The Profiteers by Sally Denton

The Profiteers by Sally Denton was one of the best books I read all year. I picked it up after visiting Alaska on a backpacking trip and seeing the Alaska Pipeline in person.

I got interested in exactly who builds all this mega-infrastructure. It turns out that there are like just a few mega-contractors that governments around the world turn to when they need mega-projects done. Bechtel is the biggest of them all (they are often the “they” when anyone says “they are building a massive dam / plant / road / subway). The book is a fascinating read that led me to think “ahhh…so that’s how the world works….”

Quick Summary

The Profiteers by Sally Denton is an investigative-style book that looks specifically at the history of the Bechtel Corporation, one of the world’s largest construction companies. But, it also looks at Bechtel as simply one company in a massive industry that exploded in growth during World War II.

The book examines the company’s decades of influence in Washington and its amoral investments, environmental damage, exploitation of labor, and chummy relationships with policymakers. It also looks at how the federal government & the United States as an economic superpower has benefited from the relationship. When people talk about the Military-Industrial Complex – Bechtel is Exhibit A.

The book begins with the story of the Hoover Dam, which was built by a consortium led by Warren Bechtel. Denton highlights how the dam set a pattern for Bechtel’s alliances with other businesses and federal officials, and how the company obtained the contract through the influence of a former government insider. She also notes the safety violations and labor unrest that characterized the construction site. The win-win-win bargain was –

• The project gets done without the Federal government having to staff up
• Bechtel and its partners are overpaid, but in a way that benefits the Federal government, since they’ll be able to stay in business until the next mega-project
• Bechtel runs the project the way they want to run it while regulators are there mainly to smooth the project to completion (any forced compliance is to help smooth the politics over and keep the project going)
• Bechtel provides contracts & work for Congressional districts in addition to campaign contributions so that the Congressmen who support the project get re-elected
• The contract money is spent domestically so that the money stays in the US economy, increases US GDP, and gets taxed by the Federal government
• The skills that Bechtel builds are expected to be sold abroad to bring in cash to the US economy and high-level foreign policy relationships

This model is scary & easy to rant against…but it’s also foundational to modernity and economic growth. Every wealthy nation-state has figured out a way to do this. It’s even practiced at the state level. In my home state of Georgia, it’s no secret that C.W. Matthews gets contracts from the State of Georgia to keep the State’s money in Georgia.

Denton then looks at the relationship between corporate power and government in a political democracy. She argues that corporations are useful but they also concentrate power in service of private gain & private interest, and deserve healthy skepticism and intelligent oversight.

In other words, when you need a power plant that can run millions of homes, you can’t just call anyone. And it’s much better to call a local company than someone in another country.

She also looks at the early days of corporations as relics of mercantilism, and how large companies embody interests that Washington cannot ignore. This is business at the highest level where foreign policy, national security, serious money, national skills, and massive economic growth all combine. The US has been doing this well since 1789 when Alexander Hamilton had the insight that a nation-state could never be truly free unless it was powerful…even if it was that power that could also suffocate freedom. The US has been dealing with this contradiction ever since.

Finally, Denton looks at the founder of Bechtel, Warren Bechtel, and the internal culture of the company. She notes that despite her extensive research, she was unable to access information about Bechtel contracts with the Department of Energy due to the company’s “longstanding tradition of privacy and secrecy.” She focuses on the top, populated by Warren Bechtel’s descendants, who have maintained a consistent, and boring, sensibility.

Overall, The Profiteers provides an insightful look into the history of the Bechtel Corporation and its relationship with the federal government. It examines the company’s influence in Washington, its amoral investments, environmental damage, exploitation of labor and chummy relationships with policymakers. It also looks at the relationship between corporate power and government in a political democracy, and the early days of corporations as relics of mercantilism.

What I Liked

I loved the topic, the investigative journalism, and the examples. Denton also did a better job than anyone explaining the how and why of the military-industrial complex, and even though it is rightfully everyone’s favorite boogeyman…it’s also sort of necessary? So the real question is what do we do about it as citizens & taxpayers who are still the ultimate bosses.

What I Did Not Like

I wish the author had covered the broader industry and Bechtel’s competition a bit more.

Takeaways

The world is much, much more complicated than you’d ever expect. And there are good reasons for why things are the way they are.

Institutional inertia is real. Just because a given institution is useful (or was useful) does not mean that it can just run on its own. It needs maintenance and correction so that the tool doesn’t become the master (i.e., war services providers who can basically create a war).

There is no ideal model for a human organization. Every model (profit, non-profit, public, corporate, partner, etc) can be corrupted and incompetent. Also, every model can be massively successful and efficient. The key is to provide the organization a single, clear, measure-able objective; hire good people who understand the objective; and let them get to it.

The bigger the project, the more impossible conflict of interest is. There is no substitute for integrity and good judgment and long-term, enlightened self-interest.