by @JeffBezos for purposes of keeping taxes down at his no profit company, @amazon.” December 7, 2015.
“If @amazon ever had to pay fair taxes, its stock would crash and it would crumble like a paper bag. The @washingtonpost scam is saving it!” December 7, 2015.
“Really sick to watch the Fake and totally Slanted News(?) coming out of MSDNC and CNN. It bears NO relationship to the Truth or Facts. They are merely offshoots of the DNC, much like the @nytimes and the Amazon @washingtonpost. Just like 2016, but worse. Sad, but we will win big!” June 3rd, 2020.
“Amazon is doing great damage to tax paying retailers. Towns, cities and states throughout the U.S. are being hurt – many jobs being lost!” August 16, 2017.
Prompted by Amazon’s lawsuit, the DOD launched an investigation that yielded a 317-page report evaluating Amazon’s allegations. The authors claimed that lack of cooperation from White House officials prevented them from reaching any clear conclusions.
The DOD later canceled the JEDI contract arguing it no longer suited the Department’s needs, and it is pursuing a new multi-vendor contract called “Joint Warfighter Cloud Capability” (JWCC). As CNBC reported, “the agency said it plans to solicit proposals from both Amazon and Microsoft for the contract, adding that they are the only cloud service providers that can meet its needs.”
Although the JEDI contract cancelation appears to be a unique case, it brings to light a pervasive problem with the military industrial complex. Trump’s uncharacteristically loud administration simply highlights this problem, which is present in all administrations
Politics, Procurement, and Picking Winners and Losers
Although other president’s are less vocal about their opinions about specific businesses and CEOs, their decisions are no less influential. Every year, the DOD, under the direction of the president, consumes billions of dollars in goods and services.
This presents a major problem for the government. How can the world’s most expensive military convince someone to produce what military bureaucrats demand? There are two possible solutions to this problem. The military can either hire someone to produce the goods and services, or the military could produce them itself.
For the most part, the military opts for the first option, offering private companies the opportunity to produce military equipment and technology in exchange for billions of dollars every year. Private companies then submit “bids” detailing how they plan to complete the project with the billions they’re awarded.
The problem inherent in this process is it distorts free market competition. Under the free market, companies win by providing goods which are more valuable to consumers than what they cost to create. When a business does this, they earn what economists call “economic profit”. Any business that fails to do this will earn a loss, and, unless the owners turn things around, they’ll go out of business.
But, when businesses seek government procurement contracts, they no longer are seeking the favor of consumers. Instead, businesses must compete for the favor of politicians and bureaucrats spending taxpayers’ dollars. In other words, politicians are in the position of picking winners and losers. So how do they pick?
Well, perhaps, as in the case of Trump, personal grievances will underlie their decisions. But this is actually the least sinister method of competing for political favor. Alternatively, companies seeking large procurements may be willing to pay politicians and bureaucrats with campaign contributions, fancy lobbying dinners, or outright under-the-table bribes.
So long as the company makes more money for the procurement than is spent on buying political favors, they come out on top. Politicians and bureaucrats also come out on top being able to accept bribes. This process of buying political favor is known to economists as “rent-seeking.”
So who is worse off? Taxpayers and consumers. Taxpayer dollars are now being allocated in a way which serves the politician and bureaucrat rather than the public. Further, these dollars now can prop up otherwise failing businesses that continue to use society’s resources in a wasteful way since they aren’t beholden to consumer values. When a wasteful business wastes scarce resources but is allowed to operate on a windfall from political bribes, the average consumer loses.
A Fundamental Flaw
The ability of companies to engage in rent-seeking is a fundamental flaw that springs out of the military-industrial complex. A military with a budget of billions will use that budget, and when it does so this provides politicians and bureaucrats an opportunity to solicit bribes and favors. The military can’t engage in large-scale purchases without this flaw because the incentives are generated by the system.
Some may argue that the process could be fixed by having the military produce its own goods. This suggestion is akin to arguing that military production should be nationalized or socialized. If military technology is internally produced, there is no problem of purchasing from politically connected corporations, after all.
However, this doesn’t solve the problem at all. This solution merely re-draws the lines. Instead of a company being given the privilege of an excessive procurement contract, an internal bureaucrat now is placed in that position.
If the government is expected to nationalize all military equipment production, this will mean several high-paid individuals will need to be hired. After they’re hired, they’ll have to go before Congress and argue that their department needs more money. In the end, the result is the same. Taxpayer money is used to subsidize competition for political favor without regard for what consumers think is valuable.
So, while Trump may be uncharacteristically loud, there is nothing uncharacteristic about politicians picking winners and losers to suit what they want. In fact, this sort of behavior is characteristic of the system itself.
Peter Jacobsen
Peter Jacobsen is an Assistant Professor of Economics at Ottawa University and the Gwartney Professor of Economic Education and Research at the Gwartney Institute. He received his PhD in economics from George Mason University, and obtained his BS from Southeast Missouri State University. His research interest is at the intersection of political economy, development economics, and population economics.
This article was originally published on FEE.org. Read the original article.
American Patriots Uniting to Fight Tyranny from, Well, Everywhere
We’re building a new conservative news network. Based on responses from fellow patriots, we’re heading in the right direction.
It may be hard to believe based on what we’re seeing around the nation today, but there are many reasons to be hopeful. First and foremost, the false narrative that most of America hates traditional values or the foundations of our nation are finally being proven false. Despite the best efforts of globalists and Neo-Marxists, patriotic Americans are starting to unify in droves. Meanwhile, Joe Biden can barely muster a half-filled auditorium to deliver his message to the scant few watching CNN and the paid shills in the “crowd.”
The “silent majority” that drove Donald Trump to victory in 2016 and 2020 (yes, he won by a landslide but was robbed along with the American people) is finally starting to realize we cannot stay silent any longer. We used to win with our votes, but those are being stolen. We used to win with truth, but the radical left and their agents in mainstream media, Big Tech, and academia are building a post-truth society to drown out reality. Today, we are waking up to the realization that only through direct action and fearlessly spreading the truth can we overcome the nefarious forces working against us.
We are proud to be working our way up to the tip of the conservative media spear. Our network is growing. We’re establishing strong partnerships with like-minded news outlets and courageous journalists. Even as Big Tech suppresses us, the honest messages they’re trying to quash are finding their way to the eyes and ears of patriots across the nation. With the help of new content partners like The Epoch Times and The Liberty Daily, we’re starting to see a real impact.
Our network is currently comprised of nine sites:
- NOQ Report
- Conservative Playlist
- Truth. Based. Media.
- Freedom First Network
- Based Underground
- Uncanceled News
- American Conservative Movement
- Conservative Playbook
- Our Gold Guy
Some of our content is spread across all of these sites. Other pieces of content are unique. We write most of what we post but we also draw from those willing to allow us to share their quality articles, videos, and podcasts. We collect the best content from fellow conservative sites that give us permission to republish them. We’re not ego-driven; I’d much rather post a properly attributed story written by experts like Dr. Joseph Mercola or Natural News than rewrite it like so many outlets like to do. We’re not here to take credit. We’re here to spread the truth.
The slow and steady reopening of America is revealing there was a lot more economic hardship brought about from the Covd-19 lockdowns than most realize. While we continue to hope advertising dollars on the sites go up, it’s simply not enough to do things the right way. We are currently experiencing a gap between revenue and expenses that cannot be overcome by click-ads and MyPillow promos alone (promo code “NOQ” by the way).
To overcome our revenue gap and keep these sites running, our needs fluctuate between $2200-$7800 per month. May, 2021, for example, was amazing and we almost broke even. June, revenue was sluggish at best and we had to make up a big difference out of our pockets. But we’re not just trying to get out of the red. If and when we start getting enough contributions to expand, we will do just that. Very few get into journalism to try to get rich and we’re definitely not among those who do. Our success is driven by spreading the truth, profitable or not.
The best way you can help us grow and continue to bring proper news and opinions to the people is by donating. We appreciate everything, whether a dollar or $10,000. Anything brings us closer to a point of stability when we can hire writers, editors, and support staff to make the America First message louder. Our Giving Fuel page makes it easy to donate one-time or monthly. Alternatively, you can donate through PayPal or Bitcoin as well. Bitcoin: 3A1ELVhGgrwrypwTJhPwnaTVGmuqyQrMB8
Time is short. As the world spirals towards radical progressivism, the need for truthful journalism has never been greater. But in these times, we need as many conservative media voices as possible. Please help keep NOQ Report and the other sites in the network going. Our promise is this: We will never sell out America. If that means we’re going to struggle for a while or even indefinitely, so be it. Integrity first. Truth first. America first.
Thank you and God Bless,
JD Rucker
Bitcoin: 32SeW2Ajn86g4dATWtWreABhEkiqxsKUGn
New News Aggregator — Truth. Based. Media. — “Better than Drudge Report, plus unlike Drudge they love America!”