Darren Farber on Iran, China, and the Rise of Neoprimes - [Invest Like the Best, EP.474]

Transcript from https://podmenti.com/t/3bd6051fdc624590

Hello and welcome everyone. I'm Patrick O'Shaughnessy and this is Invest Like the Best. This show is an open ended exploration of markets, ideas, stories, and strategies that will help you better invest both your time and your money.
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My guest today is Darren Farber, and this is his second appearance on the show. Darren's the managing partner of Albion River, a defense focused investment firm, and he previously served as a special advisor to the deputy undersecretary of defense.
We recorded this conversation in the middle of the Iranian contingency, and we spend most of our time on what winning actually means in a theater like Iran.
We discuss why magazine depth matters for the American industrial base, lessons from Ukraine, and what the rise of neoprime defense companies will require from Congress.
Please enjoy my second conversation with Darren Farber.
think to begin you have to define what it might mean for us to win some of these open theaters of war in the world right now. We came through this period
Where anyone that was a macro type person that I would have in that seat.
We're talking about
This multipolar world in the US is retreating from the global stage and it's not gonna be the world police any longer, and we don't need the interaction with the rest of the world.
Seems like we're in a very different world now.
Everyone's wondering what winning would even mean in a theater like Iran.
And I'm curious for you to just riff on that.
So winning is politically defined.
The street of Hormuz was open.
before this contingency at the end of the day. And so if all we get
is the straight of war moves back open.
Strategically maybe
Was the juice worth the squeeze, for lack of a better term.
I would argue that you've degraded an enormous amount of Iranian military capability, which is what the department's internal frago, their order.
was to do. And so you have degraded that, but the
Straight of Hormuz is an economic.
choke point has to open back up in order for
Commerce to work.
But
We're sitting here today.
The streets functionally closed.
The economy's still ripping here. The United States markets you have high inflation, but
I think
The conventional wisdom is that America
Can withstand less pain than the counterparty.
There's this hybridization that happened in certain parts of the Shia Muslim world.
through the works of Shiriadi, which is a hybridization of Marxism.
and martyrdom together, which is kind of like an absolute
Cont of an environment.
And to say
If you martyr yourself, you're winning.
You're ascending.
It's such a satanical philosophy because
It promotes internal destruction and sacrifice to the limit.
As evidence that you're winning.
We were talking right before we sat down.
Gaza has been leveled.
By any stretch of the imagination.
There are still elements of Hamas operating.
But have they won?
Well, in their mind, in that Shiriati form of
red Shiism, they're winning.
You can bring people to the precipice of their own destruction.
And in that ideology, that form of religious ideology
They're winning.
You're gonna have to bring an enormous quantum of hertz.
And the problem or the challenge with democracies are
How much of our
Moral rectitude will we compromise in order to achieve the political goal.
If we don't feel the existential threat sitting here today in New York, so that is tough.
There's the tailor view.
Of flexible power of this proportional response.
The threats and then there's
The Eisenhower school of massive retaliation.
I love Cotkin because he talks about
If you don't know history, everything is unprecedented.
The Japanese
had a martyrdom culture that they memorialized into their force structure, right? Through kamikaze, they would chain people up.
In trees in Okinawa?
Why do we drop two bombs on them? We drop the first bomb.
Enormous mass destruction.
He refused to surrender.
And they were prepared to fight to the death.
We dropped the second bomb, and it was only Emperor Hirohito that broke the tie.
If he didn't break that tie, if he said continue
They would have sacrificed themselves.
It's extremely hard with a martyrdom culture.
to have regime change.
And then the question is, what are you going to defect
Two.
You need an alternative power structure there to defect to. You can defect from, which is you leave.
But to defect two, to get regime change, even if
eighty five or ninety percent want the regime to change. You need an alternative force structure to do it.
And so the IRG C controls
Half of the economy.
And they have all the guns.
They have all of these elements of power, they're very hard to replace.
Can you co opt them successfully between
all the assets that they own in Western Europe. They own an enormous quantum of assets in Western Europe.
What kind of assets?
Homes in London.
Villas, billions of dollars that they've exfiltrated from the country and
Abbas Milani.
as documentated this in
voluminous detail. He's wonderful scholar on the topic.
But really
Think of the average Iranian, the limit at the ATM is seven dollars.
That's how much you can pull out.
You had the second largest bank fail about two months before this recent contingency.
Milani calls it.
a mafia style regime. And it's true. The quantum of corruption is absolutely enormous.
dictators are enormously strong and enormously weak at the same time. This is actually like a good frame for our entire conversation, which is say
We have to be able to hold two competing ideas in the same vessel and both can be true.
A dictatorship.
can be enormously weak because they're illegitimate.
They haven't been tested. They only have to be stronger than their
strongest opposition and opposition is outlawed. And so they're weak. And at the same time they're strong because they control the apparatus of the state.
This is the cauldron that you have in the people that you're fighting and
There is a growing body of evidence that suggests
Yeah.
Ayatollah Hamini martyr himself.
He like allowed himself to be above ground and to be targeted to die to solve a whole series of problems.
He killed potentially thirty or forty thousand of his own people.
He was sick and succession was unclear. I think maybe there would be some infighting.
And so martyrdom
in the Shiriadi school of Red Shiism is like this beautiful solution. He was sick and ill.
And so there's a growing body of evidence that suggests
He wanted to be killed. These are the adversaries here.
Winning at the limit.
And the way we think of it.
And almost like a
Documentary for World War Two.

But we experienced that in World War Two as well. The bombing of Dresden.
There was this horror that we would firebom a city and kill thirty thousand people.
under the premise that they have to know that they lost.
And this is what happens when you deal with
Fanaticism.
It makes you question
The kernel
of your moral fiber as a democracy, and you have to go really far.
I just think the analogue with Israel
And Hamas in Gaza is like a perfect example.
Israel has annihilated
Gaza.
It has been leveled.
You can't say that.
Gaza from a
technological standpoint, that Hamas from a technological standpoint.
has any kind of military capability compared to the Israelis, it's like comparing a toaster oven to the sun.
In order to win it, look how far that they've
Had to go.
And I don't know if Netanyahu has
the support in the Knesset.
for the purposes of doing this last leg in the groundwork, but it's what's necessary for his condition of winning.
You have to have a design on it.
of the concept of positive propaganda.
Propaganda has a bad connotation to it, but it's just marketing. It's marketing. It's your political worldview.
Israel has just
not spent the calories on it.
And so the question is
Should they
I believe
The answer is yes.
In a finite pie, how much of the pie should they spend on it?
It's not immaterial.
Their adversaries are spending enormously on it because it's working, but also
The martyrdom culture has
Because it's hybridized with religion.
to create a higher form of fanaticism.
It allows you to run for so long.
The design to coopt American universities.
Can be traced to a single hotel room.
In Philadelphia by the FBI.
Listening with laser microphones.
Where after the Oslo Accords
Palestinian authority with Arafat.
Is brought in.
And Hamas is considered
Left out in the coal. They go to Hamas and go, Guess what?
You're not in this deal.
And so now this is a political organization with no home.
They laid out in this single conversation that the FBI has transcripts of their plan to co-opt universities.
And co-op university teaching.
And institutions for the express purposes of changing
Western opinion over the course of twenty years.
I think Bezos has attributed the quote that if you have a seven year plan, you win.
Because most people give up.
These guys had a twenty year plan.
And it totally worked.
But
To make it seem like it was this
natural
formation out of the ether.
Through moral will.
is to downband the sophistication of what these people
And the Muslim Brotherhood and Hamas set out to do.
They set out to do this. They were so committed to it.
And they saw it through.
We're talking about
People
Advocating for a society that brutalizes their own people.
And denies the rights.
You have a series of people
advocating for them that would be denied those same rights there.
It was done with intent. It was by design.
But
This administration is moving the goalposts.
In the popular vernacular of what winning means.
But my view is if you have a straight open and you have a degraded
Iranian military capability that can't reconstitute itself very quickly through oil profits.
then that will be a win. And if it can quickly its
Export network of terror.
and the strait is closed, then strategically it will be a failure.
What do you think?
Will happen.
in the street.
How would you describe the state of things today?
And the options that
the rest of the world has or we have.
Going forward. What do you think will happen?
In practical terms, the rest of the world.
We're there and then we have
the Iranians and there are foreign flagged and
Commercial vessels there.
But no one else is there in practical terms.
It's just us.
And the rest of the world is really
to a large extent watching.
Save for the Gulf Arab States.
The amazing thing is.
The Gulf Arab States.
Have a much stronger will.
The fight.
UAE has left OPEC.
That's kind of big. And then they said they will participate in projecting force.
With their own forces.
That's pretty big too. They are very concerned that we will lose our will to fight by virtue of the fact of whatever economic pain
in the interim basis that it generates. But
The concept of
overcoming the blockade is gonna need
More magazine depth.
More forces in the region.
We're going to need an amphibious force.
On the shore for sure.
That is a major escalation. And so that's where Taylor's theory and Eisenhower's theory begin to merge.
Can you describe those two? It's such an interesting history.
Maxwell Taylor is a four star general as a
Kennedy's chairman of the joint chiefs of staff is
great military leader, but also could be blamed for the escalation of the Vietnam War.
Eisenhower's warning about the
military defense industrial complex.
really came out of this concern of
We now have this new super weapon, and so that should really
work as the maximal deterrent for any of these things breaking out. And so why spend all the calories on building
All of these
proportional capabilities
When through a chain of escalation it's
Just ultimately gonna lead to
The big red button.
Those are kind of the competing theories. Eisenhower's theory was.
Maximal deterrence.
If you do anything, we're gonna use the really special stuff.
Taylor's was we're going to use proportional force and he had
viewed it as a deterrence gap.
Because are we really gonna go nuclear?
For
Small incursions.
Small foot faults.
I think to an extent that was right.
But
All of it leads towards escalation.
If you don't embark with this very clear directive internally of what you want to accomplish.
From a political standpoint and you're not crisp about it?
Then you lose political will and then you lose the ability to do it. You lose Congress.
You lose the budget.
you ultimately lose the executive. So that becomes more and more important.
But you have to
paint the target of what you want to accomplish. And so all these things are political.
So who is more right, do you think?
between Eisenhower and Taylor and apply those two lenses to today's
Stance for the US. What is the US doing, not just in the Iranian theater, but
in general with its military with the Department of War.
What are they doing? What should they be doing that they're not doing? What are they doing that they shouldn't be doing?
I think it's fair to say you need both.
If you took an exclusive
maximalist view of Eisenhower of having this nuclear deterrent.
Your only response is nuclear deterrence. Can you imagine the world that we'd be living in? Now you'd say
There are some people that say, Well, great.
That would mean we wouldn't get involved in any of these contingencies and we wouldn't have gotten involved in Vietnam.
wouldn't have gotten involved in Iraq.
probably wouldn't have gotten involved in Afghanistan because we wouldn't have this flexible projection of force.
to correspondingly respond.
And maybe we wouldn't have the temperament to drop a bomb.
On someone.
Maybe we would.
But
The binary choice would be so stark.
Flexible.
Power.
has all these gradations of capability that Taylor outlined and that have been modernized for the new concepts of warfare.
And that's how we build magazine depth in all of these things. Tomhawk missile is not a nuclear. Hymar's not a nuclear weapon.
It's the concept of
being able to enforce the smaller infringements, if you will.
You probably need both.
I just think it would be
A very scary world if all we had was a nuclear button.
In order to prevent
A full scale contingency.
How would you compare the state of our military capability and prowess today to when you were in the Pentagon?
We're the best, man. So someone asked me earlier today, they had said, What's the grade?
Then you give it.
And I said, it's not fair to do this huge compound grade.
Because one.
This is a government organ. So how great can a government organ be?
But our ability to train and equip the forces
And what they deliver.
It's the best fighting force in the world that the world has ever known.
You have to do some
relative comparison to the rest of the militaries around the world.
We are number one.
But it is a body of government.
And so because it's a body of government, it gets one year money from Congress.
You have deck chairs that constantly change.
You have
these features of government.
But make it
Suboptimal.
But as a grade as a military
And it's capability.
I give it a super high grade.
Is the bureaucracy a problem? Yes.
Do we have to modernize it? Yes. Do we go through it every 20 years? Yes.
Because we recognize how important it is.
But our ability to project force is so
Good.
I think having a pacing threat.
Unto itself is valuable to make sure that we are
serious about maintaining capabilities. But I love the works of Descartes because he's so clear about how strong and weak China is at the same time.
Who's the Cotter? So the Cotter is a well regarded historian on China.
And has a theory on how China is not a super empower just by virtue of how illegitimate and how weak it is and how
Tense.
the plenary in the party is
He has good points.
The Chinese equivalent of the chairman of joint chiefs of staff.
Has disappeared.
He went to kindergarten with Xi Jinping.
These guys are close.
When you have power, and you ascent power.
in a fundamentally illegitimate structure, who do you trust?
The answer is
No one.
you are constantly worried that someone's gonna put a bullet in the back of your head.
And then
that form of illegitimacy cascades down through the immediate organs of that government.
To include its military.
We've talked about
Their lack of jointness, the corruption internally within the force.
The corruption of the missileer crew.
They have turned over their senior military leadership.
three or four times in the last three years.
That is not a high trust environment.
High trust comes through esprit de corps and believing in the mission and legitimacy of what you're doing. That is one of our
Enormous strengths.
But their magazine depth.
industrially is so enormous.
The calculus becomes.
Can the magazine depth?
overcome their institutional weakness? It's a good question.
And that's why we as a country are embarking on this enormous effort.
to industrialize in order to add magazine depth to the capabilities we have. You wouldn't
Add magazine depth.
If you had the maximalist view of nuclear deterrent.
You have magazine depth when you
believe in the concept of flexible power. I talked to Sean from Palantir about this. He had just come out with his book. I think it was called Mobilize.
About this exact thing of
Increasing magazine depth. I don't think he used those words, but it's what he meant.
How would you grade us on that specific thing?
What is the state of it today? Are we doing a good job?
Who is doing it?
How's that gonna unfold?
We're in a democracy.
In a dictatorship, if you don't
Build magazine depth and that's your job, you're dead.
That mechanism of enforcement is pretty compelling.
Here we balance things like
Will it be profitable?
We'll have duration.
And Congress is giving one year money.
And so there are new efforts to create.
Multi year contracts for ordinance, which we've never done before.
You really need it.
That's great. So we're changing the architecture to allow us to do more to add to magazine depth.
We need to go faster for the purposes of filling the deterrence gap.
So we can
Stop small incursions on the margins, especially with the south east.
Asian nations that we have.
Cooperative peacekeeping agreements with
these bilateral agreements where we have to protect them and they're being violated right now, like the Philippines, for example.
So we have to do more there.
It's getting better.
And compare it to anyone else in the West?
We're still the best.
It's just your adversary.
has a political structure that allows them to bring people to the precipice, but the illegitimacy
Of the Chinese.
Fundamentally an illegitimate power.
Is also our advantage.
And we are making enormous strides in the clandestine services.
of co opting that environment.
Say more about that.
She doesn't know who's on our side.
In his standing committee.
Or on his side.
Every day he wakes up with the thought of
Maybe I need to kill someone off.
That is our edge.
Our edges that he is
Fundamentally illegitimate.
The monopoly of power.
That is communism.
their form of Marxism of communism is extremely powerful.
Because the apparatus of an enormous economy to pay off all these kinds of people, but they are illegitimate.
And our ability to recruit
And retain and train.
It had really degraded.
And we have lost a lot of capability through a series of
Assets that were cod.
But we have rebuilt that.
In a very meaningful way.
I don't think she sleeps well at night.
Is that very recent that change?
No.
These things are built brick by brick.
We have these
Government agencies.
where everyone goes into work every day.
Monday to Sunday and their job is
How am I going to infiltrate this illegitimate political structure for the purposes of making it weak?
We have people.
They drive their car in and they have their sack lunch and this is what they do every day.
And ultimately.
We break through.
Why? Because
Every
Chinese person in the standing committee has a relative somewhere in the United States.
How I mean degrees removed.
that owns a small business that is doing well, is able to stay and do what they want, is able to fundamentally live free.
We can't forget what makes us special.
And that we are the bug out point for the world.
even for the people in the standing committee.
That are worried if they're on the outs.
They have a plan to get here.
We have weaknesses, but we also have enormous strengths. And their weaknesses are also enormous. It doesn't mean that
They can't bring us to the precipice.
Their mass is so much greater than us. Their population size and what they can do industrially.
But
It is dictatorship.
It is a totalitarian regime.
I don't even know how this is up for debate.
I just think the thread of that is lost.
That's what we're talking about here.
They are fundamentally strong and weak at the same time. We can hold both of those in the same vessel.
I believe in our lifetime China will fall.
I believe in our lifetime.
Iran will fall.
What does it mean for China the fall?
I know what it means for a random fault.
I believe it will be run like Taiwan.
I believe it will fall.
We grew up
With this concept of the Soviet Union.
It had this enormous technical capability. It's this monolith.
It lasted several generations and then all of a sudden it fell. It looked super strong right up until the last moment. There were planning documents circulating at the Pentagon about
How strong they were two weeks before they fell.
Because
Their constitution, their concept of a constitution is fundamentally corrupt.
That monopoly of power.
saying that these people are gonna permanently be in charge.
You know it to be wrong.
And so the question is, does it last fifty years?
This last a hundred years.
It does fall.
'Cause it's fundamentally illegitimate.
The Chinese Communist Party is illegitimate.
They are an illegitimate dictatorship.
I believe in the natural
Order.
of humanity and freedom that at some point it's the natural state.
that ultimately prevails.
But
Our enemies use our freedoms.
so successfully against us.
And I think
The real issue of our time will be
As they use these freedoms against us, how will we have to fence them in to prevent them from being completely polluted?
The psyop of social media?
on us, what they do against us in that.
It's enormous.
And we're kind of allowing it under the rubric of our freedoms. And so
Are we gonna have to degrade a portion of our freedoms in order to protect ourselves?
This isn't gonna be the real
Hard part.
against a very motivated
and sociopathic adversary that's illegitimate.
What's an example of a degradation of our freedom for protection?
This concept of when you're in the four walls of the country.
There's the general expectation of a freedom of speech.
That creates the freedom for disinformation.
Now that you can amplify
Disinformation through the concept of
Freedom of speech.
Do you create this alternative?
World
where people are disconnected from reality. Think about where people get their news from.
That there are no gates on any of this anymore.
It's not something founders could have ever
Contemplate it.
They are true geniuses in that
The gridlock is super intentional.
So compare us to every other parliamentary democracy in the West.
Every parliamentary democracy in the West
has a ceremonial senate.
The UK it's the House of Lords. They don't have real power. House of Commons has power.
And then
When the party
of power is in power is a monopoly of power because they also
choose the prime minister. You don't vote for the prime minister in a parliamentary democracy.
In the United States.
Our upper body is completely separate with a different term that's longer by design.
So right there.
You have a separation of powers.
And then the executive is technically voted on by the people.
It is the purest expression of democracy. You vote for the president directly and the vice president. You put him down.
You have an executive branch that is separated.
From the party. And
This president and previous presidents do things that the parties don't like.
And you do not get that in parliamentary democracies.
Parliamentary democracies are more septible to being overtaken.
Yeah.
These
mass hysteria moments into things like
Fascism like these directions where
The gridlock was designed to prevent someone from co-opt the activity.
And it makes us slow.
To respond.
But we have
The overarching architecture is we are fundamentally legitimate.
And these guys are not legitimate.
When people talk about some of these things of like
Their society's eclipsing ours.
Like, dude, are you high? You are not free there. You can't say what you want.
A very popular book these days.
And justifiably so it's a great book, it's Freedom's Forge about the mobilization around World War Two.
The story of how our industrial base
moved so fast to arm.
companies retooling themselves. It's a great book.
The history of
peacetime mobilizations in democratic societies is mixed or bad.
I guess we're not in peace time right now, but we're not in some like global scale war.
What are the things that you hope happen from here?
For the US to be the best overall positioned in the world.
We clearly need a change in how we fund the department.
So we can have
longer visibility
for capitalism to answer the call and build the stockpiles we need for that depth of whatever
instrument of projecting force.
A ten year contract, but subject to the availability of funds.
Is scary.
We have
On average four or five continuing resolutions a year.
The Paccadillo of CRs is no new starts are allowed. So if you think
The iteration.
Of new technology.
is going faster and faster, technically.
If you have a new start, you can't do it. We're gonna have to change some of the laws and the rules of procurement.
We're going to need these multi year authorities.
order to be able to build this stuff.
There are these things that happen when we design the joint structure where we say
Okay, we're gonna make a joint strike fighter.
between these branches of service, we elevate it to this catalog of joint weapons.
And so the manufacturer has a reasonable expectation that
You're gonna keep on ordering even if it's one year month.
We know there's gonna be a multi year authority here at some point.
We need to do it for
The stockpiles that we believe are critical for projecting force. We need to do it across the board to include
ordinance and all these other things. The Tomahawks.
One fifty five's all of these
Kinetic Articles Warfare.
It's politics.
You need a fundamental change in how we appropriate.
And then we need to create billets.
That
lessen the political influence over the things that we all agree on as a country are non negotiable.
If you look back at the entire Ukraine story now, what are the main things that you've observed or learned, your main takeaways from watching the whole thing unfold?
The rate of technological change in the commercial world.
becomes
This direct input.
into the capabilities that you can project for mass.
Drones have been used since the Vietnam War.
But you wouldn't think that.
Drones became commercially viable and cheap.
And by virtue of that became a new article of war because they were so inexpensive.
The cost of losing one is low.
They gave you a lot of signals intelligence at the end of the day.
You could deliver some lethality through the weakness of some of these systems.
But it was
The commercial viability
And the commercial pervasiveness.
of that product that made it a great
Input.
into a military for mass.
The commercial world
has so much influence.
on the rate of change that will happen in warfare because it's about your ability to produce and your ability to sustain and withstand.
These wars
work faster than markets sometimes.
The evolution of a Ukrainian drone.
From three years ago to today.
It's unbelievable. There's like fifty iterations, there's all these new capabilities. And that's because
You can sit in your garage.
through commercial supply chains and build the capability.
We think of war
in this top gun style way and you don't think about
Something that you could buy at best buy as being important.
into the projection of force, but
Things that become
permissive and inexpensive in a commercial world.
have these enormously valuable inputs into
Fighting kind of asymmetric war. Clearly. What does this whole last six months do to the likelihood or impact of something happening in Taiwan, do you think?
The likes of Kevin Rudd.
and the scholars of the area. So Kevin Rudd used to be the Australian prime minister.
Is fluent in Mandarin, by the way, as a PHT in Mandarin, is really a she watcher.
He said that she's a risk taker.
I think
If you've gotten to a certain age and you view it as the apotheosis of your life's achievement in order to complete the journey.
Which is to say.
Imperial China's what Taiwan is.
And the takeover
by the C C P is not complete.
Until Taiwan falls, until that.
counter narrative of how a Chinese society can be run.
I don't think she needs to go.
If KMT wins the election
Coming up.
KMT almost won last time, and that is a rapprochement party.
To the CCP is clearly like we don't want war, we want peace.
It's an accommodation party.
I believe a bullet may never need to be fired in order for China to get what they want.
I think that's the more likely outcome. It keeps with their strategy.
Why go?
That terrain is hard.
It will ostracize them in the world of
I don't see it strategically.
if they were running out of options and they felt they had to do it and she was near the end of his life, I think the likelihood would increase.
But the appetite grows with the eating.
If Taiwan is overtaken in a military exercise.
Is there any doubt?
That
These other countries that have a real historical beasts will be next.
And that's why Japan has been so vociferous at
advocating for strong defense now under this new prime minister. She's tough lady.
She knows what happens.
There's a real historical beef between
China and Japan.
I think that would be exercised.
It would not stop at Taiwan, most likely.
There to spend this thousand flowers blooming thing happening on the entrepreneurial side of defense companies here in the US.
lots of appetite after a long, long drought. Like basically no new companies. Androll is the is of course the most famous.
But tons of companies doing something, drone specific companies, submarine boats.
Missiles.
Basically everything.
It's ten years from now.
A whole bevy of neo primes have been hugely successful.
Their stuff is great.
In the sense that it's used and it's the thing we rely on.
More so than the old primes.
Which
My understanding is still the vast, vast, vast majority of
What gets used in war.
These new companies have won and and that's a good thing. What do you think has to happen for that to be true?
We have to exercise so much of this.
There's a part here where
You only really know what's really good until you go to war with it.
That's why the Warthog keeps on being reused. It's just so mission capable.
We were supposed to kill this thing like
Thirty separate times.
We remobilized it for the Iranian contingency.
Theaters of war are the laboratories for these products.
To a certain extent.
We don't really know how good these things are.
until we have the contingent environment in order to exercise the capability. So we run exercises in the training equip mission.
But the proof in the pudding is when we actually fight.
And that's why drones
Have had this huge iteration because they're being used in an actual contingent environment. And so that's why we've had so much iteration and so much improvement.
And now they will
Clearly be this.
important part of the fulcrum of war.
So these other things are going to have to be used to really know the limit of the capability in the cat and mouse game. But my advice for Congress is we have a one point five trillion dollar
Designed
FY
twenty seven budget.
I don't think
We're gonna get all that money.
But in that enormous surface area of a budget.
You can continually allocate a lot more towards the concept of risk in order to maintain technological superiority.
I think the FFRDC budget needs to be a portion needs to be repointed towards industry.
So we can encourage the iteration of these commercial developments to see how good they can get and exercise them in our own way.
to simulate war to see how good we can get them. So
We need to allocate a portion of the budget.
And it needs to be more coordinated so it can't be spread out.
We federate the research and development portion of the budget.
In so many different ways. We're gonna have to take a
Concerted effort here for these
legs of future power and we're gonna have to continually reinvest in them.
Even if we don't get
A great business out of it.
We may not get a war in order to test all this stuff. Obviously, you don't want to tell the wag the dog for the purposes of just exercising the equipment.
So we need to allocate.
A more meaningful amount to try.
And then Congress needs to create multi year authorities across the stack.
These continuing resolutions kill industry. And that is something I consistently worry about because
We are gonna lose these companies through CRs and through the absence of multi-year authority.
Because right now the capital markets are working for these businesses and they're able to
outpace the innovation of the department.
And the Congress in order to move faster.
But
Capital markets aren't things that
Trees unlimited, yeah. Yeah, trees don't grow to the sky.
And so there has to be return and exit at some point.
If you get that and you get that flywheel, then great, maybe capitalism can be the exclusive solution, but we're gonna need
Congress to make more multi year authority money available.
And then we're gonna have to allocate the budget.
As a percentage for higher risk of reward.
The Manhattan Project was one percent of GDP.
We're gonna have to have our own
Couple hundred bips of GDP levels of effort.
In these certain areas.
We're gonna have to make those kinds of investments.
And have you.
multi year world view as to how we get there.
Some of these companies have been around.
Is any of the stuff produced by these places being used? And if not, why not?
If we only know if it works in actual battle.
There's a lot of battles in the world right now.
Lot of military equipment being used.
Is the Neo Prime stuff being used?
Some of these companies are
relatively new and haven't fielded systems of record and then
The way we build our military
And the promise we make
to our GIs.
Soldiers, sailors, airmen's, marines is that
We are gonna train and equip you on these things for the express purposes of
Giving you
The chance to win.
It's part of our moral code and the way we train and equip the forces, and then we have to simulate it in the joint doctrine of warfare.
Just because I make a new widget.
Doesn't mean I can ingest it so easily. We have to exercise it.
And imputed into this
joint concept of warfare with all these other things.
So it's not easy.
Clearly on the targeting side, these technologies are being used.
The signals intelligence, clearly that stuff is being used.
The elements of projection of force outside of drones.
hasn't really gotten there yet. But targeting's pretty important, right? You think of World War Two.
would carpet bomb an entire environment.
And so people were like, Well, we produce so much mass in World War Two.
But look at the efficacy of the mass.
І вас суперло.
What we have
now is highly precise, but we don't have the quantum of mass because of the precision.
And the sophistication. Now we're gonna need to bring it back.
A little bit.
More to the center to increase the mass.
And maybe these
targeting networks and some of the software and the knowledge that we've built in signals intelligence.
Can
augment the cost of the precision that we have to have on board in order to make them cheaper.
It's not a fair criticism to say all the Neo Prime's stuff's not being used at the limit in wars because we have to integrate it into the joint concept of warfare. Back to where we started.
What it means to win.
But war in Iran is extremely
Unpopular.
in polls sort of US citizens.
You said we live in a democracy like the will of the people matters.
What can be done.
To win.
the percentage of the Iranian population
It's like ten out of ninety million or something are loyal to the existing regime. Is there anything short of actual regime change that can
Cause a wind to happen.
How do we affect that outcome?
If I knew the answer
the red phone over there would be ringing pretty quickly.
These regimes can last for a very long time.
How do we muster the political will?
To have
staying power that outlasts the political cycle.
It's so hard.
Against
A
read she a culture of martyrdom
But at some point
We have to agree as a society.
The value system
Uh
Some of these cultures has been hijacked and they are fundamentally incompatible with modernity.
This is a clash of civilizations.
Who wants to tackle it when you don't have to?
There's a risk in going.
Always.
And then there's a risk in not going.
The provalac always fiels
Worse.
Because
The clarity of when to go wasn't decided for you.
America didn't enter World War Two because of
The concern we had over Germany
We ultimately enter World War Two because the Japanese bombed Pearl Harbor.
They made it.
Crystal clear.
But with the benefit of hindsight, obviously.
the provalactic probably would have been better to prevent
the adversary from accumulating all this power.
Because they have a value system that clash with our worldview of modernity.
And I would argue
The Red Shia Martyrdom.
Cult.
The fanaticism
is incompatible with humanity.
Preserving itself.
Can you imagine?
If that fanaticism
Got its hands on the ability.

I get why it's unpopular.
Doing something in advance of something becoming existential is not fun.
'Cause you can always second guess when to go.
What have we not talked about that you have your mind on?
Dist.
A well known ambassador.
to the United States.
He said something to me that I thought was so profound, he said.
Democrats are obsessed with process.
And Republicans are obsessed with outcome.
That's the challenge between these
two sides of the aisle right now. But really
It's a very good mix.
If you have someone that
Spends a lot of calories on form and someone that's very outcome focused too. And you can bring the concept.
Together.
You should get the optimal outcome.
Presidents have declared or functionally created contingencies
Without the consent of Congress since Truman.
When the opposite side of the aisle is doing something, it's an affrontery.
That statement
is actually very profound because you can kind of see it in the current
Contingency right now.
We're not following a process that's conventional. What would be conventional?
Conventional would be
You go to the UN
Security Council resolution.
Build up to the war.
This kind of diplomacy
Shots fired.
That would be the conventional way.
But
Obviously if it's devoid of the outcome.
What was the purpose of it? Think of the Iraq contingency.
And so here it
There hasn't been any of that process.
could you get the outcome that you wanted?
And then history would forgive you. You're seeing the strength and the weaknesses.
Of both.
of those worldviews play out over the last twenty five years.
Gulf for two.
We tried to remake the environment in our image instead of remaking it in our interest.
Now
We're operating almost exclusively to try and
remake these environments in our interest and not in our image.
Venezuela is a perfect example of that.
That environment is functionally remade in our interest.
I know a whole series of members of Congress that just went to Venezuela for a trip. Former members of Congress.
A lot of people are gone. Yeah, for like a business trip.
Can you imagine that four months ago? It's kind of amazing. And so
The power structure there hasn't changed.
We've just
chopped off the head and we've remade the environment in our interest, not in our image.
I think that's probably a good natural evolution of where we've been.
Question.
Will it be enough?
Two
Change the behaviors of these martyrdom cultures that point towards their suffering.
As a test of faith that they're winning.
How do you win that?
I realize I didn't ask about AI.
What wrench does that throw in the works?
Of all this stuff.
I'm so fascinated by how it can be co opted.
So I don't know if you've read these stories about people producing fake academic papers.
And leaving them out there on stablish sites.
The established sites say
This isn't peer reviewed, but it exists in the ether.
And we're gonna get to it and here's the access to the paper.
And then the models pick it up.
And one in particular, one test of this was someone invented a phenomenon.
Or I think they invented a medical condition.
And left it out on an academic website posted.
For about three months.
And then ask the large model.
And then it said, You have this disease.
And you made it up.
We're talking right now about the power of AI and its ability to do all computing that's smarter than us.
But
If we co opted
The danger of co opt these models when they become part of the loop of decision making in these important military systems.
Can you imagine?
If you can create a foundation of fact
That is wrong.
For a model.
I could see an alternative universe where the models become complete towers of Babel. We've lost them.
because of what they've imputed through the junk that we've posted.
Interesting place to leave it off. Darren, thanks for your time.
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