Tom Cassidy and the Predator

Without the revolving door, it is unlikely the United States would have developed the Predator in time to eliminate terrorists in the aftermath of 9/11. The world’s first armed reconnaissance drone changed doctrine, challenged what it meant to be a fighter pilot, and sat at the nexus of Title 10 - Title 50 political warfare. In other words, it should have been impossible to sell.

Enter Tom Cassidy.1

Cassidy epitomized the revolving door. Shortly after retiring as a Navy Rear Admiral, Cassidy joined General Atomics to lead sales. He had 30 years of experience as a fighter pilot and had commanded the Miramar Naval Air Station, home of Top Gun. While his operational experience from six thousand hours in the cockpit was certainly relevant, it came second to his stints in the Pentagon. Cassidy was Director of the Navy’s Aircraft Weapons Requirements Branch and then ran the Tactical Readiness Division for the Chief of Naval Operations. He knew how the Department of Defense bought stuff.

Cassidy reported to Neal and Linden Blue, the brothers who owned and operated General Atomics.2 They were savvy and scrappy repeat entrepreneurs, but they had no military background and were unable to sell the concept of drone-as-cheap-cruise-missile in 1991 (no such challenge would exist today!). They pivoted into reconnaissance drones when they acquired Abe Karem’s company, Leading Systems. Karem, a brilliant Israeli immigrant, had spent 10 years toiling on various state-of-the-art endurance drones. In a fine illustration of technology being secondary to go-to-market, Karem had failed to build a successful business. The Blues purchased Leading Systems for pennies on the dollar.

Neal and Linden Blue were able to make some progress on their own. The CIA bought two General Atomics drones for $5 million. This stirred sufficient competitive rivalry with the DoD, causing John Deutch, the Undersecretary for Acquisition and Technology and a fan of Linden’s, to express serious interest in purchasing some of the drones for the DoD’s use.

But as anyone who has worked for even a few weeks in DoD sales quickly learns, grabbing the attention of a senior civilian or general officer is not only insufficient, it can distract from the steps needed for the real sales process. Cassidy, who had worked in a requirements branch, of course knew this. He aggressively lobbied the top aide of the influential Congressman Jerry Lewis to ensure $20mm would be included for an endurance unmanned aerial vehicle (UAV) in the next defense bill. Cassidy also relentlessly cultivated a relationship with the Joint Program Office (JPO) UAV to shape their acquisition strategy and requirements. Within 40 days of the UAV money being appropriated, General Atomics was awarded a contract for $31.7 million to deliver ten drones and three ground control stations, marking its first significant sale to the Department of Defense.

Cassidy’s relationships proved as useful as his understanding of the requirements process. During the Predator’s first operational deployment over the Balkans, Cassidy went on site with users and was shocked to learn they were not watching the video feeds coming off the Predator. Instead, they were pausing the video to print out frames. Cassidy went to the commander in chief of the U.S. and NATO forces in the Balkans and told him the value proposition of the Predator was the live feed and that the intel analysts needed to use it. As Cassidy recalled, “Fortunately I knew the guy, so he agreed.”

And when the time came to arm the Predator with Hellfire missiles—a heretical idea at the time—Cassidy was key to quickly brokering a deal with General Jumper, the Commander of Air Combat Command. The briefing to discuss the timeline and milestones was attended by dozens of people. In what easily could have been a contentious and months-long negotiation, the bonhomie between Jumper, the four star general, and Cassidy, the former two star admiral, allowed Cassidy to arrange an impromptu sidebar from the massive group. They emerged from their private chat with a deal in hand: General Atomics would get $2 million over two months to arm the Predator.

Cassidy possessed no uniquely brilliant technical insights—it was the Blues who pushed for the acquisition of Karem’s mature technology, and Karem managed to build the world’s best drones independent of the revolving door. But Cassidy uniquely accelerated go-to-market in time for America to have eyes and firepower over Afghanistan. Karem’s 10-year old business was anemic, and while General Atomics had managed a small sale to CIA, the likely trajectory of converting that into a full fledged defense business sans the revolving door would have been at least a decade (see: Palantir).

Would the Predator have eventually made it to market without Cassidy? Probably, but weapons don’t get deployed in a vacuum. Weapon-warfare fit, much like product-market fit, is real. When you deploy a weapon matters as much as your ability to deploy it (the Predator is not much use over China). The revolving door helps move things along.

Our People Industrial Base

Cassidy and the Predator is an exceedingly functional example of the revolving door. For every Predator there are hundreds of executives propagating the status quo or actively derailing innovation. But to repurpose a quote from at the same HASC hearing mentioned earlier “By creating processes that ensure nothing goes wrong, you also create processes that make sure that nothing can go right…and it constrains you to mediocrity. I would gladly accept more failure if it meant that we had more catastrophic success as well.” The Predator is one such catastrophic success.

Much like onerous AI regulation, banning the revolving door would only serve to entrench incumbents. The primes would have their positions protected, and new entrants would be completely helpless, forced to operate under the naive premise that the effectiveness of their product is a sufficiently differentiating variable. For example, Anduril, founded by Gaetz’s brother-in-law, would not have been able to hire their Chief of Strategy, who was the Staff Director of the Senate Armed Services Committee months before joining the company.

The revolving door is a symptom, not a cause, of our dysfunctional military-industrial complex. The root of the issue is that selling to the DoD is extremely specialized and filled with gatekeepers. When the Berlin Wall fell in 1989, only 6% of the Department of Defense’s budget went to defense specialists (e.g., companies with no commercial business). Today, that number has jumped to 86%. Revolving door hires are essential in such an environment. To mitigate their influence, we would need to stop treating the defense industrial base as an island unto itself, completely disconnected from the American ingenuity flooding every other corner of the country.

If I can offer one critique of the revolving door, it’s that it doesn’t seem to work in the other direction as often as it should. Hopefully this changes soon. As the Wall Street Journal recently reported, the “department is considering asking chief technology officers and other senior tech professionals to take up high-ranking positions in the reserves.” Brynt Parmeter, the department’s chief talent management officer, aptly refers to this initiative as creating a people industrial base.

1934 was a bad year to be an aviation executive. Industry leaders were hauled before Congress multiple times to stand trial as Big Business villains and Merchants of Death. William Boeing was banned from the industry. New legislation capped aircraft manufacturers’ profits at 10 percent. 

First, it’s worth understanding the atmosphere that enabled these events. Against the backdrop of the Great Depression, agrarian populism, and war clouds in Europe, Congress campaigns to prove industry incited World War I and is on track to start World War II. Supported by FDR, Senator Gerald Nye (R-ND) launches the Special Committee on Investigation of the Munitions Industry, informally known as the Nye Committee, whose ambitions are nothing short of nationalization of the entire defense industry. Underpinning the Senate investigation is the Marxian question, “Should industry be allowed to profit when providing goods and services to the government?” 

Senator Nye’s hearings lasted from 1934 to 1936. The most famous hearings see the Du Pont brothers on trial for “excess profits” – their company supplied 40% of the gun powder used by the Allies – and J.P. Morgan on trial for advocating for U.S. entry into the war so banks could be made whole on their massive loans to the Allies. The hearings produce thousands of pages of reports but fall short of producing evidence that a conspiracy among arms makers and their financiers fomented World War I. The Nye Committee’s final report weakly concludes:

While the evidence before this committee does not show that wars have been started solely because of the activities of munitions makers and their agents, it is also true that wars rarely have one single cause, and the committee finds it to be against the peace of the world for selfishly interested organizations to be left free to goad and frighten nations into military activity.

The hearings lead to no new legislation and fail in their goals to nationalize industry. In other words, they’re a waste of time and taxpayer money. 

Alger Hiss is the assistant counsel to Senator Nye for the hearings. Hiss is notorious for a 1950 perjury conviction in connection with accusations of Soviet espionage in the 1930s, but I think Hiss – in partnership with Nye – engaged in an equally treasonous activity in plain sight. If I wanted to neuter America, it’s hard to think of what would be more effective than launching a campaign to nationalize the most productive sectors of its economy. It’s always difficult to speculate on the counterfactual, but I feel good making the statement that had the Nye Committee succeeded, there would have been no arsenal of democracy and no Freedom’s Forge to speak of. We’d be speaking German, as the saying goes.

The sensationalist but influential book Merchants of Death (Engelbrecht and Hanighen, 1934) fans the flames of the Nye Committee with quotes like “On April 6, 1917, the U.S. entered the conflict and the heart beats of the war traffickers became normal again (Engelbrecht et al., 176).” The authors engage in intellectually lazy arguments, regurgitating the financials of the successful “arms dealers” and expecting the reader to accept the conclusion that profiteering (i.e., corporate prosperity) is equivalent to at best, greed, and at worst, moral bankruptcy. 

“The profits reported were simply colossal. Du Pont paid a dividend of 100 percent on its common stock in 1916. The earnings of the United States Steel Corporation for 1917 exceeded by many millions the face value of its common stock, which was largely water. In 1916, this same company reported earnings greater by $470,000,000 than the combined earnings of 1911, 1912, and 1913. Bethlehem Steel paid a stock dividend of 200 percent in 1917…. Winchester Repeating Arms Company, manufacturer of rifles, bayonets, and ammunition, could hardly complain of bad business. During the war period it sold almost 2,000,000,000 separate units (ibid., 178, 180).”

“A few years later a Congressional Committee showed that the government had paid about 49 cents a pound for powder while the cost of production was estimated at 36 cents. No wonder Du Pont stock increased 5,000 percent in the war period (ibid., 180).”

Missing from the above is any acknowledgement that services were rendered. Products were sold. A war was fought and won. While the terminology “Merchants of Death,” and the push to nationalize industries may be outdated, the ideology is not. If you squint, cost-regulated margins ensure our defense primes are functionally state-owned enterprises. A continued aversion to awarding contracts to firms with high profit margins serves as an effective barrier to entry to innovative companies capable of delivering a superior product at a lower price point.

Aviation on Trial

Unlike Du Pont, aircraft manufacturers were not awash in “excess profits” during World War I, and their business fundamentals remained poor throughout the 1930s. Nonetheless, in 1934 they’re subjected to several high profile Congressional hearings, including the Nye Committee. The industry drew the short straw of Girardian scapegoat largely thanks to the stock market boom.

From 1926-1929, the public invested $300 million in aviation stocks. “By March 1929, aircraft, air transport, and related stocks… represented 11.2 percent of all new corporate issues to that point in the Wall Street Boom (Vander Meulen, 92).” This capital buoyed the industry through the Depression years when the government was barely buying aircraft, and the promise of the commercial market remained unfulfilled. It also allowed the government to continue to buy aircraft below cost despite its ongoing and destructive policy of not recognizing the design rights of manufacturers (described in Part I). But this influx of private capital also put a target on the aviation industry. Already wealthy individuals like William Boeing unapologetically grew richer, and they lacked the savviness of Salesforce’s Marc Benioff to wage a public relations campaign that would convince the public they were but a simple billionaire-turned-socialist.

Boeing in particular paid for his shortsightedness. In partnership with Pratt & Whitney president Fred Rentscheler, he formed United Aircraft and Transport (UATC) in 1929, a holding company that pursued a vertically integrated strategy by acquiring airlines and military aircraft manufacturers. UATC won an airmail contract with the Post Office to exclusively serve the northern airmail route. This contract was distributed in 1930 by Postmaster Brown at what was later deemed the “Spoils Conference,” so called because Brown divided up the country into three airmail routes and directly awarded the contracts to the largest airlines in an attempt to impose efficiencies and force the smaller airlines to merge with the larger. 

The distribution of lucrative contracts to only the largest airlines was considered corrupt and drew the ire of President Roosevelt in 1934. He abruptly canceled private airmail contracts, turning the mission over to the Army Air Corps. But the Army wasn’t prepared to absorb the responsibility. Ten pilots died in two weeks, creating a scandal for FDR that was much worse than the Spoils Conference. In the ultimate irony, the airmail routes were quickly re-privatized, and the contracts were redistributed in an almost identical way to the Spoils Conference. Of the three companies, everyone is re-awarded their route except UATC.

Although the government was the monopsonistic buyer of airmail contracts, the blame for the Spoils Conference is laid largely at the feet of industry. The subsequent Air Mail Act of 1934 forbids aircraft manufacturers from also operating airlines, which forces UATC to break up into United Air Lines, Boeing, and United Aircraft Manufacturing. Airline executives alleged to have colluded in monopolistic practices are banned from working for airlines. In response, Boeing exits aviation entirely, sells all stock in his companies, and takes an early retirement to his horse farm.

Overlapping with these events are the aircraft industry’s first public Congressional hearings. In addition to the Wall Street Boom, news that engine manufacturers like Liberty had made 45 percent profit provided the perfect impetus to flagellate aircraft manufacturers. Comedy ensued. In the 1934 hearings, Congress went in with an agenda to show how rich industry was getting, but aviation – specifically airframe manufacture – was generally a terrible business to be in (engine manufacture was more profitable because those producers were allowed to keep the rights to their proprietary designs). As one anonymous Navy financial analyst put it – and this was after WWII, when business had done well – “no business man in his right mind, with a free choice, would make a career of aircraft manufacture (Vander Meulen, 192).” 

The Navy, to its credit, at least had the self-awareness to recognize it was exploiting industry and wanted to continue to be able to do so. In response to Congress’s questioning about excess profits, Admiral King, the new Chief of the Bureau of Aeronautics following Admiral Moffett’s untimely death in an airship crash, proudly educated Congress that Navy audits revealed “industry averaged only 4.3 percent returns on its total naval business and that many contractors, particularly airframe manufacturers, regularly absorbed substantial losses (ibid., 135).” He opposed nationalizing aircraft manufacture at the Naval Aircraft Factory because “contractors always bear the losses,” and “the navy would always be able to take advantage of aircraft manufacturers who had an endless supply of motivation to build aircraft (ibid., 106, 136).”

Navy Secretary H.L. Roosevelt amplified this point by explaining the government was getting the best of both worlds: it did not have to provide any “tangible consideration” to the aircraft manufacturer, but it received the full benefits of the latest innovations in private design. “Without further compensation to the designer, [the government] has the right to make, to have made for its use, and to use any number of aircraft embodying the design (ibid., 136).” The Nye Committee rounded out the proceedings a few months later with a special emphasis on linking aircraft exports with war fever – never mind that the European export market in large part kept the aircraft manufacturers alive during the 1930s.

Unfortunately for industry, the 1934 hearings were not the nadir of their suffering.  An inability to prove aircraft manufacturers were Merchants of Death did not prevent passage of the 1934 Vinson-Trammel Act, which exacerbated the already punitive legislative landscape. It required 10% of aircraft work to be filled at government plants, and it placed a 10 percent profit limit on all Navy contracts above $10,000. Profits were computed before federal taxes, so actual profit limitations were 7 to 8 percent. And these were profit caps on firm fixed price contracts!

The IRS was responsible for auditing contracts and collecting excess profits, but they would not specify in advance what counted as acceptable costs. This imposed a huge amount of uncertainty on industry, leading Donald Brown, President of Pratt & Whitney, to comment “This of course means only one thing. The contractor will not know his profit or loss until the contract is audited by the IRS (ibid., 143).” Contractors could not apply the losses from one contract to the profits on another in the hope of evening out profits and losses over time. And most painfully, “losses on development contracts could not be recovered in production contracts because the Treasury had simply decided that that was forbidden (ibid., 195).”

Of course, auditing enforcement required massive expansion in government resources and the amount of time firms spent on documentation and cost itemization. Leroy Grumman’s complaint that Vinson-Trammel was transforming his aircraft business into a compliance shop is reminiscent of Skunkworks’ Ben Rich enumerating how onerous classification and auditing measures were hampering Lockheed’s ability to actually deliver an airplane.

As it turns out, legislation imposing profit limitations was redundant – the industry was perfectly capable of losing money on its own. During a three year period from 1934-1936, manufacturers’ losses on Navy work averaged 71 percent on development contracts and profits of 2.8 percent on production work. Martin consistently lost money on military contracts during the 1930s, and Curtiss Wright earned only $5.8 million in contracts off of $25.6 million spent on aircraft development from 1937-1941. Boeing lost 27.7 percent on only $2.2 million in sales in 1938 and produced the B-17 at a loss well into WWII (ibid., 190, 213).

Almost 100 years later, Congress and the DoD’s fixation with industry’s profit margins persists. In a recent post, and provide the hypothetical of two companies responding to a DoD Request for Proposal: Company A is a traditional defense prime that bids $1B with an 8-10% profit margin, and Company B is a non-traditional defense company that bids $500M with a 50% margin:

It should be a no-brainer for the government to go with Company B at half the cost yet there are significant process barriers given the perception of excessive profits. There is currently little chance that a Contracting Officer could justify going with Company B to its business clearance board. There would be fear of an article in the Washington Post that “Company B is Price Gouging the DoD at 5X the Profits of Established Primes”. Certain senators would call for hearings and GAO audits to unpack what must be fraud, waste, and abuse and seek to void the contract.

The 1934 aircraft industry hearings were the early Indications & Warnings that much of the DoD would continue to reject market forces.

Innovation in Time for World War II

In a macabre way, we know this story has a (mostly) happy ending. The U.S. forges the arsenal of democracy during World War II, succeeding in a vision of mass production of aircraft that was unrealized during World War I. American bombers, and eventually some fighters too, are superior to our adversaries, something that was not true during World War I. How does this happen despite the poor policies described?

First, buying dynamics became more competitive and less monopsonistic for U.S. aircraft manufacturers during the 1930s. Foreign exports of combat aircraft to Europe helped buoy the industry from the Depression years through entry to WWII, a period of time when Army and Navy dollars for aircraft remained small and laws remained counterproductive. The export market didn’t directly spur innovation because until 1938, the military and State department limited firms to selling only their obsolescent designs abroad. But it did help keep companies solvent: “In 1937, for example, Martin sold abroad flying boats and obsolete two-engine B-10 bombers worth $15 million, while his combined business with the Army and Navy totaled less than $500k (ibid., 197).” While the Nye Committee continued to peddle the unfounded claim that foreign sales incited World War I and the aircraft industry was on track to repeat history, other parts of Congress embraced the role of aircraft as a useful instrument of foreign policy (e.g., exporting aircraft to certain Latin American countries as part of the Good Neighbor policy).

Second, rapid innovation occurs during the 1930s as the industry transitions from the promise of dual-use markets to actually being dual-use. Cargo transport and commercial passenger transport precipitate the U.S.-led bomber revolution. During the late 1920s, the government began subsidizing private airlines for transporting airmail; this market was too small to drive a step-change in aircraft design, and the subsidies were so generous that they disincentivized passenger transport. In 1930, the Watres Act reduced the subsidies for airmail. This had the effect of spurring innovation in larger and more efficient transport aircraft because airlines were now incentivized to find profitable ways of also transporting passengers.

Fortuitously, the performance envelope and dimensions of passenger and cargo transport overlapped with bombers, and so bomber aircraft had the first dual-use area for commercial application. In fact, the monoplane revolution started with commercial aircraft. Lockheed’s Vega and Alpha (both designed by Jack Northrop) and Boeing’s Monomail 200 were moderately successful passenger planes. The Monomail 200 heavily influenced Boeing’s B-9, “widely considered to have revolutionized bomber design in the United States, if not the world. It was an all-metal, two engine, semi-monocoque, cantilever low-wing monoplane with retractable landing gear.” Martin soon followed up with the superior B-10, which the Army procured over Boeing’s bomber. 

The dual-use learnings were bi-directional. Boeing incorporated its B-9 innovations into the Boeing Model 247, “the world’s first truly successful modern passenger transport.” Douglas, which built Navy torpedo bombers and Army utility aircraft, employed Jack Northrop in the design of DC-3, “the most successful and most famous commercial transport of the prop era.” 

Both Martin’s B-10 and Boeing’s B-9 were developed with company venture capital. In military-industrial complex parlance, this is called “internal research and development (IRAD)” dollars. I don’t like using that term here because Martin and Boeing ventured their capital in a way much closer to how commercial companies make product investments than anything that resembles what their 21st century successors do today. IRAD today is largely dictated by the government customer, and the expense is reimbursable because the primes can allocate the cost to existing customer contracts as part of general and administrative overhead.1 So much for nothing ventured, nothing gained. 

But a very different type of “IRAD” happened in the early days. Companies were truly taking a gamble on novel designs. The government was not force-feeding companies a perhaps well-intentioned but misguided vision of innovation. Nowhere is this more evident than with Boeing’s B-17 Flying Fortress, developed at private expense in 1935. The Army’s requirement was for a multi-engine aircraft, but the assumption was this would follow the norm of two engines. Boeing instead developed a four-engine bomber, and the rest is history a popular TV show.

Too much government R&D can be perilous for an innovative company. writes of how powerful it is when “companies can treat government as customers for their products rather than as the boss of their R&D.” Bob Noyce, then co-founder/CEO of Fairchild and future co-founder/CEO of Intel “declined most military R&D contracts (despite these customers representing 95% of his revenue) so he could stay in control of his R&D roadmap. He never let more than 4% of this R&D budget come from Govt contracts. So 96% of his R&D was self-financed from investors and profits.” The commercial world intuitively understands that you do not let the customer dictate how the product is developed, but people get confused once the government is involved.

And the final push to getting good aircraft into production was, of course, World War II. FDR unshackles industry, and Congress is forced to concede that the time for own goals has passed. Following FDR’s May 1940 call for annual output of 50,000 aircraft, Congress finally repeals Vinson-Trammel and gives the Navy discretionary power to negotiate directly with aircraft manufacturers rather than hold price competitions for production. A $2.9 billion appropriation quickly follows, along with the use of cost-plus contracting and authorization to make 30% advanced payments to manufacturers. These authorities are soon extended to the entire War Department — an explicit acknowledgment that bad policy was a peacetime luxury.

Boys and Their Toys

The heroes in this story are the mostly nameless pilots and soldiers who went to fight with whatever was available. I can’t say for certain, but they probably cared a lot more about flying the best airplane than flying the plane that was made with a 7 percent profit margin.

The other heroes are the aviation founders who woke up each day to battle the U.S. government. Aviation is exciting, and a good thing too, because the government benefited enormously from the inherent appeal of airplanes. Between forfeiting the design rights to their aircraft, subsidizing the military for decades during the interwar years, and being accused of instigating global conflict, aviation entrepreneurs could have found an easier way to make a profit. 

By providing the only market for many years, the military expedited aviation development. It is also clear that the government uniquely hamstrung the industry for decades. These days, it’s hard to elicit sympathy for a Boeing executive, but William Boeing’s story is a tragedy of Shakespearean proportions. I’m deeply appreciative of individuals with a passion for building highly regulated and speculative but promising technology whose commercial market has not yet been proven. Today, that’s a lot of commercial space, hypersonics, nuclear reactors, etc. These individuals should be celebrated as they notch successes, and they certainly shouldn’t be mocked when they fail. I’ll even go so far as to say we should be more appreciative when the founders are already wealthy and could retire on an island but instead choose to build something hard (see the denigration of “rich boys and their toys”). 

I, for one, would rather see billionaire fortunes blowing up on launch pads than being lit on fire in the form of donations to the Democratic party or Harvard’s under-performing hedge fund. But that’s just me ¯\_(ツ)_/¯

With disintegrating 737s in the news, a lot of people are wondering how things got so bad. I’m here to rewind the clock 100+ years to reassure everyone that the aviation industry has always been beset by challenged business models, bad incentives, and shoddy aircraft. 

From the first takeoff in 1903 through the late 1920s, “dual-use” aircraft were merely a promise – there was no commercial aviation market. There was, in fact, barely any U.S. market, and it was the inherent appeal of aviation that attracted both entrepreneurs and capital.1 As nascent markets for passenger transport and airmail transport emerged, so too did the first dual-use application for bombers, accelerating innovation in the early 1930s. Fighters did not lend themselves as nicely to commercial applications, and absent a procurement strategy and meaningful expenditures from either the Army or the Navy, U.S. fighters at the time of Pearl Harbor were inferior to their German and Japanese counterparts.

The mythos surrounding the Wright Brothers, Charles Lindberg, and successful mass production during WWII belies the reality of a pre-WWII aviation industry plagued by poor policies and dysfunctional relations between the government and manufacturers. The Army and Navy remained tepid – often hostile – buyers right up until the outbreak of WWII, and in partnership with Congress, they managed to inflict maximum abuse on manufacturers. During the interwar years, industry subsidized the military for both the development and production of aircraft, losing lots of money along the way. In return, manufacturers were deprived of their intellectual property rights and accused of graft and wartime profiteering. Acquisition law was so punitive towards aircraft manufacturers as late as 1939 that firms were convinced it was a conspiracy led by the automotive industry. It wasn’t. 

Early on, there were some Cassandras: “In 1919 Secretary of War Baker called for a long term procurement program for military aircraft and warned Congress that “it cannot be expected that industry will long engage in an unremunerative line,” but he underestimated the aircraft manufacturers for whom the industry’s appeal defied rational calculation (The Politics of Aircraft, pg 45).”2 Indeed, the optimism-cum-masochism of early aviation entrepreneurs (e.g., Douglas, Grumman, Martin, etc.) enabled bad policy to persist.

The military-industrial complex as we know it did not exist prior to WWII, yet this period serves as a reflecting pool for the best and worst attributes of our modern defense industry.

Pre-WWI and WWI

During the first decade of the twentieth century, the U.S. led the world in heavier-than-air aircraft. We ceded this early lead to Europe in part because of patent disputes between the Wrights and Curtiss and in part because of late entry into WWI. However, even before the outbreak of war, Europe showed a much greater interest in the military utility of aviation. From 1909-1911, the U.S. Army owned one military aircraft. In comparison, France owned over 250 planes by 1912. By the time the U.S. entered the war, its domestic aircraft industry was so far behind that of its peers that the U.S. almost exclusively used foreign combat aircraft of French or British design, with the American Expeditionary Force flying the French SPAD. (The U.S. Combat Aircraft Industry, 1909-2000).

The first true test of U.S. industry-government relations was an abject failure. In 1917, Congress passed a Hail Mary, $640 million “Aero Bill,” which at the time was the largest congressional appropriation ever.3 Industry was meant to fulfill the government’s vision of mass production of aircraft, but aircraft of the era were truly “crafts” made of wood and fabric and not ready for the assembly line. This problem was exacerbated by the decision to have industry manufacture foreign designs, as there were no cutting-edge American combat designs ready for mass production.

Building a foreign fighter and retooling a factory around it proved too challenging. The U.S. licensed the SPAD design from France and contracted Curtiss Aeroplane to manufacture it, but the firm was wholly unequipped to produce the thousands of fighters expected and nearly went bankrupt trying to do so. Its early units of SPADs were immediately declared “worse than useless,” and the Army Signal Corp told Curtiss to produce the British Bristol instead. But when Curtiss failed to produce a light enough version of the Bristol, it was back to the SPAD – this time, a new variant (The Politics of Aircraft, pgs 33-36).

Glenn L. Martin refused to commit to unreasonable production expectations, explaining it was only possible for his firm to manufacture three planes a day. He was blacklisted from the war effort until summer 1918 when the Army had him build prototypes of his excellent MB-1 bomber. 

At the end of the war, the government did not receive anywhere near the value of aircraft for the money spent. Rather than consider that high technology aircraft were incompatible with mass production under the conditions, President Wilson, Congress, the media, and much of the War Department concluded the failed effort was a big business conspiracy to raid the wartime coffers of the government. It was the last time the industry operated largely unregulated.

The Interwar Years: The Myth of the Fungible Engineer

After WWI, the government decided it would no longer license foreign designs, but it did not learn any lessons about the difficulty of having one firm produce a different firm’s plane. In the interwar years, the root cause of industry’s struggles was the government’s decision to separate design contracts from production contracts.4 Ostensibly, this was to ensure there was competition at every phase of the acquisition, ensuring the best deal for Uncle Sam. In reality, the attempts to cleave R&D from production were disastrous for all parties. Here is how the process worked:

1. Firms would respond to government specifications with their paper designs and the estimated cost to build the prototype. The government would select two to four firms to build a prototype and have a fly-off. The government then acquired the design rights to the winning firm’s prototype. Firms consistently lost money on prototyping in the hope of making a profit on the production contract – provided they could win it, that is.

2. The government then held a separate competition to determine which firm(s) would produce the winner’s prototype. Production competitions were almost solely based on price. This meant the firm who had the winning prototype was at a huge disadvantage because it needed to amortize its design costs, so its production bid inevitably came in higher. The firm that won the contract for production received just the winner’s prototype and had to reverse engineer the blueprints; although as we will see, having the blueprints would have been of little use. 

The government treated aircraft as standardized goods to be manufactured, but aircraft were not widgets. This decision to hold pure-price manufacturing competitions resulted in manufacturing failures that make Boeing’s recent plane window blowout look positively quaint (emphasis mine):

1) Martin sold his aforementioned excellent MB-1 prototype bomber to the Army at a loss. “In 1919 [he] was underbid by three contractors on the bomber’s production. Martin was given twenty to build anyway but lost money on the reduced volume, suspended the bomber’s development, and in disgust, declined to deal with the army until 1931. L.W.F. Engineering built fifty, Aeromarine built twenty-five, and Curtiss built fifty. The bombers in the field proved to be completely different airplanes of widely varying quality (The Politics of Aircraft, pg 59).”

2) “In 1923 Curtiss lost $182,000 on a $175,000 development contract for the successful navy Curtiss Scout …In the competition to build 40 Scouts, Curtiss submitted a bid of $32,000 per plane, but Glenn Martin won the contract at $23,000 apiece. Martin complained that the plane came with no blueprints but admitted that they would have been useless in his shop anyway. His staff drew up new blueprints and in the process produced an entirely new plane inferior in performance to the Curtiss design (The Politics of Aircraft, pg 62).”

3) In 1919, the Ordnance Engineering Company developed Orenco-D, “the best pursuit in that day,” but Curtiss won production for 50 of the planes. “Ordnance Engineering liquidated; and the fifty planes built by Curtiss had to be destroyed as unsafe (The Politics of Aircraft, pg 59).”

4) “The demise of Thomas-Morse, the designer of a reasonably successful indigenous fighter design (based on the French SPAD), can be directly traced to the award of the production contract in 1921 to Boeing, which had little ability to design an advanced fighter but which underbid Morse on the production contract.”

And so the myth of the fungible engineer was born. 

The myth holds that any worker is the same as any worker, and any production line is the same as any other production line. It’s a fundamentally un-American concept and reveals a captured, collectivist mindset. The belief that the sum total of innovation could be captured in a prototype or blueprint rather than in a network of humans doing exceptional things was demonstrably false. It didn’t matter that the government owned the most innovative aircraft designs – absent the designers, the prototypes were unlikely to be faithfully manufactured at scale.

It’s hard to overstate how damaging the myth of the fungible engineer is in a dynamic industry undergoing rapid technological change. With aircraft, a prototype was almost immediately rendered obsolete upon selection. Had the firm with the winning design been the one to manufacture it, it would have been able to incorporate new innovations during the manufacturing process. But the firm most able to manufacture the winning prototype was the least likely to win. The implications for innovation are clear: Firms were incentivized to keep a bare-bones design staff to minimize R&D expense, since there was no money to be made in designing the most innovative airplane. 

To quote Freedom’s Forge author Arthur Herman, “it’s through making things that we learn what can be made better, which is why the most productive companies also tend to be the most innovative.” In what appears to be an oxymoron, aircraft manufacturers were deprived of the opportunity to manufacture their aircraft. And because aviation is a relatively low volume industry, missing out on the limited military production orders of the interwar years had a high opportunity cost. As writes on production learning curves: 

If you’ve produced 1,000,000 of something, whether you make another 500 or 5,000 will make almost no difference in learning curve terms. But if you’ve only made 50 of something, making another 500 makes a huge difference in the level of cost reduction that can be achieved. Thus, if you only plan to sell a few hundred of something, a relatively small number of sales will have a large impact on how efficiently you’re producing and how profitable you are.

Separately competing design from production was a short-sighted acquisition strategy, although the taxpayer temporarily got a great deal. The government was paying less than the full cost for a prototype, and then it paid less than the full cost for production. Industry was subsidizing the government! But it was unsustainable for industry to operate unprofitably, and more importantly, it resulted in the warfighter getting a bad product. Note how the health of industry and national security share an intimate relationship.  

Not everyone had blinders on. The legendary U.S. Navy Admiral Moffett, then director of the Bureau of Aeronautics and credited with introducing the aircraft carrier, believed “the distinction between design and production was meaningless and an obstacle to procurement” and “procurement laws dishonored the government.” Although price competition on manufacturing orders was the default, there were some loopholes that allowed for “negotiated contracts,” where a contracting officer (CO) could award the manufacturing contract to the firm with the winning prototype without a full competition. Moffett pushed for the use of negotiated contracts whenever possible, but extreme risk aversion from COs prevented them from being used with any regularity (The Politics of Aircraft, pg 86).

This piece is supposed to be focused on the origin story of the myth of the fungible engineer, but I can’t help but do a quick diversion on the origin story of the CYA, risk-averse, CO. Many will read the above manufacturing failures and ask how it’s possible that the COs – faced with such incontrovertible proof – would still pursue price competition over negotiated contracts. Were they simply useful idiots? 

A closer examination of incentive structure reveals they were just acting rationally. Congressional scrutiny, allegations of wartime fraud, charges of favoritism or collusion, and an extra-long contract review process loomed large for the CO who went with the negotiated contract. It was much easier to pick the firm that could do it the cheapest  – actually receiving the plane purchased was of secondary concern.

Things haven’t changed much, and we continue to encourage COs to adhere to process at the expense of outcome. As and write in their recent summary of the DoD Inspector General’s Audit of Cost-Plus-Award-Fee Contracts: 

To conclude, in reviewing $32B of contracts, COs regularly did not follow policies, but still effectively managed the contracts for most of them, with a 0.015% of improper payments not fully justified in the contract files. As a result, DoD IG recommends increased oversight and controls. And people wonder why many COs are risk averse.

The Fungible Engineer is Alive and [Un]Well

I wish we could say we learned from this chapter in history, but the myth of the fungible engineer is the central tenet in acquisition today. We see it manifested in two ways. First, the government largely acquires software with a labor-based, butts-in-seats model that does not account for individual exceptionalism. Fromstill-relevant 2016 piece “Innovation Deficit: Why DC is Losing Silicon Valley”

The average Request for Proposal (RFP) involving software development services requires estimates on count of full-time equivalents (FTEs) who will be engaged in the effort, a “basis of estimate” (BOE) modeling FTEs, their labor categories, and the FTE blend deployed against RFP requirements and delivery dates (e.g. requirement “x” needs 2.5 engineers for 6 months to complete). This process massively disadvantages efficient and more talented teams. Because the talent gap between average and excellent is so large, it would generally be better to have one Lebron-level coder than to have 100 average ones. 

Second, the government continues to equate ownership of source code, diagrams, and prototypes with innovation – once again, not realizing it is the networked people surrounding these artifacts that breathe life into them. While it is no longer an option for Boeing to bid on the production of Lockheed’s fighter, the pre-WWII mindset around the value of owning atoms has extended to owning bits. A recent report from the United States Geospatial Intelligence Foundation (USGIF) enumerates in meticulous detail different solicitations from the National Reconnaissance Office (NRO) effectively boxing out commercial software by requiring aggressive ownership of IP – and these examples are just from a single government agency.5

Running and maintaining a software system is much closer to producing an aircraft at scale than it is to designing and delivering a prototype for a fly-off. Despite its proliferation of software factories, the government still has not internalized this point. For a thought experiment: if the government acquired the code base of OpenAI and turned it over to [insert favorite Systems Integrator], do you think said Systems Integrator would continue on OpenAI’s trajectory of building a next generation AI company? Relatedly, as any entrepreneur raising venture capital money for his/her startup will tell you, leading your pitch with a list of patents is not a winning strategy. 

One final point. Right after WWII, there was a race by the Allies to seize as much knowledge from the Germans as possible. America’s “acquisition” of one Werner von Braun via Operation Paperclip was by far the most successful of these technology transfers. But America and the UK also pursued an expensive strategy of microfilming and translating millions of documents, which was not successful. France, who didn’t have the resources or political capital to pursue this strategy, instead embedded trainees into German research centers, maintaining the intangible value of a scientist’s network. This people-centric strategy was very successful for the French at a fraction of the cost.6

America has a deep bench of Founding Fathers and entrepreneurs we celebrate. China only has Mao, maybe Xi. They had to disappear Jack Ma because the CCP does not accommodate outliers. Our acquisition system should reject the myth of the fungible engineer and instead reflect the time-honored American tradition of elevating the individual over the collective. 

Grab your popcorn for Part II. Industry goes on trial as Big Business villain and Merchant of Death. In the process, they are subjected to even more onerous legislation. 

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Because this is the natural state of affairs, it’s understandable why libertarians often adopt extreme positions as a counterweight, like eliminating government agencies entirely.1 I’m sympathetic to their arguments, but the creation of the U.S. Space Force is one of the rare times when expansion was essential. Like the formation of the U.S. Air Force in 1947, we will one day look back and view the Space Force’s existence as axiomatic, when in fact it was anything but.

Standing Up Space Force (2023) by Forrest Marion provides a cohesive – albeit vanilla –  narrative of the historical context and decades-long momentum for the creation of the sixth armed service, signed into existence by President Trump on December 20, 2019. Those looking for an insider’s account will be disappointed. Marion, a historian employed by the Air Force, largely cites facts already in the public domain and steers clear of the most controversial aspects of the forging of the Space Force, namely, friction with the Intelligence Community.

At the heart of the Space Force’s formation lies a paradox: it required decades of advocacy but was ultimately created on a Trumpian whim. There had been agitations for an independent Space Force since a 1981 article by two U.S. Air Force officers, and both the Gulf War and the U.S./NATO air campaign against Serbia underscored the integral role of space in the reconnaissance-strike complex. However, it was not until the publication of the 2001 Rumsfeld Commission Report on National Security Space Management and Organization that the policy debate began in earnest. 

Over the next two decades, external events provided supporting evidence for the pro-space faction. Both China and Russia reorganized their militaries in 2015 to promote the importance of space.2 Beyond mere organizational musical chairs, the Chinese conducted anti-satellite (ASAT) weapon tests in 2007 and 2013, and the Russians conducted three ASAT tests of their PL-19 Nudol missile between 2015 and 2016.

And yet, none of these events were significant enough to overcome political inertia. The tipping point required an individual  – Trump – willing to elevate content over process in the Department of Defense (DoD), no small feat in the most process-obsessed organization on the planet. Trump’s big reveal in March 2018 announcing his intention to create the Space Force was characteristically informal: “My new national strategy for space recognizes that space is a war-fighting domain just like the land, air, and sea… We may even have a Space Force… Maybe we’ll have to do that.”

This announcement was so informal that Secretary of the Air Force Heather Wilson was almost certainly caught off guard, although Marion is unable to confirm this: “While others in attendance may have been taken aback – reportedly among them were Secretary Wilson and Joint Chiefs Chairman Gen. Joseph F. Dunford Jr (pg 101).” Marion is also unable to confirm precisely what triggered Trump to make the announcement. He identifies that Vice President Pence, former speaker Gingrich, and Rep. Mike Rogers all had Trump’s ear, but he concedes, “the degree to which the whisperers had influenced Trump’s thinking was unknown at the time (and has remained largely opaque to this study) (pg 99).”

It’s disappointing Marion was unable to get on-the-record accounts from key leadership involved in creation of the Space Force. Maybe we are simply too close to the founding events, and we’ll have to wait a few more years for an intrepid reporter to come along before the right people start talking. 

In U.S. government bureaucracy, precise language matters, oftentimes to the point of comedy. Marion recounts that a pivotal moment in the Space Force debate was in 2001 when General Jumper, Chief of Staff of the Air Force, changed the Air Force’s approach to the relationship between air and space when he emphasized “air and space” as two separate domains rather than simply saying “aerospace (pg 52).” Similarly, Air Force Secretary Wilson fought (and won) to have “space” and “warfighting” in the same sentence of the opening statement at her confirmation hearing (pg 109). Prior to that, publicly discussing space as a warfighting domain was verboten. 

These subtle changes mirror an additional subtle force that I hypothesize had a hand in the creation of the Space Force: the gradual declassification of space. It would be difficult to launch a new armed service if you couldn’t talk about the missions at all. But for a long time, military or intelligence activity in space was not publicly discussed in any meaningful detail. The National Reconnaissance Office’s (NRO) existence, after all, remained classified for over 30 years. 

Recently, I was at a space conference with a friend from a defense prime who works on all manner of spooky programs. There was an unclassified threat briefing scheduled, and he was dismissive that it could possibly be informative. But after the briefing, he remarked “that was actually really good.” His feelings echo those of Chief of Space Operations (CSO) General Saltzman who said “he would have been fired seven years ago had he discussed Chinese counterspace capabilities, such as jammers, directed energy weapons, and on-orbit grappling arms, as openly as he did.”

While science fiction conjures images of squadrons of space marines, the reality is that the Space Force mission to date is almost entirely centered around controlling and defending unmanned satellites. In a world without bureaucracy, this means the Space Force would remain a small service. Here’s Brian Weeden writing optimistically for Cato in 2021:

For the first time, we have a military service that is not people heavy. Look at the Army, the Navy, and even the Air Force: you need a lot of people to support the things that they’re doing. Space is very, very different. It’s all robots, and the robots are largely controlled by a handful of computers.

But the swamp has a different set of rules. In an interview last year, General Saltzman said the quiet part out loud (emphasis mine): 

“We get out-staffed” in key Pentagon meetings and committees, he said, with other services sometimes overmatching Space Force 10 to 1 in staff preparation. “Quantity is its own kind of quality,” he said. “If that means we’ve got to get bigger, I’m okay with that.” 

Of course, he’s correct. It’s unfortunate this is the state of affairs, and it’s the opposite of Kelly Johnson’s Skunk Works, which promoted the engineering leaders who managed the fewest people. The Space Force today has 8,400 active-duty Guardians and is set to receive most of its $30 billion FY24 request. These numbers will inevitably go up and to the right. The Space Force needs to grow so it can contend with its adversaries head-on. And I’m not just talking about Russia and China.

Enter the Intelligence Community

At the end of 2023, the Defense Business Board published an extensive report with recommendations for improving space acquisition. One of the recommendations was that the National Reconnaissance Office (NRO) remain separate from the Space Force. That NRO consolidation into the Space Force was even on the table had me in stitches (yes, this is the type of thing you find funny if you work in defense tech). The NRO isn’t going anywhere, but the Space Force does legitimately threaten some of its missions.  

Since Marion only focuses on how the Air Force would lose its rice bowls if the Space Force were created while ignoring the (arguably more important) tension with the Intelligence Community, I’m going to add some honorary paragraphs:

The source of the tension is the Title 10 – Title 50 debate. “Title 10” refers to military operations and “Title 50” refers to intelligence activities. By and large, the DoD has Title 10 authorities and the Intelligence Community, naturally, has Title 50 authorities. However, technology does not always cleanly fit into bureaucratic boxes. Nowhere has this debate manifested more publicly than with Earth observation data from commercial satellites, although it’s only one of many examples.

First, some quick history. In 1960, the CIA became the first organization in the world to successfully launch a spy satellite and recover reconnaissance photos from it. This technology innovation led to the creation of the NRO in 1961, and it took over the mission from the CIA. For decades thereafter, NRO had a monopoly providing satellite-based Earth observation data to the U.S. government. They built and operated spy satellites to provide strategic intelligence, answering big picture questions like “does the U.S. actually have a missile gap with the Soviets?” This activity was Title 50. 

But data about stuff on the ground was not exclusively desired by the Intelligence Community. The DoD wanted pictures too. What’s over that hill? Did I blow up the thing I thought I blew up? This precipitated DoD – Intelligence Community conflict. The tasking of satellites is controlled by the Director of National Intelligence, not the Secretary of Defense, and NRO and NGA reigned supreme, prioritizing tasking requests as they saw fit. DoD customers of Earth observation data, like the Combatant Commands, often felt ignored and underserved, but there was nothing they could do about it. 

Then the balance of power started to change, all thanks to commercial space companies. Starting with Planet Labs in 2013, commercial companies successfully launched and operated Earth observation satellites. Gradually, and then all at once, an opportunity presented itself to disrupt the Intelligence Community’s monopoly on satellite tasking. 

Now the newly formed Space Force could serve the Combatant Commands operationally-relevant information via Title 10 by directly buying the data it needed from BlackSky, Capella, etc. They didn’t have to enter the Intelligence Community queue and hope their order was fulfilled on a timeline that mattered. Right? Not so fast.

The NRO “maintained acquisition authority for commercial remote sensing imagery since 2018, when the office took it over from NGA.” NRO subsequently launched contract vehicles to buy billions of dollars of commercial satellite data. 

With the formation of the Space Force, the Title 10 – Title 50 debate around commercial overhead became very public. Was the Space Force really going to sit back and let the NRO be the only agency that could purchase commercial satellite data despite the Space Force having “space” in its name? Of course not. So while the NRO led commercial data purchases, the Space Force stood up a Commercial Space Office.

At first, the Space Force argued it needed tactical intelligence, surveillance, and reconnaissance (ISR) data to serve the Combatant Commands, and this represented a Title 10 authority. But NRO disagreed that tactical ISR was a relevant distinction, and it really didn’t like the Space Force using the word “intelligence.” So Space Force had to get creative, and it redefined one of its mission as tactical surveillance, reconnaissance, and tracking (SRT). 

Just like there is no “I” in team, there is definitely no “I” in SRT, the Space Force made sure to say. Multiple times. By banishing the word “intelligence” from their vocabulary, it’s impossible for the Space Force to be doing intelligence. Intelligent.

If all this sounds horribly petty and bureaucratic, it is. But it’s also really important. The Space Force and NRO missions will continue to collide, as we’re seeing play out with who will control future Ground Moving Target Indication (GMTI) satellites with the retirement of the aging Air Force JSTARS.

We need to have an honest conversation about what happened to an agency that used to be able to launch spy satellites and analyze imagery in the analog era but is now bickering about who gets to buy commercial images. 

The U.S. government can do better. One team, one dream! 🇺🇸

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Matterhorn / The Best and the Brightest

“Modern classic” gets thrown around a lot to describe fiction that is most decidedly not that, but Mattherhorn deserves the epithet. This emotional Vietnam combat epic follows young Marine lieutenant Waino Mellas through 700 pages of blood and jungle. Published in 2009, it took author Marlantes 35 years to write his debut novel based on his own Vietnam experience. I can’t improve upon journalist Christina Robb’s review of the book as a story of “unfathomable waste and unfathomable love.” 

Matterhorn serves as a violent contrast to the sterile, bureaucratic war prosecuted by the technocratic elites in Washington, as documented in The Best and the Brightest (1972). Halberstam provides Robert Caro-esque studies of power of the usual suspects (e.g., LBJ, McNamara) but also JFK, Dean Rusk, the Bundys, Averell Harriman, and more. Prep schools, Ivy league degrees, and/or proper family lineages pepper the background of most of these actors. It’s a timely reminder that the possession of credentials does not imply the possession of decision making skills — often just the opposite.

Snow Crash / The Sovereign Individual

Both of these books explore the premise that the nation-state is not our final form of governance. In their worlds, the Internet, cryptocurrency, and the metaverse break the backs of extortionary states around the world and empower decentralized infrastructure, affecting everything from traditional media to our current ideas of sovereignty and how we wage war. Most notably, governments will collapse and private corporations and entrepreneurs will instead franchise sovereignty and compete for citizens. These books are held in high regard by the tech community for writing cogently in the 1990s about technology that did not yet exist or was very nascent.

Snow Crash (1992) is science fiction, and Stephenson explores a serious topic with satire. We follow our protagonist — literally Hiro Protagonist — as he tries to understand a mysterious computer virus while delivering pizza for the now-corporate American Mafia. The Sovereign Individual (1997) explores the collapse of the nation-state with the utmost seriousness and does not shy away from bold claims like “there will be no more conflicts like WWII.” I disagree with at least half of the arguments, but it’s worth a read if you want to understand the world view of Silicon Valley (it’s one of Peter Thiel’s favorite books and he wrote the foreword for the 2020 re-print). 

The Three Body Problem / Big Sister, Little Sister, Red Sister

What could cause a person to become so disgusted with humanity she would betray her own kind to a powerful alien species hell-bent on obliterating homo sapiens? China’s Cultural Revolution, answers author Cixin Liu. The opening pages of The Three Body Problem (2008) find Ye Wenjie witnessing her father, a “reactionary” physics professor, being beaten to death by four teenage girls during a public inquisition led by her mother. Mao’s China serves as a powerful framing device that propels forth the most compelling science fiction book of the last 15 years and one of China’s only successful cultural exports to the West.

The Three Body Problem is the book that made me interested in 20th century Chinese history and revealed to me that my public school education dropped the ball on this subject. Jung Chang’s very accessible Big Sister, Little Sister, Red Sister: Three Women at the Heart of Twentieth-Century China (2019) is a good place to start. Learn about Sun Yat-sen, Chaing Kai-shek, and Mao Zedong through the lens of the Soong sisters, who formed various marital and political alliances with these men. I promise your family’s most contentious Thanksgiving political fights will pale in comparison to the ideological differences between Mao’s vice chair and Chiang Kai-shek’s wife.

The Paper Menagerie (“The Man Who Ended History”) / The Rape of Nanking

The English translator for TheThree Body Problem, Ken Liu, proved himself to be a talented science fiction writer in his own right with his 2011 short story collection, The Paper Menagerie. I especially recommend “The Man Who Ended History”, which explores the implications of a breakthrough in particle physics that allows a human to experience a particular place at a particular time, after which no one can ever go back there again. The researchers prioritize sending observers to the Japanese Biological Warfare Unit 731 (“Asia’s Auschwitz”) in Pingfang, where the Japanese Imperial Army performed gruesome experiments on primarily Chinese civilians but also Allied prisoners during the Second Sino-Japanese War and World War II. Some 200k-300k people were killed in Japan’s quest to develop biological weapons, and the Japanese burned the compound down at the end of the war. 

I had never heard of Unit 731 and subsequently became interested in other Japanese atrocities perpetrated by the Imperial Army around the same time period. This led me to Iris Chang’s The Rape of Nanking (1997), a concise but harrowing account of the war crimes committed against Chinese civilians over a six week period in 1937. Nanking was then the capital of China, and Japanese General Matsui Iwane ordered the city destroyed.

And on that gloomy note, I’m feeling especially grateful to be living in America in the 21st century. I hope you get to spend quality time with your loved ones and read lots of books this holiday season. I can’t wait to share more Kinetic content with you in 2024.

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The U.S. military-industrial complex has made a Faustian bargain. It hasn’t sold its soul for infinite knowledge, but it has become dependent on crisis to fuel innovation. World War II and the Cold War were required to forge the arsenal of democracy, build the Pentagon, split the atom, field radar, operate SLBMs, launch earth observation satellites, get to the moon, achieve Mach 3 flight, and deploy stealth technology.

This is neither a good nor necessary bargain. 

Maybe you disagree and don’t find anything wrong with the current arrangement. You might be thinking the Department of Defense (DoD) exists to wage war and respond to enemies, so it’s appropriate that innovation happens when the threat is at our doorstep (or our Allies’), and it languishes otherwise. 

But relying on war to motivate progress is not an optimal strategy. It is a fundamentally reactive posture that imposes a ceiling on American excellence by positioning it relative to a competitor. That competitor could be a pacesetter, but they could also be mediocre, in which case America is dragged down to the lowest common denominator. For a sports analogy, consider Usain Bolt. He broke both the 100m and 200m world records, twice. He wouldn’t have broken either a second time had he been content to just beat the second-place finisher, because the second-place finisher was slower than Bolt’s previous personal best.1

During the Cold War, the Soviet Union was a technological pacesetter (or we thought they were, which for practical purposes had the same effect). After the fall of the Soviet Union, the U.S. engaged in conflict with various Balkan and Middle East states who were not pushing the boundaries of innovation. These conflicts lowered our standards of excellence. In this period, the U.S. accelerated drone technology – a lead we subsequently squandered2 – and advances in the military applications of AI, but in comparison to the 1940s-80s, not much happened.

To the point of lowered standards: a much-touted success story during the Global War on Terror was the rapid acquisition of mine-resistant, ambush-protected vehicles (MRAPs) to replace the Humvees that were insufficient protection from the IEDs killing and mutilating our troops at a horrifying rate. Ultimately, the DoD shipped 27,000 MRAPs for $40 billion in what was “the first major military procurement program to go from decision to full industrial production in less than a year since World War II.”3

However, this accelerated acquisition occurred only after requests for MRAPs had been delayed two years because none of the Services wanted to foot the bill for a vehicle that was not the long-term replacement for the Humvee. Secretary of Defense Gates himself had to reach down and issue a directive making the MRAP program the highest priority DoD acquisition program, providing it legal priority over other military and civilian production programs. The MRAP acquisition was a “success” in a sea of dysfunction.

The DoD is hyper-focused on China as a pacing threat. All eyes are on a possible invasion of Taiwan by 2027. But if that’s really what the U.S. is concerned about, we should be acting with a sense of urgency. As I’ve previously written with my colleagues:

When WWII started, America did not have an industrial base equipped for the fight. Fortunately, we had a luxurious eighteen months to ramp production under Lend-Lease, supply the Allies, and build the arsenal of democracy while we were still at peace. The U.S. should similarly be using the Ukraine war as the canary in the coal mine to ramp production full-scale. Instead, we’re immobilized.

A popular topic of debate right now concerns the U.S.’s ability to pull off a WWII-esque production coup. Greg Ip’s recent WSJ piece provides a good summary of the current situation: production has shifted to East Asia and “government’s emphasis on lowest-cost production discourages the remaining contractors from having the extra capacity needed to surge production.” Our inaction suggests a complacency that because we did the improbable during WWII, we can do it again. But as any financial advisor will tell you, past performance is not an indicator of future results. 

There is also a lot of low hanging fruit representenative of a military-industrial complex that is deeply unserious when it comes to driving progress. The Navy will not get all the Super Hornet jets it needs from Boeing because of data rights disputes. The National Reconnaissance Office (NRO) and the U.S. Space Force are squabbling about who has the authority to purchase commercial satellite imagery. The Israeli variant of the F-35 is demonstrating a higher operational tempo than the U.S. can manage, in part because Israel negotiated independence from the main F-35 program, allowing the IAF to directly test and ship software. And on and on.

It's hard to imagine a break-glass, wartime general allowing any of these issues, which amount to middle school politics, to get in the way of outcomes. But why wait until wartime to solve problems we can fix today?

If the military-industrial complex is only capable of innovating during wartime (and even that premise is questionable) and is dysfunctional during peacetime, this bodes poorly for progress writ large. The U.S. government has a unique role to play in progress by seeding capex intensive and often highly regulated technologies that will not otherwise make it to a commercial market. For some of the world’s most impactful technology, the U.S. government will be the first but not the biggest customer. The integrated circuit is the best example of this. Minuteman and Apollo were critical early programs, but chip demand for personal computing was soon a much bigger market than defense. The Space industry today is around the same stage as the integrated circuit was in the early 1960s. 

Now, the U.S. government should not seed industries it has no use for, but for certain technologies, it is the pacesetter on progress. It is therefore unacceptable to have stagnation just because the American people no longer practice duck-and-cover drills. 

I concede there are attributes of crisis that make it easier to innovate. Lives are on the line. People are motivated to work harder than they ever have. Unnecessary regulations are ignored. Peacetime generals are replaced with wartime generals. The most talented people are more likely to be given responsibility over the most political people. The boat gets rocked.

But ultimately, rejecting our Faustian bargain does not require breaking the laws of physics. It requires embracing the intrinsic value of progress as a good in and of itself. Some will dismiss this sentiment as idealistic, but dedicating ourselves to a vision of a better future is the only path forward. We have evidence this is possible. I mention SpaceX a lot, but it’s one of the few organizations – public or private – to achieve wartime results in peacetime.

We don’t need a pandemic for the FDA to get out of its own way in accelerating vaccine approval.

We don’t need to wait for the electric grid to go out before we embrace nuclear power.

We don’t need Xi Jinping to visit San Francisco before we clean up the streets.

In 2024, let’s fight for peacetime progress.

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Military history and strategy often seem divorced from rigorous, quantified, historical economic studies, but we need economics to help us assess things like when the application of force is and is not successful. Economist Melissa Dell understands this. She is an economic historian who is as likely to study U.S. industrialization in the nineteenth century as she is the impacts of foreign military intervention on insurgency.  These topics matter because, as Patrick Collison and Tyler Cowen put it, “humanity needs to get better at knowing how to get better.” 

While it feels intuitive today that overwhelming firepower was not an effective strategy in Vietnam, it is actually difficult to demonstrate evidence of causality. For example, did VC activity increase because of air strikes, or were the areas targeted for air strikes the places where insurgency was already on the rise?

One of the biggest challenges about being an economic historian is there are no opportunities for randomized control trials, the gold standard for empirical evidence. Dell can’t ask the Department of Defense to randomly assign drone strikes so she can causally study if they increase or decrease terrorist activity. Instead, our economic historians must look for “natural experiments” or historical accidents, where there is plausibly random variation that influenced the allocation of military force at the margin. 

Unearthing these natural experiments is a skill in and of itself, and Dell demonstrates mastery. Her 2017 paper Nation Building Through Foreign Intervention: Evidence from Discontinuities in Military Strategies took advantage of one of these natural experiments via a newly discovered algorithmic component of bombing strategy in Vietnam. She provides evidence that air strikes increased the military and political activities of the VC Communist insurgency and weakened local governance.

Project CHECO is a declassified Air Force Study that describes one of the variables that informed how the military selected targets for its weekly pre-planned Vietnam bombing missions. Hamlets (small villages in rural Vietnam) were prioritized for bombing based on their security rating. The rating was calculated using an algorithm combining data from 169 questions on security, political, and economic factors. Hamlets rated 1 were the least secure, and those rated 5 were the most secure. Less secure hamlets were prioritized for bombing. 

While the hamlet security rating ranged continuously from 1 to 5, the output was rounded to the nearest whole number before being printed from a mainframe computer and passed to the military planners. This last detail matters because it allowed Dell to exploit a discontinuity. For example, a hamlet that received a score of 3.49 got rounded down to 3, while a hamlet that received a 3.52 got rounded up to 4. Two hamlets that were very similar received very different bombing treatment if they fell on different sides of the rounding threshold. Dell exploits the randomness introduced by the rounding thresholds to establish causality:

Moving from no strikes during the sample period to the sample average increased the probability that there was a village VC guerrilla squad - which consists of local fighters - by 27 percentage points. It also increased the probability that the VC Infrastructure - the VC’s political branch - was active by 25 percentage points and increased the probability of a VC-initiated attack on local security forces, government officials, or civilians by 9 percentage points.

That extensive data existed for Dell’s study is a reflection of the times. Secretary of Defense Robert McNamara and his Rand corporation “Whiz Kids” infamously tried to quantify the Vietnam War using systems analysis. McNamara drew on his previous experience as President of Ford Motor Company to introduce operations research and computing into Department of Defense (DoD) operations. While McNamara’s attempts to use statistics to forge an American victory in Vietnam were unsuccessful, they did produce an unusual trove of wartime data for economists today to mine. 

Even though the era of McNamara produced a lot of data, it is not easy to parse today. Dell shows an impressive level of ingenuity to revive data sets many would have declared dead. During the Vietnam War, field data was key-punched into IBM 360 mainframe computers in Saigon and Washington. However, the Hamlet’s continuous scores (i.e. the non-rounded numbers), were never printed or saved from the mainframe’s memory. Dell had to re-calculate those scores using the original conditional probability matrices in uncatalogued documents at Fort McNair and the question responses from tapes held at the U.S. National Archives.

The flawed hamlet rating system with its arbitrary rounding threshold is a good example of a complex, ostensibly rational system that is mostly style over substance. It may seem contradictory that I’m critiquing McNamara’s data-driven war but simultaneously calling for more quantified studies like Dell’s. Let me try and thread the needle: McNamara and the DoD used data as a cudgel for justification of actions in Vietnam (this folly is explained in the superb The Best and the Brightest); Dell uses data to parse meaningful signal out of an inherently complex situation. 

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Imagine living during the golden age of your profession. Like being an English Admiral in the late eighteenth century, a painter in Italy during the Renaissance, or a philosopher in ancient Greece. Vannevar Bush was a perfect man of his time: a government-minded technocrat who led and shaped American institutions during their golden age in the mid-twentieth century.

Largely at the direction of Bush, the federal government transformed during WWII into the primary funder and coordinator of technological innovation. Bush led the newly formed Office of Scientific Research and Development (OSRD), which was responsible for all wartime R&D. Here, he initiated the Manhattan Project and oversaw advances in radar and the mass production of penicillin.

Under his watch, OSRD dollars poured into universities for basic and applied research, which became intertwined with the government in a new and lasting way. University labs sprung up, like MIT’s Radiation Laboratory or “Rad Lab,” and Johns Hopkins Applied Physics Laboratory. These connections to academia hearken back to Bush’s pre-war career as an MIT professor and dean of its School of Engineering. Even Bush’s commercial endeavors, like co-founding Raytheon, have tentacles to academia and government.

His influential manifesto written at the end of the war, Science: The Endless Frontier, provided the intellectual foundations for the formation of the National Science Foundation (NSF) in 1950, which ultimately was just one of several  government agencies funding R&D. By 1964, federally funded R&D as a percent of GDP reached its apex of 1.86%. Bush was no longer a big time government bureaucrat at this point, but his fingerprints are all over the continuously expanded role of government and universities supporting the post-Sputnik space race. As Brian Balkus writes,

Over 20 percent of Caltech’s budget in 1964 came from the DoD, and it was only the 15th largest recipient of funding; MIT was first and received twelve times as much money. The U.S. military and scientific elite were enmeshed in a way that had no parallel in the rest of the world then or now.

But the government would soon begin ceding its role in innovation. Conservative free market policies in the 70s and 80s, like the 1981 Research and Development Tax Credit, and the emergence of venture capital facilitated this trend. By 2020, U.S. businesses were outspending the government on R&D by 3.5x.

If Vannevar Bush had published Science: The Endless Frontier in 2023 rather than 1945, he would have been pilloried. We know this because Marc Andreessen provides us with a pretty good controlled experiment with his recently published The Techno-Optimist Manifesto. 

Techcrunch asked “When was the last time Andreessen talked to a poor person?” NYTimes called it a “horrifying, silly vision.” Washington Post, a “self serving cry for help.” Gizmodo rather confusingly labeled it a “Unabomber-style manifesto.” For comparison, here are excerpts from Bush’s and Andreessen’s pieces:

Without scientific progress no amount of achievement in other directions can insure our health, prosperity, and security as a nation in the modern world. - Bush

Technology is the glory of human ambition and achievement, the spearhead of progress, and the realization of our potential. - Andreessen

Bush feels unusually anachronistic for an historical figure. He regarded himself as a “link between the President and American science and technology,” and he enabled innovation by aligning institutions as an insider. Today, confidence in American institutions is at an all time low. Venture funding is our contemporary engine for prosperity, and it often necessitates subverting existing structures. Our modern Bush-ian figure would have to be an outsider from the private sector.

To me, Elon Musk most closely represents the modern manifestation of Vannevar Bush. 

From a character perspective alone, many will bristle at the unsightly comparison. Bush was a dedicated public servant, son of a pastor, humble to a fault, a family man wedded to the same woman his whole life. Musk is a megalomaniac, public philanderer, and Twitter shitposter. A parody of Silicon Valley. 

He is also a reflection of our society and very much a Man of Our Time. Where Bush was an atomic era industrialist, Musk is a digital era industrialist who understands that the most interesting innovations in the physical world still require approval from the government, whether it be voluntary or coerced. 

It is a feature - not a bug - of Musk that he is a world shaper at odds with the very institutions he needs to work with. SpaceX had to sue NASA for the right to compete. And SpaceX won! Bush wouldn’t approve of the government breaking the law by excluding commercial companies. 

Musk revolutionized launch economics with SpaceX, which is the single greatest improvement to our national security posture since Bush’s Manhattan Project. I shudder to think how our space capabilities would compare to China right now had the United States continued to rely on Lockheed Martin and Boeing’s United Launch Alliance for pioneering rocketry. 

Now Musk is tunneling through Vegas with the Boring Company, ushering in the era of the electric vehicle with Tesla, and building human-machine interfaces with Neuralink.1 While these endeavors require contact with institutions at the federal, state, and local level, Musk is not an institutions man. 

To be clear, this approach has its faults. By always treating the government as an adversary, Musk has made things harder on himself. The Justice Department’s lawsuit against SpaceX for discriminating against refugees and asylum seekers feels vindictive. Musk publicly complains about FAA regulations impeding launch progress, but the FAA has done a pretty good job of enabling Musk’s experimental launch regime. And his donation of Starlinks to Ukraine and subsequent refusal to allow the Ukrainians to use them to launch an offensive in Crimea was a decision viewed by many military leaders – rightly or not – as an ugly attempt to privatize DoD policy.

Bush’s approach also had its limitations. The academia-industrial complex he enabled has stagnated. The grant system and PhD-to-tenure pipeline is dysfunctional. 

It’s simplistic to say Bush unified government, academia, and business. These are three very heterogeneous sectors whose relationships to one another have always had tension. He did, however, demonstrate a functional model of leadership worthy of inspiration, if not quite emulation. 

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They worked. And they delivered in time to meet the moment. Apollo inspired America at a time when kids were hiding under their desks. The Manhattan Project ended WWII when teenagers were preparing to invade Japan. The Pentagon, the world’s largest office building until earlier this year, was constructed during WWII in time for 20,000+ War Department employees who needed a place to plan and prosecute the war. 

Nobody cares that these programs were over budget. They are priceless gems in American history that delivered eye watering capability on a timeline that mattered. Today, the Department of Defense would do well to reorient towards spending money to save time and deliver outcomes. This isn’t as easy as it sounds. It requires identifying leaders who are seemingly preternatural and funding them over those who are less capable.

Speaking of preternatural leaders - when Matt Damon Lt General Leslie Groves wasn’t on screen in Oppenheimer leading the Manhattan Project, he was busy leading the construction of a little known building called the Pentagon. His boss, General Brehon Somervell, the man who had conceived of the idea for the Pentagon, was also a good multitasker; he was running logistics for the entire Army the moment the U.S. entered the war.1

Groves and Somervell were men who understood the tradeoff between time and money. I’ll use their leadership constructing the Pentagon as a model example from which the entirety of the military-industrial-complex should draw inspiration as we seek to increase our technological baseline in time to deter conflict with our adversaries.

In 1941, the Pentagon was urgently needed. War was closing in as the War Department was spreading out. Some 24,000 employees were dispersed across dozens of buildings, and that number was set to increase to 30,000 by year’s end. This fragmentation was a national security threat. The inefficiencies of a scattered War Department were endangering American readiness and limiting the Army’s ability to coordinate mobilization. To mitigate the dire situation, Congress decided to construct temporary buildings and called on Somervell, then head of the Construction Division of the Quartermaster Corps, to figure out “an overall solution (pg 33).” Over the weekend, Somervell had his team draw up plans for a $35 million, 5.1 million square feet, 5-sided monstrosity to house the entire Department. 

This was an incredibly bold move on Somervell’s part. Just one month earlier, a new, $18 million War Department headquarters, literally called The New War Department Building, had opened. Fortunately for Somervell, the new headquarters was considered completely inadequate, able to accommodate only 4,000 employees. It was also considered pitifully ugly, and Secretary of War Henry Stimson refused to move in. Even still, Stimson was not inclined to embark on yet another expensive headquarters.

But it wasn’t up to Stimson. FDR gave the green light for the Pentagon on July 24, 1941, just one week after Somervell drew up the initial plans. Somervell promised that the world’s largest office building would be ready for occupancy well within one year. And it was. The Quartermaster Corps broke ground on Sept 11, 1941, and the first employees moved in on April 30, 1942, less than eight months later.2 The entire building was completed by mid-February 1943, by which time the Pentagon had expanded to 6.1 million square feet (Somervell took advantage of the momentum of Pearl Harbor to add a fifth floor).   

Everywhere, Somervell and Groves made creative decisions, bordering on the questionable, to accommodate the dual constraints of time and war shortages. Infamously, the Pentagon is a low building because Somervell needed to limit the amount of steel used (as well as aluminum, tin, copper, and most copper alloys used for galvanizing iron and steel…). Instead of steel, it’s constructed using reinforced concrete made from 680,000 tons of sand and gravel dredged from the Potomac river and supported by 41,492 concrete piles. Groves personally called engineering firms around the country desperately looking for concrete specialists.

Construction took place concurrently with architecture and structural design work. As the architects and engineers renovating the Pentagon learned more than fifty years later, many sections of the Pentagon were built without drawings or with drawings that bore little resemblance to reality. Somervell’s mandate to add a fifth floor was made with such haste that workers didn’t have time to fully remove the original roof.

Somervell and Groves had so spectacularly succeeded with the Pentagon that neither of them was particularly stressed about informing Congress in 1942 that they were $14.2 million over budget (they were actually $40 million over budget, as would be revealed in later investigations not made public).3 And Congress, for that matter, didn’t give them a hard time. The House Appropriations subcommittee chairman did remark to Groves that “you have overshot the mark by a pretty big margin” but that was the extent of the fuss (pg 221). “No protest was raised at the increased size or cost. Instead, much of the hearing dealt with complaints that the floors of the Pentagon were dusty (pg 221).”

Today, we have cost overruns for all the wrong reasons. It’s not because we’re building wonders in record time, but because poor-performing programs keep moving through the production pipeline irrespective of the value they’re generating (among other reasons that require a separate post). The former category of cost overruns is acceptable, as I’ve hopefully convinced you through the example of the Pentagon. The latter category of cost overruns is an abomination and an affront to American excellence. 

Just deliver the value promised and nobody will remember the price tag.

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People who challenge the status quo are a threat to establishment institutions. Silicon Valley built its reputation by fostering these mavericks in the form of venture capital funding to founders. Militaries, as establishment institutions, have a reputation for conformity. Despite the title of Top Gun 2: Maverick, the Department of Defense (DoD) is not known for its production of contrarian individuals. Here’s Albert Einstein on the matter: “This topic brings me to that worst outcrop  of the herd nature, the military system, which I abhor. That a man can take pleasure in marching in formation to the strains of a band is enough to make me despise him. He has only been given his big brain by mistake; a backbone was all he needed.” 

Einstein’s caricature of the military is generally right but specifically wrong: The DoD does have mavericks; they just rarely become four star generals. And Silicon Valley’s love for its founders is not unconditional: see Apple and Steve Jobs, Uber and Travis Kalanick, etc. Much as venture capital firms sour on their founders and force them out, the DoD has an unsavory history of punitive action against the very individuals uniquely capable of building something great. 

It wasn’t just Oppenheimer who got betrayed by the DoD after dedicating a significant portion of his life to protecting American lives. Let’s go through a brief tour of the DoD’s banished heroes:

Brigadier General William “Billy” Mitchell

Mitchell is known as the Father of the United States Air Force. A genuine war hero, Mitchell was the first American to fly over enemy lines during World War I. At the Battle of Saint-Mihiel, Mitchell commanded 1,481 American and Allied airplanes in what was the largest air operation of the war. After the war, he advocated relentlessly for investments in air power via an independent Air Force. In the process, he pissed off a lot of people, especially in the Navy, by arguing that bombers would render the battleship obsolete. Mitchell was a PR master and arranged for a highly publicized Army bomber attack that resulted in the sinking of the former German battleship Ostfriesland. 

The impetus for his infamous court martial were Mitchell’s comments following the 1925 crash of the Navy airship Shenandoah. He publicly accused both Army and Navy leadership of neglecting aviation due to “incompetence, criminal negligence, and almost treasonable administration of our national defense.” Mitchell was found guilty and suspended from active duty for five years. He resigned instead. Needless to say, he was vindicated in America’s need for an independent Air Force, but he died a decade before it was created in 1947.

Colonel John Boyd

Perhaps even more of a rabble-rouser than Mitchell, Boyd managed to escape a court martial but drew the ire of huge swaths of the DoD and its contractors. He started his career as an Air Force fighter pilot (a group hardly known for its subservience) and earned the nickname “Forty Second Boyd” for his ability to defeat any opposing pilot in less than forty seconds. His signature move can be spotted in an adrenaline-fueled sequence in the original Top Gun: Maverick lets the opposing MiG fighter get close up on his tail, ready to fire, then he pitches his own plane up at an angle, catching the air to slow him down so that the other guy flies right past him. When Maverick pitches the plane back down, he has the MiG directly in his sights. 

Boyd’s fighter tactics are emblematic of how he approached life: Understand and anticipate your opponent’s decision-making process and find ways to use superior maneuverability to get one step ahead of him. All of his accomplishments used this framework, from his design of the F-16 fighter and invention of the OODA Loop to his invasion strategy for Operation Desert Storm and (my personal favorite) his bureaucratic wars with the Pentagon via the Reform Movement. 

Irreverent to the core, Boyd barely made colonel and had no hope of becoming a general officer. (As a major, he once called a colonel a “lying fucker” to his face, and it was far from an isolated incident).1 Eclipsing all of his impressive material contributions is the spiritual: Boyd had a timeless morality code summed up with the phrase “to be or to do,” whereby he implored his officers if they wanted to be someone or do something.

Lieutenant Colonel James Burton

A Boyd protégé, Burton fought to put an end to the Pentagon’s corrupt processes for testing its weapons (these events are chronicled in Burton’s excellent memoir turned HBO satire The Pentagon Wars.) You wouldn’t test a bullet proof vest with a water gun, but the equivalent was happening with systems like the Bradley Fighting Vehicle. In the 80s, Burton testified before Congress multiple times. He was disgusted that the program office was prioritizing getting the Bradley into production rather than ensuring a highly combustible vehicle transporting 11 men first see conditions representative of live combat. Burton’s comments echo Mitchell on DoD’s willful negligence, “By refusing to conduct realistic tests against a vehicle fully loaded with fuel and live ammunition, the Army senior leadership, in my opinion, demonstrated that it had a callous disregard for the lives of troops in the field.”2 

Thanks to Burton, Congress passed legislation requiring all new weapons systems to go through live-fire test series before commitment to production. Here’s the general in charge of the Bradley: “During Desert Storm, more soldiers' lives were saved as a result of Bradley live-fire testing than we can count.”3 Burton’s forced into retirement by the Air Force and doesn’t even make full colonel.

Colonel Drew Cukor

For a contemporary example we have Cukor, the man responsible for Project Maven, which remains one of the lone examples in all of the federal government of a functional, scaled, operational AI program. When it was created in 2017, Maven was a first-of-its-kind initiative by the DoD to deploy AI. The initial use case was assisting operators with analyzing the huge amount of drone footage from Iraq and Syria in the fight against ISIS. The program has since evolved and scaled with the changing geopolitical environment. 

Maven almost immediately drew controversy when Google publicly pulled out of the program after a vocal minority within the company opposed work with the DoD. Many government program managers would have leaned away from commercial solutions after being burned by Google, but Cukor - much to his credit - maintained faith that there were Silicon Valley companies who could work with the government. Today, it’s still hard to convince the government that the private sector offers a better solution than the government building the same thing from scratch, and it certainly wasn’t any easier in 2017.

Cukor, a Marine for over 25 years, is described by his colleagues as “a classic disruptor” and “super aggressive.” As you can probably guess by now, these qualities don’t correlate with promotion. Cukor prioritized outcomes over politics and paid the price, landing a cushy private sector job as consolation prize.

Reward the Rebels 

It’s difficult for any large bureaucracy to make room for independent thinkers, but the stakes are uniquely high for national security. The DoD is not leaning into its competitive advantage against any of our authoritarian foes when it crushes dissent by ensuring irreverent minds do not hold top leadership positions. There is too much focus on protecting downside and not enough emphasis on maximizing upside. Ironically, this “risk averse” attitude becomes exponentially riskier as we erode our ability to credibly deter conflict. Silicon Valley does not have a monopoly on mavericks, but it does have a much higher threshold for tolerating them. 

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In 1960, the United States Navy rapidly procured, developed, and fielded the world’s first operational ballistic missile submarine, equipped with solid-fueled Polaris missiles. Today, it is taken for granted that the solid-fueled ballistic missile is superior to liquid-fueled, but this was not at all obvious in 1955 when President Eisenhower designated the development of ballistic missiles the highest priority and created four competing programs. From the beginning, the viability of solid-fueled missiles was discounted by the Air Force and Army. Prominent figures like Saturn V rocket engineer Wernher von Braun brushed them off as toys: “the farthest east the Navy could hope to reach with a solid-fueled missile fired from the Atlantic coast of Europe would be the Simplon railway tunnel in Switzerland.”

Initially, the Navy wasn’t even given one of the four ballistic missile programs. This was partly the Navy’s fault, as internal disunity prevented it from rallying around a proposal until too late. After begging to join the Army’s liquid-fueled Jupiter, the Navy later backstabbed the Army and abandoned the Jupiter to make room for Polaris as soon as it had the chance.

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The Navy’s triumph - more accurately, the triumph of the Navy’s Special Projects Office (SPO) created to run the Polaris program - is told in Harvey Sapolsky’s The Polaris System Development: Bureaucratic and Programmatic Success in Government. The incredibly boring title belies a superb account of the unique features of the Polaris program that caused it to deliver solid-fueled missiles years ahead of schedule (and only a little over budget). Critically, there was sustained competition from all stakeholders on Polaris: 

• Contractors were at risk of losing work to other contractors. Lockheed (not yet Martin) is most commonly associated with Polaris, but there was actually no prime contractor on one of the most epic defense acquisitions.

• The Navy was at risk of losing funding and priority to the Air Force’s ballistic missile efforts. This intense rivalry propelled the Polaris as well as the Air Force’s Minuteman to greatness. 

• Civil servants were at risk of losing their jobs if Polaris failed, as the creation of the SPO was supposed to be temporary.

The SPO operated with an unusual degree of financial and program autonomy within the Navy, a status it considered essential to delivering solid-fueled missiles on an extremely compressed timeline. The Department of Defense (DoD) is a bureaucracy that often poses a greater risk to program success than the enemy itself. The SPO was keenly aware of this fact and craftily employed a novel project management system, the Program Evaluation Review Technique (PERT), to keep the monkey off its back and obtain a disproportionate amount of Navy funding.

PERT was created within the SPO at the direction of Admiral Raborn, the director of the Polaris program. PERT is a complex R&D planning and scheduling tool that calculates the probabilistic distribution of the expected time for completing critical program activities, using data from bench engineers as inputs. PERT checked all the right boxes for a fancy management system that would impress bureaucrats and outsiders: it was created by Booz Allen Hamilton and included a custom formula invented by a mathematics PhD. Almost as soon as PERT was announced to the public, it was “hailed as the first breakthrough of management science in a decade (pg 111).” It wowed everyone from Harvard Business School to the Secretary of the Navy and gained the reputation as the primary cause of success of the Polaris program. 

The only problem? It didn’t work. Everyone internal to the Polaris program thought it was bullshit. Here’s a SPO official on PERT:

It had lots of pizzazz and that’s valuable in selling a program. The real thing to be done was to build a fence to keep the rest of the Navy off us. We discovered that PERT charts and the rest of the gibberish could do this. It showed them we were top managers. PERT made us OK with people who had the money. We did it in spades - computers, the whole bit (pg 124).

Much as a magician uses misdirection to distract an audience, so Admiral Raborn and SPO used PERT to distract comptrollers and auditors from looking too closely at how SPO was actually operating Polaris - namely, with far greater autonomy and far less oversight than any previous weapons program.

The theater of the absurd continues with a plot that would seamlessly fit into Catch-22. Admiral Raborn ensures PERT is nominally in use for the optics of selling the program. When the first Polaris missile is successfully launched, he receives a Distinguished Service Medal for “establishing a single yet forceful management system which encompassed all elements of his responsibility, implementing a totally new management tool, PERT (pg 125).” Shortly after, the DoD and NASA make PERT a department-wide contract requirement. 

Humor aside, this is an early example of bureaucratic worship of process over outcome. The DoD latched onto PERT because of the appeal of an omniscient, objective system identifying program delays in advance. The real factors for success - an empowered, accountable program office and continuous competition throughout the acquisition process - were ignored. Today, we still experience the negative reverberations of the DoD’s ignorance of reality, albeit at a much greater scale. There is only one program office for the F-35, so its survival is guaranteed in a landscape without predators. Polaris did not have a guaranteed gravy train. The ballistic missile mission was up for grabs, and inferior projects could and did lose their funding (see the Army’s Jupiter and the Air Force’s Atlas and Thor missiles). Admiral Raborn was an effective PR man for PERT. We need an effective PR (wo)man to bring competition back into the acquisition process.

In summary, in each case where a military organization led the way to a disruptive shift in the competition, it enjoyed the benefit of a clear vision of the envisioned end state - what it was trying to do and how it would go about accomplishing it (pg 403).

Part I of The Origins of Victory “identifies the emerging competitive environment’s prospective characteristics,” and it includes a survey of disruptive technologies (e.g., AI, quantum, additive manufacturing). I would recommend skipping Part I, which is a long prelude to the heart of the book: Part II details four iconic revolutions in military affairs (RMA) that changed how wars were fought:

1. The British Royal Navy at the close of the 20th century and its reckoning with the likely obsolescence of the battleship and the potential of torpedo-armed submarines;

2. The German military’s development of blitzkrieg between WWI and WWII;

3. The U.S. Navy’s refinement of the aircraft carrier and its investment in naval aviation between WWI and WWII;

4. The U.S. Air Force’s precision warfare revolution leading into the Gulf War.

Where Krepinevich is spot-on is his critique that the U.S. military has failed to define and prioritize specific, operational challenges, which prevents it from experiencing the “virtuous cycle of analysis, war-gaming, field exercises, and interaction with industry important to disruptive innovation (pg 411).” As someone from industry, I can attest to the lack of a virtuous cycle, to put it mildly. New concepts are constantly pushed and branded by the U.S. military as the guiding concept going forward, but they are agnostic to the enemy and could just as easily apply to Vietnam in the 70s as China today or the Germans in WWII. See: Joint Warfighting Concept for All Domain Operations.

Because these concepts are not defined at the campaign level of warfare and are overly broad, they are not implemented successfully. Industry ensures their marketing material is aligned with what the government wants to hear, both sides get sick of the lack of progress made at the overly broad directive, and the concept develops a stigma that then warrants a rebrand. See: JADC2 to C-JADC2, kill chains to kill webs, and ABMS to C3BM.

Krepinevich’s dull writing is not his greatest sin. That distinction belongs to his harsh critique of the Defense Reform Movement of the 1970s and 80s. This critique is in direct conflict with his conclusions in his final chapter where he describes what the U.S. military needs to do differently to adopt innovation at speed and scale. Krepinevich characterizes the Reformers of John Boyd, Chuck Spinney, and Pierre Sprey as luddites who tried to stymie the precision warfare revolution of the 80s by presenting a false dichotomy to Congress and the American people: the Pentagon was buying expensive, high-tech weapons when large numbers of easy to maintain, affordable, reliable weapons would produce a more effective military and save money.

Krepinevich’s proof that the Reformers were wrong is the First Gulf War, where the F-15 performed spectacularly and accounted for a disproportionate number of kills. Sprey was critical of long-range fighters, while Boyd was overly indexed on maneuvering air combat fighters. The latter was influenced by his experience in the Korean War, and he aggressively advocated for the F-16 over the F-15. What Krepenivich omits is that Boyd was central to the design of the F-15 (originally the F-X, which Boyd vociferously opposed) and its shift towards a lighter, more agile, less complex fighter. And as the most widely operated fighter jet in the world, the F-16 is hardly irrelevant. Sprey was also extremely supportive of the A-10, which itself performed very well in the Gulf War. The A-10 remained so popular that there was genuine debate over if it could provide most of the functionality of the F-35, and it’s only in 2023 that its retirement has begun.

Thematically, the Defense Reform Movement could not have been more correct, something Krepinevich refuses to concede. The Reformers were not luddites - they were against high complexity weapons systems, not high technology weapons systems (War on the Rocks recaps the distinction nicely).[1] Chuck Spinney’s prophetic Defense Facts of Life remains as relevant as ever and predicts high complexity/high technology procurement disasters including but not limited to: the Army Future Combat Systems, the F-35, the Zumwalt, the Littoral Combat Ship, OCX ground stations, etc. The Reform Movement is consistent with Krepinevich’s critique of U.S. military procurement:

Not only is the U.S. military slow to field new capabilities, but it has also compiled an unenviable record of “failure to launch” systems that have stumbled through their development process only to be canceled for being impractical, far over the initial cost projections, or both (pg 440).

The Pentagon risks operating off “program momentum:” simply continuing to field capabilities that are moving through the production pipeline. Yet these programs were initiated years, and in some cases well over a decade ago, when the United States’ geopolitical position was far more favorable, and the threats it confronted far less advanced (pg 439-40).

Krepinevich then proceeds to pose the questions: “Which capabilities merit continued production? Which should be canceled?” For Krepinevich, these don’t need to be rhetorical questions, and this is where he should use his status as an insider to take an opinion not only on what programs should be canceled but also who should be held accountable for their failures.

Krepinevich is also the co-author of The Last Warrior: Andrew Marshall and the Shaping of Modern American Defense Strategy. On innovation, Krepinevich arrives at the following conclusion following his tutelage under Marshall:

No methodology or set of rules could ensure innovation would succeed. Peacetime military innovation appeared to be a highly contingent endeavor in which factors such as visionary leaders with the talent to operate effectively in bureaucracies, and plain good luck could play - and often had played - decisive roles (221).

In other words, he’s a believer in the Key Man theory. Great. Let’s find and raise our key (wo)men in industry and government. As much as people must be held accountable for failures – again, in both government and industry – so people must be incentivized to grab glory and be properly exalted when they have succeeded. I want a 2,000 word Time profile on a career bureaucrat or an up-and-coming Colonel. While Krepinevich and I may disagree about who counts as a visionary leader (e.g., Boyd), we are in vigorous agreement about the ability of the individual to affect outcomes, something that sadly feels out of vogue in many circles.

But maybe we’re making progress. After all, a three star general did interview Palmer Luckey at a recent U.S. Space Force Reverse Industry Day. The latter wore his signature flip flops and Hawaiian shirt and held the audience rapt with his equally signature irreverent commentary. It was the highlight of the event.

[1] “[Defense Reform Movement] has been interpreted as an argument for smaller budgets, or as an argument against advanced technology. This view is totally incorrect. We need more money to strengthen our military; however, we believe that unless we change the way we do business, more money could actually make our problems worse. Inextricably combined with the broad issue of how we spend our money, is the issue of how we should use our superior technology - specifically, should we continue to increase the technological complexity of our weapons? Do the positive qualities of high complexity weapons outweigh their negative qualities? Advanced technology and high complexity are not synonymous.” - Defense Facts of Life.

You would think that Nazis, who typify the enemy, would be sufficient motivation to get the AFL and CIO unions to cooperate in wartime production, particularly when said Nazis had just invaded Communist utopia Soviet Union in 1941. You would be wrong. “1941 was a near-record year of strikes and disputes, with more than 3,500 of them, costing 23 million man-days of labor - enough to build 124 Fletcher class destroyers (pg 151).” If not Nazis, then surely U.S. involvement post-Pearl Harbor would do the trick? Wrong again. In April 1943, John Lewis of United Mine Workers sent his workers on strike for increased wages, which halted production in Pittsburgh. I couldn’t help but experience some schadenfreude at what came next: New Deal, labor-loving FDR gets spurned by his own creation.

“When Roosevelt got the news, he exploded. He ordered the army to take over the mines and prepared a radio broadcast for May 2 appealing directly to the miners to go back to work. He was being wheeled down to the Oval Office to make the broadcast when word came Lewis had struck a deal. [… That deal only lasted until] June 19, when more than 60,000 coal miners dropped tools and went home. When Roosevelt threatened to strip the draft deferments from every mine worker, Lewis decided to halt the strike after three days (pg 246).”

Ultimately, 1943 work stoppages totaled 13.5 million man-days, and 1944 was only slightly better with 8.7 million man-days lost. “Even so, a week before D-Day, 70,000 workers were on strike at twenty-six plants in Detroit alone (pg 247).”

The U.S. is not at war today (I think), and there’s no AFL union corollary at Google (despite best efforts), but a similar dynamic is at play in the technology industry. If war starts, one of the U.S.’s greatest vulnerabilities will not be the private sector’s inability to innovate, but labor’s unwillingness to participate, often for reasons of Communist ideology cloaked in morality.

Tech workers, who naturally are well positioned to exploit the advantages of Internet virality, have hacked the need for unions. A small vocal minority organizes themselves, writes a letter to company leadership that’s inevitably leaked, and leadership caves to the demands of its Communist employees. The most notable example that’s frequently trotted out is a minority of Google employees in 2018 successfully protesting Project Maven, the Department of Defense’s marquee effort to bring AI to the warfighter. Google canceled its Maven contract, proving that less than 5% of employees have the power to hold the company hostage [1].

The chilling effect of the tyranny of the local minority is how it preempts the company leadership to make decisions that are likely to be aligned with the ideology of the day. More recently, Boston Dynamics and other robotics companies pledged to not weaponize their robotics. As is often the case with these open letters, cognitive dissonance abounds. Boston Dynamics is owned by Hyundai, which is Korea’s largest manufacturer of naval ships and artillery. Most disappointingly (and it pains me to include SpaceX, who I praise later in this review), Elon Musk announced he would not allow Starlinks to be weaponized for drone control in Ukraine [2]. Additionally, a senior SpaceX executive revealed in private conversation with me that 50% of SpaceX employees disagree with national security work, causing leadership to downplay national security contracts in internal and external communications. I’ve always been impressed with SpaceX’s ability to maintain its branding as a space company first and foremost and a government contractor second, but surely its brilliant employees can infer what the NRO satellites launching on Falcon Heavy are being used for, right?

This Kinetic Review is a negative reflection on Big Labor’s failings, but it is worth reading Freedom’s Forge to understand how a few executives from the private sector — especially former auto exec Bill Knudsen — created the proper incentives for industry to transition its production lines to be responsive to military needs. Despite the labor strikes, America unambiguously converted to the most successful wartime economy ever seen. From mass producing Liberty ships to B-29s, Herman shows it was not centralized planning by the War Production Board, but America’s free enterprise industrial system that led Knudsen to exclaim “America is in production now.”

Knudsen disabused the War Department of its notion of “M-day,” that the government could “effortlessly mobilize an economy of war with the throw of a fiscal switch (pg 341).” As is often the case when capitalism triumphs with a large Pareto improvement, the urge to rewrite history and separate the victor from the spoils is strong. And so the New Dealers moved in to credit Labor and government-directed production for the spectacular results, something not even Stalin could bring himself to do [3].

Bruce Catton, editor of American Heritage magazine, wrote in his memoirs of his years as public relations officer at the War Production Board, big business constantly got in the way by demanding it be well paid for its services and refusing to embrace a new social construct combining government, big business, and labor - an American version of socialism, one in which “labor moved up to partnership with ownership in the great U.S. industries” and government respected “its right and duty… to disregard the last vestiges of property rights in a time of crisis (pg 341).”

The media and much of the public is still allergic to industry’s success. Last month, SpaceX’s Starship, a rocket with the potential to alter the trajectory of human progress, flew for four minutes before ultimately exploding during its first test flight. Employees were holding the possibility of the rocket blowing up on the launchpad to be very real, so achieving flight was a great success. As space reporter extraordinaire Eric Berger generously engaged on Twitter with never-Elon-ers, he explained flawed test flights are part of the company’s iterative design process and will ultimately produce a functioning Starship.

But the sentiment below was a common one (link):

Politicians joined the fray, with Rep. Zoe Lofgren (D-Calif), top Democrat on the House Science, Space, and Technology Committee, remarking, “I must say, when I saw that rocket blow up, I thought, thank God there’s no people on board. Sometimes the lowest bidder is not always the best choice.”

Had rockets never flown successfully before, I could empathize with the public’s skepticism over test rockets blowing up in flight being a “good thing.” But you could not design a more perfect record of iterative design than SpaceX: In the early 2000s, their first 4 rockets exploded or didn’t reach orbit, but those tests led to the Falcon 1 and then the Falcon 9, a money-saving, reusable rocket. SpaceX has done more to advance U.S. national security and our position relative to China than any other company or government agency in the last 50 years. Truly, no good deed…

What’s more, SpaceX didn’t invent the playbook of iterative design. Reporters and politicians unequivocally criticizing the Starship launch reveal themselves to be ignorant of history or so biased in their hate for Elon and industry they are incapable of objective analysis—probably a mix of both. I’m more than happy to give the government due credit for its incredibly successful Cold War CORONA Project, which used an iterative design process to launch the world’s first spy satellites consistently and reliably. The program was not immediately successful - far from it. The first twelve launches failed in some form or another, with six of them never reaching orbit and some of them even involving rapid unscheduled disassembly.

As Rep. Lofgren mentions in the second paragraph of her bio, she worked the night shift at Eastman Kodak in the late 1960s. This was right when CORONA had hit its stride and was launching satellites multiple times a month. I wonder if she’s aware that Eastman Kodak supplied the cameras used in the CORONA satellites, and if so, how she feels having worked at a company with a heritage of “failure.”

To borrow Rep. Lofgren’s words, I must say, when I saw that rocket blow up, I thought, thank God politicians don’t run SpaceX.

[1] About 4,000 employees signed the letter out of over 98,000.

[2] Now whether this is because of Tesla’s ties to China, Russian assassination threats to Elon’s life post-Starlink donation to Ukraine, or Elon’s stated reason of preventing WWIII, we can only speculate. The outcome is the same.

[3] “When Stalin, Roosevelt, and Churchill first met at Tehran in 1943, Stalin raised his glass in toast “to American production, without which this war would have been lost (pg 336).””

The book catalogs the Reform Movement writ large and Burton’s contribution to it, while the movie focuses exclusively on the moment Burton “crosses the Rubicon,” to use his phrase, and goes to war with the Pentagon over the testing of the Bradley Fighting Vehicle [1]. Burton meticulously details how careerism, incompetence, and willful stupidity collide in a tragically ironic way to undermine the testing of the weapons meant to protect troops.

In 2023, the Bradley is back in the headlines with the United States’ commitment to send them to Ukraine. That makes now as good a time as ever to revisit the troubled history of this tank vehicle that looks like a tank but is emphatically not a tank.

Context and Background

In 1983, the cover of Time magazine was splashed with the face of Chuck Spinney, a key individual in the Reform Movement, and the question: U.S. Defense Spending, Are Billions Being Wasted? It was a different era. A civil servant could become a celebrity, Time was relevant, and the public was capable of being surprised that the answer to this question could be anything other than a resounding “yes.”

The Reform Movement started by John Boyd and Pierre Sprey in the late 1970s garnered bipartisan support and led to the creation of the Congressional Military Reform Caucus. At its peak in the early 1980s, the caucus had over 100 members. Boyd and Sprey generated bipartisan support with arguments for reform that transcended mere advocacy for budget cuts. The Reformers reached the damning conclusion that “budget constraints were not the source of the problem.” No surprise there. The problems were how the military fought, the weapons they fought with, and the way those weapons were tested and procured.

Enter Colonel Burton

Burton served as the military assistant to three consecutive assistant secretaries of the Air Force across the Carter and Reagan administrations, a highly unusual tenure given that assistant secretaries typically dispense with their predecessor’s appointees. The culmination of his service was getting Congress to pass legislation to require all new weapons systems to go through live-fire test series before commitment to production. Burton advocated for realistic testing via the disastrous Bradley Fighting Vehicle. It was in development for over 15 years and started as a transport vehicle for an eleven man infantry squad. However, after design by committee, it only nominally resembled a troop transporter.

The Bradley ended up with more ammunition than any other vehicle on the battlefield, crowding out five of the eleven troops it was supposed to carry. All of this ammunition made the vehicle both a prime enemy target but also highly combustible for the troops inside, as the ammo was packed throughout the vehicle. A separate version was manufactured in parallel for the Israeli Defense Force, who demanded the fuel tank and ammo be stored in external compartments, separate from troops. Burton fought hard for this version to be used by the U.S. Army, but he was only partially successful. After years of Burton advocating, the Army moved some ammunition out of the troop compartment, but they never went so far as to store it separately. Operational testing for the Bradley consisted of water-filled ammunition and pre-selected test points. Here’s Burton on fighting for realistic testing: “By refusing to conduct realistic tests against a vehicle fully loaded with fuel and live ammunition, the Army senior leadership, in my opinion, demonstrated that it had a callous disregard for the lives of troops in the field. I could arrive at no other conclusion (pg 190).”

What’s impressive about Burton’s whistleblowing on weapons systems testing is he takes no actions stereotypical of whistleblowers, like talking to the press or selectively leaking classified information and documents. When the Bradley test data is being suppressed and manipulated, Burton writes a steady stream of reports and memos. The Xerox machine is his best friend, as he shares his documents with the maximum number of people allowed. He knows someone in the Pentagon will eventually talk to the press, thus generating immense outside pressure and accountability for accurate testing from once-revered press outlets like the New York Times and The Washington Post. Boyd is an indispensable mentor during this time. He knows that if Burton talks to the press, the establishment will have easy fodder with which to accuse Burton of publicity-seeking or unpatriotic motives. By following Pentagon procedure to the letter, Burton leaves an impeccable paper trail. It turns out having the man who invented the OODA loop as your ally is a pretty good way to out-maneuver your enemies.

At this point, the reader may be wondering in earnest just why testing and procurement are so dirty. The answer is simple: human behavior maps to the incentives an organization creates. This is not to excuse the immoral behavior of many of the actors in The Pentagon Wars, but it does explain it. Here’s Burton’s assessment:

Many incentives exist for people to usher new weapons successfully into the system. The rewards include promotions, career advancements, and the possibility of high salaried jobs with the defense industry after retirement […]. As a result of unchecked advocacy, a steady stream of weapons of unknown or questionable performances passes into military inventory. Strong resistance to realistic testing exists because such testing inevitably produces unflattering data that often inconveniences the military’s senior leaders (pg 160).

Burton’s reward for cleaning up Bradley testing was forced retirement. Technically, the Air Force tells him to transfer to Wright Patterson Air Force Base or retire. This transfer order is delivered prior to the completion of the Bradley’s Joint Live Fire tests, despite on-the-record assurances from the Undersecretary of Defense that Burton would have unfettered authority to see testing through to the end.

Then and Now

Sadly, the chutzpah of the Reform Movement now feels quaint. The F-35 replaces the Bradley as all that is wrong in defense procurement: 20 years in development, billions of overspend, unaffordable sustainment, defunct software, and an aircraft that tries to be everything to everyone [2].

The mismanagement and cronyism of weapons systems is not confined to hardware. In June 2018, the DoD launched the Joint Artificial Intelligence Center (JAIC) and funded it to the tune of $1bn, dishing out large software contracts to the usual suspects (Deloitte, Booz Allen). Its purpose was to be the U.S. government’s premier example of AI development and deployment across the armed services. After a couple of years of prolific PR and spending with nothing of substance to show, the JAIC was quietly dissolved and wedged under the newly established Chief Digital and Artificial Intelligence Office (CDAO). I am yet to see a single piece of journalism examining why the JAIC failed and who should be held responsible. What I did notice was the JAIC CTO’s smooth exit, becoming the CIA’s first ever CTO.

Today, there is a version of the Reform Movement that’s dispersed across Twitter, Silicon Valley defense companies (e.g., Anduril, Palantir), and innovation outposts across the DoD (e.g., DIU, AFWERX). While it lacks the crisp branding and centralization of Boyd’s movement, today’s movement offers ideas that are no less worthy of the brightest spotlight:

• DoD should buy commercial technologies from innovative companies (often venture-backed, Silicon Valley startups) when the solution already exists rather than waste money and time building custom solutions that rarely work as advertised.

• DoD needs to help non-prime companies cross the “valley of death” dividing successful prototypes and pilots from actual procurements or programs of record.

• DoD needs to invest in “attritable” technologies, which are larger numbers of inexpensive, often unmanned, machines, rather than large numbers of exquisite, complex, and heavily manned machines.

On the last point, Burton and the original Reformers saw the future. The Blitzfighter was Burton’s proposal for a “small, simple, lethal, and relatively cheap airplane that would be designed for close support of the ground troops who would be engaged with Soviet tanks and more.” It would cost less than $2 million, a price point that would allow the Air Force to “flood the battlefield with swarms of airplanes.” Today, we call this concept attritable, and it’s one in which the Air Force is increasingly interested, even if they aggressively denigrated the idea in the 80s.

Many of the issues the Reformers rallied around 50 years ago still exist today. This is frustrating. Fortunately, Col. Burtons, while rare, are not extinct. Throw in the new(ish) addition of VC-funded defense tech companies looking to spearhead change, and I will optimistically state we’re looking at a lethal combination.

[1] It’s hard to summarize the Reform Movement in one or two sentences, but some key tenets were simpler, less expensive equipment, in greater numbers. Equipment should be functional and highly aligned with the warfighter’s needs rather than with a general or defense contractor’s career. If these things seem axiomatic, think again.

[2] Not that anyone has the decency to be embarrassed. The wildly popular Top Gun 2: Maverick features cute Lockheed Martin product placement and a cheeky reference as to why the F-35 can’t be used in the mission.

Satellites, particularly Earth observation satellites, are magical. They were magical when the U.S. government first launched them in 1958, they are magical now, and they will get more magical over time. It is one of the great ironies that as innovation in bits fuels innovation in atoms, increasingly sophisticated technology often seems less impressive because the inner workings become invisible. Remote sensing is a great example of this.1 I take it for granted that satellites today digitally downlink data to ground stations, but there was an epic era in Earth observation where satellites orbited for a few days before discharging and deorbiting a 40 pound film capsule with retro-rockets and parachutes. The falling capsule was then (hopefully) intercepted mid-air and recovered by an elite crew of fighter pilots turned parachute-catchers. This was the era of CORONA (no, the name did not age well).

CORONA was a technology borne of the Cold War and the USSR’s Iron Curtain. The CIA-operated, Air Force-assisted program began in 1958 in direct response to Sputnik, and it notched its first success in 1960 when the first successfully recovered space capsule brought reconnaissance photos back to Earth.2 Over twelve years of operations, 165 Corona flights returned 145 capsules containing 866,000 frames of film. To quote the National Reconnaissance Office (NRO), itself a product of CORONA, “The United States of America, confronted by the problem of a closed society, was once blind, but now it could see.”

Immense credit goes to President Eisenhower. While the almost 88% success rate is impressive, it belies the repeated early failures that would have made many presidents consider canceling the program. The first twelve launches failed in some form or another, with six of them never reaching orbit. For comparison, recall the infamous early history of SpaceX, where the company’s existence was contingent on finally reaching orbit on its fourth Falcon 1 launch attempt after the previous three had failed to do so. Part of Eisenhower’s commitment to seeing CORONA through was that the other reconnaissance options were both inferior and untenable. Eisenhower was extremely reluctant to approve U-2 flights, and for good reason, as his utmost fear was realized in the disastrous 1960 incident that delivered an American pilot to the Soviets. The predecessor to CORONA and U-2 was Genetrix, a balloon reconnaissance program that launched over 500 balloons during a month in 1956, with a small fraction of those balloons providing usable photos.3 The United States needed to know how many ICBMs the USSR had. The satellites had to work.

And once they worked, they really worked. Most importantly, CORONA provided the U.S. government with a precise inventory of Soviet ICBMs. This knowledge put the United States in a strong negotiating position during the 1961 Berlin Crisis. The success of CORONA also proved to President Nixon that satellite reconnaissance could be trusted as a verification method for the Arms Limitation Treaty (part of the Strategic Arms Limitations Talks (SALT)), a treaty to which he was unlikely to have committed had there been no way to check the Soviets. Less urgent but still important were the instances where CORONA revealed aspects of the Soviet ICBM and space program that otherwise would have been denied and perhaps lost to history. On the former, see the Nedelin catastrophe. On the latter, see the N1 rocket that was supposed to be the Soviet counterpart to Saturn V.

CORONA is documented in Curtis Peebles’, The Corona Project: America’s First Spy Satellites (1997). Given the gripping subject matter, it’s unfortunate how poorly Peebles relates it. Large sections of the book read like a long Wikipedia article, listing flight after flight without a proper narrative or compelling voice. He is considered the definitive author on this subject, and despite my negative commentary, he is still the best option for an independently published read of CORONA. However, the now-declassified and publicly available book-length history as told by the NRO is the better option. The lack of books on this subject is at least partially attributable to the intense secrecy around it, with declassification of CORONA not occurring until 1995. Still, almost 25 years later our best option is an out-of-print book reselling for $170. Where is the interest from today’s seasoned aerospace writers? I’m looking at you, Eric Berger.

While many satellite technologies and programs remain classified, there is a remarkable degree of openness in the industry that likely would have shocked the architects of CORONA. Where once pilots intercepted capsules from space without even knowing those capsules contained film, now photos of our revived Cold War rival are posted directly to Twitter as the Ukraine-Russia war evolves in real-time. This openness is in large part thanks to the commercial industry, where Planet and dozens of other companies have launched commercial birds into low Earth orbit. We have a front row seat to the complicated decisions that will determine how the U.S. government will divide up responsibilities among the NRO, National Geospatial-Intelligence Agency (NGA), and U.S. Space Force (USSF) to buy commercial capabilities for enabling not just intelligence workflows but also the operational workflows now possible with increasingly timely and ubiquitous satellite collection. That’s a book I’ll want to read in 10 years.

Regardless, “Sputnik Moment” entered the lexicon to refer to a single event that spurs a country into realizing they need to change the status quo to remain competitive. In defense circles, the term is ubiquitous. President Obama even used it in 2010, calling the recession “our generation’s Sputnik Moment” and that we cannot go back to an economy “built on financial speculation.” Like many an overused idiom, Sputnik Moment has lost its potency, particularly when used by the US defense establishment (today, everything China does is a Sputnik Moment, but, ironically, nothing is severe enough to warrant a change). However, the term is useful when considering what events may have served as other countries’ Sputnik Moments.

The Gulf War (1990-91) was China’s Sputnik Moment. Only one month after Iraq’s swift and stunning defeat by the US-led coalition forces, China’s senior leaders, during party speeches, perfectly capture the sentiment of a Sputnik Moment: Jiang Zemin, CCP General Secretary, noted “[China’s] backwards technology means being in a passive position and taking a beating;” Liu Huaqing, Central Military Commission (CMC) Vice Chairman, said “We should face this reality squarely. In no way should we be satisfied with our present situation and hold an arbitrarily optimistic stance (pg 190).”

The Highway of Death televised for immediate consumption probably expedited China’s realization that war had changed and, as Zemin summarized, “modern war is becoming a high-tech war.” As M. Taylor Favel writes in his excellent (albeit dry) Active Defense: China’s Military Strategy Since 1949, the Gulf War thus “ignited a wholesale reconsideration of future warfare within the PLA.” This is reflected in the CMC 1993 strategy, which is the most significant of the strategies adopted by the People’s Liberation Army (PLA) and is the basis for China’s military strategy today, following adjustments in 2004 and 2014. The circumstances that forged the 1993 strategy have all the attributes of a Sputnik Moment.

Element of Surprise

Much as the American public was shocked by the Sputnik 1 launch, so China was surprised by the outcome of the Gulf War.

• “In the early 1990s, China’s senior party and military leaders believed that China’s regional security environment was the “best-ever” since 1949 (pg 182).”

• “Chinese military analysts predicted that coalition forces would become bogged down in a protracted conflict against the battle-hardened Iraqi army and that air power would play only a marginal role in the war (pg 188).”

Immediate Understanding of the Need to Change the Status Quo

A Sputnik Moment requires that people with the authority to implement change start crusading for it:

• Students at the PLA’s National Defense University were urged to “Use the Gulf War to clarify what kind of war modern war will be (pg 189).” Zhang Zhen, President of the National Defense University, 1992.

• “As can be seen from the Gulf War, modern war is becoming high-tech war, becoming multi-dimensional warfare, including electronic warfare and missile warfare;” and “we really do lag behind in weapons and equipment, and in some areas, the gaps are increasing (pg 189).” Jiang Zemin, 1991.

• “The Gulf War was a high-technology local war [that] shows that the development of high technology is the ‘dragon’s head’ of national defense and economic development;” and “The Gulf War used the largest variety of new weapons since World War II (pg 189).” Liu Huaqing, 1991.

Major Changes Enacted in Direct Response to An External Stimulus

The 1993 strategy was defined by “local wars under high-technology conditions (pg 182).” [1] This translated to increased offensive capabilities, as priorities shifted from defense of the homeland to the more ambitious goals of “winning territorial disputes along China’s periphery and unifying Taiwan.” The operational doctrine to support these changes included the first-ever campaign outline for joint operations among the services, a direct response to the Gulf War’s “obvious characteristic” of the “integration of land, air, sea, space, and electronic capabilities.” With the focus now on destroying an opponent’s operational system, new technologies were required, including “precision-guided weapons, intelligent support systems, electronic warfare systems, and automated command systems (pg 191).” [2]

The force structure also changed with a reduction of 500,000 personnel in 1997. The army took the largest hit and shrunk by almost 20%. These changes were made to increase the quality of the force and strengthen the navy and air force.

Conclusion

In the 1964 film Dr. Strangelove, the titular character points out that the Soviet Union’s doomsday machine is only an effective deterrent if everyone knows about it. As nobody knows about it until it is too late, nuclear apocalypse ensues. While this line of reasoning is pretty intuitive, the game theory becomes complex when one thinks about how much to reveal and when to reveal it.

Sputnik Moments are therefore interesting to analyze not only from the perspective of the party with the inferior technology, but also from the perspective of the party with the superior technology who, willingly or not, shows their hand. Superficially, it seems that the hand is forced more in a war that needs to be won than in the revelation of an important but non-essential capability. The counterfactuals are very interesting here: What trajectory would the US Space program have taken if the US beat the Soviets to the first satellite launch? How much would China’s military modernization have been delayed if the Gulf War had never happened? These are unanswerable questions, but a flavor of them undoubtedly occupies many a defense strategist.

[1] The 1993 strategy was a result of the Gulf War, but it was delayed by two years because of divisions within party leadership after Tiananmen and politicization of the PLA. It was not until unity was restored at the Fourteenth Party Congress in October 1992 that the PLA was able to pursue the change in strategy.

[2] Although this language is 30 years old, it echoes US Defense strategy now; joint force operations remain a challenge for the US and Joint All Domain Command and Control (JADC2) is everything and nothing.

• The birth of the Thiel Fellowship, a controversial program encouraging exceptional young people to forgo a university education in exchange for $100k over two years to pursue their ideas;

• The subsequent launching of Gibson’s and Strachman’s venture capital firm 1517, which invests exclusively in individuals without a college degree; and

• The thoughts and actions of Thiel from someone who worked with the man intimately over an extended period. Given that Thiel is notoriously private, Gibson serves as a rare primary source willing to go on the record with accurate Thiel anecdotes. This stands in stark contrast to most of the “journalism” about Thiel, which primarily consists of aggrieved establishment reporters who cannot imagine a Trump supporter producing anything of value (see Max Chafkin’s 2021 The Contrarian).

Unfortunately, Gibson spends about a third of the book on content that is only tangentially relevant, like rehashing innovation stagnation already well documented in books like J. Storrs Hall’s Where Is My Flying Car? He also leans away from rather than into his most ~contrarian~ arguments. Still, this is a worthwhile read for anyone with the sneaking suspicion that $70k/yr college increasingly resembles a boondoggle. It is also timely, as OpenAI’s release of the GPT-3 chatbot challenges our conventional education model in a world where any student can generate mediocre but passable content.

Would you rather have a Princeton diploma without a Princeton education, or a Princeton education without a Princeton diploma?

- George Mason University economist Bryan Caplan

This is one of the 95 theses Michael Gibson tapes to the doors of university administrators, in homage to Martin Luther’s 95 Theses in 1517. That most people desire the former is a damning indictment of higher education today and the principal reason for the creation of the Thiel Fellowship.

Gibson succeeds in proving the Thiel Fellowship is an unambiguous success. Collectively, the fellows have generated hundreds of billions in value with their startups. Notable names and endeavors include Dylan Field and Adobe’s $20bn acquisition of his design company, Figma, Austin Russell and Luminar (NASDAQ: LAZR), building autonomy technologies, and Vitalik Buterin and Ethereum. A Harvard sorority sister of mine was a Thiel Fellow who founded Legalist, a hedge fund investing in litigation claims. These people are impressive, and Gibson and Strachman deserve major kudos for talent spotting and incubating said talent. One of the biggest surprises of the book is that Gibson and Strachman aren’t content to let applications to the fellowship flow in. They visit college campuses all over the country, crashing hackathons and staying in dorms. That last part sounds awkward, but I admire the hustle.

Where Gibson loses me is with his argument that the Thiel Fellowship model is extensible for everyone. “[The Thiel Fellows] represent not some group of extraordinary outliers, who cannot be taken as a model for the average student, but the beginning of a new era in education (pg xv).” This is a bold claim Gibson does not properly defend. I am largely in agreement with Gibson that a college degree does not improve the skills of most students. This doesn’t change the reality that the degree is still a necessary signaling device for most employers. Moreover, Gibson does not acknowledge that the Thiel Fellowship is itself a high-status credential and therefore a valuable signaling device; in this case, to investors, not employers. I find this pretty ironic, and I would have expected Gibson to walk us through a hypothetical path for an average student who forgoes college. Is everyone supposed to become an entrepreneur?

Paper Belt on Fire also would have benefited from a chapter on how the university system degenerated to its current state. It would have been relevant to include information on tuition consistently rising while wages stagnate, student loans that cannot be discharged in bankruptcy, the spike in administrative staff on campuses, the proliferation of irrelevant majors, and ideological homogeneity of professors, among other factors. The macro trends are very much in Gibson’s favor, and he should leverage them.

“Few [countries] truly have full sovereignty, as most contract out their defense to the US or (nowadays) China” writes Balaji Srinivasin in The Network State. Indeed, the US as Global Policeman has many downsides, but an upside is we de facto control significant portions of the chip supply chain via Taiwan, South Korea, and the Netherlands. Taiwan’s TSMC and South Korea’s Samsung fabricate almost all of the most advanced logic chips (the remainder are produced by Intel). The advanced processors require extreme ultraviolet lithography (EUV) machines produced by only one company, the Netherlands’ ASML, and the EUV’s irreplaceable light sources are manufactured in San Diego.

The US has a significant contribution besides Intel: “nearly every chip in the world uses software from at least one of three US-based companies: Cadence, Synopsys, and Mentor (pg 315).” If there was a question of if these companies would fall into line when faced with US allegiance or profits, it was answered when TSMC enthusiastically supported the US’s 2019 crusade to ban Huawei, despite Huawei being TSMC’s second-largest customer.

Miller doesn’t paint an overly rosy picture, and the long tail of possible risks is very, very bad: the invasion of Taiwan and the TSMC takeover, if successful, would disrupt the global economy by eliminating access to the most advanced chips. And no, this is not the good kind of Unicorn-led, Silicon Valley disruption. What’s worse is China would potentially still receive what it needed from TSMC. I say “potentially” because we have to imagine there would be some drop in production from recalcitrant Taiwanese who would sooner give up their life (or at least craftily introduce production delays) than work for China.

The less extreme scenarios are also bad for the US. While China doesn’t produce the most advanced chips, it does have 15% of the fabrication market, mostly for low-grade chips, and this is projected to increase to 24% by 2030. We rely on low-grade chips for everything from cars to coffeemakers. But we can at least rest assured that China is stuck in a supply chain of “weaponized interdependence” for advanced chips. “Establishing a cutting-edge, all-domestic supply chain would take over a decade and cost well over a trillion dollars in that period (pg 323).” The lithography machines alone cost $150mm. And it’s not just about having the money, but also the expertise to natively support such an advanced supply chain.

One of the biggest questions I had going into this book was how Taiwan birthed TSMC, one of the most valuable companies today, and, short of having nukes, the best deterrent to a Chinese invasion. The answer is Operation Paperclip — only there were no Nazis, and instead of Werner von Braun, Taiwan got Morris Chang. He moved to Taiwan in 1987 to start TSMC after over twenty years at Texas Instruments, where he was passed over for CEO. He brought key American-trained execs along with him, including from TI, Motorola, and Intel.

Transplanting this know-how into Taiwan proved to be a key differentiator as to why TSMC is in Taiwan and not Hong Kong, Singapore, South Korea, or Malaysia, which were all investing heavily in advanced memory chips. (China was a competitive threat with the low wages it offered for chip assembly, but the aftermath of the Cultural Revolution proved a real hammer to the knees). Chang going to Taiwan to start TSMC and explicitly bringing US know-how and customers with him is an interesting quasi-controlled natural experiment where you could feasibly imagine him starting TSMC in a Singapore or a Hong Kong. This is also what makes the recent Biden ban on American execs working for Chinese chip companies so powerful — China potentially just lost access to the next Morris Chang.

Chip War provides key nuance and critical historical information entirely lost in media coverage of this issue over the last two years. During peak Covid in 2021, there was a chip shortage, yes, but it was also the year with the most semiconductors ever produced (1.1 trillion with a 13% increase from 2020). Miller christens the shortage “mostly a story of demand growth rather than supply issues.” For example, the automotive shortage was caused by car companies cutting chip orders in the early days of the pandemic and then unsuccessfully trying to claw back chip capacity that had been reallocated to other customers.

In finance, a “poison pill” is a defensive strategy used by public companies to prevent activist investors from a takeover. The takeover becomes self-defeating by diluting the activist’s stake in the company, therefore making it harder to extract outsized value. Is it too optimistic to view TSMC as Taiwan’s poison pill? Surely China’s dependency on TSMC would give it pause before an invasion, and, as I speculated above, we don’t know how production would be impacted by an invasion, even if it were a successful one.

Here’s to hoping advanced fabrication plants are the new nukes.

As it turns out, taking technology is easy (kind of); integrating it is hard. Just as stealing answers to a calculus exam does not yield an understanding of calculus, so the Allied nations’ seizing of German documents, industrial equipment, and even people was often not correlated with success. What did work was sustained, on the ground contact with German scientists, including visiting factories and embedding trainees into German research centers. The Allied powers (mis)understood this to various degrees, and their approaches to technology appropriation differed based on resources available and ideology.

French Approach

O’Reagan finds it was the French who best understood science and technology as profoundly embedded in society and were therefore the most successful in benefiting from Nazi technology. Granted, their industrial capacity and technological baseline were lower than the other Allied powers, so there was more to be gained. The French approach differed in that it was more benevolent to Germany, adopting a Marshall plan ideology of sorts. They kept German laboratories intact and didn’t grab scientists en masse, noting that the “milieu around a scientist, including personal contacts, is so essential that a top scientist or technician displaced in another country… is practically rendered sterile (pg 90).” France was primed to go this route in a way other countries were not, as it had practice collaborating with the Germans; investments in Franco-German scientific institutes and business relationships came more naturally.

Regardless of whether the French uniquely understood the interconnectedness of a technology ecosystem, they didn’t have the resources to pursue any other policy. They were aware of their inability to exert total control over their occupied areas, box out infringing Allied powers, import and integrate scientists, and write thousands of reports. This worked out for the French. As O’Reagan writes, “a role at the heart of western Europe was worth more than boxes of reports and miles of microfilm (pg 98).”

American and British Approach

Of the Allied nations, the U.S. and U.K. relied most heavily on document copying to obtain German knowledge. When faced with billions of pages of available documentation, they chose to take the haystacks and worry about finding the needles later. As Mark Twain said, “if I had more time, I would have written a shorter letter.” Wanting to keep the original documents intact, the U.S. and U.K. resorted to copying as much as they could via microfilming with the goal of summarizing and distributing the findings as consumable reports. It was a herculean task.

First, teams of experts were sent to a factory or lab to select what should be copied from the hundreds of thousands or even millions of available pages. Selections were microfilmed, shipped, and processed. Translation was a frequent bottleneck, although several successful translation businesses were started during this period and drove down the cost of translation. (A fascinating second order-effect of aggressively translating German research into English was that it accelerated the transition to English being the language of science, which was not the case pre-WWII). Finally, a report was written and assigned a classification designation. The classifying of information is its own battleground, and the tendency to over-classify was alive and well in 1946.

Had it been more difficult to copy documents, the U.S. and U.K. would have been forced to develop a more discriminating process for selecting documents, and ironically, more material and insights may have been dispersed faster.

Soviet Approach

Unsurprisingly, the Soviets’ approach to taking technology yielded the grand-scale absurdity characteristic of Stalin. Operation Paperclip pales in comparison to Operation Osaviakhim. In October 1946,

“Soviet troops and NKVD teams rounded up about three thousand German scientists, engineers, craftsmen, and other technical specialists, along with their families and possessions, and placed them on trains heading east… nearly every major firm in a war-related industries were impacted, including Carl Zeiss in Jena, BMW Strassfurt, Leuna, Siebel Works, Junkers, and Schott (pg 110).”

The following anecdote describing how the V-2 scientists were rounded up would have fit perfectly into Iannucci’s hilarious The Death of Stalin (2017), a black comedy chronicling the frenetic political machinations immediately following Stalin’s death. Unfortunately the film’s action doesn’t get rolling until 1953 (naturally).

Helmut Gottrup and two hundred of his colleagues working at the Mittelwerk rocket facility were invited to a party with a Soviet general, after which they were informed they and their families would be on trains to facilities in the Soviet Union the following morning (pg 110).

The theater of the absurd continued with the Soviets’ massive industrial seizures, where they lifted not just equipment but entire factories on the order of thousands for transport by rail to the Soviet Union. Equipment was broken en route and ended up rusting in depots. When it did reach its destination intact, written documentation for how to assemble was lacking (or in German!). Despite these struggles, “there is little question that artifacts and raw materials taken from Germany formed the basis for the Soviet rocket program (pg 107).” Notably, the historical consensus is that the German contribution only resulted in a few months saved.

American Approach Revisited

O’Reagan reaches the contrarian conclusion that the United States benefited little from unfettered access to German technology. He concedes von Braun was a unicorn critical to the Saturn V, but that’s as far as he’s willing to go:

This is not a story, ultimately, of the United States getting a free lunch at Germany’s expense. Instead, it is a story of American firms having an unprecedented ability to study a long-standing rival, realizing that they had relatively little to learn, and moving forward as self-aware leaders in industrial research… The biggest shock was one of disappointment (pg 44).

The United States’ aggressive push to absorb as much German technology as possible was a policy motivated in large part by a desire to deny the Soviets, and even the other Allies, access to knowledge. It was less about what the Americans would gain than what the Soviets would lose. Look no further than the hundreds of German scientists who sat idle in American barracks while the Air Force struggled to find businesses who wanted them. But even here, it seems the Americans didn’t deny the Soviets all that much, as they were well on their way to developing an atomic bomb with or without German “assistance.”

Why Taking Nazi Technology Matters Today

O’Reagan’s major finding is that sustained contact with the people and processes that collectively form the intangible “know-how” for a given technology is necessary to successfully transfer and innovate on it. This has profound implications for how we replicate progress and foster innovation, and it goes a long way in explaining America’s hollowed-out manufacturing base and fragile supplier ecosystem. Despite innovations in computing, AI, and robotics, manufacturing knowledge is concentrated in the heads of people who learned the trade at a young age via an apprenticeship model, and who usually lack a college degree. When this knowledge is not passed on, it dies. When the small business that went made a critical piece of the B-2 bomber retired, the U.S. Government released an RFP to reverse engineer the parts (frightening).

As the number of critical but unfilled manufacturing jobs increases, there is no guaranteed and inexorable march towards automation to save us (contrary to popular belief). Failed startups like Plethora, which raised over $30mm and was founded by very smart people, are case in point. Encoding know-how is hard, and automating parts of the factory will require more venture money and government investment towards those companies and technologies showing the most promise.

O’Reagan’s book also has something to say of the inverse: how do we prevent and punish theft of technology? One silver lining is that industrial espionage in the form of document pilfering, while not desirable, may not pose much of a threat. What does pose a threat is having well-networked American technologists working for the opposition. The Biden administration understands this! Its recent U.S. export control rules prohibit U.S. citizens from supporting China’s semiconductor development, handicapping Chinese access to critical American know-how. It will force American executives in China to choose between their job or their U.S. citizenship. The move caught industry off-guard and is widely considered to be the most punitive American action taken against Chinese industry in recent years, inclusive of Trump’s tariffs and blustering rhetoric.

Effectively integrating German technology was neither easy nor obvious, and O’Reagan’s book puts a point on why we must continue to study what enables and blocks technological progress.

In both books, the argument goes like this: the feminization of men is a lagging indicator of a hyper-successful and decadent society. With all enemies vanquished, no threats on the horizon, and wildly successful technological progress, society becomes complacent. Not only is there no need for a physical advantage, but the lack of any conflict de-selects for masculine traits genetically and epigenetically. This sufficiently feminized society eventually becomes a leading indicator for a society at risk of being rapidly extinguished; it is hubris to believe dominance will persist indefinitely, and when a new or unforeseen enemy emerges, a society with no gender distinctions will face peril.

I liked this evolutionary lens, and Wells was known to be something of a disciple of Thomas Huxley (“Darwin’s bulldog”). I will quote Wells at length, when his Time Traveler encounters the human-like “Eloi” for the first time, 8,000 years into the future. He is yet to discover that the Eloi are essentially being reared as cattle by the subterranean Morlocks:

I perceived that all had the same costume, the same soft hairless visage, the same girlish rotundity of limb. In costume, and in all the differences of texture and bearing that now mark off the sexes from each other, these people of the future were alike.

Seeing the ease and security in which these people were living, I felt that this close resemblance of the sexes was after all what one would expect; for the strength of a man and the softness of a woman, the institution of the family, and the differentiation of occupations are mere militant necessities of an age of physical force.

It seemed to be that I had happened upon humanity upon the wane. The ruddy sunset set me thinking of the sunset of mankind. For the first time I began to realize an odd consequence of the social effort in which we are at present engaged. And yet, come to think, it is a logical consequence enough. Strength is the outcome of need; security sets a premium on feebleness. The work of ameliorating the conditions of life - the true civilizing process that makes life more and more secure - had gone steadily on to a climax. Things that are now mere dreams had become projects deliberately put in hand and carried forward. And the harvest was what I saw!

The entirety of chapter 4 is reason enough to pick up the book.

On a similar note, here is Death’s End protagonist, Cheng Xin, waking from suspended animation hundreds of years into the future. She encounters the men on a version of Earth that has attained a perfect standard of living, with no violence or hardship present:

[They] had smooth, lovely faces; long hair that draped over their shoulders; slender, soft bodies — as if their bones were made of bananas. Their movements were graceful and gentle, and their voices, carried to her by the breeze, were sweet and tender.… Back in her century, these people would have been considered ultra-feminine.

…Most men from the Common Era tried to, consciously or otherwise, feminize their appearance and personality to adjust to the new feminine society.

…At one point a military commander exclaims, “Don’t you know that there are no more men on Earth?”

The people of Earth pay the price for their softened ways when the alien Trisolarans eventually find a chink in Earth’s metaphorical armor, causing mass casualties and destruction.

Some people will read the above excerpts and conclude Wells and Liu to be misogynists, but they are exploring an interesting and controversial question of the necessity for gender distinction in a society that has for the most part transcended the need for physical advantages. This is where the West largely finds itself, even in military matters. National defense policy is focused on developing more lethal soldiers via better technology not better physique.

The mere existence and popularity of the phrase “toxic masculinity” raises the question: is masculinity toxic to society, or have we prematurely decided that masculinity is no longer necessary and are now trying to bury it under the guise of being toxic? I think it’s a touch of the former and a lot of the latter, and any campaign to blindly vanquish traits that have traditionally mapped more to men (e.g., disagreeableness) is sure to lead to bad outcomes.

I will now wade away from the controversial waters of gender differences and their societal impact. There is an additional lens in which Wells and Liu’s conundrum is generalizable and agnostic to gender that is intimately relevant for Western Educated Industrialized Rich Democratic (WEIRD) societies today. As we optimize for the removal of discomfort and friction from our lives, are we digging our own graves?

The most simple and well known answer to this question is G. Michael Hopf’s aphorism “Hard times create strong men. Strong men create good times. Good times create weak men. And, weak men create hard times.” But my favorite take is psychologist and Holocaust survivor Viktor Frankl on what creates resiliency in the human psyche: “If architects want to strengthen a decrepit arch, they increase the load which is laid upon it, for thereby the parts are joined more firmly together.” Finally, Ross Douthat’s Decadent Society (2020) is the best articulation in the past few years of all the ways in which our WEIRD lifestyles have produced a “civilizational languor.”

The extent to which gender differences (or lack thereof) play a role in our civilizational languor is a corner of the internet that right-leaning anons have covered with their shakily-argued 280 character thought leadership. My hope is that economics departments pick up this slack with rigorous research to explore gender similitude in a more meaningful and interesting way.

Aside: I picked up The Time Machine because I had some faded memories of watching the 1960 film several times when I was around 10 years old. I have no idea why my mom showed me this movie or why my friend and I enjoyed watching it so much, but it had an indelible impression on my subconscious in much the way I imagine a bad drug trip would (seriously, just google Morlocks from the ‘60 film).