National Security Rent-Seeking

I am currently re-reading Milton and Rose Friedman’s 1980 book Free to Choose for an economics book club in which I participate. On page 47 is a passage about national security-rationalized corporate welfare that asks the economist’s favorite question: how does this proposal compare to other realistic options?

“Yet in all its pleas for subsidies on national security grounds, the steel industry has never presented cost estimates for alternative ways of providing national security. Until they do, we can be sure the national security argument is a rationalization of industry self-interest, not a valid reason for the subsidies.”

Economics can get highly technical, which is why some people find it intimidating. They shouldn’t. Good economic analysis is often as simple as asking the right questions. Anyone can do it, and more people should give it a try.

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