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University of Colorado, Boulder Classroom: Econ 5

Economics 4999-809 Spring 1994

Defense Economics

Professor: Dr. Bernard Udis Office: Econ Bldg 106

Phone: 492-8872 Office Hours: WF 9:30-11 :OOam

and by appointment

Class Hours: TR 11 :00-12: 15p.m.

Required:

Optional Texts:

1. 2.

3.

4 .

5.

5.

6.

1.

Keith Hartley, The Economics of Defence Policy (London: Brassey's [UK], 1991 ). Amos A. Jordan, W.J. Taylor, Jr., and L.J. Korb, American National Security: Policy and Process (Baltimore: Johns Hopkins University Press, 1993, 4th ed). Thomas L. McNaugher, New Weapons-Old Politics: America's Military Procurement Muddle (Washington: Brookings Institution, 1989). James 8. Steinberg, The Transformation of the European Defense Industry: Emerging Trends and Prospects for Future U.S.-European Competition and Collaboration, (R4141-AIO) (Paper, Rand, 1992). Murray Weidenbaum, Small Wars· Big Defense: Paying for the Military After the Cold War, (NY, Oxford, 1992). U.S. Congress, Office of Technology Assessment, Bu,1ding Future Security: Strategies for Restructuring the Defense Technology and Industrial Base (OTA-ISC-530) (Washington: U.S. Government Printing Office, June 1992, Paper) . Student Subscription to Wall Street Journal.

U.S. Congress, Office of Technology Assessment, Redesigning Defense: Planning the Transition to the Future U.S. Defense Industrial Base (OTA·ISC-500) (Washington: U.S. Government Printing Office, July 1991, Paper).

2. Either one of the following: a) Howard S. Becker, Writing for Social Scientists (Chicago: University of

Chicago Press 1986). OR

b) Donald N. Mccloskey, The Writing of Economics (New York: MacMillan, 1987).

This course is offered as a capstone course in the Economics in Action series. It is approved for the Critical Thinking segment of the Core Curriculum required by the College of Arts and Sciences. As such it is designed to force the student to subject the myths, emotion and special pleading which dominate defense debates to economic analysis, critical scrutiny and empirical testing. An important goal will be to demonstrate how economic analysis can be applied to aid the understanding of defense issues faced by any nation with a defense budget. Major focus will be on the United States and the industrialized countries of Western Europe but, on occasion, the case of the former Soviet Union and the more advanced countries of Central and Eastern Europe will be examined for comparative purposes.

Students majoring in Economics, Political Science, and/or International Affairs should find the course particularly useful but any students who have taken introductory economics (micro and macro) should be able to handle the material, whatever their major department.

The course will be run as a seminar with extensive student participation and substantial reading required. 1

Grades will be based on class participation, two short essays (3-5 pages) on a common topic, and a major term paper (of at least 15 pages) . The subject area is important, interesting, and highly policy-relevant and a serious commitment of effort should yield a very rewarding learning experience.

1 In addition to the material in the required texts, additional items will be distributed to students and assignments made in material on reserve at Norlin Library. Free riders will be neither welcome nor happy in this class.

Thursday 1 /13/94

Tuesday 1 /18/94

Thursday 1/20/94

Tuesday 1/25/94

Thursday 1 /27/94

Tuesday 2/1 /94

Thursday 2/3/94

Tuesday 2/8/94

Thursday 2/10/94

Tuesday 2/15/94

Thursday 2/17/94

Tuesday 2/22/94

Thursday 2/24/94

COURSE OUTLINE

Organization and Introduction

Hartley Ch 1 - Economics and Defence Policy: An Overview The Economist, Sept. 5, 1992, "Defense in the 21st Century" Jordan et al, Ch 1 - National Security: The International Setting Jordan et al, Ch 2 - Military Power and the Role of Force in the Post-Cold War Era

Hartley Ch 2 - How Do Economists Analyze Defence? Weidenbaum Ch 6 - Reconciling Economics and the National Security Jordan et al, Ch 3 - Traditional American Approaches to National Security Jordan et al, Ch 4 - The Evolution of American National Security Policy

Hartley Ch 2 - How Do Economists Analyze Defence? Weidenbaum Ch 6 - Reconciling Economics and the National Security Jordan et al, Ch 14 - Economic Challenges to National Security

Hartley Ch 3 - Defence Budgets Weidenbaum Ch 1 - Matching the Military Budget to the National Security Environment Jordan et al, Ch 9 - Defense Planning, Budgeting, and Management

A. Wildavsky, Ch 9 "Budgeting For Defense." RESERVE Jordan et al, Ch 13 - From Low Intensity Conflict to Forward-Presence Operations

Hartley Ch 4 - The Determinants of Defence Expenditures Weidenbaum Ch 2 - Cutting Back the Defense Sector Jordan et al, Ch 7 - Intelligence and National Security

Steinberg Ch 1 -Steinberg Ch 2 -Steinberg Ch 3 -

Introduction Background: Characteristics of the European Def ense Market The Changing Economic, ·Political and Security Environment in

Europe and It's Impact on the Defense Industry Jordan et al, Ch 16 - The Former Soviet Union Jordan et al, Ch 21 - Europe

Hartley Ch 5 - Economics, Politics and Public Choice Jordan et al, Ch 11 - Nuclear Strategy

Hartley Ch 5 - Economics, Politics and Public Choice Jordan et al, Ch 1 2 - Limited War

Hartley Ch 6 - Equipment Procurement Policy Weidenbaum Ch 7 - Understanding the Defense Industry OTA, Building Future Security, Ch 3, "Prototyping-Plus"

A Review of Defense Acquisition in France and Great Britain, A Report of the Subcommittee on Investigations of the Committee on Armed Services, H.R., 101 st Congress, 1st Session, August 16, 1989. RESERVE

McNaugher Ch 1 - The Unhappy Accommodation & Ch 2 - The Era of Construction McNaugher Ch 3 - The Era of Reform & Ch 4 - Mismanaging Modernization Jordan et al, Ch 5 - Presidential Leadership & the Executive Branch in National Security Jordan et al, Ch 6 - The Impact of Congress on National Security Policy

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Tuesday 3/1/94

Thursday 3/3/94

Tuesday 3/8/94

Thursday 3/10/94

Tuesday 3/15/94

Thursday 3/17/94

Tues!Thurs 3/20-3/27

Tuesday 3/29/94

Thursday 3/31/94

Tuesday 415194

Thursday 417194

Tuesday 4112194

McNaugher Ch 5 - Perverse Priorities & Ch 6 - The Accidental Industrial Policy Jordan et al, Ch 8 - The Role of the Military in the National Security Policy Process Jordan et al, Ch 10 - The National Security Decision-making Process: Putting the Pie- Together

Hartley Ch 7 - NA TO and Equipment Standardization Steinberg Ch 4 - Patterns of Industrial Adaptation Steinberg Ch 5 - The Corporate Response

Steinberg Ch 6 - Emerging Trends in the European Defense Sector Steinberg Ch 7 - Conclusion: Competition vs. Consolidation

Hartley Ch 8 - The U.K. Defence Industrial Base Weidenbaum Ch 5 - Refocusing Military Research and Development OTA, Building Future Security, Ch 2 - Research and Development Jordan et at, Ch 1 5 - Research and Development

A . J . Alexander, P.T. Hill, and S.J. Bodilly, The Defense Department's Support of Industry's Independent Research and Development: Analysis and Evaluation, Rand Corporation, April, 1989. RESERVE

OTA, Redesigning Defense: Planning the Transition to the Future U.S. Industrial Base. RESERVE Ch 1 - Summary, Major Findings, Policy Issues Ch 2 - Threats, Forces, and Operations Ch 3 - Structure of the Current Base

SPRING BREAK

OTA, Redesigning Defense .. . Ch 4 - Trends and Problems in the Base Ch 5 - Framing the Debate Jordan et at, Ch 22 - International Forces and Peacekeeping

OT A, Building Future Security ... Ch 1 - Summary and Conclusions Ch 3 - Prototyping Plus Ch 4 - Efficient, Responsive, Mobilizable Production McNaugher Ch 7 - Toward Meaningful Reform

Integrating Commercial and Military Technologies for National Strength: An Agenda for Change (Washington: Center for Strategic and International Studies, 1991 RESERVE OT A, Building Future Security •.. Ch 5 - The Maintenance Base Ch 6 - Good, Integrated Management

Hartley Ch 9 - Evaluating International Programs OT A, Building Future Security ... Appendix A - Defense Technology and Industrial Base Policies of Allied Nations

Hartley Ch 9 - Evaluating International Programs OT A, Building Future Security ... Appendix A - Defense Technology and Industrial Base Policies of Allied Nations

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Thursday 4/14/94

Tuesday 4/19/94

Thursday 4/21/94

Tuesday 4/26/94

Thursday 4/28/94

Friday 5/10/94

Hartley Ch 1 0 - The Political Economy of Arms Control Weidenbaum Ch 10 - Planning for a World of Lower Tensions Jordan et al, Ch 23 - Conflict and Arms Control

Michael Moodie, Conventional Arms Control and Defense Acquisition: Catching the Caboose? (Washington: Center for Strategic and International Studies, 1990). RESERVE

Office of Technology Assessment, Arming our Allies: Cooperation and Competition in Defense Technology, (Washington: U.S. Congress, May, 1990). RESERVE Jordan et al, Ch 24 - National Security Perspectives for the 1990s

Office of Technology Assessment, Global Arms Trade: Commerce in Advanced Military Technology and Weapons, (Washington: U.S. Congress, June 1991 ). RESERVE

Weidenbaum Ch 9 - Recognizing the People Factor in the Armed Forces Weidenbaum Ch 4 - Helping the People OTA, After the Cold War RESERVE Ch 3 - Displaced Defense Workers. Ch 4, Engineers: A Special Case? Ch 5, Veterans' Adjustment

Congressional Budget Office, The Economic Effects of Reduced Defense Spending (Washington: U.S. Congress, 1992). RESERVE Summary and Ch 1 - Introduction Ch 2 - Effects of Reducing Defense Expenditures on the Level of Economic Activity

(skim balance)

Congressional Budget Office, The Economic Effects of Reduced Defense Spending .•. Weidenbaum Ch 3 - Downsizing the Defense Companies

Office of Technology Assessment, After the Cold War: Living with Lower Defense Spending (Washington: U.S. Congress, February 1992) Summary and Findings RESERVE

FINAL EXAM - REGULAR CLASSROOM 3:30 - 6:30 p.m.

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