At the height of its mobilization during the Second World War, the United States possessed a vast industrial and demographic advantage over both its foes and friends.  In particular, it could build and man warships and war planes in greater numbers and at a much faster pace.  To take one example, the Japanese losses of aircraft carriers and of combat pilots at Midway in June 1942 could not be swiftly replaced. 

            Now the shoe is on the other foot in any non-nuclear confrontation between the United States and China.[1]  China possesses a vast industrial base that is firmly under the control of the government.  A Sino-American war over Taiwan could begin as a naval war in the Western Pacific.  China has powerfully developed its ship-building capability, while the American ability has badly wasted over many years.  In China, there is a shipyard that can produce in one year as many ships as American yards have launched in the last nine years.  No, those ships, like many other products, are not as good as high-end Western products.  However, Chinese industries have been improving quality.  On top of that, in the Second World War, German soldiers were generally better than Red Army soldiers.  The Red Army just had a lot more soldiers. 

In the United States, the defense budget as a share of Gross Domestic Product (GDP), has slid from 8.9 percent during the Vietnam War to 4.6 percent during the Afghanistan-Iraq War to 3.1 percent today.  Declining defense spending has led to a wasting defense industrial base.  That is, the ability to produce weapons to meet needs. 

After 1990, the end of the Cold War and falling defense budgets caused the Pentagon to give defense contractors a strong shove toward consolidation.  Furthermore, a series of small-scale wars encouraged arms manufacturers to limit productive capacity to what was needed to serve a just-in-time delivery model.  One effect has been endemic cost-overruns.  Another has been a stretching-out of delivery times.  Doubling production of anti-tank missiles will take four years, not the originally projected two years.  There’s an up to six year lead-time in the production of anti-ship missiles already promised to Taiwan. 

It will take time to set this right.  Productive capacity includes manufacturing capacity, supply chains, and skilled personnel.  All have been thinned out over the last thirty years.[2]  Other economic changes of the time have similarly shrunken the U.S. manufacturing base in general.  Moreover, weapons production sometimes requires highly-trained specialists, so training may take a long time.  As a result, it will not be easy to shift key resources from non-essential to essential industries.[3] 

It took better than thirty years, along with some fundamental social and economic changes, to arrive at this situation.  Just reversing course doesn’t seem like a workable solution.  Facetiously, Wall Street Journal columnist Greg Ip raises the possibility of just handing the problem to Elon Musk. 

The essence of the issue lies in risk: could the U.S. Navy risk battle with the Chinese navy if it meant taking losses that would be hard to replace in a timely fashion? 

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[1] Greg Ip, “U.S. Struggles to Build Up Its Military Might,” WSJ, 7 December 2023. 

[2] The same thing happened in Great Britain between the world wars.  This contributed to appeasement. 

[3] During the Covid lock-downs in New York City, it finally occurred to people that many activities combined in an economic “eco-system.”  The same goes for the arms industry, in particular, and all industry, in general.