
America’s Monopoly Crisis Hits the Military - jdkee
https://www.theamericanconservative.com/articles/americas-monopoly-crisis-hits-the-military/
======
mNovak
Having a small business that works in defense, I can tell you the upper tiers
of military recognize and are worried about diverse production and innovation.

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.

~~~
robertAngst
>because the Primes will come muscle them out.

Over and over people mention this phenomena. I am not sure why its okay, or
that people even suggest giving these organizations more money.

~~~
zdragnar
Regulation- the kind that creates red tape- favors the biggest companies. One
of my favorite clients had a software product that their contacts in the
military said stood head and shoulders above what they were currently using.
Unfortunately, they were not the people in charge of procurement, and didn't
have the clout necessary to make inroads enough to land a contract that would
keep the company afloat.

In the end, they pivoted to market their software to commercial enterprise
clients (think data analytics) and they've been going ever since. It's a
shame, really.

The flip side, of course, is that a lot of the same regulations I bemoan as
red tape exist because someone, somewhere, bought something that either
completely failed, or the supplier wasn't big enough to support the military's
scale. I've seen businesses make similar reactions- every time there's a
mistake, layer on another new process or documentation requirement.

There's got to be a middle ground somewhere between the needs of auditing,
accountability and avoiding regulatory capture, but I don't really have a good
answer for what it is.

~~~
ngold
I always think of the two kids that got rich gaming the new Internet bidding
process to buy tons of ammo that went to the military in george jrs. Iraq war
that was completely useless.

------
ex3xu
It's refreshing for me to see an article from a modern conservative outfit
that actually seems to understand the adversarial relationship between the
finance sector and the principles of economic conservatism. I particularly
liked the section talking about historical precedents and bipartisan support
for initiatives:

> 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.

~~~
thelittleone
Wow thank you for this comment. I look forward to reading John Kay's "Other
People's Money".

Are there any proposed models that could potentially replace the current
consumerist / capitalist model that results in these monopolies or other
effects such as maniacal focus on short term gains?

While a company is hot and innovative, growth comes from value creation. Then
innovation slows, but the executives need to give shareholders growth, so it's
extracted in any way possible such as making employees work more hours no
increase in income, or buying out smaller innovative emerging competitors and
either shelving their innovations or destroying them through staff attrition
when integrating after acquisition (like being assimilated by the borg).

~~~
AnthonyMouse
> While a company is hot and innovative, growth comes from value creation.
> Then innovation slows, but the executives need to give shareholders growth,
> so it's extracted in any way possible such as making employees work more
> hours no increase in income, or buying out smaller innovative emerging
> competitors and either shelving their innovations or destroying them through
> staff attrition when integrating after acquisition (like being assimilated
> by the borg).

What actually causes this is the tax code. Shareholders want to make money and
in general are pretty agnostic as to whether it comes from dividends or
increases in share price, outside of the taxes.

But the US income tax creates a major preference for share price increases. If
a corporation pays a dividend, it first pays corporate income tax on the money
it earned, then the shareholder pays personal income tax on the dividend. But
if the corporation instead uses the same money for "growth" it doesn't get
taxed at all -- many forms of expansion are tax deductions.

Switch from income tax to, say, VAT and that no longer happens. (The immediate
objection would be that VAT is less progressive, but that can be solved by
combining it with a UBI.)

------
wrs
In broad strokes this is also what has happened to the US health care system
and other important realms in the past few decades: making numbers in
spreadsheets (and the compensation of a small number of people) a higher
priority than the actual problems supposedly being solved, whether it’s
communications, national security, or the well-being of the population.
Somehow, profits as measured by the finance sector have become an absolute
positive, as if there’s never any tradeoff with other non-financial goals.

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

~~~
robertAngst
Healthcare is expensive because of Physicians.

They are the bottleneck. The American Medical Association has lobbied
400,000,000 dollars in the last 30 years to make sure they are the only ones
that can issue prescriptions.

Making 300,000 USD/yr is unnatural, even for professionals. The market is
artificial and gives them massive power even outside yearly income.

~~~
zdragnar
You're not wrong that physicians are an artificially restricted job market.
The consequence is that most people actually spend very little time with one;
PAs and nurses do a lot of what a doctor used to do.

Rather than doctors salaries driving up health care, there are fewer doctors
serving more patients. A substantial amount of the increase in health care is
the fancy facilities, high tech equipment, and the under-charging by medicaid
and medicare for services.

On the one hand, I know a doctor who was essentially paid by medicaid less
than minimum wage for certain treatments. On the other hand, I paid cash for a
pre-surgery physical to make sure I was healthy enough for the surgery (I
showed up thinking they were in my insurance network, and they were not).

Basically, a couple hundred bucks down the drain for a nurse to take my
temperature, blood pressure, height, weight, and for a doctor to look at me
and say "yup, you're good to go".

~~~
tech_tuna
There are doctors in my extended family. . . the way their referral networks
work and the way they can restrict who can practice in the same town/area is
straight up mafia.

------
Aloha
This covers most everything I wanted to say - From the comments in the
article:

"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."

~~~
SkyMarshal
Andy Grove spent the last decade or so of his life campaigning about exactly
that problem. R&D is not separate from production. Lose the latter and you
lose the former.

[https://www.nytimes.com/2016/03/26/opinion/andy-groves-
warni...](https://www.nytimes.com/2016/03/26/opinion/andy-groves-warning-to-
silicon-valley.html)

~~~
rstuart4133
> R&D is not separate from production. Lose the latter and you lose the
> former.

It's fortunate it doesn't apply to software, isn't it? Otherwise the West
would be screwed. As it is Google / Apple et al don't make much at all, it's
all done in China. But there is literally zero chance of their expertise all
toddling off to China. Trump's Huawei ban has a better chance of leading to
China developing it's on inhouse software expertise than Apple making stuff
there.

~~~
SkyMarshal
They won't lose their software expertise, but China is gaining it, especially
in some areas like AI.

And b/c of that I'm not sure how much of a moat software-only expertise is as.
It's hard to spin up a rich supply chain of industrial production, or re-spin
it up in this case, but much easier to spin up software production and compete
in that domain.

------
aswanson
America's short-term focus on quarterly results will be its eventual undoing.
No long-term thinking; it's like making your kids drop out of school & farming
them out for child labor to make monthly family income look good. Totally
shortsighted.

------
dctoedt
Apropos of Wall Street's dominance: I've read that the "greed is good" [0]
obsession with money started to catch on in the 1980s, after the Reagan tax
cuts. Plus, corporate executives use their financial compensation as a way of
keeping score in the career game, while compensation committees look to
consultants to tell them what the average comp is for executives — which means
that the average comp keeps drifting up ( _because we certainly wouldn 't want
to pay_ our _CxO_ less _than the average, would we?_ ).

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](https://www.wikiwand.com/en/Gordon_Gekko)

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

~~~
microcolonel
The tax code is completely different today from what it was when there were
considerably higher marginal tax rates. The actual ratio of tax to GDP has not
changed considerably since then.

Try to actually understand the totality of the circumstances you're talking
about.

Too many people think they have just-so solutions to a problem they can't even
characterize in any useful way. Please don't add fuel to the fire. The
problems facing America can not be reduced to a misunderstood slogan or the
name of a president or a street name or a single policy strategy. "Fight for
fifteen"-ism and "the one per cent!"-ism do not magically make ordinary
Americans richer. The catchier it is, the more likely there is a hidden
beneficiary you aren't considering.

~~~
dctoedt
> _Try to actually understand the totality of the circumstances you 're
> talking about._

Please enlighten us.

> _The tax code is completely different today from what it was when there were
> considerably higher marginal tax rates._

I'm aware. (I was in law school taking a couple of tax-law courses during the
1980 election debates about Reagan's proposed tax cuts.)

> _The actual ratio of tax to GDP has not changed considerably since then._

Please explain how this is relevant to _individual_ incentives and the
"emergent behavior" that they create.

~~~
microcolonel
> _I 'm aware. (I lived through those days, and was in law school and newly in
> practice during the Reagan tax cuts.)_

So yes, like most people here, you did not personally file taxes as a one-per-
center before the Reagan administration. Nobody here is expecting you to muse
accurately on pre-Reagan tax filing and how people accounted for their wealth.
Just remember that nobody pays marginal rates on any money, ever. The
deduction structure changed with the rates, as happened for FY 2018. The
relationship between marginal rates and revenue/liability is modulated by
deductions.

> _Please explain how this is relevant to individual incentives and the
> "emergent behavior" that they create._

I'm saying that the "incentives" you cite (marginal tax rates you arbitrarily
consider to be low) probably don't create that behaviour, because those same
people have actually been paying about the same amount of tax this whole time;
with the difference mainly coming in the form of subtle differences in
compliance and in the way that people account for wealth.

If you want to tax the caricature baron-type people you seem to be talking
about, make playing by the rules as cheap as the creative strategies they
inevitably and understandably employ when nominal marginal tax rates are
higher than the cost of doing business a bit differently.

Also consider that dragging down the rich doesn't uplift the lower and middle
classes. If we have a monopoly problem (as the article's framing conveys),
then we should maybe look at a solution to the incentives for excess corporate
consolidation and anti-competitive behaviour, rather than getting dragged into
the weeds with tired conversations about personal income taxes. Or if we're
looking at the personal income tax side of things, at least look at something
more relevant to the pain that small businesses face: people who are self-
employed are at a tax disadvantage in the U.S, and self-employed people are
often the ones who start businesses with their after-tax self-employment
income.

~~~
majormajor
> If we have a monopoly problem (as the article's framing conveys), then we
> should maybe look at a solution to the incentives for excess corporate
> consolidation and anti-competitive behaviour, rather than getting dragged
> into the weeds with tired conversations about personal income taxes.

How do you discourage consolidation without increasingly punitive tax levels
on concentrated wealth and income (individual and corporate)? There are strong
financial incentives for winner-take-all, I don't see non-financial tools
being effective at fighting them.

~~~
AnthonyMouse
> How do you discourage consolidation without increasingly punitive tax levels
> on concentrated wealth and income (individual and corporate)?

Income taxes can't do that anyway. If you have a pile of money collecting
interest, it gets bigger over time whether you keep 80% of the interest or
only 10%. It changes the rate but not the trend. And that's assuming it even
does that, rather than having a nominally high marginal rate that nobody pays
in practice, as was the case prior to the 1980s.

The way you fight consolidation is by facilitating competition. You can't keep
a monopoly if anyone with a dominant market position is prohibited by
antitrust from vertically integrating and anybody with $100 in their pocket
and an hour's notice can join the market and compete with you. The way you get
stable monopolies is regulatory capture and a regulatory environment with many
overlapping barriers to entry for small businesses.

------
topkai22
Fascinating that the author starts an article on the danger of monopolization
with Bell Labs as an icon of American innovation, as the reason Bell Labs
existed was Bell's monopoly of the American telephone system. I really wish he
had addressed that, especially as it suggests that a well regulated monopoly
may be desirable.

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.

~~~
wrycoder
Not only that, but semiconductor equipment manufacturing and, to a great
extent, its design has been offshored to the Far East. Many of the associated
US engineering experts have since retired. The lead time to replace this
capability is likely decades, not years.

~~~
khuey
The Department of Commerce claims that the US produces half of the world's
semiconductors and slightly less than half of the world's semiconductor
manufacturing equipment.

[https://www.trade.gov/topmarkets/pdf/Semiconductors_Executiv...](https://www.trade.gov/topmarkets/pdf/Semiconductors_Executive_Summary.pdf)

~~~
nickpsecurity
That probably includes companies that are U.S.-owned with overseas fabs. I
don't think I'd count that as U.S. production if thinking about jobs or
subversion. Corroborated by something in the report which corroborates many of
the fabs mostly being outside the U.S.:

"Over 90 percent of global semiconductor manufacturing equipment sales outside
the United States take place in five markets: China, Taiwan, Japan, Korea
(South) and the EU, creating a very concentrated market. "

------
jdhn
As someone who leans conservative, it's interesting to see anti-monopoly ideas
starting to come back in from the cold. However, as we all know, talk is cheap
and action isn't. I guess I'll start believing that this isn't just a fad once
a Republican Justice Department goes after existing monopolies.

~~~
SubiculumCode
I am also happy about this. We can all talk about the wonders of a free
market, but a free market without competition or with rampant price-fixing
agreements does not operate...and indeed could be worse than a government
monopoly on those goods and services, because at least with a Constitutional
Republic, we can vote to change the people running it.

We need to aggressively ensure competition, and not just three or four
entities. There needs to be more viable businesses in a market. We will
stagnate if we don't have smaller thriving companies that compete.

~~~
ernst_klim
>We can all talk about the wonders of a free market

You don't have a free market in US. Try to sell a drug, for example. You need
to get FDA's approval. And FDA is run by big pharma, so even if your drug is
used in EU and proved fine, you need to spend quite a lot to push it on
american market.

US is more a classic corporate (i.e. fascist) state than a free market state.

~~~
AlexCoventry
Has there ever been a free-market state, in that case?

~~~
ernst_klim
There is nothing perfect, but EU is much closer to proper market than US. I'm
far from being anarcho-capitalist myself, but I think that all the america's
troubles are from the terrific centralization of power, and from how this
power is controlling everybody's lives, while being controlled by so few
entities.

That's why I warn any american of any sort of increase of gov's presence. It
will cause a great calamity, because the centralized power can never be
controlled by many.

It's fine if you have a small/local transparent government controlling and
regulating. But when you have a big opaque one, you end up in a crony/fascist
state.

EU is very different in that regard: EU parliament is a very weak political
entity, the states' governments are much stronger, and the govs of local
provinces are even pore stronger, so the whole political system is very
healthy. US seems to be just the opposite to that.

~~~
jackcosgrove
A federation like Germany, which was historically made of small
principalities, fits your description. However France is famously centralized,
and the UK while less so is also more centralized than the US.

~~~
ernst_klim
>However France is famously centralized

Yes, but if you consider the size of economy and population, France =
California, and EU = US federal government. And France, being centralized, is
quite independent and self-governed, unlike California.

------
solidsnack9000
_Yet, TransDigm 's stock price thrives because Wall Street loves monopolies,
regardless of who they are taking advantage of._

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.

~~~
rossdavidh
Absolutely. The problem is not that Wall Street loves monopolies, but that
every other part of the American society that was supposed to _not_ love
monopolies, has been asleep at the switch in this regard for decades.

~~~
nickpsecurity
It's both. You can always invest in companies that make money and do less
evil. Even better, mandate that they form as public-benefit companies or non-
profits chartered to act like a profit-seeking business but minimize known
forms of harm. Can get us _some_ of the way. On buyer side, buy from ethical
suppliers or just more ethical ones. My easy example is getting stuff from
Costco vs Amazon if available at both. AFAIK, Costco isn't putting anyone in
ambulances to avoid air conditioning or other major evils.

------
dctoedt
FTA: "Policymakers must recognize that industrial capacity is a public good
and short-term actors on Wall Street have become a serious national security
vulnerability. While private businesses are essential to our common defense,
the public sector must once again structure how we organize our national
defense and protect our defense industrial base from predatory finance. For
several decades, Wall Street has been organizing not just the financing of
defense contractors, but the capabilities of our very defense posture. That
experiment has been a failure. It is time to wake up, before it’s too late."

~~~
andrekandre
that “experiment” being neoliberalism perpetrate by both parties, to the
detriment of us all... a slight-of-hand to bring back the old days of rule by
financiers and basically “cancel the future‘

------
georgeburdell
I reject some of the premise of the article. Just because we can't build mega
structures doesn't mean we can't effectively project power and defend
ourselves. There hasn't been a conventional war in years; no amount of fighter
jets or tanks will cause the Taliban to submit.

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.

~~~
paganel
> 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.

This is a direct consequence of starting the Iraq war on very false premises
(even lies) and then continuing to wreak havoc in the entire Middle East for
the the sole interest of a few people and corporations. Eventually lies do get
to you.

------
solotronics
Many (most?) American corporations have already been subverted on a level
where they make major decisions against US long term interests in favor of
short term profits and working for China. Working for China I say!? how
outrageous! A board member, middle manager, CTO, etc. can literally be bought
by the Chinese government and NOTHING will ever happen. The Chinese have
looked at our corporate system and found the weakness in decision makers.
Without strong laws in place preventing this we will suffer a death of a
thousand cuts as our companies sell out secrets and markets to the Chinese
government.

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?

~~~
api
Marx once quipped that capitalists would sell the rope used to hang them. The
Chinese are really only nominally Communist (and barely even that) but that
statement remains as true as ever. Finance has zero foresight.

~~~
SkyMarshal
The CCP may be nominally communist, but it’s scarily authoritarian.

------
Dowwie
>>> One of the most ardent opponents of consolidation in the 1990s is current
presidential candidate Bernie Sanders, who in 1996 passed an amendment to
block Pentagon subsidies for defense mergers, or what he called “Payoffs for
Layoffs.”

------
gumby
Instead of worrying about domestic production, how about entangling the two
economies such that they can't afford to attack each other. Canada, USA, and
Mexcio aren't going to start shooting at each other because any attack would
ruin the attacker's supply chain -- and customer base.

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).

------
sandworm101
>> top market share because its equipment—espionage vulnerabilities aside—is
the best value on the market.

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.

~~~
bilbo0s
Except in this case, there is no Ferrari. That's the crux of the issue that
the article kind of touches on, but not really.

Are Ericsson and Nokia free of EU surveillance facilities? Is any American
equipment free of surveillance facilities? This is the real problem, lack of
open hardware that we can readily validate as "better" or "worse". With a
Honda and a Ferrari, we're free to pop the respective hoods and look into what
we find. Heck, we can go way further than that if we know our OBD equipment
well enough. But not so with, say, your average router.

So people out in the non American parts of the world say, "Meh, one's just as
good as the other. They're all spying. May as well get the cheapest equipment
I can." And right there, market share is won.

~~~
sandworm101
There is some good stuff out there. It ain't cheap, but it is possible to
purchase and maintain secure networks.

[https://en.wikipedia.org/wiki/TACLANE](https://en.wikipedia.org/wiki/TACLANE)

(just an example, one of the few publicly-available descriptions of such
networking products.)

~~~
bilbo0s
The point is that no one outside the US is going to accept that such equipment
is completely free of American surveillance facilities. So why pay the
premium? Buy the cheap stuff, and just let the big guys spy on you. Since they
will do so whether you spend a lot, or a little.

That's how the Chinese are winning market share. Because in a world where
everything is compromised, well, price all of a sudden is the dominant
consideration.

------
chewz
War or no war China will be always happy to sell material to US. It had
happened before with British buying Zeiss binoculars from Germany in exchange
for rubber during WWI.

[https://en.m.wikipedia.org/wiki/First_World_War_glass–rubber...](https://en.m.wikipedia.org/wiki/First_World_War_glass–rubber_exchange)

~~~
cheerlessbog
The cynicism in that negotiation is startling. Essentially they are both
agreeing they want the war to be extended. Unless both sides considered the
other was over estimating the benefit to themselves.

------
tsunamifury
The American economic tournament is incentivizing the wrong north star
metrics, and people are beginning to finally realize it. However most seem to
not know what to do about it. Quality of life, on many dimensions, is any
communities North Star, and the current metrics of employment and market size
have detached themselves from that. I think things like Libra and other
attempts will be the beginning of individuals experimenting with post Dow
national metrics, and hopefully one of them will discover a better tournament
for human growth and value.

------
mensetmanusman
I honestly don’t see America surviving the next century. There is no simple
way to describe the inefficiencies, but one thrust follows the fact that it is
in essence a ‘bad thing’ that our politicians are held in such contempt.

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.

~~~
jackcosgrove
I agree that good people avoid politics because of the media exposure, but
that happens everywhere.

I disagree that the brightest minds go into finance. That may have been true
in the 80s and 90s but since the dot com era the brightest minds have gone
into tech (as distinct from science and industry).

------
asni
I can't speak to other services, but the Air Force is pushing hard (relatively
speaking) into investing in startups. Naturally, since the minds behind this
are rather technologically inept the results are mixed. (3d printers and
virtual reality for everyone!) but they have implemented some programs to
provide funding and contracts for startups that fill a critical role - afwerx
being an example. [https://www.afwerx.af.mil/](https://www.afwerx.af.mil/)

------
kneel
>Americans invented the telephone business and until recently dominated
production and research. But in the last 20 years, every single American
producer of key telecommunication equipment sectors is gone.

So qualcomm doesn't exist?

~~~
georgeburdell
Qualcomm is largely modems. The actual base stations with which the modems
communicate are not made by them to my knowledge. Nor the fiber optic
infrastructure, switches, etc. Their statement is accurate. You can't build an
all-American telecomm network today.

------
rb808
I agree the loss of manufacturing & production skill in the US is a problem. I
dont think you can blame Wall Street directly for "short termism".

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.

------
fourthark
It's good to see a successful think tank (Open Markets Institute) devoted to
the anti-monopoly cause.

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...](https://www.wired.com/story/freedom-from-facebook-
open-markets-institute/)

------
taxicabjesus
Overall I think this is an excellent article. But it misses a few points,
mainly in how much of the United States' resources have been squandered in
fighting pointless wars.

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-...](https://www.cnbc.com/2017/01/18/chinese-billionaire-jack-ma-says-the-
us-wasted-trillions-on-warfare-instead-of-investing-in-infrastructure.html)

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

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...](https://en.wikipedia.org/wiki/Attempted_assassination_of_Ronald_Reagan)

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.

~~~
spamizbad
That's because in the United States, it's politically easier to spend $1
trillion on war than $1 Billion on infrastructure.

If you propose any program that broadly benefits the American public, concerns
arise about "fairness": either that the money is being spent at all, or that
it may benefit those undeserving -- either because it will benefit the
slovenly or because it will benefit "the rich"[1]

[1] An aside: When talking about social programs in America, "rich" usually
starts at 1.5x the median household income. But for taxes, you get long drawn-
out arguments as to why a household making $500,000 a year is still middle
class because they can't afford to quit their job and retire.

------
tanderson92
More from this author on monopolies (and politics):
[https://www.theatlantic.com/politics/archive/2016/10/how-
dem...](https://www.theatlantic.com/politics/archive/2016/10/how-democrats-
killed-their-populist-soul/504710/)

~~~
dredmorbius
Matt Stoller (the author), along with Lina Kahn (see her "Amazon's Antitrust
Paradox" [https://www.yalelawjournal.org/note/amazons-antitrust-
parado...](https://www.yalelawjournal.org/note/amazons-antitrust-paradox)) are
probably the two leading scholars of anti-trust and monopoly in the United
States.

Both are strongly recommended.

------
SkyMarshal
It's incredible how much damage the financial industry has done to America
over the past two or so decades. GFC, healthcare financialization/rent-
seeking/price-gouging, and decimation of our industrial base. How much more of
this can we take.

------
pergadad
The author makes.many excellent points but one very big mistake: the
assumption of evil intentions on the part of China (and Nazi Germany for that
matter). They are not so much concerned with pushing the US into a dependency,
but rather mich more with 1) building up key economic sectors and 2) assuring
_their own independence_ of US suppliers. That US capacity shrinks at the same
time might be a side effect but is not the first priority any other country
aims for. Its actually the US which has long and intentionally cultivated
dependence of other countries in defense and these others do resent this
situation the same way the author sees.it from the US perspective. Just look
at the embarrassing Eurohawk project, which takes outdated US drone technology
and adds a mild update, but to produce it the consortium first has to buy full
drones from US suppliers. Totally ridiculous and immense >bn€ waste of funds,
but initiated in a mutual understanding that there is a defense partnership
and interreliance between the US and EU partner countries.

------
deboflo
This article explains everything. Holy cow.

------
olliej
I mean it seems like the simple thing here is just to treat price gouging the
military equivalent to treason - after all money paid to executives paychecks
rather than, say, armour is direct harm.

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

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

I assume the part that isn't profit is development. The actual unit cost of
manufacture is quite small.

This is why military contracts should be fixed price payable on achieving
deliverables. Let the vendor own the risk and price it in. The military picks
the lowest credible price.

~~~
olliej
Back in the days of the nuke programs the companies were not permitted to
charge more than the _per device_ cost.

It was recognized that the tech that they developed depended on a lot of
resources they got from the us gov - r&d, testing facilities, etc.

In exchange for only chargin actual cost, they were allowed to monetize
technology and equipment that was developed in conjunction with the
government.

That’s why they weren’t allowed to charge more than the cost of production:
they didn’t pay for all of the r&d, they didn’t have to pay for cleanup (hence
superfund sites). Their profit came from selling products using government
funded research to non-gov entities

