According to the Department of Defense, Mississippi has the 10th highest defense spending as a percentage of state GDP. This works out to about 5.3 percent of the state’s total GDP. Some of the top entities to be awarded this spending include Huntington Ingalls, Olin Corporation, Seemann Composites, and Mississippi State University.
While the defense industry is unique in that it services a very specific market, the industry does not operate in a vacuum. Much of the defense industry is directly affected by the policies of the states they operate in. Like other industries, the defense industry is subject to regulatory policies, labor laws, business filing requirements, taxes, environmental regulations, and many other elements.
Thus, it is important for public policy to directly recognize the economic importance of the nation’s military-industrial complex. But at the same time, one of the most significant ways that states can support the development of the defense industry is to pass industry-agnostic policies that encourage free-market productivity and growth. Lower taxes, a lower regulatory burden, and a friendly business climate all contribute to the development of states so that they are better prepared to encourage defense companies to come to their states.
Currently, California has the highest level of total defense spending, followed closely by Texas. But the amount of companies willing to stay in California’s high tax and regulation environment is shrinking. The defense sector is no exception. One glaring example is Lockheed Martin, which has the highest amount of defense spending of any company in the nation. The company’s Fleet Ballistic Missile Headquarters, formerly based in Sunnyvale, California, moved to Titusville, Florida. On a smaller level but still significant level, Mississippi has also seen some defense sector migration from California. OceanAreo, an underwater drone development company with work in the defense and commercial sectors, recently announced its relocation from San Diego to Gulfport.
Mississippi has made many great strides in creating a friendlier business climate, but much work remains to be done. According to the Fraser Institute, Mississippi still ranks 41st for economic freedom. While states larger populations and financial investments might have more reasons for companies to relocate to them, Mississippi does not always have that same negotiating power. If the state wants to get more competitive and see defense industry growth, economic freedom reforms through lower taxes and regulatory reform are key ingredients to creating that environment.
The defense industry is the economic foundation for America’s defense of liberty against its enemies. Mississippi has an opportunity to see the growth of this sector in the state, but in order to see stronger growth in the sector that helps defend liberty, the state should start by expanding its own economic liberty. That’s the American way.