← The Lawfare Podcast
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- [00:00]
Olivia Manis
Nearly every News alert in 2025 has raised questions, some old, some new, about the law and national security. And now you get the chance to ask Lawfare directly. It's time for our annual Ask Us Anything Mailbag podcast, an opportunity for you to ask Lawfare this year's most burning questions. You can submit your question by leaving a voicemail at 202-643-846, or by sending a recording of yourself asking your question to ask us anything lawfairmail.com by December 16th.
- [00:40]
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- [01:51]
Susannah Glickman
Who drives the world forward?
- [01:52]
Olivia Manis
The one with the answers or the one asking the right questions?
- [01:56]
Susannah Glickman
At Aramco, we start every day by asking how? How can innovation help deliver reliable energy to the world? How can technology help develop new materials to reshape cities?
- [02:06]
Olivia Manis
How can collaboration help us overcome the biggest challenges?
- [02:10]
Susannah Glickman
To get to the answer, we first need to ask the right question. Search Aramco Powered by How Aramco is.
- [02:17]
Olivia Manis
An energy and chemicals company with oil.
- [02:18]
Susannah Glickman
And gas production as its primary business.
- [02:25]
They end up staffing the Pentagon and trying to sort of remake it in their own image. Be that, you know, sort of the Silicon Valley model or like as private equity. Like, you know, I talk a little bit about this new form of state capitalism that is emerging right now. Like the MP Materials deal, the intel deal, the Nvidia deal. That looks a lot like private equity.
- [02:45]
Olivia Manis
It's the Lawfare podcast. I'm Olivia Manis, associate editor of Lawfare with Susannah Glickman, an assistant professor of history at Stony Brook University who specializes in the political economy of computation and information.
- [02:58]
Susannah Glickman
There need to be some reliable safeguards. And this kind of uncertain environment, lack of government planning, government funding of research, all of these infrastructures that all these companies benefit from, the destruction of it, it makes reviving manufacturing or doing anything innovative, any kind of long term industrial policy, impossible.
- [03:19]
Olivia Manis
Today we're talking about the shifting landscape of defense tech as it relates to the policies of the second Trump administration. In particular, we'll unpack a recent article by Susannah and the New York Review of Books which traces the historical relationship between tech defense and the US Government and explains how defense tech firms, which have historically benefited from U.S. industrial policy, are now undermining it. So, Susanna, you recently wrote an article called the War on Defense Tech for the New York Review of Books. Before we kind of dive into the substance of that, I wonder if you could kind of give us a really broad overview, kind of set the scene for us about how defense tech is making its mark on the second Trump administration.
- [03:58]
Susannah Glickman
So to me it seems like whereas in the first Trump administration, these kinds of self branded defense tech firms did not have the same intimate relationship to the administration. I mean, there were some.
- [04:14]
Folks in the Defense Department like Ellen Lord, who were interested in industrial policy. And that's been a long current going back at least to the mid 2010s, but maybe a little bit before these sort of Silicon Valley defense tech folks really came to have a closer relationship with the Republican Party and with Trump's coalition, like midway through the Biden administration and as a fallout, I think in part of like some of the way that they perceived the Ukrainian war and how their efforts around that were sort of treated. And by defense tech, like, I think there's a lot of things that can fall under that rubric. There are sort of traditional defense companies like the Primes that we're not really talking about. There's tons of smaller contractors who have existed for a long, long time, you know, high tech defense firms that kind of came out of, you know, the rearrangement of US Industrial policy under Reagan especially. But this news that when we talk about defense tech, it tends to be that we're talking about Silicon Valley tech firms or tech firms in Silicon Valley who have rebranded. But I want to say, I want to just mark that there are like lots of other firms that would call themselves that, but that aren't affiliated and like maybe aren't part of the same political project, although there's Some that are.
- [05:45]
Olivia Manis
I think you mentioned, for example, that this is a really broad landscape and it's a little bit difficult to define exactly what defense tech means. But the firms that you focus on a lot in the article, how do they differ maybe from what you call the prime. So really established firms like Lockheed Martin, for example, what are they doing differently?
- [06:05]
Susannah Glickman
Yeah, I mean, I think it's also where they come from is very different. What they're doing differently we can get to. But these new defense tech firms seem to have emerged or made their pivot much more recently. So since. Since a lot of the defense consolidation in the 90s and early 2000s. So like Lockheed. Lockheed Martin, to say their full name, because they used to be Lockheed and used to be Martin Marietta and like a million other firms. Right. Are products of this intense defense consolidation in the 90s. They tend to be relatively large, a bit sclerotic. You know, part of why they are the way they are is that the consolidation of the 90s happened so fast and so much faster than anyone thought that they ended up having all these different, you know, business capabilities or business responsibilities that maybe they weren't necessarily prepared to handle. Whereas these new tech defense firms are a product of actually some of the industrial policy that the. These earlier defense firms wanted for themselves. You know, coming out of institutional experiments like in q Tel, the CIA's sort of venture capital, unique venture capital firm whose success in Tubal, if you want to define it as successful, you know, many other agencies and sort of armed services have tried to replicate, but these. Yeah, the new. The new group comes out of especially those kinds of institutional experiments and then out of Silicon Valley startup culture proper. So like, I'm thinking of film firms like Palantir, Anduril, Shield AI there's like a million of them now. They just like pop out because there's a lot of money to be made, even if you don't deliver on anything particularly exciting. They're also tied to a different financial ecosystem which we can talk about that encourages sort of, you know, that looks more like the startup IPO kind of pump and dump sort of infrastructure.
- [07:59]
Olivia Manis
Yeah. And we'll get into kind of like the different sort of methodologies of financialization that you talk about in the article. We'll talk about the different sort of models that we're seeing. I think maybe I want to really boil down at least what I see the article as doing, and then we can kind of branch out from there. But in my view, what the article is kind of doing is explaining A paradox that's at the heart of both the Trump administration's and defense tech's purported industrial policy. So I wonder if you could kind of talk a little bit about this paradox in really general terms, and then we'll dive a little bit more into what that looks like in practice.
- [08:35]
Susannah Glickman
Yeah, so it's kind of interesting. So I'm a historian, so I'm always going to want to go back further than you do. You want me to? But what's really weird for me is I wrote my dissertation a lot about firms that were insistent that they were not doing industrial policy, but in fact were and were trying to lobby for that and coordinate with the government in very concrete ways to sort of secure that. Now we're in a moment where industrial policy is popular buzzword especially. I think a lot of it has to do with China and the success of the Chinese state in fossil. And it's very misunderstood. So we can talk about the misunderstandings too, about how China works. But yeah, so this now we have the inverse of that, where you have all these companies saying, like, we really need to, you know, these defense tech companies saying, we really need to do industrial policy. We need to revive American manufacturing. We're the ones who can actually do it because we're more efficient, ruthless, whatever, when in fact what they're doing is undermining the possibility of doing industrial policy. And the kinds of industrial policy that have actually worked or sustained or, you know, like even very basic infrastructure like standard making capacity, there's a lot of inconsistencies and things that are incoherent about this group. And I can talk a little bit about why I think there are these contradictions. But, yeah, we sort of flipped from companies that say they're not doing industrial policy, but really solicit it, need it, to companies that say they're doing industrial policy, say they're encouraging industrial policy in the return of manufacturing and in fact, undermine the conditions through which that might be possible.
- [10:09]
Olivia Manis
Yeah. And I want to talk about sort of weird coalition that we're seeing and some of those internal contradictions. I definitely do want to come back to that. I think before we do that, I want to discuss maybe some of the criticisms that these new firms are levying against the sort of current space of defense or current US Industrial policy, either explicitly or implicitly in terms of their discussion of the financialization of the military and the consolidation of the military. So what exactly are people like Shamsankar, like the CTO of Palantir, what are they pointing to here? What are their criticisms?
- [10:45]
Susannah Glickman
So, I mean, I think a little bit about Naomi Klein's Doppelganger book. When I think about these guys, the ways in which a lot of the right has co opted criticisms that traditionally sound, sound like left criticisms in order to gain purchase in a world where a lot of the status quo has sort of lost credibility. And so some of the things that Shankar and his group criticize these big defense companies for sounds a lot like the kinds of criticisms that come from the left, especially around the Bush administration, Bush 2, and these sort of exploded, corrupt, inefficient defense companies that, you know, spend too much money on stock buybacks, are too tied to the stock market, that don't actually innovate, that they're led not by engineers, but by MBA cadres. There's also this very gendered criticism. I mean, it's not like sometimes it's very explicitly in gendered terms and sometimes it's not, but that, you know, the really innovative companies, like the tech firms, the greatest minds have been going and to creating like financial instruments and ad tech instead of like manly submarines and we should have been preparing for war with China and all this. This kind of, you know, it seems very gendered to me. There's those kinds of, you know, very familiar criticisms. But at the same time, you know, these guys, while invoking these criticisms, are maybe even more financialized than the kinds of firms that they're the Lockheeds of the world.
- [12:22]
Olivia Manis
And maybe we could get a little bit into the ways in which they're more financialized. So how are these firms more financialized? What is private equity doing here?
- [12:31]
Susannah Glickman
Yeah, I would say venture capital and private equity are both heavily involved in the ways that these firms work. So there's different kinds and there's better and worse in each. So Palantir got its start coming out of the CIA's venture capital firm, which is not like a venture capital firm, like the other sort of venture capital firms on the market. And we can talk about why it's different, why it's more like, you know, just like state subsidy and, you know, a lot of other benefits in a very different way than a bunch of other venture capital firms. So kind of want to bracket that. So basically like in the late 2010s, early 2020s, with the end of the sort of zero interest rate, cheap money phase. And at the same time there's all of these kind of speculative tech investments coming out, like the metaverse, NFTs, early AI stuff that feel, I mean, felt, I think, to Investors and like VC and PE firms like, like pretty risky. And so I think that's part of why they start getting really interested in defense and defense tech, because that looks like a hedge against like those, those kinds of things. And we're pretty familiar with this, the criticism of like the PE model and the VC model, I think, but I can go into it, but basically that you. Their what venture capital does is it invests in like a lot of, a lot of different startups, knowing that some of them will fail, others, like, might actually gain value. Their goal seems to be to take them public and cash out and then kind of let those companies, you know, whatever happens, happens. Like WeWork is a great example of like the kind of model there. So that the time, the timeframe is very, very quick. These are not long term investments. Private equity firms, you know, sort of emerge from the same period in the 1980s and are very good at taking advantage of loosened regulations and financial rules in order to. Basically, their model is you take over a company. They originally did a lot of like, hostile takeovers, which, you know, affected actually a lot of the early primes. And defense companies back in the 80s made them very precarious, but we can rack at that. And what they do is they tend to saddle the companies with a lot of debt, pay themselves out large salaries to justify making the firms more efficient. And what they mean by efficiency. Efficiency could mean any number of things. What they mean by efficiency is making the balance sheets look better in the short term, often by cutting stuff that would make the firms more resilient in the long term, but the balance sheet looks better in the short term. Then they bring those up for an IPO or some other way of cashing out. They cash out and the companies sort of end up collapsing in a lot of cases. So I mean, I know that they think they have a different model, but that, that is, that seems to be how this works. And I. And they're obviously like better and worse ones. But private equity has been very, very successful in the Trump administration at getting important appointments. Like, the most visible of which is Steve Feinberg, who's Deputy Secretary of Defense in charge of like restructuring the Pentagon in his mind.
- [15:51]
Olivia Manis
So what is this notion of software driven reindustrialization? How does that differ, for example, from traditional weapon systems? And why is that being promulgated right now?
- [16:04]
Susannah Glickman
If I'm going to be completely honest, I think it's a marketing term that volunteer guys came up with. They love these flashy, the whole 18 theses thing. But I think what they mean. And because they specialize in software, they have this idea that the next sort of wave of industrialization, and they literally put it in this sort of timeline with the industrial revolution, water mills, then oil, then steam, then oil, and then software. And they have this idea that by putting software or AI in all sorts of weapons systems, by, you know, optimizing data, by optimizing, you know, using data to optimize systems that you can affect like another sort of industrial revolution. So yeah, yeah, they literally list like water, steam, coal, oil, then software. It's rarely precisely defined, but it does invoke some, some like, you know. Yeah, it invokes like Palantir strengths in terms of like data driven optimization and efficiency. But it's very unclear what that would actually mean. So. Right. They're like, we're gonna, we're gonna make, we're gonna maximize lethality using software. We're gonna, you know, these precision guided weapons or linked drone swarms. There's lots of issues with these visions of where things are going. But the selling point is that Palantry is uniquely sort of positioned to affect this new industrial revolution in sort of defense hardware tech using software and data.
- [17:44]
Olivia Manis
Yeah. And I think that dovetails nicely with something that you do in the article, which is like unpack this kind of great man theory of defense tech, which is like that singular individuals are kind of revolutionizing the world through these companies. And so I think you essentially say that this amounts to kind of historical revisionism. So maybe unpack this theory a little bit more. And if you could explain why it's been used historically, why it's being used now, and then I think we can get into maybe the corrective for that. But if you could just briefly explain what that is, what that looks like in practice, this kind of gray man theory.
- [18:22]
Susannah Glickman
As a historian, it's kind of mind boggling to watch all these guys. I was like, you know, I go around the world and I think about history a lot. These guys think a ton about history and they like love being called like Oppenheimer or you know, like being, you know, collecting all this like Cold War relics and imagining themselves as the Manhattan Project gets invoked over and over and over and over again. But these guys, Shankar has like all these incredible quotes where he like retells the entire history of the 20th century as a story. Not of like, sort of like, like World War II, like the way we won. World War II is not. It's not about the strong state, it's not about, you know, infrastructure. It's not about industrial policy, it's actually about a bunch of like founders. And he literally uses, he has this quote like yeah, that, that, that somehow this focus on great men is, is really how you, how you win. And I love this word winning. He says like I'm not a founder, a Palantir, but I think going back to the World War II era period and the immediate Cold War, it was founders. We think of it as Northrop Grumman and Martin Marietta, but in fact it was Jack Northrop and Glenn Martin, Howard Hughes and Henry Kaiser. And even inside of government, the Kelly Johnson's, the John Boyd's, these are uniquely hard headed, creative, difficult people that are required to win. And I think every startup understands that that's what a startup looks like. So the whole World War II effort, this amazing reindustrialization, this reinvention of the US state was in fact the product of all of these founders who happened to be dispersed in the government and these crucial defense companies. It's totally ridiculous on its face, but it is a way of making the case for them to be invested with extraordinary power and control over the direction the US Government goes and in particular these kinds of industrial policy pieces that they seem to be trying to effectuate at the Pentagon.
- [20:19]
Olivia Manis
Yeah, so then you provide a really compelling history of the US Government's historical intervention in defense and defense adjacent industries. So to that end, can you talk a little bit about the concept of military Keynesianism and explain how it unraveled under Reagan and following the Cold War?
- [20:37]
Susannah Glickman
Yeah, I mean so I think we really, we've never left military Keynesianism. It's just changed in form. That's something that I've discovered, you know, through my research. Lots of other people have, like Tim Barker, his dissertation is really fantastic. I think he's turning it into a book on that. But yeah, so like after the Great Depression, right, There's like all of these institutional experiments with the New Deal, but none of them really turn the economy around or make large scale big changes, especially to wealth redistribution until the war when the government uses military spending to spur economic growth and enables not just, right, the industrialization of whole parts of the U.S. like the south, the West or the Southwest and the, the west. All these sort of defense manufacturing places that we think of like San Diego, but but also to create lots of other public goods like the military still to this day functions as a kind of welfare state within a state, you know, providing housing, health care, education. And that's sort of like been the, especially during The Cold War. But even to the present day, like that's been the bargain, right? That massive spend, not massive defense spending, is how we do industrial policy in the US and it underlies like a lot of other social spending in the mid-1960s that begins to unravel for various reasons that I'm very interested in my book when, when that comes out. But some of it you can trace to McNamara and the kinds of efficiencies. And I'm saying this with scare quotes that he tries to implement in the Pentagon which lead to, you know, like long term cuts. Like the physicists all start freaking out because their, their whole political economy collapses. And by the 70s, like the early 70s, mid-70s, a lot of the defense industry is in crisis. And it's not just the defense industry, right? It's all the stuff that relies on defense spending. And out of that there's like a ton of political organizing, understandably, because a lot of these major recessions that come out of that are localized in politically powerful areas. In fact, you know, like there is this regional coalition between California, both North and south and Massachusetts and other sort of defense hubs to remake politics. You know, this is part of where the Atari Democrats come from in the 80s is they realize like, either we have to do something about all of these unemployed defense engineers in this whole sector of the economy because like, you know, everyone's hurting, you know, we're sort of in economic crisis. What comes out of that? First, there's an attempt by some on the Democratic side to civilianize defense spending to basically like all these defense engineers should instead work on like urbanization or like civilian, I don't know, there's like BAS. Basically all of that dies, especially with McGovern's law since 72, and instead gets channeled into a movement tied to venture capital, like Bill Casey, who, you know, among other things is the guy who, in the CIA director who did Iran Contra. But before that he had like a long life. He, Mal Sodder writes about this very well, but he is the theoretician of tax havens. And he sees VCs as another way to do a kind of tax haven. He ties them together with a small business movement and forms a very powerful constituency that's able to extract from Reagan, you know, a real industrial policy for small defense contractors. SBIR comes out of that. But there's like other things like the ATP, the Advanced Technology Partnership, and like all these manufacturing industrial policy pieces. I mean, Reagan does like a ton of new, new kinds of industrial policy. They're much more, it's much more corporate friendly. It's not as durable because by the, there's a lot of internal right wing politics that lead to industrial policy being demonized. Newt Gingrich in the 80s is very pro industrial policy. And then all of a sudden, you know, in the 90s under Bush 1 and then especially under Clinton, he like demonizes the term. It becomes really toxic. Yeah. So military Keynesianism survives in a kind of compromise that I describe in the article where it's hidden and it's much more anemic and there's all kinds of new institutional experiments that are actually still ongoing into the Obama administration. But like how are we, how ought we do industrial policy in a way that isn't too overt, but it does survive. And there's a reason why like the defense appropriationist chair in the house is like an incredibly powerful position. You're directing so much money and so you have so much power over where that money goes as a part of that. So yeah, that's sort of how that infrastructure is remade. And now we're sort of at another crisis phase point where yeah, there's a sense that that that version of industrial policy really hasn't worked, especially with the rise of China. Although also, you know, like Covid supply chain issues made some of the deficiencies very visible. And there's like, I'm sure other things that I'm not tracking. But yeah, we're at a moment where we're remake, we're remaking or thinking about remaking that, that kind of infrastructure.
- [25:38]
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- [31:58]
Olivia Manis
You know, you talk about how these challenges in the post Cold War era and the 80s and the sort of rearrangement of this system resulted in the consolidation of these firms. So how did Defence respond to these challenges and what was the consequence of this, especially for the Primes, but for other firms as well? The figure of Norm Augustine, I know plays a really central role in your article as kind of almost saving Defense from these challenges. So maybe you could talk a little bit about how they adapted.
- [32:34]
Susannah Glickman
So it's not kind of the narrative that we think about. So Norm is really interesting. I think he's, you know, he's generously spent a bunch of time letting me interview him. But also I think he's interesting because he starts under McNamara. And those initial sort of efficiency, you know, business bringing business practices into government shifts that McNamara Institute in the Pentagon to disastrous ends, by the way. Like the data centric prosecution of warfare where you're like, how many North Vietnamese do we killed today? And using that as a metric to sort of give it get a sense of how well the war is going. Was, was failed under McNamara. But somehow that idea has never died. I'm writing an essay right now about lethality, so it's on my mind. Inefficiency and sort of these things coming together. But anyway, so Norm starts under that and then sort of ping pongs between government, the private sector and especially defense firms. And so he's useful to sort of track the way these things go. Like the industry has evolved, but starting, I mean they, they have a lot of challenges in the 70s that I've des. Described these regional recessions, they come into the 80s in a somewhat of a better position, especially with Reagan's commitment to defense spending in the 1980s. The Strategic Defense Initiative does funnel a ton of money into the Defense Department, however, about midway through his term in Congress during the whole period is Democrat controlled. So they're pushing a lot of oversight, which is kind of quaint now. Nice. We don't have that as much, but yeah. And there's a lot of like, you know, Norm describes those years as the dark years. Like I think trust between the defense industry and the government really fell apart. Things were audited. Defensibility to profit, you know, sort of evaporated, which, you know, I'm not weighing in whether that's a good thing or a bad thing. But that together with all these sort of Reagan's sort of financialization of the economy, the loosening of regulations meant that all of a sudden all these defense term firms were targets for private equity by, by corporate raiders. They also were much more exposed to like needing to care about share prices. They were, they became a lot less profitable. Right. So their share prices were much more endangered. All of these big companies had had defense wings like Georgia, but much more weird, weird companies. Everyone had a defense wing. They sold them all off because they were very unprofitable and the defense industry started buying them up. You know, proper defense firms like Martin, Marietta, Lockheed, they also like, they'd relied so much on government spending, government planning, all that, you know, sort of deteriorates to some degree during Reagan, the second half of Reagan and into the Bush administration.
- [35:26]
And a ton of them end up having these like, huge debt equity ratios, low margins and then the 1990s happens, right, that the Berlin Wall collapses and there's all this political talk about a peace dividend. We've been spending so much on defense. Shouldn't we spend that instead on other things? There's also this idea coming out of the 80s that future wars will not be kinetic in the same way. They'll be economic, sort of more like the conflict between the US And Japan over high tech sort of products like semiconductors. And so the Clinton administration really wants to do. People like Bill Perry, John Deutsch really want to do defense reform, defense cuts. And they come into the 90s trying to do that. They hold this meeting that I think Norm actually calls the Last Supper. I think it's his fault that it gets called this, that it carries all this weight where they say, basically, like, here's a slide of, like, what defense capacities we anticipate needing. Here's what we have. So we're going to need you guys to figure out the difference. And weirdly, and I don't think this is very well known, and I don't think maybe this was not on the mind of Clinton people. I talked to this really interesting defense scholar who was around during the period who says he had no idea this was happening. But Norm was very worried that they might actually nationalize parts of the defense industry because they mean they really weren't profitable, their necessary capacities. But anyway, instead what happens is he's very good at negotiating, you know, a lot of government subsidies, a lot of mergers and acquisitions. And so you get all these huge monopolies in the defense industry that are pretty sclerotic. They've taken over all of these different manufacturing capabilities, all these different sub companies. And that's a really hard thing to do in a short period of time. You may not know how to run a company that like, does like a, you know, like a kind of subsidiary that you've taken over that, you know, so it's just very, very cool. Quick. Their margins are still fairly low. Yeah, they're just like, massive and hard to. To run. And then the Bush administration happens. Bush originally was going to kind of continue along the Gingrich line of cutting defense. Then Obviously, you know, 911 happens. Rumsville basically says, you know, do your own thing, but with a focus on surveillance, precision tech, you know, the kinds of things that Palantir lakes now actually kind of interesting. And that's also when they get their start. And, you know, there's a defense bonanza. These, you know, defense firms like Lockheed basically survive on that and they try to diversify a little bit, but they, they basically have the same structural problems that they had coming out of the 90s.
- [38:04]
Olivia Manis
Yeah. And then it seems like what happens is then sort of tech swoops in and this becomes sort of an opportunity.
- [38:12]
Susannah Glickman
Right.
- [38:12]
Olivia Manis
A unique opportunity for tech. You have all these different industries and private equity and emerging tech and venture capital. And you say they exploit these legal loopholes and kind of take advantage of the sort of decreasing regulation of the private sector. This is kind of how tech firms kind of come into the picture to some degree. It seems like according to that history, we spent a lot of time on sort of the historical elements of this. And I think that's great because I think it's really. No, no, no, no. I think it's really important to trace this genealogy to understand what's happening now. And so to that end, I kind of do, I want to move us a little bit more into the present. But before we do that, I wonder if you could talk a little bit about how in Q Tel and initiatives like the Defense Innovation Unit came into being. Because I know that those are really central actually to what Trump administration is doing now. So maybe if you talk a little bit about that.
- [39:11]
Susannah Glickman
Yeah. I mean, before we get there. So just in terms of tech's involvement in the Pentagon, this has been a long term priority of Democratic defense thinkers going back to the 90s, maybe even before. But like Bill Perry was like, you know, this is what we want to do. Silicon Valley is producing stuff that we can't produce in the military, especially off the Gulf War. Right. Like, like a lot of things seem to work. High tech weapons seem to work in a way that, you know, later we realize it's a little bit more complicated. But it's been a long term Democratic priority to switch out defense primes for tech firms. Because, you know, in the 90s, they had a very close relationship. Under Obama, they had a very close relationship. You can kind of see the political calculus. It's not genius. Right. Because you have the same structural problems. Right. If you have big monopolies controlling defense, you have big monopolies controlling defense and they have a veto power over, you know what. But, you know, but that, that actually has a much longer history. But yeah, so they're, they're so in. Bill Perry actually like advises Ash Carter under Obama on like how to begin, you know, the DIU stuff, but also how to begin bringing tech more into like Pentagon contracting. And he says you want to start small and then push outward and like slowly Create space for, you know, these sort of Silicon Valley firms in that. And there's all these initiatives, right, to bring Silicon Valley personnel, like ways of doing business and companies into the defense space. Which, yeah, coincides with like, you know, these very, as I said, these very speculative directions that the tech industry is going, coming out of the sort of zero interest rate period under Obama and you know, under Obama, a lot of these initiatives are pilot programs. There is in qtel, which is a special, you know, it's like, so in the 90s, all these defense firms are thinking about how to secure industrial policy in some form. Again, they would never use that word, but in Q Tel is one of those. It's formed as a nonprofit under the auspices of the CIA. Norm Augustine is actually a big part of how it's founded, or he's like one of the founders. And what it does is it acts like a VC firm, it takes equity stakes, it governs, you know, helps govern the companies and then, you know, connects these companies with long term lucrative contracts. So Palantir actually could not succeed on the free market when it tried to. Well, from 2005 to 2008, it's just in Q Tel, it's just the CIA funding Palantir. Then you know, there's this great Buzzfeed article about like Palantir really struggling to be useful to commercial businesses. Because, look, my sense from talking to people is that their tech is considerably overhyped. But yeah, that doesn't work for them. They move out of commercial businesses and stay in sort of the sort of government, stay on the government, on government benefits for quite some time. And then only recently with their sort of political affiliation with this rising Trump administration have they really entered the commercial world in a different way. But it's a lot of government contracts, like even what they're getting, you know, the NHS here, I'm in the UK right now, so in the uk, right. Like these are, these are government contracts. Not, not succeeding on the free market. Right. In and of themselves. So in qtel there's like a lot of different conversations about whether it's a success. So it's a success in the sense that it assures this, the financial well being of the companies in which it invests. Right. Because it can both provide guidance, long term government contracts, all these great things. Right. But there's definitely, among the people that I've talked to, there's a lot of skepticism about whether that tech actually ends up in the intelligence community. And again, this is one of many attempts to try to get Stuff that's happening in the private sector in Silicon Valley, new tech into the military and the intel community under Obama. I think the proclivity, they're more interested in doing ARPA things, things that look like darpa, arpa, ARPA E, some of which seem pretty successful. I've heard, like, ARPA E is very good. It's not really my area of expertise. But there's also this DIU experiment, which again, I've heard really mixed things about. And like, you know, you can read the article for more details about, you know, how they haven't really been able to produce useful things for, you know, Ukraine. But. But I'm sure there's like plenty of other examples. And at the same time, like all of these branches of the military start creating their own venture capital arms or like Silicon Valley adjacent things. There's all these fellowships to bring Silicon Valley people into government, into defense. Yeah. That build. And actually the Biden administration really doubles down on this. I'm not totally sure why. I mean, it seems like. Seems like the Biden Pentagon was kind of left to its own devices. Like Lloyd Austin, from what I've heard, maybe wasn't the most present. And a lot of things just like, continued. Like a lot of people's pet projects just continued. And then Trump too, Right. These guys decided to affiliate with Trump. And so now they're sort of. They're in powerful positions in the Pentagon. I have like a long list in the article of like, who from where is in what positions. But you, you can. There's probably even more that I weren't able, that I wasn't able to find. But they end up staffing the Pentagon and trying to sort of remake it in their own image. Be that, you know, sort of the Silicon Valley model or like, as private equity. Like, you know, I talk a little bit about this new form of state capitalism that is emerging right now, like the MP materials deal, the intel deal, the Nvidia deal, that looks a lot like private equity.
- [45:04]
Olivia Manis
What you kind of are pointing to here is that there's an importation of Silicon Valley culture of sort of like, move fast, break things into government, especially at the Trump administration, right, where it's kind of hollowing out some of the core functions of government and then outsourcing them to these contractors. So can you talk a little bit more about what this looks like in practice? How has the Trump administration outsourced these core functions? How has it broken things to some degree? I do want to talk about the Nvidia deal and how this differs from sector wide interventions. But first, maybe just some general thoughts on this approach of the Trump administration.
- [45:50]
Susannah Glickman
Yeah, I mean, there seems to be this idea, it's a little bit counterintuitive coming from all these industries that have relied so for such a long time on government subsidy planning, providing the research base for a lot of what they do. Like it's weird coming from them that they want to privatize all those things. All this free stuff that they've been getting. Right. We haven't been seeing the returns from it, but they have. Right. Or you know, we're even getting, I guess, the trickle down at best. Right. Well, first of all, they've been staffing the Pentagon and awarding them and companies that they're sort of in their network, like pretty significant contracts are planning to. So like SpaceX Anduril all stand to benefit a lot Palantir from a lot of these new firms. But they're also breaking stuff like the National Oceanic Atmospheric Administration, a lot of the stuff that NIST does around standard setting and kind of making it easier to do things like anything as a service. Right. The software is a service, anything as a service model which allow private companies to continually modify the things that they offer. But that also means that they could theoretically shut them off. There are contracts, but we've learned in the Trump era is that written law is only so good as your ability to enforce, force it. This has also made US Arms exports much less appealing. Right. To our European allies. We're seeing especially. Right. There's that national defense strategy that came out today that I'm sure they're even more alarmed about. But yeah, this idea that, like you're hoping that Alex Karp isn't going to shut off whatever service that you. I mean, it's just kind of a. I can understand their position given the things that some of the Trump administration says about Europe or about, you know, other partners. But yeah, so they're getting tons and tons of government contracts and destroying a lot of the infrastructure, a lot of the research infrastructure. So shutting off all these grants across agencies that, you know, these companies have relied on this kind of research for such a long time. And my sense from talking to folks in the tech industry, which sometimes they're kind enough to do, is that they think they can have so much money they can kind of do research on a mercenary basis, which doesn't make a ton of sense because a lot of the things that underlie our modern world require decades and decades and decades of continuous investment and continuous research and oversight and Evaluation. Right. Like what should we be investing in? And it's not that the government doesn't take risks. Right. But that there is oversight. But anyway, they think they can do this on a mercenary basis. Right. Like this guy explained it to me, like, you know, it used to be that you can have an army or you can have a mercenary service and that like maybe, you know, we're moving toward more research as sort of a mercenary function of private companies. There are lots of other ways in which they're sort of undermining the kind of industrial policy stuff. But the big thing is, right, like uncertainty, like business, like you need to have long term stability, a reliable business environment. You know, things like, you know, it had been a long time goal to bring foreign technical know how manufacturing, know how to the US like with that Hyundai factory in Georgia. And then you know, ICE desire, these Korean workers are humiliated and you know, kind of tortured and you know, the ability to, to learn from foreign expertise is greatly curtailed by, by these kinds of, you know, like you need to, there need to be some reliable safeguards. And this kind of uncertain environment, lack of government planning, government funding of research, all of these infrastructures that all these companies benefit from like the destruction of it. It makes reviving manufacturing or doing anything innovative, any kind of long term industrial policy impossible. And I think, you know, sometimes we think about artificially separating the defense world and the regular economy, but it's really the same thing. Right. Like we, there are no real boundaries. A lot of companies dupose like the people who provide wooden pallets provide wooden pallets for defense and for like groceries. Right. Or shipping. You know, it's like kind of a. Yeah. Anyway, so that's, they're privatizing more and more functions or not replacing them at all.
- [50:18]
Olivia Manis
Yeah. So sort of like they're doing these case by case equity deals as you mentioned. Right. With you know, the Trump administration announcing it would take a stake in Nvidia and others. So what do you make of them and how do they differ from sector wide interventions like we saw Post World War II, for example? Yeah.
- [50:34]
Susannah Glickman
Or even like the Chips Act. Right. Is quite different. And I have my criticisms of that. You can check out my piece in the American Prospect for why I think there were some issues with chips and its implementation, but at its heart rate was like we're going to revive this sector. These deals, what Feinberg knows is doing private equity deals. And that is sort of, from what I can tell, that's the model for these new deals. And they're sort of one off deals I've heard and you know, who knows if this is true that, you know, some of these contacts come through. I mean, some of them are obvious, right? Some of them come through these people's private networks. Some of them, you know, like a lot of these ex private equity guys, ex Silicon Valley guys, you know, have these long standing networks, have been sort of investing in defense tech for a while or these, these, you know, these, these areas that now they're doing so, you know, as, as a function of government and they're sort of, each one is quite different and they're taking bets on companies, you know, that look a little bit uncertain. Like the MP Materials deal, you know, this is not my specialty, but I was reading from, you know, someone who is a specialist saying, you know, they really haven't been making these rare earth magnets until like last year. You know, I don't, I think the, you know, these interesting, like price floor ideas and production guarantees are interesting. And you know, if they were applied to a wider set of companies it would make more sense. But in this way it does, it does appear to be more like a patronage network and more of a way to like allow the executive branch and the Defense Department to run around Congress. Because usually, you know, like, like the Nvidia deal right there, there's certain, there's certain deals where they're like, okay, we want to make sure you produce X by X date and we'll guarantee that we'll buy, you know, have our money if you're able to do this or you're able to revive this mine and, or we're taking a X percent stake to make sure you don't like move production abroad, which some of them, like the Nvidia dealer, just like give us a percentage of your profits, you know, for chips that you sell to China. And that seems to be just creating pots of money that don't require them to go to Congress to ask for, which is, you know, if I were in Congress, I'd be upset about that. As a citizen, I'm upset about that. But it's just sort of this, this unaccountable. Yeah. Pots of money. The other thing that I was struck by, and I don't, you know, maybe it's sort of obvious and not that interesting, but like when Trump, well, when they made the intel, when they bought the intel stake, Trump also made a personal investment in intel, which makes these things look even more, more about sort of personal, personal gain and much more about like creating these, these patronage networks and about really re industrializing. What I think is at the heart of some of this or justifies some of this is some of these guys, and I said this in the New York Review interview, you know, I think a lot of these guys have a misunderstanding. They look to China and they're like, oh, they're able to build all these very competitive, innovative companies by doing state capitals, be doing something like what I do at my private equity company, which is like, you know, subsidizing and sort of guiding things when instead, you know, from what I've read, the Chinese economy, the way that these companies have developed have a lot to do with long term consistent investment in sort of industrial infrastructure, in long term research and development, but also very fierce competition at the regional and sort of province level. And at the locality level there's involved very interesting financial experiments. Right. Like there's localities that have basically figured out how to get around. They basically figured out how to like print their own money in really interesting ways. It's not my research, but there's, there's some great researchers whose name I can give you later who have been sort of looking at that. And like the competition between companies in China is like incredibly fierce, like technologies companies. But the consistent thing is like long term government investment and guidance and oversight. They are not afraid to discipline capital, which is not at all what's happening here. Right. This is like creating a patriot network among, you know, companies and figures that seem to kind of already have these existing business networks and if not, you know, are building them now. And again the secondary function is as a way to kind of create pots of money to run around Congress.
- [55:08]
Olivia Manis
Yeah. So just finding ways around democratic accountability mechanisms essentially. Right?
- [55:13]
Susannah Glickman
Yeah, yeah, yeah.
- [55:15]
Olivia Manis
So I think I just have one more question for you which is more so kind of looking to the future and the future of this sort of course that we're kind of on. I think we talked a little bit earlier about, this is a weird coalition. Right. This defense tech coalition is a weird one. And there seem to be these sort of diverging interests between Silicon Valley, which stands to benefit from globalization versus more regional manufacturers. You touch on definitely that the approach that defense tech is taking right now is not tenable in the sense of it's looking for short term profits without examining the long term sustainability of this model. But I also wonder if you see this being untenable in the sense of this being a really strange collection of interests that kind of conflict with each other. I wonder how you see that playing into this sort of future success of this Model. I guess it depends on how we're measuring success.
- [56:12]
Susannah Glickman
Yeah. I wonder what they would count as success. I mean, they're making tons of money, so they're succeeding in that way. They're consolidating power. They're succeeding in that way. But, yeah, I think you're right. I think it is a weird coalition. I mean, something I pointed to in the New York Review interview was that they're very different in terms of, like, what they want to see out the other side of this state transformation. And I do think their interests seem to be at odds in. In certain sort of fundamental ways. And China is like a good example of that. Right, Because. Yeah, like, there's a bunch of Silicon Valley interest in China. They talked a big game about it. They seem to be less concerned now about competition with China. But also. Yeah, there are these. Yeah. Sort of regional manufacturers or the Christian right who want something quite different. But what all of these groups have been very good at is exploiting. Yeah. Exploiting legal loopholes, lack of oversight, unwillingness to enforce laws and regulation, and kind of, you know, Trump himself is. Was really great. Was really great at that. Well, you know, how many times did you go bankrupt? How much did he rely on getting bailed out? You know, and these kinds of, you know, in relying on, you know, sort of government not cracking down on him. Silicon. A lot of these Silicon Valley companies have the same methods, and I. And I feel like they have, as a result, you know, of cultivating these. These practices. Maybe they recognize each other in some way. Like, you know, they see the world and they, like, see how to act on the world in a similar way and that, like, this kind of crony capitalism, these kinds of patronage networks are something that they all are interested in building. Right. This way of reorganizing government to consolidate power, like, is something they recognize in each other, and they're able to build a coalition in the short term around that. I have no idea what happens in the future. I find this. I mean, everything just happens so fast ever since. I mean, it feels like we haven't barely. We haven't even had the Trump administration for a year. Things feel so different. Everything changes so fast. I mean, I'm constantly having to update what I'm thinking and reading just because there's so many changes and in politics at all different levels. I mean, it's also true of the resistance, right, to this administration. Like, I see pots of money moving around, different regional coalitions being formed. Like.
- [58:39]
People on the ground level are getting organized in a Very different way, you know, internationally. Like, there's. There's lots of different. So I have no idea what happens, but I see a lot of different contradictions and I see a lot of potential clashes. I mean, you've seen already, right? Like, so many fractures within the MAGA movement, and it's unclear, you know, where those go or what happens. But yeah, I guess the thing that we can say for sure is that things are happening very quickly and it's very uncertain and we're in a period where, I don't know, maybe we should see this opportunity. Like, institutions can be remade and the future is open. So any vision of the future, you know, could. Could exist. Things are, you know, now is the time to organize, build coalitions and, you know, kind of think about what institutions we'd like to see in the future, because I believe that those opportunities will present themselves, maybe for better, maybe for worse, but it's just a period of intense change, and maybe that's also where some of this nostalgia is coming from.
- [59:47]
Olivia Manis
That's a great note to end on, so thank you so much, Susannah. I think this is a really interesting conversation. Thanks for unpacking a really complex and interesting topic.
- [59:56]
Susannah Glickman
Yeah, thanks so much for having me on. And, you know, who knows, My thoughts may be totally different in six months. I'm really, like, taking in a lot of interest information and trying to make sense of it. And I appreciate you guys for having me on.
- [60:11]
Olivia Manis
The Lothair podcast is produced in cooperation with the Brookings Institution. You can get ad free versions of this and other Lawfare podcasts by becoming a Lawfair material supporter at our website, lawfairmedia.org support. You'll also get access to special events and other content available only to our supporters. Please rate and review us wherever you get your podcasts. Look out for our other podcasts, including Rational Security, Allies, the Aftermath, and Escalation. Our latest Lawfare Presents podcast series about the war in Ukraine. Check out our written work@lawfaremedia.org the podcast is edited by Jen Patia and our audio engineer. This episode was Kara Shillin of Goat Rodeo. Our theme song is from Alibi Music. As always, thank you for listening.
- [61:05]
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