Free Minds & Free Markets

REASON Interview: Ernest Fitzgerald

The defense expert fired by Nixon explains why military budgets are still too high.

(Page 6 of 6)

FITZGERALD: I got involved while I was fired from the Pentagon and working on Capitol Hill. About a year after I went to work on Capitol Hill I was analyzing the supersonic transport program. I was working for the Joint Economic Committee part-time, and Senator Proxmire was the chairman. And of course he'd been fighting the supersonic transport subsidy for seven or eight years with no success at all up until then. So I began contacting groups who were interested in it, and the Taxpayers Union was very helpful; they really did terrific work on it, particularly in recruiting such people as Sen. Harry Byrd from Virginia and Sen. Jordan from North Carolina, senators who'd ordinarily be expected to vote for aerospace programs. And even though this wasn't a military program, it was so draped in the flag as to have all of the appeal of a big military program. NTU did a great job but in the process lost a lot of their right-wing support. They came on hard times and asked me to help them. I worked with Jim Davidson to reorganize it and became chairman at that time.

REASON: Are you still chairman?

FITZGERALD: No, I'm just a member, I resigned as chairman shortly after I went back into the Pentagon, because it's a lobbying organization and I didn't feel comfortable as head of it. I'm chairman of the National Taxpayers Legal Fund, which is a public charity; we're not primarily a lobby. But I've worked with the Taxpayers Union, and all the time I was fired from the Pentagon we economized and cut it back to nothing and rebuilt. Of course, it's a huge organization now, 120,000 people.

REASON: Do you consider yourself a libertarian?

FITZGERALD: Yes, in most respects I certainly do. I'm not a member of the Libertarian Party, but I've had these brushes with all-powerful government, I've been the object of a lot of their attention, and I became very frightened of unaccountable government power. When you see it coming down on you personally, it comes home to you; it's not just a theory.

REASON: As a small-"l" libertarian, what views do you have on defense policy in general?

FITZGERALD: Well, I've changed over the years, in that I used to describe myself as a parsimonious hawk. I thought that for much less money than we were spending, if we were spending wisely, we could buy so much stuff we would hardly have room to park it. And I never really gave much thought to anything other than the efficiency aspect of it, until I was fired and thrown into closer contact with the various groups who push different points of view on Capitol Hill.

I think we are going to have some sort of large military force; I don't see any way out of that in the foreseeable future. However, I think it's equally true that it's not getting us anywhere in the world, that it's becoming less relevant than it used to be. And I think for one very good reason we ought to think about trimming back, cutting down. It's clear that what we've got to do is to revert to exemplary leadership. For the first 150 years of our national existence we had almost no army and not much of a navy and no CIA at all, and yet there were revolutions fought all over the world by people who wanted to be like us…

REASON: Yes, we set an example.

FITZGERALD: Today we see most of the popular revolutions being made by folks who want to be different, and that ought to tell us something, that we should rethink it. Of course, I think they're mistaken, I think they get out of the frying pan into the fire in most of these revolutionary situations, but nevertheless their aspirations are not to be like us to the extent they used to be.

But the other factor is the impact of the huge military outlays on our competitive position in world markets. NTU did a study several years ago showing the percentage of military spending to gross domestic investment. I've forgotten the exact figures, but it was something on the order of 50 percent for the United States compared with 14 percent for West Germany, for example. When I was a young engineer we could compete in almost any market we chose anywhere in the world on the basis of price and quality. That's no longer true; there's very few areas where we're competitive.

REASON: People like Martin Feldstein, at Harvard, think that's mostly because our tax policies discourage saving and that we have the lowest saving rate of any industrial country. Do you really see it as being due significantly to the level of military expenditure?

FITZGERALD: Sure. No question about it. Let's take an example of three manufacturing companies. Let's say we had the Firm USA, the Firm West Germany, and the Firm Japan. And the Firm USA says, "You guys don't worry about guards for the plant. We'll give it to you, or provide most of it out of our money." And then we'll say, "You don't even need to worry about applying your engineers to designing the fancy equipment you need. We'll do that, too. You guys go ahead and work on your products." Well, we've seen the decline in industrial productivity—the decline in the rate of productivity increase, actually. In recent times we've had an actual decline. And so we're slipping behind the other industrial countries. The first time since records were kept we had a balance-of-trade deficit in 1971. That was the first time ever. And of course the huge deficits are commonplace nowadays—30 billion a year, on that order. The dollar can't stand that. We're seeing the results of it, because our productivity is the only backing we have for the dollar now. Productivity is down now. We operate the oldest stock of metal working equipment in the whole Western World. So we're diverting enormous resources, too, and the balance-of-trade thing is what's really got to be focused on, I think. Because the excuses given are totally phony. They're blamed on the Arabs.

REASON: But Japan doesn't have that situation. They import all of their oil.

FITZGERALD: 100 percent, I believe. I don't believe they produce a drop. And they have very little coal. The Germans import practically all of their oil and they have coal. But they have huge trade surpluses. They're efficient enough that they can compete in world markets and earn what they need to pay even the exorbitant prices from OPEC. We're hurting from the diversion of investment, the diversion of skilled people, engineers, toolmakers. I really think the skilled workers are perhaps more important than the engineers, because we have lots of them tied up in that sort of business. And also from the infection of our whole industrial body with the bad work habits and management practices that we encourage in the military industry, our largest manufacturing industry.

REASON: You've certainly been enlightening. Thanks very much.

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.


Get Reason's print or digital edition before it’s posted online