The Lawfare Podcast – "America's Defense Industrial Base"

Date: December 2, 2025
Host: Daniel Byman (Foreign Policy Editor, Lawfare)
Guest: Seth Jones (Director, Defense and Security Program, Center for Strategic and International Studies; Author of The American Edge)

Episode Overview

This episode explores the strengths and vulnerabilities of the United States’ defense industrial base, tracing its evolution since the end of the Cold War and comparing it to those of major competitors like China. Daniel Byman interviews Seth Jones about his new book, The American Edge, examining America’s ability to produce military equipment at scale, the impact of industry consolidation, the rise of commercial and venture capital influences, challenges posed by China’s massive state-driven production, lessons from the Ukraine War, and workforce and supply chain issues. The episode concludes with policy recommendations for leveraging allies and adapting U.S. industry to modern conflicts.

Key Discussion Points & Insights

1. Defining the Defense Industrial Base

[03:30 – 04:32]

• Seth Jones: The defense industrial base is a “broad ecosystem of government agencies... plus industry that brings together different elements of research, development, production, and even export of defense systems. It’s government and private sector, bringing together the full cycle from concept to deployment.”
• Range of Companies:
  • Large “primes” (e.g., Lockheed Martin—“produces everything from F-35 jets to long-range missiles”)
  • Smaller, specialized firms like General Atomics (drones such as the Predator and Reaper)

2. The ‘Last Supper’ and Post–Cold War Consolidation

[05:55 – 10:39]

• The 1993 “Last Supper” was a pivotal Pentagon meeting instructing major defense firms to consolidate:
  • “The basic message that comes out of the dinner is the Pentagon says, this is where we want to get to. CEOs, figure out how you are going to get there—it can be mergers and acquisitions, or companies just shutting down defense lines.” (Seth Jones, [08:19])
• Result:
  • Massive reduction in the number of firms (“from a large number...to a half dozen or so big primes”)
  • Positive: economies of scale; Negative: less competition, rising prices, loss of innovation and resilience
• Quote:
  • “The loss of a lot of medium sized companies meant that there were not sufficient competition in the industrial base... The result...is that prices can rise, almost monopolies...and inefficiencies.” (Seth Jones, [11:15])

3. Rise of Private Equity and Venture Capital

[12:27 – 16:03]

• Shift away from government-driven (DARPA-like) R&D, rise of private capital and “dual-use” tech
  • Example: Google’s Project Maven and the backlash that led tech firms to temporarily shy away from defense work.
  • Dramatic growth in VC/PE deals in defense, especially in AI, quantum, drones, and biotech
• Intelligence community (e.g., CIA’s In-Q-Tel) began to seed and steer innovation

4. China’s Wartime Mentality and Industrial Base

[16:03 – 22:43]

• China has strategically expanded state-owned enterprises in defense production:
  • “By 2024, five of the world’s top largest defense companies...are Chinese enterprises...a decade earlier there were none in the top 100.” (Seth Jones, [17:23])
  • China now produces 23 million tons of ships per year (vs. <100,000 U.S.)
  • Focus is on mass production and rapid capacity building (aviation, naval, nuclear, and cyber systems)
• Wartime Mentality: China invests with the goal of deterring adversaries and, if needed, winning a great-power war

5. Comparative Strengths & Weaknesses: U.S. vs. China

[19:37 – 22:43]

• Chinese Weaknesses:
  • State-owned enterprises: inefficient, corrupt, and not as innovative
  • Quality control, corruption (“range of Chinese defense executives jailed”), supply chain dependencies (e.g., rare earths, some high-tech components), demographic challenges (aging population)
• U.S. Strengths:
  • Decentralized, innovative private sector
  • Leadership in advanced tech, agility (though threatened by consolidation and contract/budget pitfalls)

6. Lessons from the War in Ukraine

[28:25 – 34:39]

• Unexpected resilience and agility from U.S. and Ukrainian private sectors (drones, cyber, munitions)
• Key moments:
  • Cyber support: “Microsoft’s Threat Intelligence center...provided massive help to Ukraine in identifying and wiping malware.” (Seth Jones, [30:20])
  • Starlink played a crucial role in comms and targeting but also withheld service at times—highlighting the power and foreign-policy role of private firms
• Quote:
  • “SpaceX and Starlink in particular become an integral part of a war—as a company, which raises some very interesting questions about treating companies as a combatant, giving companies significant power in providing not just information, but targetable information to countries engaged in war.” (Seth Jones, [33:38])

7. Vulnerabilities of Reliance on Private Sector, Especially vis-à-vis China

[34:39 – 37:27]

• Many U.S. defense suppliers have business interests in China—risk in a conflict scenario
• Example: Taiwan hesitant to use Starlink due to Musk’s China investments; looking to Amazon’s Kuiper instead
• Challenge:
  • Modern military tech (cyber, AI, drones) increasingly commercial—hard to police exports or leakage to adversaries or non-state actors worldwide

8. Can the U.S. Replicate WWII Industrial Mobilization?

[37:27 – 41:25]

• Modern platforms (e.g., F-35, advanced missiles) are too complex for rapid conversion of civilian industry
• Production ramp-up limited by factory capacity, timelines (2+ years for some missiles), regulatory and real-estate hurdles, and a lack of political will (presidents not spending “political capital” on defense industrial reforms since the end of the Cold War)
• Quote:
  • “I just don’t think [a WWII-style rapid conversion] is likely...the bigger challenge is getting companies already producing these things to ramp up.... The timelines...and the money required...that's a bit of the challenge that the US faces right now.” (Seth Jones, [40:23])

9. Contracting, Bureaucracy, and Workforce Challenges

[41:25 – 48:30]

• Contracting bottlenecks: Longstanding, require presidential-level intervention to break logjams
• Promising recent progress: e.g., the Air Force awarding to non-“primes” and getting a prototype from General Atomics within a year
• Workforce crises:
  • Critical shortages of skilled workers in shipbuilding; high living costs make recruitment and retention hard
  • Recommendations include: funding for education/vocational training; Defense Production Act incentives; rebuilding industrial infrastructure
• Quote:
  • “It’s just going to be hard to do if you’re not spending more money, particularly in education for the workforce.” (Seth Jones, [48:06])

10. Role of Allies and Partners

[48:30 – 51:19]

• The U.S. should leverage allied capacity, particularly in shipbuilding:
  • Example: “The U.S. produces less than 1% of commercial and military ships... The two biggest allies that actually produce pretty good surface ships are the Japanese and the South Koreans.” (Seth Jones, [49:13])
• Calls for changing “Buy America” laws and making it easier for allied companies to participate directly in U.S. defense production

Notable Quotes

• On U.S. Industry Evolution:

  “The basic message that comes out of the [1993] dinner is the Pentagon says, this is where we want to get to. CEOs, figure out how you are going to get there.”
  – Seth Jones ([08:00])

• On China’s Surge:

  “By 2024, five of the world’s top largest defense companies... are Chinese enterprises... a decade earlier there were none in the top 100.”
  – Seth Jones ([17:23])

• On Starlink’s Role in Ukraine:

  “It is interesting that, in some ways, SpaceX... becomes an integral part of a war as a company, which raises some very interesting questions about treating companies as a combatant...”
  – Seth Jones ([33:38])

• On Modern Readiness vs. WWII:

  “I just don’t think [a WWII-style rapid conversion] is likely... I actually think the bigger challenge is getting companies that are already producing some of these things to ramp up on production.” – Seth Jones ([40:23])

• On the Need for Allies:

  “There’s a strong rationale for working much more closely with foreign companies... Japanese and South Koreans... Some of this is political; there are Buy America provisions Congress is going to have to change.” – Seth Jones ([49:13])

Important Timestamps

• [03:30] – Defining the defense industrial base; company examples
• [05:55] – The 'Last Supper': 1993 Pentagon meeting on consolidation
• [09:32] – Post-consolidation landscape; pros and cons
• [12:27] – Rise of venture capital and private equity in defense
• [16:36] – China’s defense industrial expansion and “wartime footing”
• [19:37] – Comparative strengths and weaknesses: U.S. vs. China
• [29:58] – Role of private sector in Ukraine War (Palantir, Microsoft, Starlink)
• [32:20] – Starlink’s influence, ethical and policy implications
• [34:39] – Dilemmas of private firms’ overseas interests (China, Taiwan)
• [37:27] – WWII-style industrial mobilization: Why it’s difficult today
• [41:25] – Contracting and acquisition bottlenecks; recent reforms
• [45:44] – Industrial workforce shortages and proposals for fixing them
• [48:30] – Leveraging allies—especially for shipbuilding

Takeaways

• The U.S. defense industrial base is both a source of strength and risk: Its innovation capacity and tech prowess are offset by consolidation, slow contracting, aging infrastructure, and workforce deficits.
• China’s meteoric rise as a “wartime” producer exposes both quantitative and qualitative challenges for Western industry.
• The commercial sector—especially big tech and private equity—now shapes the defense landscape, bringing new dynamism but also vulnerabilities, especially when firms have global interests.
• Lessons from Ukraine: Agile, tech-based private sector players (like Microsoft, Starlink) can be critical—but may also blur lines between public and private roles in war.
• Policy priorities: Reforming acquisition processes, rebuilding the workforce, leveraging allies (especially in areas where the U.S. lags, like shipbuilding), and preparing for a world where commercial technologies and supply chains are global and contested.

For listeners seeking an in-depth but accessible primer on modern defense production, competition with China, and the intersection of tech and war, this episode is essential and engaging throughout.