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The cover of the book, "Is War Necessary for Economic Growth"

Is war necessary?

In a new book, Vernon Ruttan argues that the decline of the U.S. military as a driver of 'big science' and 'big technology' projects is a cause for concern

By Deane Morrison

January 30, 2006; February 8

War is a terrible business, and the last thing most of us would want to hear is that the United States depends on war in any way for its economic survival. But if history is any guide, war or the threat of war has stimulated American productivity in too many bedrock technologies to dismiss its importance as an economic force. That is the somber conclusion of Vernon Ruttan, Regents Professor of Applied Economics, in his new book, Is War Necessary for Economic Growth? Military Procurement and Technology Development. Earlier this month, Ruttan read from and discussed his book on the Twin Cities campus.

In the past, the U.S. military has been the impetus behind the birth and early nurturance of satellite communication, jet propulsion, semiconductors, nuclear power, space industries, and the Internet. Of these, nuclear power is the most clear-cut example of a technology highly unlikely to have developed without defense-related procurement, says Ruttan. Who can imagine nuclear power without the Manhattan Project and the postwar rush to build a hydrogen bomb? Taken together, the listed industries account for a substantial share of U.S. industrial production.

In the past, the U.S. military has been the impetus behind the birth and early nurturance of satellite communication, jet propulsion, semiconductors, nuclear power, space industries, and the Internet.

Today, however, progress toward the next New Big Thing has slackened. One factor is changes in federal policies that have reduced support for long-term R&D activity likely to produce such revolutionary new technologies. Without such "patient" monetary support, private companies have less of a cushion and have tended to shift toward safer, slower technological progress with a shorter-term payoff. An example from the past illustrates the point:

"The U.S. commercial aircraft industry was unwilling to commit to jet aircraft until the reliability and fuel efficiency of the jet engine had been demonstrated by more than a decade of military experience," Ruttan says. Without the military support for aircraft R&D in World War II and military procurement during the Korean War, the airline industry would not have switched from propeller-driven planes to jets nearly as soon as it did.

Another roadblock has been the demise of the "dual use" concept. In the past, new military technologies would naturally spin off new civilian technologies to stimulate the American economy. But in 1993, the Clinton administration ended half a century of efforts to maintain rivalry among defense contractors who made comparable products like tanks, aircraft, and submarines. Mergers and acquisitions soon cut the number of defense contractors with sales of over $1 billion annually from 15 in 1993 to four in 1987. With hardly any competition left, the remaining firms felt less pressure to develop products with civilian use in mind. And in 1994, Congress eliminated the budget for a program that helped refocus defense-only R&D to dual-use.

Geopolitics has also played a role. The end of the Cold War has shifted the attention of defense agencies toward shorter-term tactical missions, says Ruttan. The upshot has been the weakening of incentives for long-term investments in defense-related "big science" and "big technology." In general, the second half of the 20th century has seen most major, formerly hot, new technologies reach maturity. At maturity, technologies grow much more slowly--in incremental increases rather than leaps and bounds. For example, electric power generation from coal-fired plants reached maturity by 1960, and none of its potential successors, including nuclear power, promises to reduce the cost of power generation enough to restore the industry to leading, rather than sustaining, source of economic growth, Ruttan says.

At this point, it isn't obvious how revolutionary leaps forward in technology will be funded, but Ruttan sees two areas with potential for huge growth. One is the fight against infectious disease, where the emergence of new diseases like AIDS and Ebola and the reemergence of old nemeses like tuberculosis and malaria cry out for a huge and continuous stream of effort and funding. The other is alternative energy, which could reduce or eliminate carbon-based fossil fuels and the attendant destructive effects of global warming. But even in these areas, Ruttan expects the government to emphasize technologies that will do little more than contain the threats and not transform the economy.

One thing Ruttan is sure of: If the United States doesn't soon develop new general-purpose technologies, economic growth will slow down. And if military defense is not to be the impetus, then another must be found. "If defense procurement is not going to force the development of new general-purpose technologies, the United States will need to develop a new strategy for catalyzing radical technological progress," he says.