Yesterday, at Tapped, I argued that when evaluating whether a good or service is better provided by the public or private sectors, you have to keep in mind the private sector's need to turn a profit. So if company X is 6% more efficient than the government at doing something, but will take a 12% cut for profit, you're better off leaving the service in public hands. This article on how much we're paying for private military contractors in Iraq makes the point nicely:
Blackwater was a subcontractor to Regency, which was a subcontractor to ESS, which was a subcontractor to Halliburton's KBR subsidiary, the prime contractor for the Pentagon -- and each company along the way was in business to make a profit. [...]
According to data provided to the House panel, the average per-day pay to personnel Blackwater hired was $600. According to the schedule of rates, supplies and services attached to the contract, Blackwater charged Regency $1,075 a day for senior managers, $945 a day for middle managers and $815 a day for operators.
According to data provided to the House panel, Regency charged ESS an average of $1,100 a day for the same people. How the Blackwater and Regency security charges were passed on by ESS to Halliburton's KBR cannot easily be determined since the catering company was paid on a per-meal basis, with security being a percentage of that charge.
And how does that compare with what the government spends?
An unmarried sergeant given Iraq pay and relief from U.S. taxes makes about $83 to $85 a day, given time in service. A married sergeant with children makes about double that, $170 a day.
Army Gen. David H. Petraeus, the top U.S. commander in Baghdad overseeing more than 160,000 U.S. troops, makes roughly $180,000 a year, or about $493 a day.
So we're paying Halliburton $1,100 for their rent-a-soldiers, while we're paying General Petraeus less than half that for his services. It's astonishing. And we have less operational control over the Blackwater forces than we have over members of the military.
The Bush administration has discovered that it's far easier to convince Congress to appropriate more funds than it is to convince the American people, much less the military, to send more troops. So we're purchasing extra manpower instead. It's a way of hiding the human cost of the war in the financial cost of the war. It's a way, in other words, of lying, albeit in a uniquely expensive fashion.
