Hacker News new | past | comments | ask | show | jobs | submit login
2020 Industrial Capabilities Report to Congress [pdf] (businessdefense.gov)
47 points by apsec112 12 days ago | hide | past | favorite | 53 comments





> The estimated cost of this report or study for the Department of Defense is approximately $159,000 in Fiscal Years 2020–2021. This includes $24,000 in expenses and $134,000 in DoD labor.

I don't know, for some reason this cost feels incredibly low for the view of this document. This is a 184-page document basically summarizing the entirety of US domestic production. Even if you're not paying market rate, I'd have guessed you're talking at least a 5-6 people working full-time on keeping this data up-to-date throughout the year, which can't possibly be true with that number. $159k buys you, including org-level expenses, maybe 3-4 people's last four months? If that? For the world's largest domestic economy spanning sectors from biotech to machine tools to "cyber"? Hopefully there's been some significant investment in automation of data production for each of these channels in past years, and even then, I'm a little dubious about how accurate this assessment could possibly be at the claimed cost.


This is DoD truthiness at the core - it only cost 159k to assemble the report, which was probably based on 7-8 multiple studies and analysis that cost a couple of hundred thousand to a million dollars each. This isn't greenfield research, this is a report compiled from a bunch of other reports

"Preserving U.S. overmatch in and through cyberspace is an explicit objective of the 2018 National Cyber Strategy."

U.S. overmatch? Nope... not even close. We're so far behind the curve it's doubtful we can ever catch up. We learned a ton of things getting our ass handed to us in Viet Nam, and then promptly forget all of it when the PC showed up and the internet took off.

Look at the breach of the Form 86 records from the OPM a few years ago... https://en.wikipedia.org/wiki/Office_of_Personnel_Management...

"The attack originated in China".... why was it even possible to access this incredibly sensitive database from the internet?

The theory that the NSA and CIA can retain hacking tools for themselves, and keep the rest of the world in check was falsified a few years ago as well.

All knowledge of multilevel secure systems seems to have been wiped out of the collective memory of those in charge of the NSA, DOD, etc.

The only way I see back from this lagging position is to fund open source efforts to drive the development and adoption of multilevel secure systems. If we make computers everywhere more secure, the baseline security of the entire free world will rise.

--- Tangent time ---

It also wouldn't hurt to fund a few low cost projects aimed at being able to "restart civilization from scratch", with a particular emphasis on building educational, non-profit, well documented supply chains that start with rocks and branches, and work all the way up to modern technology as far as they can go.

These should considered a part of the education and national defense efforts. If the end result is a gear... the sources of the metal, cutting tools, etc... should all trace back to non-market sources. You should be able to name every single person who helped along the way, and how. All of that knowledge should be shared and preserved.


>The theory that the NSA and CIA can retain hacking tools for themselves, and keep the rest of the world in check was falsified a few years ago as well.

They're used to operating in the physical world. For example, that approach (until very recently) worked quite well for nukes. You can control physical things that cost money.

Obviously this doesn't work for digital information with the internet. You see the same attitude every time they lement that cryptographic doesn't have backdoors. "Oh just make one for us, no one else will know how to use it"


The "Quantum Technologies, their readiness, and expected military impact" chart from page 127 reads like nonsense.

How can liter-scale atomic clocks have higher "military impact" and only be in "lab demonstration" phase, while chip-scale atomic clocks are in the "fielded phase"?

Additionally, how can "Chip-Scale Atomic Clock (ns error)" have less military readiness & higher military impact than "Chip-Scale Atomic Clock (ps error)"?


"But unless the industrial and manufacturing base that develops and builds those goods modernizes and adjusts to the world’s new geopolitical and economic realities, America will face a growing and likely permanent national security deficit. "

True. But this will be hard to fix, especially in a broad sense and not only with focus on specific military technology.

I did my STEM PhD in the US that proved to be worthless. Things like SBIR are just too corrupt (I have a pretty good insight and trust me on that one). In China there are much better opportunities, at least for me, even as a non-Asian.


Curious what opportunities you're thinking of? China is hostile to foreigners in a lot of ways, and basically has no naturalization process, so you can't immigrate in the same way you'd immigrate to the US or Canada or Australia.

EDIT: How China may arrest foreigners with no cause or due process, or "exit ban" them to prevent them from leaving: https://harrisbricken.com/chinalawblog/how-to-avoid-china-pr...

China can also just nationalize foreign companies arbitrarily: https://www.foxbusiness.com/markets/china-coronavirus-nation...


I am not Chinese, but I grew up in China, and while immigration is generally not open, it would be a far cry to sday that China is "hostile to foreigners". My father moved to China to work because it was a huge career opportunity for him. In the process, he made a ton of money as cost of living in china was lower than cost of living in my home country, despite the extreme luxury which could be afforded. Once, we grew up we moved back to our home country and he plans on retiring here.

In my experience you can find a job in China within days or weeks. They ask you "Can you start tomorrow?" and this is not a rhetorical question.

You can not get naturalized, true. At least not in Mainland China. But they also have a Green Card now.

While I also have a US passport, how do you "immigrate" to the US? It is very difficult, a work visa in China is much easier to get. And believe it or not, I started as an illegal immigrant in China with a tourist visa (While I was not illegal, I was working full time on a tourist visa).

Hostile to foreigners? I don't know. But I speak okay Chinese by now. And doors I tried to kick in in the US that never opened, opened easily in China.


Success in business as a foreigner requires making friends in high places, plus some IP transfer.

I am happy to deliver IP, if the price is right. In fact, I just submitted another patent that I plan to sell in China.

You don't need friends in high places, at least I did not require this. But do you think US SBIRs and government contracts are really open?


As far as I understand it SBIRs are a way to get seed rounds, maybe a series A, in silicon valley parlance. I'm sure there's an ecosystem of people in the know who get them regularly, and it's not a meritocracy. It's just kind of small change vs private equity investing that I'm just amazed to have found somebody who seems to have a grievance against it. But I haven't lived your experiences so who am I to kibitz. If you're successful over there more power to you.

What is this total bullshit?

Like hello? This isn’t true at all?


https://www.bu.edu/jostl/files/2020/08/3-Lee.pdf

I don't do business in China, so I'm not speaking from personal experience. It seems forced technology transfer is a thing.


Could you provide some context to what you just wrote? I know it seems like spitting in the wind commenting here, but it sounds pretty random unless you talk about details. By opportunity do you mean academic, business, or something else? Why was you PhD worthless? Is it applicable in China? How?

In China I have job opportunities, business opportunities and even academic opportunities.

During my 2 year post doc in the US, after my PhD (due to lack of a job) I may have written 1-3 job applications per day. You do the math. My PhD proved worthless because after my post-doc finally run out, I had no money for food and shelter. To make things worse, I became super sick and had no health insurance anymore. In the end the fix of my super rare disease was easy but hard to figure out. But I never forget the pain and desperation.

I came to China as a very broken person with no hope left. But it all worked out well.


It's the best not to star in Chinese newspapers, or at least I would've not done so, and then gone to an internet forum.

> China’s lower costs may mean that its defense spending has purchasing parity with ours.

This was shocking to me.


If I may quote two sources (controversial, so please take it with a grain of salt but keep an open mind)

http://cluborlov.blogspot.com/2019/07/war-profiteers-and-dem...

https://www.amazon.com/Losing-Military-Supremacy-American-St...

I am not Russian by the way, the links could give you this impression.


Great article!

I have been thinking a lot about the feeling I have that “US manufacturing jobs” has become a political myth, and that real decay is setting in.

I have been ordering CNC machined parts from a machine shop in China. The only US organization I priced from is Plethora which probably isn’t the cheapest but their prices were much, much higher than China.

Of course Chinas prices have been lower for a long time, but in the past my simplified understanding is that there was a large volume of cheap labor that suffered a poor standard of living. But China has grown leaps and bounds in the past three decades. I suspect that now for many machine shops in China the standard of living for their workers is probably on par with that of workers in the US. It could even be better, I wouldn’t be surprised.

So now it’s cheaper in China just because they took manufacturing seriously. In the US we let MBA’s sell off all our manufacturing capability to foreign nations. Which seemed to work great for increasing profits. But the lack of higher level planning has left us with a vulnerability. Selling your business to China works great in peace time. But China has power over us now.

I am hopeful that the article is correct, and our horrendous military spending is coming to a close. But I worry about what will happen in the US to make us finally understand the need to change our ways.

I think the best outcome would be for the US to end its posturing against China and learn to benefit from collaboration.

astrea 12 days ago [flagged]

Your prevalence in the comments speaks louder than the words you type

It seems he has relevant experience in the subject matter and is relating that experience to an audience eager to interrogate him. How could that be interpreted negatively?

Very roughly :

US GNP $21 Trillion China $14 Trillion

Using PPP US $21 Tn (obv) China $28 Tn (!!!)

China can buy more stuff from itself each year than US. It just cannot buy the most sophisticated stuff yet.

This is presumably why the report puts "reshoring" and building out 21C manufacturing top of its priority list.

source:https://podcasts.apple.com/gb/podcast/macro-musings-with-dav... (worth listening too !)


This seems to imply that one party or the other is manipulating the currency markets aye? the claim is effectively that $1 when converted to local currency in china buys 2x what $1 buys in the US.

Not really, why?

There are a lot of things that go into pricing of a purchase. Especially large scale purchase of cutting edge military technology with long time horizons by state actors.


Yes thats the point of PPP. I found it counter intuitive for ages, but might have got it now.

Think of it as if 2 bucks buys you 1 loaf of bread in Chicago, but take those two dollars to Beijing, turn it into yuan at the prevailing exchange rate, and that buys you 2 loaves of bread in Beijing, then very roughly speaking China can take 50 million dollars worth of yuan, and buy two jet fighters for the price USA pays for one.

It varies of course, when you look at shipbuilding capacity, in that China probably has a huge cost advantage in that they, you know, build ships a lot. Vice versa Jet fighters.

As ever it depends greatly on the basket of goods - which is naturally bent towards consumer and FMCG.

The Economist runs a Big Mac index - a trivial but effective means of doing the same - how much does a Big mac cost in different cities. (https://www.economist.com/big-mac-index)


The part that bothers me is that this discrepancy butts heads with the idea of comparative advantage. Somehow every economy which is heavy on imports has a higher overall cost level than peer economies that are not import dependent (see Hawaii). While in theory some of these import dependent economies are powered by comparative advantage (e.g. pork, and coffee growing in Hawaii) - the dominant term appears to be the imports for the average basket of products.

Is China's cost level lower because a local supply chain inherently more efficient and advantageous than an external supply chain? When does an external supply chain actually make sense? If there are some markets which are winner takes all, then is the economic theory more about "do you make it or do I?" rather than a smooth supply/demand/cost curve with comparative advantage.


If anyone is ready to learn about the Chinese market deeper than obsessing over whats happening on the other side of the Gobi desert, now is the time.

The coastal cities have a lot going on in them.

I recommend getting on to Wechat, thats actually pretty difficult. You need to find a mainland Chinese person.

The key concept is that they keep the user experience rated “PG” and it isnt deemed controversial that the government moderates it as opposed to management at Disneyworld.


As an ignorant American, I feel like I pay enormous taxes to defend international trade that mostly seems to benefit non-Americans. For 30 years, I was told “trade causes democracy” and “democracies don’t fight each other”. But, that doesn’t seem to be working very well. Why should the US continue to spend on defense so heavily? Why should we care?

Because you need to defend the exorbitant privilege of having the worlds reserve currency. This means Americans can generally live easier lives by borrowing from the rest of the world. It’s also why wages in the US are so high. America can’t really be an export manufacturer as long as it’s currency is artificially inflated by massive inflows from global trading imbalances. It could after WW2 for a short while. That was because all others were bombed out and China etc weren’t developed.

And now the price is here. I was always telling all smarty business degree holder that you can't make money out of thin air no matter what trick you use.

One way, or another, you can't escape the invisible hand finding ways to smack you good in the end.


It’s not easy to go back to working hard in an era of global competition. Chinese workers work far longer hours and make more product for each hour worked. Plus they are integrated into a massive supply chain and ecosystem.

The wages that need to be paid to an American worker to assemble phones all day would be really really high. They’d rather just work at McDonald’s or play video games.

Those high wages would give them enormous leverage (unions etc) upsetting the entire American economic system.

The American system is a cyber punk reality where a country is just a container for the aspirations of a bunch of short term thinking warring AIs called corporations. The people being one of its inputs. Elections don’t change much. Anything that disrupts the AIs too much is taken care of one way or the other. Doesn’t matter if it’s Bernie or Trump.

So I would say that China is safe because the last thing america will do give up any notions that their system is the best or needs to change.

The west needs to realize that the momentum of a head start on industrialization and ill gotten gains from historical loot is running out. As everyone joins the industrial game the world inherently becomes multi polar. There’s no reason why only the west can have high living standards or that only the western system can sustain it.

in a situation of having to manage Russia, China and Iran at once while greatly weakened , Multi lateralism is inevitable. Democracy cannot be delivered at the barrel of a gun. That only creates more messes.

This week witnessed the amusing spectacle of Boris Johnson calling himself a Sinophile (give us a trade deal please). All this after running down the Chinese for months. The west can’t even decide what to do.


And the price for it is China being able to shut down a big chunk of your multi-trillion dollar economy with a few pen strokes.

Look for example how SMIC sanctions effectively shut down the car industry, and few others.

A murmur I heard is of US now backing off on SMIC because of the car industry, but that will send an even worse precedent.

It will mean that nobody else will come and fill the SMIC niche, and it will still have a chokehold on a very well moneyed, and full of lobbyists industry.

The next time, sanctions on SMIC may come not from US, but China itself.


The sanctions on SMIC were imposed by the US which incentivized a stock piling and cut global supply. So it was US hobbling itself and not Chinas doing.

Instead of this ham fisted approach it needs systemic solutions. For eg - make college free. Make corporations subservient to state planning of strategic priorities.

It’s clear that China has the upper hand as long as US is a bunch of warring corporations that think of the next quarter.

US corporations will eventually force a retreat to protect their Chinese profits. China just needs to offer them some returns. As the largest market in the world they now can.


> Make corporations subservient to state planning of strategic priorities.

If the US makes it a battle of who has the better government, they will get crushed by the Chinese. Not even close. The Chinese government is noticeably more competent than the American one.

The only hope America has is letting people do things without government planning. That is why big wealth generators like Microsoft, Google, Apple, etc, etc are all American companies rather than Chinese. Nobody in government saw any of that stuff coming.

Pretty much everything China is doing to get ahead is illegal in the US for environmental or worklaw reasons. Copying the parts that keep China behind isn't going to help.


Government doesn’t have to suck. Nor is good government and central planning incompatible with democracy or markets.

The government sent people to the moon and invented the internet.

America can win if it makes its government great again.


You've listed evidence of 1 success every 100 years. That isn't the sort of track record to be talking about if the plan is to take on the Chinese.

And the internet didn't achieve widespread success until the government turned it over to the free market where it became the most ultra-free-market environment we've seen this generation.


> The sanctions on SMIC were imposed by the US which incentivized a stock piling and cut global supply.

No... SMIC was making a great deal of 200mm business, possibly the biggest 200mm foundry.

A lot of those decades old automotive ICs were fabbed there for the proximity to assembly lines, and tarriff avoidance.


Of course, but if it can't develop finer lithographies, it might as well give up and declare bankruptcy right now.

> Of course, but if it can't develop finer lithographies, it might as well give up and declare bankruptcy right now.

No, SMIC was in very good financial position. They work tax free, got a rather good niche of expensive old chips, and a status of the only first tier foundry in worlds biggest semiconductor market.

200mm is currently booked for years ahead, so they are not going anywhere for those years ahead at least.

People on this forum know very little of how the economics for microchips work. I want people to learn up this industry to a level where they wouldn't embarrass themselves without at least having a glancing doubt about what they say first.


SMIC works tax-free and enjoys massive government subsidy because the government is counting on them to progress to finer lithographies.

If they give up on that goal, many of their government-given advantages disappear.


Near the entirety of semiconductor industry in China works tax free. From fabless to chemical, and material companies, to actual fabs.

Every few years they throw some new tax exemption programs effectively making them perpetual.

I don't see why would the specifically single out SMIC for that.


Clearly you have no appreciation for hard work when you equate someone working a job at a McDonald’s with laziness and playing video games.

That wasn’t my intention. My point was that even jobs considered hard in the first world are much easier than a typical manufacturing job. And so people may forego them altogether.

The reason for this is that the USD is the global reserve currency. The petrodollar (OPEC only trades oil for dollars) is kinda how we solidified it. However, being the global reserve currency forces you to be a net importer. You have to run trade deficits. Running trade deficits is not sustainable over the long term [1] and we're probably nearing the end of it.

So we should continue to invest in defense because it is a massive industry for the US. To solve the trade imbalances though, the dollar should be weakened (it may occur naturally). That will allow us to rebuild our manufacturing base as our products will be more competitive on the international stage.

Additionally, right now we're in a low interest rate period of the long term debt cycle and will probably remain there for about a decade (at least). This is great because it means there is a ton of money exiting bonds looking for yield. There is a lot of capital ready to invest in projects. Combined with a weaker dollar, we're at a critical point for on-shoring and rebuilding US manufacturing.

I'm pretty hyped about the next 10 years for this reason. It will allow us to shore up the DoD supply chain as we currently rely on adversaries for defense critical parts.

1. https://en.wikipedia.org/wiki/Triffin_dilemma


> So we should continue to invest in defense because it is a massive industry for the US. To solve the trade imbalances though, the dollar should be weakened (it may occur naturally). That will allow us to rebuild our manufacturing base as our products will be more competitive on the international stage.

A side effect of this not talked often is that the bigger you economy, and currency is globally, the more deficit spending by the government hit your balance of payment.

US can't devalue the USD dramatically for as long as its debt is held of special value inside the country, and around the world.

Americans, want slash, and murder your trade deficit? Run state budged at surplus for a few years, and you will see it melt away.


As an equally ignorant non-American, I'd like you to look at a map of all US fleets for 30 seconds

By doing so you'll be able to see that the US Navy is strategically positioned to defend international trade against any kind of blockade that an enemy would try to pull up in a strategic chokepoint

If you squint, though, you'll be able to see that coincidentally the US can use those same fleets to enact said chokeholds. In other words: no one can have a significant world-wide logistics network without the implied consent of the US. Do you know what kind of requires this scale of transportation? a world war between great powers

Is it clear now what you're paying for?


Technological solutions to this problem are coming. Try as it may, in the next decade or so, a US blockade will have to run the risk of catching a few hundred hypersonic missiles.

We will likely move to a world where no one is able to enforce more than localized blockades for a while.


> By doing so you'll be able to see that the US Navy is strategically positioned to defend international trade against any kind of blockade that an enemy would try to pull up in a strategic chokepoint

What is "international" trade these days. It's trade in between two countries, yours, and China.

To blockade anybody economically, China just needs to put an embargo.


Because the US military is not about defending trade, arguably it's the very opposite: it is China's goal to protect global trade as it is the biggest trading partner of most countries, while the US invests heavily to maintain the ability to disrupt trade of any country it thinks is benefiting too much. (e.g. the first island chain for blocking China's access to the seas - https://en.wikipedia.org/wiki/First_island_chain)

The military and all its associated suppliers are also a massive jobs/welfare program - maybe the money could be used more constructively but plenty of americans benefit from it

Efficient trade benefits everyone, including Americans. But Americans aren't the only ones who pay for it.

A few things that I found interesting: the amount of quantum stuff on the DoD's roadmap besides computing, Page 127 sounds crazy. The Black Hornet 3, a tiny drone by FLIR. The new B-21 is also in there, hasn't been officially revealed yet. Also curious to see no specifics about satellites or any mention of the X-37. Guess its all classified.



Applications are open for YC Summer 2021

Guidelines | FAQ | Lists | API | Security | Legal | Apply to YC | Contact

Search: