I thought this was interesting

[pocketfullofshells]

In terms of a "$600 dollar hammer", I think it needs to be pointed out that in terms of a government contract like that, the contractor agrees to provide X for X amount of money, and is required to account for every single item.

The contractor will say rent and electricity, heat etc for the facility they will use to produce items are included in the X amount of dollars for the contract. To make the accounting scenario easier for all parties involved, (because how do you account really for the amount of AC it took to make each item etc) the contractor is allowed to just divide the cost equally among every item, thus making a hammer appear to cost $600, when in reality it did not.

Also there is economy of scale...when you make thousands or more of something for sale in the private sector...you have the high cost overall spread out over many many products made...when the only custamer is the Military, and there are only say, 4 of this type of Sub being made...the cost are much higher. Same reason why the US builds a top of the line fighter...and then sells lots of them around the world...rather then just keep them all and be the only one with them.

Not that that there is not huge waste to cut in the military...there are lots of things people like to bring up...because they sound good so long as you only think about it for 10 sec and no one explains why.