After The Cold War: Living With Lower Defense Spending

3y ago
31 Views
3 Downloads
4.67 MB
238 Pages
Last View : 7d ago
Last Download : 5m ago
Upload by : Dahlia Ryals
Transcription

After the Cold War: Living With LowerDefense SpendingFebruary 1992OTA-ITE-524NTIS order #PB92-152537

.-——.—Recommended Citation:U.S. Congress, Office of Technology Assessment, After the Cold War: Living With LowerDefense Spending, OTA-ITE-524 (Washington, DC: U.S. Government Printing Office,February 1992).I.(m .;IIc b! lhc ( I S (io\crnIIIt,I)l PIIIIIIIIg OI]ILL.sLl[ cllll[c.llclL.111 (It IX)clllm l)l., AI(l II Mop SSOP, W’ iwl[lgloll. [)(’ 2040?” () {?sISBN 0-16 -036108-7

ForewordThe great events of 1991 ended the Cold War, banished the threat of global nuclearconflict, and freed us to redefine national security. While future U.S. defense needs are stillunclear, they will surely require less money and fewer people, as well as shifting in kind. Itis now safe to contemplate very substantial reductions in defense spending-perhaps to thelowest level in 40 years—and to turn our attention to other pressing national needs.Welcome as these changes are, adjustment to lower defense spending is not painless.Many of the workers and communities that depend for their livelihood on the military willhave to find new jobs and new sources of economic strength. Defense companies will haveto adapt to commercial demands, or shrink, or possibly go under. On the bright side, the sizeof the adjustment is modest, compared to defense build-downs of the past and to the presentsize of the U.S. economy. From 1991 to 2001, perhaps as many as 2.5 million defense-relatedjobs will disappear. That averages to 250,000 a year, or two-tenths of 1 percent of theemployed work force in 1991.Averages, however, can be misleading. The decline could be uneven, with steep dropsin short time periods, making adjustment more difficult. And hardships will be much greaterthan average in some communities where defense spending and jobs are concentrated. Anothercaveat: the U.S. economy is not as sturdy as it was during earlier defense cutbacks. Americanindustry faces tough challenges by foreign competitors, especially the Japanese; well-paidjobs to take the place of defense manufacturing jobs are scarce; and the 1990-91 recessionshows few signs of lifting in early 1992. Government programs can help defense industryworkers, veterans of the armed forces, and communities make the transition, and can lendassistance to defense firms that want to get into more commercial production. But theirprospects will depend most fundamentally on growth in the national economy.This is the first report of OTA’s assessment of Technology and Defense Conversion,requested by several congressional committees and members of the Technology AssessmentBoard to examine effects of the defense build-down on the civilian side of the economy. Thisreport focuses on ways to handle the dislocation of workers and communities that is, to somedegree, inevitable in the defense cutback. It opens a discussion of how defense technologiesmight be converted to commercial applications. The second and final report of the assessmentwill continue that discussion and will concentrate on opportunities to channel human andtechnological resources into building a stronger civilian economy.U JOHN H. GIBBONSDirectoriii

Advisory Panel—Technology and Defense ConversionMcGeorge Bundy, ChairmanProfessor Emeritus of HistoryNew York UniversityMichael BorrusDeputy Director, Berkeley Roundtable onInternational EconomicsUniversity of CaliforniaI-I. Kent BowenCo-Director, Leaders for ManufacturingMassachusetts Institute of TechnologyCharles BradfordDirector, Apprenticeship, Employment Training,and Rehabilitation ProgramsInternational Association of Machinists andAerospace WorkersArthur FlathersDirector of Independent Research and DevelopmentGE Aerospace DivisionDouglas FraserProfessor of Labor StudiesWayne State UniversityGregory S. FrisbyChief Executive OfficerFrisby Airborne HydraulicsDonald A. HicksProfessor of Political EconomyUniversity of Texas at DallasAnne BuckManager, Economic Adjustment UnitCalifornia Department of CommerceFrank J. LewisSenior Vice PresidentHarris Corp.Philip W. CheneyVice President of EngineeringRaytheon Co.Ira MagazinerPresidentSJS Inc.Robert W. CarltonVice President, Community and Business ServicesJackson Community CollegeRobert S. CooperPresidentAtlantic Aerospace Electronics Corp.Jerry R. CrowleyEntrepreneurChristopher DemischPartnerMcFadden BrothersMarkusenDirector, Project on Regional and IndustrialEconomicsRutgers UniversityAnnJohn P. McTagueVice President for Technical AffairsFord Motor Co.Basil PapadalesBusiness Development ManagerW.J. Schaefer AssociatesR.C. DynesDepartment of PhysicsUniversity of California, San DiegoSuzanne TeegardenExecutive DirectorIndustrial Services ProgramState of MassachusettsCraig FieldsPresidentMicroelectronics and Computer Technology Corp.Charles D. VollmerVice President, Technology InitiativesBooz-Allen and Hamilton Inc.NOTE: OTA appreciates and is grateful for the valuable assistance and thoughtful critiques provided by the advisory panel members. The panel doesnog however, necessarily approve, disapprove, or endorse this background paper. OTA assumes full responsibility for the background paperand the accuracy of its contents.iv

After the Cold War: Living With Lower Defense SpendingOTA Project StaffLionel S. Johns, Assistant Director, OTAEnergy, Materials, and International Security DivisionAudrey B. Buyrn, Program ManagerIndustry, Technology, and Employment ProgramKatherine Gillman, Project DirectorRobert Atkinson, Senior AnalystJeffrey Lewis, Research AnalystTerry MitchellMark RobertsJenifer RobisonElizabeth Sheley, EditorAdministrative StaffCarol A. Guntow, Office AdministratorDiane D. White, Administrative SecretaryPublishing StaffMartha Dexter, Acting Manager, Publishing ServicesDenise FelixCheryl DavisChristine OnrubiaDorinda EdmondsonBonnie SparksContractorsLinda KravitzTakashi MashikoLetitia L. OliveiraChip MooreSusan Zimmerman

ContentsPage1: summary and Findings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3Chapter 2: Policy Issues and Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39Chapter 3: Displaced Defense Workers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59Chapter 4: Engineers: A Special Case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103Chapter 5: Veterans’ Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129Chapter 6: Adjustment for States and Communities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153Chapter 7: Defense Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193Appendix A: Defense Spending and Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 229vi

Chapter 1Summary and Findings

ContentsPageINTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3MACROECONOMIC EFFECTS: A HISTORICAL PERSPECTIVE . . . . . . . . . . . . . . . . . . 6After World War II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6After the Korean War . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7After the Vietnam War . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8Structural Changes in the Civilian Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9After the Cold War: The 1990s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10LOCAL AND SECTORAL EFFECTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11States and Localities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12Industries . . . . . . . . . . . . . . . . . . . . .\. , . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14DISPLACED DEFENSE WORKERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18The Dimensions of Displacement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18Prospects for Displaced Defense Workers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18Adjustment Assistance for Displaced Defense Workers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19ENGINEERS: A SPECIAL CASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23VETERANS’ ADJUSTMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24DEFENSE-DEPENDENT COMMUNITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25DEFENSE COMPANIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28The Outlook for Major Defense Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28Small Business and the Defense Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30POLICY ISSUES AND OPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31Displaced Defense Workers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33Defense-Dependent Communities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34Defense Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35FiguresFigurePage1-1. Defense Spending, 1940-91 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41-2. National Defense Spending, 1950-2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41-3. Defense Employment Levels, 1944-91 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51-4. Defense Employment Levels, 1950-2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61-5. Eight States Totaling One-Half of U.S. Defense Spending, 1991 . . . . . . . . . . . . . . . . 121-6. Defense Spending as a Percent of State Purchases, 1991 . . . . . . . . . . . . . . . . . . . . . . . . 131-7. Eight States Totaling One-Half of U.S. Defense-Related Employment, 1991 . . . . . 141-8. Percent of State Employment in Defense, 1991 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151-9. Direct Defense Spending in California, 1964-90 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151-10. Leading Defense Industries by Value of Defense Output, 1990 . . . . . . . . . . . . . . . . . . 161-11. Leading Defense Industries by Defense Share of Industry Output, 1990 . . . . . . . . . . 161-12. Prime Contracts for Hard Goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17TableTablePage1-1. Projected Defense Spending and Employment Levels . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Chapter 1Summary and Findingseconomy running at 5.5 to 6 trillion a year.Defense-related employment in defense industries,civilian jobs in the U.S. Department of Defense(DoD), and the armed forces might drop from 6.0million in 1991 to as low as 3.5 million a decadelater, or an average of 250,000 a year 2 (figures 1-3and 1-4), a substantial number, but only about 0.2percent of the 119 million jobs in the U.S. economyin 1991.INTRODUCTIONThe dissolution of the Soviet Union and the endof the Cold War have profoundly changed U.S.defense needs. Just what a prudent U.S. nationaldefense system will be in the post-Cold War era isnot yet clear. But it will almost certainly require lessmoney and fewer people than it did in the 40 yearswhen this Nation faced a hostile and obduratemilitary superpower with a huge army poised at theborders of Western Europe. Welcome as thesechanges are, they have serious implications for thepeople, companies, and communities that havedepended on defense spending for their livelihood.The changes also raise some potentially troublingquestions about adjustment for the Nation as awhole.Several cautions should be noted. First, thedecline may not be gradual; steep cutbacks couldoccur in single years, making adjustment moredifficult. Moreover, effects in some localities will bemuch more troublesome than the aggregate figuressuggest. Approximately one-half of the defenserelated jobs within the United States are in eightStates, and within the States certain local areas areexceptionally dependent on defense employment.For example, up to one in five workers in theNorwich-New London labor market of southeasternConnecticut hold defense-related jobs, and manymore are in service, transportation, and commercialjobs that serve the everyday needs of these workers.It is in these defense-dependent communities thatreductions in defense spending can hurt most.Without detailed analysis at the local level, it isimpossible to say just how many American communities are highly defense-dependent, but a roughestimate (based on the value of prime defensecontracts per capita and the presence of militarybases scheduled for closure) is 160 of the Nation’s3,137 counties.Compared to the size of the national economy, thecurrent cutbacks in defense spending do not loomvery large. Even at the height of the Reagan buildup,defense spending never reached as big a share ofgross national product (GNP) as in the Korean orVietnam Wars, not to mention World War II, nor hasthe decline so far been as steep as in those earlier eras(figure 1-1). It is quite conceivable that retrenchmentwill go farther than either the Congress or thePresident has yet contemplated-perhaps far enoughto cut another 40 percent from defense spending bythe year 2001 1 (figure 1-2). That would acceleratethe build-down and drop defense spending, inconstant dollars as well as share of GNP, to thelowest levels in half a century; it would also meanbigger impacts on defense workers and communitiesthan those envisioned so far. Even so, the declinewould average out to about 12 billion a year (1991dollars) over 10 years--not a huge amount in anSome defense-dependent communities might stillescape serious problems if their local economies arestrong and diverse enough to take up the slack. Also,the adjustment programs discussed in this report—IW fiWe is & on tie e te of mat of fe (DoD) spending at a level of 169 billion (1991 dollars) iII 2001, m presented William Kauffman and John Steinbruner, Decisions for Defense (Washington DC: The Brooltings InstitutiorL 1991). The Kauffman-Steinbrunnerestimate is chosen for illustrative purposes because it is near the low end of well-informed estimates. A panel of the Electronic Industries Association(HA) forecast in September 1991 that the DoD budget in 2001 would be between 160 billion and 240 billio% with the most likely level at about 208billiow this panel’s forecasts am well-regarded because they have proved reasonably accurate in the past. See Electronic Industries AssociationGovernment Division/Requirements Committee, Ten Year Forecast Subcommittee, Defense Electronics Market: Ten-Year Forecast, U.S. DepartmentofDefense and National Aeronaufi”cs and Space Adnu”nistrafi”on Budgets, FY1992 to FY2001 (WashingtorL DC: 1991). For a discussion of future defenseneeds and the industrial base required to support therq see U.S. Congress, Office of Technology Assessment, Redesigning Defense: Planning theTransition to the Future U.S. Defense Industrial Base, OTA-ISC-500 (Washington, DC: U.S. Government Printing Ofllcc, July 1991).%ased on the Kauffman-Steinbruner projection of DoD spending of about 169 billion a year in 2001, OTA estimates that the active duty rnilitayforces would number 1.34 milliou DoD civilian employment 700,000, and jobs in the defense industries 1.50 to 1.62 million. The total decline indefenserelated jobs from 1991 to 2001 would be 2.3 to 2.5 million (see table 1-1 and the discussion in ch. 3). This figure is for positions lost; as discussedbelow, actual job loss in the active duty armed forces and in DoD civilian employment is likely to be substantially lower.-3-

4 After the Cold War: Living With Lower Defense SpendingFigure l-l—Defense Spending, 1940-91Percent of GNPBillion 1991 9601965YearU Outlays in OURCE: Steven Alexis Cain, Analysis of the #’ 1992-93 Defense Budget Request, With Historical Budget Tables(Washington, DC: Defense Budget Projeot, February 1991).Figure 1-2—National Defense Spending, 1950-2001Billion 1991 dollars400350300250200150100500t1950 1955!!1960m Historical1 96519701975 1980 1985 3 5 1 9 9 0 1 9 9 5 2 0 0 1Yearm DoD estimate- Kauffman estimateSOURCES: Steven Alexis Cain, Analysis of the W 1992-93 Defense B-et Request, With Historr”cal Bu&et Tables(Washington, DC: Defense Budget Projeot, February 1991); and OTA projections based on Kauffman, seenote to table 1-1.retraining and reemployment help for displacedworkers and veterans of the armed services, localand regional economic development efforts, assistance to firms converting to civilian production--cancontribute to a smoother transition. However, if thenational economy falters, these moderating influences could count for little. Adjustment problemsthat are manageable in good times are much moreserious matters in a stagnant or recessionary economy, when even small losses in demand can

Chapter 1--Summary and Findings . 5Figure 1-3-Defense Employment Levels, 1944-91Millions302520151944 1948 1952 1956 1960 1964 1968 1972 1976 1980 1984 1988Year- Militarypersonnel DoD civilians Defense industrySOURCE: Department of Defense, Office of the Comptroller, Natkma/ Defense Budget(Washington, DC: March 1991).aggravate a downward spiral. While a strong recovery from the 1990-91 recession may yet happen,there were few signs of it at the end of 1991.More fundamentally, the U.S. economy is not asrobust as in earlier defense build-downs. Twentyyears ago, the United States was still the world’sdominant economic power. Now, it is under challenge as never before from extremely able foreigncompetitors (principally Japan). U.S. commercialmanufacturing in particular is under siege, and willbe hard put to take the place of defense industries,which are heavily tilted to manufacturing. Declinesin manufacturing are especially costly to the Nationbecause manufacturing provides well-paid jobs,supports most privately funded research and development (R&D), and dominates international trade. 3The profile of job creation in the United States in thelast decade has been skewed toward low value-added services with low pay, poor benefits, and littleknowledge generation.Other kinds of losses could also follow cutbacksin defense spending. During four decades of ColdEstimatefor FY 1992War, national defense usually has had more money,prestige, and power than any other governmentactivity, and it has taken on some important socialand economic responsibilities beyond the strictlymilitary. A prominent example is equal opportunityemployment. The anneal forces have become themost color-blind large institution in the UnitedStates, providing opportunities for good jobs, goodtraining, and advancement to hi

of the Cold War have profoundly changed U.S. defense needs. Just what a prudent U.S. national defense system will be in the post-Cold War era is not yet clear. But it will almost certainly require less money and fewer people than it did in the 40 years when this Nation faced a hostile and obdurate military superpower with a huge army poised at the

Related Documents:

May 02, 2018 · D. Program Evaluation ͟The organization has provided a description of the framework for how each program will be evaluated. The framework should include all the elements below: ͟The evaluation methods are cost-effective for the organization ͟Quantitative and qualitative data is being collected (at Basics tier, data collection must have begun)

Silat is a combative art of self-defense and survival rooted from Matay archipelago. It was traced at thé early of Langkasuka Kingdom (2nd century CE) till thé reign of Melaka (Malaysia) Sultanate era (13th century). Silat has now evolved to become part of social culture and tradition with thé appearance of a fine physical and spiritual .

On an exceptional basis, Member States may request UNESCO to provide thé candidates with access to thé platform so they can complète thé form by themselves. Thèse requests must be addressed to esd rize unesco. or by 15 A ril 2021 UNESCO will provide thé nomineewith accessto thé platform via their émail address.

̶The leading indicator of employee engagement is based on the quality of the relationship between employee and supervisor Empower your managers! ̶Help them understand the impact on the organization ̶Share important changes, plan options, tasks, and deadlines ̶Provide key messages and talking points ̶Prepare them to answer employee questions

Dr. Sunita Bharatwal** Dr. Pawan Garga*** Abstract Customer satisfaction is derived from thè functionalities and values, a product or Service can provide. The current study aims to segregate thè dimensions of ordine Service quality and gather insights on its impact on web shopping. The trends of purchases have

About the Cold War Museum Founded in 1996 by Francis Gary Powers, Jr. and John C. Welch, the Cold War Museum is dedicated to preserving Cold War history and honoring Cold War Veterans. For more information: Cold War Museum, P.O. Box 178, Fairfax, VA 22030 Ph: 703-273-2381 Cold War Times Sept / Oct 2002: Page 2 On the Cover:

Chính Văn.- Còn đức Thế tôn thì tuệ giác cực kỳ trong sạch 8: hiện hành bất nhị 9, đạt đến vô tướng 10, đứng vào chỗ đứng của các đức Thế tôn 11, thể hiện tính bình đẳng của các Ngài, đến chỗ không còn chướng ngại 12, giáo pháp không thể khuynh đảo, tâm thức không bị cản trở, cái được

Cold War, academic debates on the origins and characteristics of the Cold War have dominated the field of contemporary history. As the Cold War proceeded, the histori-ography of the Cold War developed its own dynamics. In the early phases of the Cold War academic discourse was ideologically partisan, fiercely divergent and even combat- ive. Indeed historians and their works were part of the .