ABSTRACT
This chapter provides some insight into national security planning during September 11, 2001. The US defense industry is adjusting to the end of the Cold War more rapidly and effectively than expected. The chapter offers one economist's evaluation of the challenges facing the US military establishment and the private sector companies on which it so strongly relies. The key task is to maintain the capacity to design and produce the military systems and forces needed to deal with future threats. The concern with the defense industrial base is far more than dealing with contract forms, cost controls, and business procedures. Overall, the defense industry is in far better shape than might have been expected from the loss of so much of its basic market. It is not surprising that, despite the massive cutbacks in US defense spending, no plea was heard for taxpayer bailouts of faltering defense contractors.
