But, there's an issue called the "Frozen Middle", where the middle managers, decision makers, and contract officers will still pick the mega-primes because they're perceived as safe, in an environment were compliance and liability is extreme. So, it's hard for (very) small businesses to get a secure foothold, and god forbid they start winning bigger contracts, because the Primes will come muscle them out.

Not mentioned in the article is the issue of blatant technology theft by the Primes from small business. This is very well known in the industry, and a huge issue because typically the Primes are the gatekeepers to integration on a weapons platform.

> Believe it or not, America has been here before. In the 1920s and 1930s, the American defense industrial base was being similarly manipulated by domestic financiers for their own purposes, retarding innovation and damaging the nation’s ability to defend itself. And American military readiness was ebbing in the midst of an increasingly dangerous world full of rising autocracies.

> Within the defense base itself, every example—from TransDigm to L3 to Chinese infiltration of American business—has drawn the attention of members of Congress. Representatives Ted Budd and Paul Cook are Republicans and Representatives Jackie Speier and Ro Khanna are Democrats. They are not alone. Democratic Senator Elizabeth Warren and Representative Tim Ryan have joined Khanna’s demand for a TransDigm investigation.

Outside of this article, the best writing I've seen on this topic of short-term incentives is from British economist John Kay's book "Other People's Money", for example when he compares the annual reports from chemical company ICI in 1987 and 1994.

1987: ICI aims to be the world's leading chemical company, servicing customers internationally through the innovative and responsible application of chemistry and related science...

1994: Our objective is to maximise value for our shareholders by focusing on businesses where we have market leadership, a technological edge and a world competitive cost base.

Kay goes on to explain how ICI, a leading British chemical company since its founding in the 1920s, attracted a short term flurry of investment activity but ultimately sold in 2007 just about a decade after their change of priorities.

Kay primarily blames an over-expansion of the finance sector and the revolving-door culture on Wall Street, fairly consistent with the premises of this article.

Money isn’t real, and generating more of it can never be a sensible primary goal; phones, airplanes, and health are real.

"Very good article. I worked at Bell Labs from 1975-77 after my undergraduate degree. Today, young Scientists don't even know that Bell Labs existed or what it accomplished. I have worked in R&D since 1983 and have watched this process from that vantage point. People used to say, we are just moving the production but we will keep the R&D. That doesn't work. It may take some time, but the R&D eventually follows the shop floor."

The problem, of course, is that this obsession makes for a bad combination with a focus on the short term, which is practically Wall Street's middle name.

I'm intrigued by the notion that the best long-term fix for short-term financial thinking is to go back to a 70% top marginal tax rate, for that portion of incomes that exceed some multiple of the median (maybe 10X?). That'd still be less than the 91% top rate in 1960 [1] — and it would reduce the competitive incentive for executives and investors to scratch and claw for more and more money as a proxy for [anatomy] measuring.

[0] https://www.wikiwand.com/en/Gordon_Gekko

[1] https://taxfoundation.org/some-historical-tax-stats/

I also wish he'd addressed that the barriers to entry in many of these areas are extremely high, and not just for monopolistic reasons - There is an analogue to Moores law (I can't remember the name) that states that the cost of a semiconductor fab facility doubles roughly at the pace semiconductors shrink. Where this is happening (and its been happening in defense aerospace for a long time), there is a natural trend toward consolidation because the payoff is too low to up another facility or line.

Overall an amazing article though.

Implicit in this passage is a judgment of Wall Street, a laying of blame, but that is misplaced, because while investors may be in a good place to assess the national security implications of the company's strategies, they are not in a position to address them. Failing to maintain critical supply chains and human capital is not their mistake to make. If the government (or governments, the 50 states matter just as much) allows or encourages certain mergers, permits off-shoring of critical industries and does little to ensure the technical capability of a new generation of Americans, investors are basically stuck with that. They can choose to buy or sell; they aren't policy makers.

That said, my opinion is that equally to blame as Wall Street is the schism between the military and the coasts, which house most of the country's intellectual power. It's hard to imagine today that the Bay Area was the center of defense R&D two generations ago. Today there is largely the perception that the U.S. military is acting in a manner counter to what we perceive ourselves to be as a liberal democracy. Evidenced by the recent Google and Amazon protests, knowledge workers bristle at the possibility of their work being used for purposes that aren't entirely positive. As far as I'm aware, the Chinese have no such hang-ups. Is it the fault of the military for appearing too evil, or is it the fault of progressives singing the siren song of non-aggression in a hostile world, who knows.

Now, the part I agree with is the supply chain issues. I go out of my way to buy American and local whenever possible, even if it means a higher price, because I realize the importance of domestic production will play in a future where the U.S. isn't the undisputed leader of the world.

Edit: If you are a Chinese business man and make decisions perceived by the PRC as selling out your people to America you would probably disappear in the night. In the US you can do this with impunity. How to succeed without becoming totalitarian ourselves?

This is similar to the NATO principle: entangle the countries' military objectives together but don't make it worthwhile for them to invest in actual military power -- essentials bribing them to not be able fight wars (this is why complaining that they don't pay "enough" is potentially destabilizing and could cost more later).

It is horrible. It is full of stupid security flaws, something that may or may not be linked to the NS concerns. It is "best value" because it ticks all the performance boxes, but is total junk in every other area. To cite Clarkson, it is like a kid with a turbo on his honda civic. It may be as fast off the line as a Ferrari, but in no other way is is anything like a Ferrari.

https://en.m.wikipedia.org/wiki/First_World_War_glass–rubber...

I see our brightest minds instead going into finance to work to enrich themselves with no clear moral framework. Our best problem solvers in science and engineering fields, who we need in positions of government at this moment, are horrified at the prospect of how they would be treated by our media and shy away.

So qualcomm doesn't exist?

Monopolies aside, investment flows to the most efficient ways of doing things. Right now in a globalized world that really is to produce in China. If you want the most strategic and adversarial way that is a different problem. Globalization has been a drive for American governments the last half a century, was it wrong? You can't blame the investment community for globalization.

I guess this means that there is a faction of the moneyed class which thinks monopolies aren't such a good idea.

Edit: some background on OMI: https://www.wired.com/story/freedom-from-facebook-open-marke...

In January 2017 Chinese CEO Jack Ma (Alibaba) commented on the United States' gifts to China [0]: "Ma says blaming China for any economic issues in the U.S. is misguided. If America is looking to blame anyone, Ma said, it should blame itself.

"'It’s not that other countries steal jobs from you guys,' Ma said. 'It’s your strategy. Distribute the money and things in a proper way.'”

"He said the U.S. has wasted over $14 trillion in fighting wars over the past 30 years rather than investing in infrastructure at home.

"To be sure, Ma is not the only critic of the costly U.S. policies of waging war against terrorism and other enemies outside the homeland. Still, Ma said this was the reason America’s economic growth had weakened, not China’s supposed theft of jobs."

Another Jack Ma quote from the same time period [1]: "'The past 30 years, companies like IBM, Cisco and Microsoft made tons of money.'

"The question is: where did that money go? It was wasted, Ma explained.

"'In the past 30 years, America has had 13 wars at a cost of $14.2 trillion. That’s where the money went.' He also questioned America’s decision to bankroll Wall Street after the 2008 financial crash, arguing the money would have been better spent in other areas.

"'What if they had spent part of that money on building up their infrastructure, helping white-collar and blue-collar workers? You’re supposed to spend money on your own people.'"

[0] Chinese billionaire Jack Ma says the US wasted trillions on warfare instead of investing in infrastructure - https://www.cnbc.com/2017/01/18/chinese-billionaire-jack-ma-...

[1] Jack Ma: America has wasted its wealth - https://www.weforum.org/agenda/2017/01/jack-ma-america-has-w...

Over the past 50 or 100 years, US Presidents from both parties have tended to be 'useful idiots'. Maybe Kennedy would've figured things out, but a loan gunman took him out before he could stand up to the "military-industrial complex" his predecessor had warned about. The peanut farmer (Carter) wasn't so bad, but he didn't seem to have a big-picture understanding of what he was up against. Reagan might've been effective, then he got shot by a loan gunman early in his first term [2], and was kind of useless after that. GHW Bush was indoctrinated in the dark arts due to his stint at the CIA. Clinton picked up Bush's "globalization" policies (NAFTA, WTO) and ran with them. GW Bush was a dyslexic useful idiot extraordinaire. Obama meant well, but he didn't have any life experience other than community organizing, academics, and politicking.

[2] https://en.wikipedia.org/wiki/Attempted_assassination_of_Ron...

Humanity's traditional problem was scarcity. The onward march of technology has allowed our species to achieve liftoff. Our problem is now in figuring out how to share the abundance.

In the early days of the MIC the companies were required to sell at cost because they were able to use the technology they developed with military resources in the commercial world.

I still don’t understand how a single missile “costs” more than a million dollars, even with absurd mark up