War Profiteering

There are many ways corporation profit from war. They can profit from war through supplying logistics, defense weapons, or even suppling private security contractors like Blackwater did. The problem with war profiteering is that they waste unnecessary tax payer’s money to profit off of war. Corporations would often price gouge or overcharge because there’s an incentive. Corporations have an incentive to overcharge and price gouge because contracts are structured as a  cost plus benefit. A cost plus benefit is when a corporation gets paid for all their expenses and they get an additional bonus which is a percentage of the total cost of the contract. A corporation like Halliburton secured a $3.7 billion dollar contract during the Iraq war that was under the cost-plus benefit arrangement. The government would reimburse Halliburton for it’s cost and on top of that pay and additional fee that is based off of a percentage of the costs. This gives Halliburton and incentive to not control costs and overly spend. An example of overspending is when Halliburton insisted on spending $7.50 on embroidered towel that read “MWR Baghdad” when regular towels cost $2.50 that were intended for recreational use. This cost three times more of what should have spent which creates unnecessary spending. Corporations also use their connections between their government to secure lucrative contracts. Dick Cheney initiated privatizing logistics during the during the George H.W Bush administration serving as secretary of defense. Dick Cheney later on became the CEO and left to become the vice president for George W. Bush Administration. He has received $1,997,525 from Halliburton when becoming president and received $1,451,398 in a bonus deferred from 1999. He also had the options to buy Halliburton Stock. This is an example of how corporations used their influence in congress to secure lucrative contracts. Dick Cheney becoming vice president and him being CEO at Halliburton played a huge role in the company’s success. Corporations like Halliburton will continue to become part of the military industrial complex and profit off of war if military budgets keep increasing. The “Department of Defense’s proposed base defense budget is $523.9 billion for next year, representing a whopping 82.54% increase over the base budget of $287 billion in 2001”(Persinos). This increase budget go into the pockets of corporations and war profiteering will be inevitable.