ON THE NEW MILITARY PERIL: TOWARD THEORY AND POLICY

• OR THE COST DISEASE: DROPPING THE OTHER SHOE

• In any group whose performance is heterogeneous,

• the performance of some of the members must be below

average• Baumol’s fourth tautology

The cost-disease other side:the falling real prices

• In 1919, the average U.S. worker had to labor nearly an hour to buy a pound of chicken. At today’s wages and poultry prices, less than five minutes of labor is required

• Color TV labor-time cost down 98 % 1954-97• VCR cost down 96% 1972-97• Microwave oven down 99% 1947-1997• Now Computer cost per MIPS down to 27

minutes of labor• From 733,000 lifetimes of labor in 1944!!!

War..As it Used to be

• “Pecunia Nervus Belli” (Money is the sinew of war) “...the favorite Latin tag of the [mid-16th century ].”

• “There were, Louis XII [king of France,1498 - 1515] was told by one of his counselors, three things a king required in order to .fight wars: First, money; second, money; and third, money.”Jones, 1994, p.130.

War—as it is Evolving

• “The AK-47 has become the world's most prolific and effective combat weapon, a device so cheap and simple that it can be bought in many countries for less than the cost of a live chicken.”

• Larry Kahaner, "Weapon of Mass Destruction," Washington Post, November 26, 2006, available at http://www.washingtonpost.com/.

Web address for more computer paintings

• http://www.stern.nyu.edu/-wbaumol