The Pomp Podcast - #1264 Elbridge Colby on How America Can Prepare For China Conflict

Episode Date: October 18, 2023

Elbridge Colby is the co-founder and principal of the Marathon Initiative, a policy initiative focused on developing strategies to prepare the United States for an era of sustained great power competition. He is the author of “The Strategy of Denial: American Defense in an Age of Great Power Conflict.” In this conversation, we talk about the threat from China, Ukraine & Russia, what is happening between Hamas & Israel, how this all feeds into the economic strength of America, how private sector can make an impact, and what America can do right now to put us in a better position.  ======================= Trust and Will has simplified the process of creating and managing your will or trust online. They leverage a data-driven, design-first approach and amazing customer support to help you protect your legacy from the comfort of your home starting at just $159. Sign up today for 10% off using ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://trustandwill.com/pomp⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ======================= Auradine, a leader in web infrastructure solutions including blockchain, AI, and privacy, has unveiled the world's first 4nm Bitcoin mining systems, featuring breakthrough EnergyTune™ technology, setting new standards in performance and energy efficiency. The Teraflux™ product line from Auradine offers best-in-class performance, efficiency, and total cost of ownership (TCO), positioning it as the optimal choice for Bitcoin mining needs. With EnergyTune™, a patent-pending technology, Auradine's Teraflux™ systems enable rapid demand response and optimal energy usage, fostering a symbiotic relationship with electrical grids, and contributing to sustainable energy practices. Designed and manufactured in the US, Auradine's Teraflux™ product line not only ensures cutting-edge technology but also mitigates supply chain risks and provides increased supply chain resiliency. Visit ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠www.auradine.com⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ for more information the Teraflux bitcoin mining systems. ======================= Pomp writes a daily letter to over 250,000+ investors about business, technology, and finance. He breaks down complex topics into easy-to-understand language while sharing opinions on various aspects of each industry. You can subscribe at https://pomp.substack.com/

What's up everyone? This is Anthony Pompliano. Many of you know me as Pomp. You're listening to the Pomp Podcast, which is my effort to find the most interesting people in the world and sit with them for hours while I ask questions in an effort to learn. So it would mean the world to me if you would subscribe to the show on your favorite audio platform, watch episodes on YouTube, and tell your friends and family about the podcast. My goal is to help millions learn from the world's most interesting people. So let's get into today's episode. Elbridge Colby is the co-founder and principal of the Marathon Initiative, a policy initiative focused on developing strategies to prepare the United States for

an era of sustained great power competition. He is the author of The Strategy of Denial, American Defense in an Age of Great Power Conflict, which the Wall Street Journal selected as one of the top 10 books of 2021. Earlier in his career, Colby served as the Deputy Assistant Secretary of Defense for Strategy and Force Development from 2017 to 2018 as well. In this conversation, we talk about the threat from China, what's going on in Ukraine and Russia, what exactly is happening with Hamas and Israel, how this all feeds into the economic strength of America, whether private sector companies like Anduril and others can actually make a dent in our military readiness, and what Eldbridge thinks is actually on the table for what America

could do right now to put us in a better position in a geopolitical global world? I really enjoyed this conversation and I hope that you guys enjoy it as well. Here is my conversation with Elbridge Colby. Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only. Today's episode is brought to you by Trust and Will.

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of and someone not. Go check them out today at trustandwill.com. This episode is brought to you by Auradon. They're a brand new startup led by a number of Silicon Valley legends who just raised $81 million to build the future of internet infrastructure. You're probably wondering what that means. Let me explain. There are numerous new disruptive technologies that are being adopted simultaneously, from blockchain to artificial intelligence to zero-knowledge technologies. In order to ensure that these technologies thrive in this new world, we need new infrastructure, and that is where Ardine comes in. They just launched their first product line called Teraflux, which is a Bitcoin miner powered by the world's first 4nm silicon chip technology.

These air-cooled, single-phase and dual-phase immersion cooling miners have unrivaled speed and efficiency. They have superior uptime, and they leverage a brand new innovation called EnergyTune that allows miners to dynamically adjust the energy consumption and Bitcoin hash rate based on demand response needs of the electrical grids. Auradine is an ambitious company working on hard problems. I'm really impressed with them. And if you want to check out more, you can go to Auradine.com. That's A-U-R-A-D-I-N-E.com. Go check them out at Auradine.com today. All right, guys. Bang, bang. I've got Elbridge here with me. Bridge, I thought a great place for us to get started is all eyes are on the current events

of the Ukraine-Russia conflict and now Hamas and Israel. How much of our attention should be focused there in what I would consider kind of short-term immediate conflict versus this long-term trade-off, which appears China playing this long-term game, potentially Taiwan being you know, part of that equation. And the United States almost has this tension between short-term versus long-term. You seem to have a very different opinion than most people on where we should be focused. Yeah, well, thanks, Anthony, and great to be with you and your listeners. I think you're right. I mean, look, I think we should support our close ally Israel, and I think, you know, we're going to have to remain engaged in Europe in some way. But by far the most

significant challenge to American interests, I mean, the first peer economy in 150 years to the United States is China. If you measure it by market exchange, we're still quite a bit bigger. But if you use purchasing power parity, which is a better metric for understanding military power, for instance, China may already be larger than we are. They have, for instance, 200 times the shipbuilding capacity, and that's according to the Office of Naval Intelligence. So what's going on right now? Look, I think it pays to be a little bit suspicious and maybe a paranoid, as Henry Kissinger said, even the paranoid have enemies. Honestly, what's looking to me like what's happening is, or what I would say is, cui bono, who benefits from the current situation? Well,

I think you could make arguments about Iran. You can certainly make arguments that Russia benefits by distracting American attention away from Europe. But even more than Russia, I think China benefits. Why is that? Well, I mean, to kind of get down to the point, I think there's a very real risk of a war between the United States and China centered on Taiwan, but not exclusively about Taiwan, in fact, much more consequential in the coming years. And I think the only way that China is going to achieve its stated basically or implicitly discernible goals of regional hegemony over Asia, the world's largest market area, essentially dominance of the world's largest market area, is I think through military force. And I'm happy to unpack that. And I think it's

very important for market participants to understand that because there's a tendency to think that that's like so too dramatic and doesn't really rack up and it's not economically rational. I actually think that's not necessarily true. It's TBD. But I actually think the way that China is behaving, and the statement it's saying, and its military buildup are more consistent with the behavior of traditionally of rising great powers, which seek to use military force to achieve what I think of as a secure geoeconomic sphere, basically a very large market area for their companies, their industries to have scale, which matters as much now as it did 100 years ago. if that's the case, and if it comes down to military power, China benefits enormously if

the United States is depleted and distracted in other theaters. And we've already depleted our stockpiles a great deal aiding Ukraine. Look, Ukraine is a just cause. It's a self-defense against an evil aggression. But we have to look at things realistically. I mean, the way I think about our foreign policy is it should be thought of more as like a business than a kind of a charity cause, right? And so you have to think of it in a kind of a fiduciary way. And we're not prepared to deal with the multi-front problem. And we've used a lot of our weapons, a lot of money, a lot of political will in Ukraine. Now we're going to be enmeshed potentially in the crisis in the Middle East, hopefully not directly involved. I think we should try to avoid that if at all

possible for the reasons I'm explaining here. But the biggest shoe has yet to drop. I mean, the, you know, the size 14 compared to much smaller shoes, which is the potential for the Chinese to move. And here's a critical thing. The Chinese are going to give us as little warning as humanly possible if they go in that direction, because if you're going to launch an invasion against Taiwan and strike at the Americans, you don't want to give us warning to flush our forces and disperse them and make them more capable. So I think that's the real danger. And, you know, if I put the points together on a graph, what's most consistent is that China benefits. I'm not saying China plotted what Hamas is doing, but I'm saying I surmise, I infer that Hamas has

read the room, if you will, of not only Iran, but Russia and China saying this kind of thing is going to be welcomed. When we look at this scenario, I think there are a multitude of different directions that we could kind of go in. You know, we can talk about Russia, Ukraine, we can talk about Israel, we can talk about China, we can talk about the southern border, we can talk about the economics, like there's so much to unpack here. But maybe what we could actually dig in on to kind of have people understand what the end game would be. China actually invading Taiwan. What does that look like? And what would the potential U.S. response be in that scenario? Well, I think the end game is not just taking over Taiwan. People tend to

focus on China's ambitions about Taiwan because it's considered a lost province because of the Chinese civil war and so forth and so on. That is all true, but that's actually not the deepest reality, which is China basically needs to take over Taiwan to be able to break out of what's called the first island chain formed by the Japanese archipelago, Taiwan itself and the Philippines. So that's been a barrier to Chinese or Soviet power since the end of the Second World War that the United States has held to. So China needs to be able to do that. China needs to also, if it's going to achieve that secure geoeconomic sphere that I was talking about, which they believe that we are trying to constrain and strangle their future economic development,

Bear that in mind. That's what Xi Jinping himself is indicating. And that's certainly consistent with their government behavior. If China is going to do that, it needs to break apart this anti-hegemonic coalition that I think of. That's not a formal thing like an Asian NATO. It's rather a mental model of what's happening with our alliance building in Asia, Japan, India, Philippines, South Korea, Taiwan, Australia, et cetera, Vietnam. So that's what's going on. If China is going to do that, though, it's going to go after Taiwan, because Taiwan is the first step. And they have the strongest case because they have a very well-established political claim. We don't acknowledge it, but most countries recognize or kind of acknowledge Taiwan as being part of China. What's that going to look like?

A lot of people say, well, China will boil a frog, they'll use peaceful means, they'll use so-called disinformation, I don't like that term, but that kind of thing. Well, I actually don't think that's what they're ultimately going to do. In fact, they've been partially because they've been doing that for the last 25 years. And not only has it not succeeded, it's backfired. China is basically like Taiwan has moved farther and farther away from China over time and is heading in the direction of really a kind of a settled status quo of informal independence and even the possibility of formal independence, which I certainly oppose, but we oppose as

a country. So if you're in Beijing and you're thinking, well, maybe Taiwan will one day convince the people on Taiwan to vote to become part of the People's Republic, there's like zero chance of that, especially after what they saw happen in Hong Kong and how things are in the mainland. No, no, no. Okay. Chinese can see that. If they see that, what's their option? Military force. If you're going to use military force, well, basically you're going to do it right, which means you're not going to probably do a blockade.

A blockade can be part of an operation. The problem with the blockade is it basically forfeits the element of surprise I was referring to before and forfeits your ability to go up the escalation ladder and say, I'm going to solve this problem. And I think a big lesson, I'm sure, I would bet a lot of money, I'm not sure, but I bet a lot of money the Chinese are drawing from Russia's experience in Ukraine is don't mess around. Go big or go home. And if you're going to go big, don't give a lot of warning. So but not only are they probably going to attack Taiwan, but they are going to have to attack U.S. forces in the region and probably Japanese as well, because they're not going to want to leave themselves vulnerable, which is going to mean it's going to look something more like December 1941 than people probably appreciate. Now, let's say that they were able to successfully invade Taiwan and essentially establish some level of control. Is the U.S. response to then go and try to take Taiwan back?

Or is it something where, you know, whoever gets there first kind of, you know, is able to put the flag in the ground and it's over before it even started? I think, unfortunately, it's going to be very, very difficult to take Taiwan back if the Chinese have secured control. It's not impossible in the sense that you could over time cut off China's ability to, for instance, sustain its forces on the island if you gained air and sea control in the area around, or at least not necessarily control, but advantage, which would be extremely difficult because the Chinese can operate from their mainland territory. I think if Taiwan falls, this is why I focus a lot like in my book and in my work in the Pentagon on the so-called fait accompli, which is just, I mean, I think most people are familiar with it from everyday life. It's basically the strategy of creating new facts on the ground before people can get really mobilized. And that's in military terms, but it can be a business strategy. It can be in a lot of different walks of life. And then kind of basically convincing them it's not worth going to the cost and risk of reversing it.

So I think if Taiwan falls, we may get to that point. Unfortunately, I increasingly am afraid that our lack of preparedness and urgency, Taiwan's own lack of preparedness and urgency, Japan's slow pace are leading to a situation in which it may become untenable, if not impossible, to defend Taiwan. But the key thing here, Anthony, is that the situation is going to be more grave and urgent and extreme if that happens. Why? Because China's goals are not merely limited to unification with Taiwan.

I mean, they're talking about becoming the globally preeminent country and da-da-da-da-da. And I think it's a very reasonable inference to suggest their ambitions go far beyond. For instance, their military force development clearly envisions using military forces well beyond Taiwan. And that's a very costly signal of what their future intent is likely to look like. And so in that case, I think we're going to have to really double, triple down on Asia. Because in that context, people in Japan, the Philippines, and Hanoi, Australia are going to say, wait a minute, I was prepared to stick my neck out to work with the Americans

to balance China because I thought it was prudent. I thought they were the big dog, but now it looks like China's actually the big dog. Maybe I'd better cut a deal. And that's going to be, that's human nature. It's only rational. And that's going to be a very, very difficult thing to push against in that context. So that's a lot of the urgency is why I'm trying to say, look, let's not let, I mean, I know this is more commercial audience, but in the policy world, I'm really saying we

got to focus on Taiwan because if we lose it, it's only going to get worse. I think implicitly in a lot of people's mind, there's an idea that if Taiwan falls, the Chinese will kind of stop there. And I just don't think that comports with either their behavior or human nature. What is the impact of something like that on financial markets, on global trade? You know, obviously, people focus very much on the superconductors and TSMC, but there's obviously other impact as well. How do you think about, OK, if China was successful here, how does America respond from an economic standpoint and what would investors need to be paying attention to? I think it has enormous ramifications for commercial people of all kinds.

I think the semiconductor issue is helpful in concretizing that, but it's way beyond semiconductors. Just to be clear, I would not defend Taiwan just for semiconductors, like better to offshore and figure it out and maybe go on rather than risk World War III. The problem is it's much more than that, because I think, again, going back to what does China really want and what rising great powers tend to want is that secure geoeconomic sphere. What does that mean for market actors. It means the center of the economic world is no longer the United States. It's no longer New York City and Silicon Valley and regulators in Washington. It's China. It's Beijing. It's Shanghai. It's Wuhan. It's Guangzhou, whatever. It's Hong Kong. That is the future that China

wants. Why wouldn't they want that? That's pretty awesome. Then you have basically your standards become common. Your companies get favored in commercial flows. You get the scale advantages of selling to the world's largest market. You get to use sanctions. I mean, we go around and we throw sanctions on Swiss banks and yada, yada, yada. And they have to fall in line. Why? Because you can't afford to get blocked out of the American market or be prevented from using the dollar. That's the future I think the Chinese are ultimately trying to supplant us from. And if they seize Taiwan, that's a major step. It's not the end of the story, I don't think. but it's the story is going to be a lot sadder and more difficult at that point but that's the

future that and i think you can basically see that because people talk about decoupling like the chinese are already trying to decouple from us and they're trying to create a parallel economy they're trying to basically you know i mean we're starting to see de-dollarization i know there's a lot of debate about the dollar and exactly you know the downsides of the chinese to using reserve currency now okay fine but the point is over the long period of time i think that's the world they want to create. If you're a market actor and you're assuming that Alphabet and Apple and Meta are going to be the biggest companies in the world, if China is dominant over Asia, I don't think that's true anymore. Because Chinese companies become the dominant one because they

get preference in, say, selling into the ASEAN market, which is going to be the world's largest areas of growth is the Asian markets, potentially India, Japan, et cetera. And the Chinese will use that to disfavor our companies and to shrink us. And then ultimately, they may become subsidiaries of those Chinese companies. And so that's the future. This ultimately, and this is one of the reasons I really try to reach out to the commercial community, is that ultimately the stakes here are economic. But the means that China would use to pursue that goal are substantially military in nature. If I was to have this conversation with you five years ago, I think that the kind of economic and investment community would tell you, invest in China,

it's fast growing it has all this opportunity you know get on the trend of growth and uh the returns will follow in the last couple of months it seems like there's data coming out that growth is actually not as fast or as big as uh previously thought uh there has been a number of issues in the debt markets and the real estate markets there's been collapse of very large companies there have been uh executives who have been you know either surveilled or kind of taken under control of the CCP, et cetera. How do you think about China's kind of economic, you know, positioning today versus maybe what the promise or the thought process was, you know, three to five years ago? Well, look, it's interesting. I mean, from a strategic point of view, I think we

have to it's almost like not reached that issue in the sense that I think we have to prepare for the downside risk from a strategic point of view of continued Chinese growth. So like I don't I don't make predictions. That said, you know, kind of from a market point of view and just kind of leaning forward a little bit on the issue. I personally think that China is not about to fall apart. I don't see the evidence for that. I see China slowing down. I mean, I see them probably meeting the frontier in some areas. They've got structural issues with misallocation of capital and so forth. But on the other hand, there's an enormous and in substantial extent, untapped human capital potential in China that's not at the frontier. I mean, maybe in Shanghai,

either at the frontier, but this is not Japan. This is not a country that in 1991 was at top OECD levels. So they have a lot of headroom for growth. And frankly, some of what they're doing, I mean, the fact that they're not doubling down on the property sector, and I'm not an expert on this, might actually be good because it would just inflate the problem further. And the other thing is I tend to be a bit more dovish on economic measures. So again, the ultimate stakes, What we in China are ultimately in rivalry about is money, because money is what makes the world around, but also it's what creates geopolitical and military strength. But at the end of the day, as Mao Zedong put it, power comes out of the barrel of a gun, right? So the guy with the gun

will dominate the guy with the dollar. Now, you need the dollar to get the gun, but at the end of the day, right? And so because I don't, that's linked my sense. And it's not just because I focus on this issue. I've become increasingly convinced of this. The gun is dominant because economic sanctions don't coerce people very well. It's very difficult to use money to basically get people to do things that they really don't want to do. You know, you can induce people to do things on the margin that they don't want to do, maybe kind of nudge them. But our experience with sanctions, including against the Russians, is they really don't work. So that's true of the Chinese, but it's also true of us. So what that means is I'm not as worried about building up economic

sanctions because I actually don't think it's going to coerce China. Like if China invades Taiwan and conquers Taiwan, first of all, I'm very skeptical that we would put massive sanctions on them because it would like potentially blow up our own economy. But secondly, I don't think it would coerce the Chinese anyway. And by the way, I don't think the Europeans and the Middle Easterners and the Latins would go along, let alone the Russians, would go along with it. But what that means is that means I'm actually less, I put less pressure on decoupling. Now I'm receptive or supportive of decoupling for our own reasons on our own terms, but that's different than saying it's necessary for our strategy. So what I would say for a market point of view is if you think

you can, I mean, basically I focus on don't contribute to the Chinese military buildup and we need to decouple on things that we really can't afford the Chinese to be able to like have stranglehold, pharmaceuticals, you know, semiconductors, et cetera. Okay. So that's a relatively narrow set of things. Otherwise, from my point of view, from a strategic point of view, people can go in there, point taken that there's more risk there just in terms of how the Chinese economy is doing. But I would just be, you know, my advice is to say, look, that's me. I'm a kind of a realist. I try to look at things dispassionately. But if we get in a war with China, which is very possible, and tens of thousands, possibly more Americans are getting killed,

How much do you want your business plan and your investment future to rely on China? I mean, I would put a heavy discount on that. So if there's something really lucrative or short term that's not going to get you crosswise, that's one thing. But if you're hoping that just things are going to be fine, I really don't think that's a very prudent investment. So you were very, very involved in creating some of the changes in what I'll call our defense or geopolitical strategy. Um, what is your evaluation of America's readiness, both as a government from a strategic standpoint, but also from a warfighting capability standpoint, if we were 100% focused on being able to address this issue?

So if we didn't have Ukraine and Russia, we didn't have Hamas and Israel, how ready are we for this at the current moment? We're not, as far as I can tell. I mean, it's all relative and it's a matter of degree. but, you know, in a conventional war, you know, the old expression for one of a shoe, the kingdom was lost. You can have outsized effects because of relatively marginal advantages in capability or position or other things. So, you know, the example of actually the Anglo-French, I mean, the French army was considered the best military in Europe in 1940,

but the Germans proved to be better. They actually had fewer, I believe they had a smaller number of troops, at least total mobilized for the offensive in the Battle of France. I'm not exactly sure, But but basically they were able to break through in some key areas in the battle, I think, around Sudan and then crossing some of the rivers in northern France. And that led to a collapse in the Anglo-French position with with enormous strategic consequences that that are far greater than like the narrow issue of the battle. And so that's that's very important. And that's what really I think our strategy, we kind of know what, for instance, the Biden administration's defense strategy is quite similar from what I understand to our strategy, defense strategy in the Trump administration that really shifted us to focus on China and warfighting readiness for deterrence. So I don't think we don't have like a strategy

problem at this point. I mean, we do have a strategy problem in the sense that like we need to really, really focus. But like what we're saying on the words on the paper is not the big problem. The big problem is the level of effort and concentration. And that's what sort of a big part of what I'm doing now is it's less like very theoretical stuff and more like focus, focus, focus. Because you said something interesting, Anthony, which is if Hamas weren't a problem, if Ukraine weren't a problem, I don't think we can wait for these areas to be settled, to be stable, because it probably is never going to happen. And also that obviously leads to an incentive, which is probably what's happening right now, to go to your original question,

that Beijing and Moscow are trying to use conflagrations in these regions to tie us down and deplete us in what for China is the central feeder. And of course, China is the key actor. Russia wouldn't be able to support its war effort if its economy weren't being propped up by Beijing, by China. So I think this is the issue. And I mean, you know, one of the things that drives me crazy, I mean, President Biden, and this is true of many Republicans too,

so this is not a partisan comment, but President Biden said, you know, in mid-October on 60 Minutes that, you know, we're America, we can do all these things. We can support you, Israel and Ukraine and everything else. And I was thinking to myself, like, you and what army? I mean, if you look at the budget, I mean, our defense spending is historic lows. And I'm not saying that it's realistic to expect us to dramatically increase defense spending in these contexts.

But very little has been done to fundamentally change our defense industrial base. Our allies are moving slowly, if at all, with a couple of exceptions like Poland, to some extent Japan, Australia. So the accounts are not adding up. And to go back to my point about running things like a business, what business is successful? I mean, I'm not a business. you know, I've never run a business, but like, I thought it was pretty standard management practice that you pick a priority and you make sure that that's what you hit. Maybe you have,

maybe you have two or three priorities max, but you really make sure you hit those things and you do it right. And you don't, you don't take major risk. And that's, what's basically happening is we're doing good things in Asia, but it's more like moving. Let's say, let's call it like a 30 degree angle. Meantime, China's military buildup is up like this. I don't know what that would be like an 80 degree angle. And so it's like, you know, it's like if you're a salesman in a company and you say, hey, boss, I doubled my sales from last year. But your boss says, well, your competitor is doing 10x. You're not doing well enough because it's all relative. And that's the fundamental problem. And especially when I think that Xi Jinping and Beijing have a lot of reasons

for movement in this decade, if not sooner. I don't make predictions. I don't know what's in Xi Jinping's head, but they're actively exercising their military and trying to fix problems that they know they have. There's reason for them to think that if they wait around too long, the American military and the Japanese

and Taiwanese military will get a lot stronger. Xi Jinping himself, who has elevated the Taiwan issue a lot, is not immortal. He's a Marxist. So like, that's a given. And they can see this coalition forming around them. So they they appear to me to be behaving like a country that's getting ready to try to deliver us a knockout blow. Again, I don't know. I don't know. But I mean, my basic view is anybody who says he or she does know is not very credible because nobody should claim to know because Xi Jinping is not sharing that information with anybody.

And if he is, we're not sure he's telling us the truth. Now, how do private companies like Anduril and others that appear to, one, take a different approach to kind of building out some of this military industrial base to seem to be doing it with a very heavy bent towards technology and innovation and kind of what I would consider like the modern battlefield? Is that enough to help us? Like, do we just need 10 more Andurils and we'll be in a much better place and we'll be good to go? Or is this something that we're going to need public and private sector both working together along with politicians and getting funding and like like how complex and like systems level is it versus, hey, we just need, you know, two more Palmer Luckys and like we'll be good to go. That's a really good question, Anthony. And I should say, I mean, I have a lot of friends at Anderle and admire a lot of what they're doing, but I think we're going to need systemic change. that's probably going to involve, frankly, and I don't have, I'm thinking, trying to think through this. I mean, one of the critiques I get is like, Bridge, you say we need to revamp and overhaul our

defense industrial base, but what do you mean? And my response is kind of like, well, I mean, we're a two-person organization. I don't have like 50 analysts working under me. I think the main thing is there are plenty of people who could do that if we get the political will to dive into that problem. Others are going to be better equipped than I to come up with it. So but I'm trying to I'm trying to get a better answer to that. This is I mean, I've been calling for a national mobilization of our defense industrial base for over a year at this point since it became clear that with the Ukraine war that we were going to heavily deplete our stockpiles and that things were going to go south, probably in other places as well. The reason I think that we're going to need more like a national enterprise level, I think that's a good way of putting it in that kind of commercial way, is because these are not minor changes that we're going to need. What we're seeing in Ukraine, I think very vividly, is drones are going to be really

important. AI is going to be really important. New networking is going to be really important. But actually, the battlefield in Ukraine probably wouldn't be that unfamiliar to a soldier fighting on the Western Front in early 1918. I mean, the drones, and that's largely because both sides are exploiting technology. And a lot of it ultimately, and so they often tend to cancel each other out or they adapt to each other.

And so what becomes really important are numbers, attrition, and the way you employ the force and then the advantages of position and resolve and so forth. So it's like it's more old fashioned in that world. Legacy platforms, as they're called, can be very useful. It depends on how they're how they're fitted together in what's called force employment. But what this says to me is we're going to need to be able to, you know, look, if we and the Chinese get in a battle and we both sink each other or whatever, we're going to need to be able to produce as much as we did. And the thing that worries me about this is I think a lot of us, even though we know there's been deindustrialization over the last generation, we sort of have in our mind that we can always follow World War II. Here's the scary thing. In some ways, we are more like the Japanese and China's more like America in 1941. Why do I say that?

And I'm saying it for effect a bit. It's not a perfect analogy because Japan was 10% our economic size and we're a peer of China. But Japan in 1941 had an exquisite standing military. It had some of the best naval aviators in the world, an incredible navy, submarines. They figured out how to work torpedoes in shallow Pearl Harbor. The zeros schooled us all over the Pacific for the first six months to a year. Here's the problem. We basically killed all those people.

They killed a lot of our people. But then we had the world's largest industrial base, so we produced 100 more aircraft carriers. And we produced thousands of aircraft and other ships and submarines and torpedoes and bombs and blah, blah, blah. And we just overwhelmed them. And unfortunately, that's a little bit how the situation is with us. We have an incredible standing military. Although sometimes I worry that not so much the warfighters themselves, but the rest of us take it for granted in terms of hubris. But China is the one with an enormous industrial capacity.

I mean, I was struck. This is the Office of Naval Intelligence officially using open sources calculated the Chinese have 200 times, I believe, the shipbuilding capacity we did. And now, you know, Senator Dan Sullivan on the floor of the Senate said recently that the intelligence community estimates that China may be actually spending roughly equivalent to us, depending if you kind of net it out. So this is the real this is the real problem. I think what we're going to need is probably more direct government intervention, maybe even taking over certain parts of the functions, making very clear to contractors, et cetera. I think we're going to have to waive a lot of the regulations, environmental, labor, whatever, to get the kind of workforce we need, train it up, heavy investment up front.

The thing I would say is that, I mean, obviously, the national security hawks are going to like this. But I also think a lot of the people who want to re-industrialize our country should like this too. And you can't do that without an upfront investment. And we have a compelling national need. There's going to be a buyer, not only ourselves, but if we can churn out stuff like we used to, we have 30 defense primes in the 1980s, then we can supply Israel. Then we can supply Ukraine to our heart's content. Then we can supply Taiwan. Then we can supply Japan, South Korea, et cetera. And that's great. And then we don't have to fight all those wars. You know, for instance, Israel right now, I hope not, but they may end up needing something like

the airlift that we delivered in 1973, and that was after Vietnam. We had no problem doing that because we had a huge and healthy industrial base. Today, it's going to be tougher, especially given that we've given all these weapons to Ukraine. So when we think about the current conflicts that are transpiring in Ukraine and Israel, one of the aspects that I think people, they intuitively kind of feel, but they can't wrap their head around, is the impact on the national debt and kind of the economic strength of America. And so, for example, in the last month or so, we have seen the national debt grow by over $500 billion. We're now over $33.5 trillion of national debt. And I think that there is a path here, and it's a possible path, not a guaranteed one,

where we continue to fund both through direct monetary contribution, but also weaponry, et cetera, the war in Ukraine. We then get involved with Israel and Hamas. And maybe there's even a world where, you know, with China, Taiwan and kind of some of the stuff we're talking about, there's more need for weapons and monetary support, et cetera. Now, Janet Yellen, Treasury Secretary, was recently interviewed and she said, don't worry about it. We can afford to fund two wars. How should we think about the pressures of the U.S. economic strength and the national debt as it either reinforces or contradicts our geopolitical strategy? Like, are these people thinking about, hey, what is the impact on the national debt and on our economic strength?

Or are these two completely separate worlds and they're not even aware of each other to some degree? Well, I was very disturbed by Yellen's comments, which there's a sort of blasé attitude towards the situation that really worries me. I am not an economist. I am a person who believes there's no free lunch in life. You know, I mean, the kind of core of being a realist at some level is you're going to pay somehow. And the notion that we can borrow just enormous amounts of money, including in peacetime, without there ultimately being some feedback, again, it just doesn't strike me as credible. That's going to show somehow. And my understanding, and you and your listeners would be better equipped to comment on this than

I, but my understanding is interest rates are starting to creep up. And there are indications in the bond market as well. I know the Journal's been reporting. Greg Ip had a column a week or two ago pointing this out, that there are early warning signs. And it's like, well, you know, you spend a few trillion here and there on COVID aid and like other things, and you run huge deficits, it's going to start to pay off. And I mean, I guess, and this is somebody pointing this out, Yellen, I guess, ignored this, but like interest on the debt is now going to exceed in the coming years, our defense budget, I think it's even going to exceed like social security payments. And it's only going north, right? Or south, I guess,

students. It's not going in a good direction. And so I just, that has to matter. And I mean, one of the things that I think is important, I mean, this is more of a policy issue, but I think it ramifies to everybody, is there's a tendency, like, look, I'm a big fan in a lot of ways of the Wall Street Journal op-ed page. But, and I've written there over the years, but the journal op-ed page will say these days that there's no trade-off. It's a false choice. We can do all this stuff. But, you know, this is the same journal op-ed page that's warning us about the consequences of massive borrowing, right? I mean, there was a very interesting op-ed by, I think, George W., I think it was Glenn Hubbard, George W. Bush is one of his economic guys, saying,

we cannot afford to borrow anymore, and we can't raise taxes. And I don't know on the margin, but that's right. I mean, you, basically, raising defense spending is going to be painful. And I mean, I think it's very obvious that large numbers of people don't want to cut Social Security and medicare um and i mean both president biden and president trump are opposed to it i saw in the journal i think yesterday or today that our health care system or retirement system is ranked low in the oecd and you know i don't i don't know what the right answer is but what it what it says to me is like it we're not just going to spend our way out and when people compare our situation we just need ronald reagan look i'm a big ronald reagan fan but ronald reagan was coming in and things

were pretty bad in those days but like much lower levels of debt you know i think a considerably probably better economic and demographic profile in terms of youth and so forth, a lot more in a stronger industrial base and so forth. So I think that is a really, a very, very serious issue. And I think there needs to be more attention to it. I do think we're going to have to spend more on defense and that could do the things that kind of things on our defense industrial base. But the first thing is like, if you have a drinking problem is step one is acknowledge your problem right and so when janet yellen's out there being like no problem that that's like that's what really worries me you got somebody who's like up at coming in home

at three at night completely blottoed and it's like oh i don't have a drinking problem like that's that's when you really know that that person has got a trouble and that's and that's going to affect uh affect all of us we've been talking a lot about conflicts elsewhere um if you look at the rhetoric that is being used, given the southern border, Trump building a wall, Biden not so interested, it seems like in doing so. There is talk that, you know, we have this migrant crisis all the way to the other extreme and would describe it as an invasion. How does the southern border and the influx of people who are coming into the country play into what we're talking around geopolitics and kind of, again, economic strain, I think, you know, is kind of

how I think about it. Yeah. How does that play into this? That's a great question. I mean, look, I'll, you know, cards on the table. I think we should have a secure southern border. I support a wall. Like, I think we should be able to secure our border and decide who comes in. And I generally am in favor of less immigration. I would want more skilled immigration. We could move towards something like what the Australians have, for instance. That would make more sense to me. I mean, look, we're at unprecedentedly high levels of a foreign-born population. I think maybe in around the turn of the century, last century, there was this, or two centuries ago, there was this level. But like, you know, that's when the assimilation process needs to take some

time and space. On the other hand, we do need like skilled workers and so forth. And I'm not an expert on immigration, but I think that kind of model, but I just don't really understand why we wouldn't want to have control of our southern border. Like that just seems, and I think, you know, first, second of all, like fentanyl is, I mean, it's killing 100,000 Americans a year. Now, it's not like, I mean, they have some agency, but, like, it's a horribly addictive and lethal drug. And if we can try to stem that flow a bit, we should do so. That is a national security issue. If it's killing 100,000 Americans a year, like, we should be trying to.

So that's, like, that should be a priority. Now, that doesn't necessarily trade off against our other interests, but it's something that we should treat seriously and with respect, more than respect. We should really do something about it. Now, part of that's treatment, part of that's dealing with the Mexicans and blocking the Chinese and the border. It's a multi-pronged thing. But, you know, that's something I've been trying to think through a little bit more, thinking about the defense and national security elements of it. But I think it's something we should be doing. I think more deeply, Anthony, I think there's this sense that a lot of Americans, you know, I'm a Republican.

I think particularly kind of, you know, a lot of the new right, if you will, people who are against the establishment, I'm sympathetic to that. I mean, you always have an establishment, but I don't think our establishment in the last generation did a very good job. I mean, we had two failed wars in the Middle East. You had a financial crisis and de-industrialization of the American economy. And now we're in a situation where China might beat us in a war. How did we get from 2000, balanced budget, unparalleled strength in the global economy, pretty healthy economy, low crime? I remember, we're probably around the same age. I remember September 2000, or no, summer of 2001, the biggest issues I can to remember in the news were this poor Chandra Levy, who was killed in Rock Creek Park in

Washington, D.C. Shark attacks like in Nantucket and stem cells. Those are the problems we had then. And now we've got a lot bigger problems. So I think people are justly dissatisfied with what our established powers have done over the last. And I think part of that is on the border, people feel that there isn't a seriousness about addressing this issue, especially border states, but throughout the country where it's like, hey, this is a huge issue and it's being imposed on us. And and that's why, like the the Ukraine, it's not logically a tradeoff against Ukraine, but people can see that Washington, D.C. and the elite areas and and these kinds of things, they're very concerned about Ukraine and they can see that those areas are not very concerned about the border.

And so I think that's where that linkage kind of comes from, is to say, hey, why don't you take my concerns seriously? and um you know so so uh you know that that's sort of my approach to that that set of issues when we see china kind of playing this out obviously uh if you study china for five minutes you know that they have these very very long time horizons they're very patient um if i had to sum up the concern i have it would be that china will allow the united states to bleed themselves dry and it's death by a thousand cuts. Is that a good summary of kind of where, you know, what we're facing and what we need to kind of be vigilant against playing into? Yeah, I think exactly. I mean, the Chinese are not, look, I mean, they're not like

super strategists, like they're so much better than we are. They're not like, they're human beings, they make mistakes. But I do, I agree with you that they tend to have a longer term orientation and be sort of more eye on target and ruthless part of that is i think because we have gotten hubristic over the last generation where we just like what biden said we're america whatever whereas the chinese actually come from a place of humiliation and they've like really struggled to get up the ladder i mean a lot of their wounds were self-inflicted by mazadong for instance but um but they they you know it's sort of the it's the attitude of the guy who's coming out like come up the hard way and knows what it what it entailed

and we're sort of like the the guys had you know been on top for for his whole life sort of thing or for as long as anyone can remember um the only the only difference i'd have with the death of a thousand cuts i think there's a thousand cuts then there's the knockout blow they're they're i think what they're doing is i don't know i mean it's not an exact analogy but what was muhammad ali's thing against you know i mean it's not it's actually not a good analogy but it's basically like wearing us down, wearing us down, dulling us, get, you know, we're kind of tired, we're distracted. And then boom, the knockout blow, because that's the only way you're going to do it. I don't think we're in a thousand. I don't think a thousand cuts alone is going to do it.

And that's what they're preparing. They're preparing their military for a knockout blow. Now, one other question I have is maybe like the quality and dependability of our intelligence. And I'll give you a couple of examples. And part of why I'm interested in asking you is i believe that you sat on the iraqi wmd commission i was a staffer yeah but i i worked full-time and so just like like you've seen kind of the the good the bad and kind of all the intricacies and and all this stuff right and so um the attack by hamas in israel i think there's a lot of people saying like how did all of these intelligence agencies miss it at the same time uh if i think back to russia ukraine there was you know half the people saying they're not going to do it there was half

people saying they were going to do it. And we were saying that they were going to lose. Remember that. We take a lot of credit now, but we got that part wrong. So anyway, go ahead. And I think that now we have all these amazing technologies, right? There's satellite imagery and all these things that we're like, oh, this is amazing. How do you look at maybe our ability to provide and capture this intelligence that actually gives our leaders the information they need to make good decisions? Like if you have bad information, you're going to make bad decisions. And so where do you think we are on that front? So my general view, and I wrote about this, I mean, 15, 20 years ago now, if people want

to go back and see, I mean, I tend to actually be more lenient on the intelligence function because yes, of course, yes, they make mistakes. But bear in mind, what we ask intelligence to do is it's not like, hey, you know, who's going to win the, you know, the Super Bowl. It's like what is like inherently uncertain problems that are that are where an adversary with an incentive to dissemble and dissimulate and deceive is going is operating and how they might behave towards us. And the thing that I think and so surprise or at least not complete surprise, but what I would think of as like operational level surprise is sort of endemic in the system. In the same way that probably in markets, it's like, you know, there was plenty of information in 2008, you know, but like it was people weren't acting based on the warnings, right?

That's really the problem more. So Israel probably picked up a lot of the indicators that in retrospect can be put together. And this is even going back to Pearl Harbor, the signals and noise issue is, you know, look, technology doesn't solve everything because the enemy knows that we have these technologies. And then they act accordingly. So for instance, Hamas, apparently, and from what I read, and I mean, surmising,

they weren't using phones or they may have spoken on phones that they thought would be tapped in ways that could deceive the Israelis because they're smart, unfortunately. And similarly with China, I think what we need to worry about, and this is important for market actors,

if people are thinking like, oh, I'm gonna have a lot of warning if China moves towards an invasion of Taiwan, Uh-uh. Because what they're going to do, in fact, they've already been doing this. They're trying to normalize and essentially hide in plain sight. So they're creating, they're making it hard for us to distinguish what's like a real indicator from what's just noise. And I mean, if you go back, it's a little bit, it's getting along. It was 50 years ago, unfortunately, now there's the anniversary, is the Yom Kippur War. But, you know, the Yom Kippur War was a war that happened. The attack began. We already had satellite imagery. We already had the ability to listen in on, you know, Arab, Egyptian and Syrian communications and so forth, presumably. But we were still surprised. Why? Well, because partially because the Egyptians did a bunch of exercises and then didn't attack. And so the Israelis said, no, they're just doing another exercise. And we believe that, you know, we went all kind of along with them, as I understand it. And I'm sure we had a similar view. But that's the kind of problem where surprise is still. And so I don't think we ever get because the enemy is adaptive and your adversary is adaptive. And if they're weaker, they're going to adapt in certain ways. If they're stronger, they're going to adapt in other ways, et cetera, depending on what their goal is. I think we should assume that intelligence is always going to be an imperfect, really more of like an art probably than a science because of these inherent challenges that it faces. My last question for you is, if you had to pick one or two actionable things that the United States could do in the next, you know, 90 to 120 days, what do you think would be the two most impactful things that we could do to better address the China issue, but also kind of improve our standing on the global stage in terms of some of these conflicts? So it's funny you mentioned that.

I've been thinking about that recently. And the answer I give is actually pretty much what you say, because a lot of this, again, if we get back to this about the military balance, and it's about, for want of a shoe, the kingdom was lost. It's very hard for me from the outside. That's a sort of a technical military question. And a lot of it gets into classified information I don't really have access to, or I don't have access to.

So what I would say is, if I were empowered, or I were advising the king for a day, or for a year or a couple of years, I would say, I want to answer the question that you just asked. What are the things that I can do now, what I can do right now going forward that will help make sure that I can defeat a Chinese invasion of Taiwan today, tomorrow, six months, a year, five years, 10 years.

And I wanna do all those things. And I'm going to empower the people who genuinely bring me solutions. I'm going to sideline or even fire and make examples of people who slow roll that. I mean, I'm just not to name names, but there's this guy, Frank McKenzie, former Central Command commander, big guy who was trying to undermine this approach, who's now out in the public talking about how we need to get back in the Middle East. That's the kind of person I would say, no, that's not what we need. I'm going to reward people and I'm going to do we need to call do I need to call the president to waive to, say, activate the Defense Production Act, waive regulations on the environment, on labor, on blah, blah, blah, blah, whatever.

You know, the federal code, I'm just we need to get this done like yesterday and I'm not going to let it stand in the way. And that is sort of that is what I would do. And I think that kind of urgency. And an incredible signal of priority, because I think a lot of what's going on right now is people see the gums flapping that they don't really believe that that's the priority. What's the priority? Ukraine was the priority. If you solve the Ukraine problem, you got kudos, you know. And now maybe if you're helping on the Israel problem, that's how you get kudos. And so it's constantly going to the back of the line. And again, who benefits? China.

So that would be the way that I would go. I continue to believe we are pressing our luck, but I continue to believe that we can deter a Chinese attack because if they think they are going to fail, I don't think they're going to do it. Bear in mind that Mao Zedong never attacked Taiwan, despite wanting to, because he knew he would fail. So I believe it's possible, but we are really pressing our luck and the hour is extremely late. Where can we send people to find you online or find the book?

Sure. Well, thanks a lot. I mean, the book is called The Strategy of Denial, American Defense in an Age of Great Power Conflict. It came out two years ago, but actually I was talking to my editor earlier today. I think it's actually more relevant now than it was then. So I think hopefully of interest you can find on Amazon or at Yale University Press. I'm on Twitter or X at LBridgeColby, my name. And then my partner and I run a nonprofit focused on great power competition called the Marathon Initiative. I have all my appearances and everything there, articles I've published, et cetera. If people haven't had enough, if they want some more, they can go there. Bridge, I really appreciate it. I'm thinking

a lot about this right now. I think many people are. And so your perspective is not only, I think, enlightening and kind of informative, but also there's an element of positivity and optimism of like, hey, the story's not over yet, right? There is still things that we can do, which I think is important as well. So I appreciate your time, and we'll definitely do it again in the future. Would welcome that, Anthony. Thanks a lot.