Munger on Permissionless Innovation
Russ Roberts: What is the most important concept in political economy?… your answer, Mike, really surprised me. What was it? Michael Munger: Well, I would claim… that […]
Month: November 2018
How does cost growth affect decision making?
I’m not sure how these results support the idea that “a solid and funded test plan often mitigates future cost growth.” It sounds like if you were 10% over budget to first flight — and that reliably means you’ll be that much or over for the program — then engineering and requirements problems were the culprit and not testing.
$22.7 billion F-35 production deal before Operational Testing
One might think that for such a big order to be placed, the F-35 worked out all the development kinks. But it looks like a ploy to get a big contract, claim economy of scale savings, and fix the planes later. The contract was 40% of Lockheed’s total ordinary revenue, and the US’s end of the bill looks to be nearly one-third of the entire aircraft procurement budget for Navy and Air Force, which came in at about $36 billion in the FY 2019 request.
How to save $1 trillion on defense spending
I was recently in an interesting round-table discussion where one gentleman was talking about a plan to cut $1 trillion of defense spending over ten years. He said there was interest on this subject from both the progressive left and the deficit hawk right. But how would you do it?
Bill Janeway has an interesting story on technological revolutions
At the frontier, advanced progress is made by trial-and-error and error and error and error. Efficiency in the allocation of resources means doing this calculus of net-present value, expected future cash flows, cost versus benefits. But, at the frontier, you can’t define the benefits.
Sunday Links
Links on the A-10 Warthog, the F-35, Space Force, the Pentagon audit, and France’s missile performance.Links on the A-10 Warthog, the F-35, Space Force, the Pentagon audit, and France’s
Do intangibles lead to a productivity divergence?
When intangibles hardly matter, then capital and labor ought to be about equally productive across all firms. When intangibles matter a lot, then productivity differences will widen. What does this mean for defense organization?
Incrementalism vs. comprehensive rationality
The philosophy of incrementalism was itself a reaction to the comprehensive rationality of the rational-deductive model of decision-making utilized in economic theory. This model posits […]
The astronomical cost of winning contracts
It’s hard to believe that Boeing was a long-shot to win an aircraft program, but it appears that there were 6 other competitors at some level. What I find interesting is the coincidence of Boeing having both the lowest price and the only clean-sheet design. Optimism, perhaps?
David Packard pitches prototyping
There are two practices which have consistently led to excessive costs and unsatisfactory results in the development and procurement of weapons systems. One is the excessive reliance on paper studies and paper analysis. The other problem is the concurrency between development and production.
Is there really $125 billion in Pentagon Waste?
Imagine you’re the Deputy Secretary of Defense, and in walks a group of consultants who tell you that you can save $125 billion over five years if you act on their recommendations. You flip through their PowerPoint brief stacked with charts and buzz words like optimize, modernize, and agile enterprise.
Space Force: what’s the organizational design?
The Space Development Agency, which would be a joint procurement arm in charge of setting standards and avoiding the duplication on space technology, appears to […]
Sunday Links
Arnold Kling on DARPA, Emergent Ventures, and project choice. Here’s a slice: “I think where DARPA succeeded was when it had two other elements. One […]
Cesar Hidalgo on tacit knowledge and social networks
Coase, in the 1930s goes to a presentation from a professor in the department of commerce in LSE (London School of Economics) and this professor […]
How voluntary is contracting in the DOD?
When economists think about contracting, usually they think about voluntary agreements made between two or more parties. But in the DOD, neither the customer nor […]