1993 Articles

Managing the Transition: Defining Government's Role in the Defense Conversion

Li, Jeffrey

"So goes the popular concept of defense conversion or whatever you call it (diversification, economic adjustment, military transition, defense reinvestment...). The central tenet of conversion asserts that companies which produce goods for the defense market can be guided, with a little effort, toward a successful civilian market. The benefits to the country could be immense. Labor and machinery reserved for defense could be retrained and retooled for civilian use. Rebuilding the infrastructure, developing civilian technologies, and shoring-up the nation's economic competitive edge are all plausible options.
However, those grandiose designs of a new civilian economy are not the reasons why conversion is a favorite in Washington. The real motive for conversion is jobs. Defense cutbacks will have a crippling effect on private industry. Everyone knows that the Department of Defense(DoD) is a tremendous stimulant to the economy. Along with the Pentagon, it practices a de facto industrial policy, subsidizing key technologies and investing in basic and applied research and development (R and D). This high-tech research is spunoff, giving the products of civilian firms a competitive boost over foreign products. But as defense funds begin to taper off, bases will close, military personnel dismissed, and defense contractors starved for income, triggering a new wave of unemployment..."--from page 10