Apologies if the sound is spotty this week - this video was put together in a few different hotel rooms and at least one airport. Sound guy does his best but he can only do so much. As far as the topic goes, this is one for the defence economics fans in the audience. Looking at incentives, industry policy etc. is a bit more niche than talking about tanks or an ongoing conflict, but it's none-the-less a video I've been wanting to do for some time. Understanding the motivations and incentives of politicians, decision makers and other stakeholders is often a good lens to use when trying to understand why militaries buy what they buy and pay what they pay. I hope you enjoy the diversion, and we'll be back to the war in Ukraine next week.
Content matters, and the sound being perfect rather than merely understandable does not. We can have CNN with their fancy sets and makeup artists puking the approved narrative or we can have you. I choose YOU😂
In a better world, it would be lovely to see government funding less needed for defense, and instead directed towards housing the populace.. In our world, government funding that is needed for defense is instead directed towards mansions for the wealthy. So close, yet so far
@@PerunAU In physics you need to keep repeating "In isolation" "Isolated case" "Ignoring all else" "In ideal case" etc. Otherwise the "but..." is going to appear really fast.
In economics, "ceteris paribus" doesn't work because every trend and transaction changes the system. In war, plans don't survive the first encounter with the enemy.
Northern California had a long term Congressman (John Doolittle) who ended up being exposed as having provided funding for a project for the military that the military didn’t want. It tuned out his wife was running a business from her home that was getting large contracts for “services” which appeared suspiciously like bribery. The congressman didn’t retain his seat but there were no ethics charges that were made to stick. He replaced his congressman job with one as a lobbyist where he now, in all likelihood, is leveraging his experience in stealing government money for other government employee’s benefit. This really gives the impression that corruption is quite difficult to detect and easy to get away with if caught. Leveraging a position of public trust to enrich yourself should be punished as treason in my opinion and there ought to be much more energy invested in policing for it. I imagine the obstacle for this is that we have to rely on corrupt politicians to police corrupt politicians
"....rely on corrupt politicians to police corrupt politicians...". Thank you for that phrase,it expresses EXACTLY what is happening in South Africa...and it is very rapidly changing a very beautiful country into a dank,dark,slimy,slippery dungeon of a failed state....Initially there was the ANC= African National Congress,but it has rapidly changed into the African National Corruption...
@@gerhardvanderpoll7378Yes, very sad. The ANC under Mandela was an inclusive party, still trying to overcome the inequalities of Apartheid. Mbeki was also a pretty good president albeit not of Mandela's stature and in full AIDS denial. With Zuma the corruption floodgates were opened unchecked. And Ramaphosa has been notoriously ineffectual in stemming the flood. He even defended 'cadre deployment'. As long as the ANC is perceived as the party that freed us from Apartheid things will not improve. It is not just the ANC, but any party that gets re-elected no matter what, is doomed to sleaze, corruption and destroying a country. I find it significant that the only province not governed by the ANC, the Western Cape, has the best Gini coefficient and the best development index. Still pretty bad, but better than all others.
For those wondering, ASIC is the Australian Securities & Investments Commission. "The Australian Securities and Investments Commission is an independent commission of the Australian Government tasked as the national corporate regulator. ASIC's role is to regulate company and financial services and enforce laws to protect Australian consumers, investors and creditors".
As a Program Manager and Contracting Officer in the Defense Sector for over 35 years, you nailed it. My experiences have led me to the following summation/conclusion: "The primary purpose of Government procurement is to promote socioeconomic goals." I am not purporting that this is either good or bad, but rather it is simply the reality. Thanks for your continued well-researched, expertly presented, and thought-provoking presentations.
As someone who specialises in studying human behaviour I enjoyed the hypothetical scenario of emutopia discussing the incentives of politicians and defence contractors, it gets quite messy and complicated very quickly but I think you did a great job of tying it all together. Cheers Perun 👍
Strategic dispersion: another issue of spreading around construction - the O Rings on the space shuttle solid rocket boosters. The O Rings that failed and destroyed Challenger _only existed_ because the solid rocket boosters were built in another State and so had to be _able to be broken down into sections_ that would fit on rail for transport from interstate. The reason why was because that State had an important vote on the entire shuttle program. The practical approach would have been to build and service the solid boosters in Florida near Cape Canaveral, and then move them in one piece to the launch pad. But that would have put the entire shuttle program at risk of being cancelled by Congress or the Senate.
Thank you for this info, as it brings me convoluted relief. In the 1950s my father et al. we’re issued a patent for a double o-ring seal on a solid rocket booster. For years I’ve had the impression my father had some vague responsibility for the tragedy.
They were eventually going to have to move those boosters, they planned to launch from Vandenberg in California. If Challenger hadn't blown up, I think they were only a couple of flights away
I never thought I'd be excited to watch a 1 hour long PowerPoint presentation every Sunday. Thank you for your hard work and great content, keep it up.
Imagine tell people from early TH-cam what the site would be like in 15+ years. 1 hour power point presentations, satellite pictures from Google being analyzed, and people making military memes all in an effort to wage an informational war on Russia. I'd also like to see how mid to late 2000s 4chan would react to finding out that the star of the Apprentice would be president.
In South Korea, if you are looking for armored vehicles you ask either Hyundai Rotem or Hanhwa Aerospace. If you are looking for ammunition, you ask either Poongsan or Hanhwa Aerospace. If you are looking for (licensed) aircraft part manufacturers, you ask either KAI or... you get the point.
Hanhwa Aerospace executives literally said that they "want to be the Lockheed Martin of (South) Korea". No wonder there are their own Boeings or Northrop Grummans in every single sectors they have their hands on. I suppose it was partially planned all along by smart people in the government. One thing to add: the company also makes Bin Chickens. Hanhwa the chaebol sponsors a baseball team Hanhwa Eagles, but because the team sucked at baseball for the recent 15 years we mock them by calling the team Hanhwa Chickens instead. This video might be the closest thing this channel will ever discuss about the -Austrailian- Emutopian defense economics in detail, and I absolutely loved it.
@@eternalwind08 well... in japan it literally is... WWII was not kind to japan (war crime, bluh bluh bluh...) US literally gutted japan of it's defense industry... with it's peace constitution
This entirely encapsulates why I left the US Defense Sector. After being a fly on the wall in more program offices than anyone would want to admit, the politics and bureaucracy of how the DoD does business will send any reasonably intelligent person running. If you factored in the politicians influence on how the DoD spends its money, figure we waste about 30% of the taxpayer funds allocated each year. This is how the US Navy ended up with the LCS. Two hulls of each class were supposed to be built for competition and for testing of mission modules, a fleet of hulls two different ended up getting built with no operational mission modules, basically the Navy just subsidized two shipyards and got a bunch of ships to be decommissioned or sold off under FMS at pennies on the dollar (hopefully - fingers crossed).
The good men need to be able to endure the corporate bs, else the only men in the game will be the dark triad types that only care about personal gain.
@@incredulousmidwit Fundamentally that doesn't happen. That's the core of Pournelle's Iron Law of Bureaucracy - the people that wind up running any organization are those that specialize in the politics of that organization, not those that excel at providing the service that organization was designed to provide.
I am learning so much from these videos that does not only apply to defense economics. Please don't stop making these videos even long after the hype for defense dies off. Even if you have to reduce the rate to once a month or once per quarter, please continue making them.
No, no, no, once a month 😱? once a week is little enough. Every Sunday I'm looking forward to Perun's power point presentation. I even started to like that Ozzy accent!
@@nicolaasstempels8207I am talking about the far off future when Ukraine is done and people stop paying attention to defense and war. Probably the views will go down but I hope he will continue even if at a reduced rate.
I fully agree. His Videos are a blessing and a highlight. To say that I learned alot from his very educational Videos and his thought process is putting it lightly. And I also hope he continues this project for a long time even if at reduced rate. Yet his contact is just so top tier it's worth the wait.
I would have loved to have seen a section on wartime vs. peacetime procurement, since the incentives on all parties change tremendously during a period of conflict
An excellent read is: "Freedom's Forge: How American Business Produced Victory in World War II" by: Arthur Herman Roosevelt wanted to have a massive government bureaucracy managing every aspect of war production. He just chose the exact wrong people to do this. Instead, they created a system where the government listed what they needed and individual companies picked the things that they would be the best at making. So instead of companies having to completely restructure in order to make what they were told to make they went and looked at what they were best at and chose to make the things that they were best at making. And the people who set up the industrial production of war materials were called the 'Dollar a Year Men' - because that's how much they were being paid.
Story told just for the algorithm. Perun mentioned a munitions factory next to a grade school and the field trips involved. As a young kid, we had a nuclear plant built just two crow-miles from the grade school I attended. And yes, we went on a field trip there - and walked. Walked across a state highway, then over a mile along the railroad tracks, all to visit a nude plant. Fun times in the 70s.
This is not just a good video about defence economics, but a great video about more general macro economical concepts. You manage to clearly address how efficient markets are driven by competition and how for big enough market participants a number of problems emerge that you wouldn't find in less complex markets.
Misaligned incentives are literally the biggest (or even only, if you look at it fundamentally enough) problem we face as a species. Every large societal or environmental problem we have is caused by some form of incentive misalignent.
It's easy to criticize from afar, but every society and procurement program has to find the solution that satisfies as many stakeholders as possible. That's Perun's lesson.
False; the largest problem we face as a species is finding a way to increase the time french fries stay crispy and fresh without compromising quality and flavor characteristics.
The Bin Chicken MBT is fully integratable with the "Cane Toad" SHORAD system, the "Moggy" model of UAV, and the "Cocky" Battlefield Communications Network. Future upgrades will include a bullbar and a mini beer fridge.
All I could think of when he gave the model designation SD-24 is an American locomotive from the early 1960s. It has a 2400hp engine, so you'll move pretty quick, but it doesn't exactly have a subtle profile, and the weight will destroy any road you drive it on
We all know that if Australia ever makes an unmanned A10 equivalent, it will either be the Lapwing, or Magpie. Birds so fierce that even Australians don't dare to give them nicknames.
It’s gotta be the Magpie. Just like the A10 avenger the sound of a Maggie swooping down behind you as you pedal your Malvern Star at top speed brings fear into the hearts of those who have heard it. Evan after 45 years 😊
Regarding the Disney announcement re: incentives, this is also an example of how such deals can fall apart. Following the Florida governor's feud with Disney over socially conservative agendas, Florida has begun trying to take away long-entrenched Disney incentives; Disney has retaliated by, among other things, cancelling the Lake Nona move. Politicians who use public incentives to buy jobs may also think they're buying political loyalty from the wooed companies, and the companies might disagree.
And this is also a cautionary tale about what happens when businesses stop paying attention to who their customers are in favor of social activists who aren't their customers. Disney's in such bas financial shape that that project is never going to happen anyway.
@@colincampbell767 the only reason Disney does that is because they have an international audience and don't care for a few nutjobs in the back waters. Money talks. They are in a bad shape due to completely unrelated failings. If they were some conservative wet dream in 2023, their sales would be 10% of what they do now. Because there are many conservatives in the world, but only few of each kind who are able to agree on what they want to conserve. Iranian conservatives are as backwards in their world view as the most backwards Christian nutjob imaginable. But the kind of things they'd like to see in a movie differs quite a lot from what the former want to see.
@@colincampbell767The social activists weren't their customers, but their employees. Many of the creative folk that work the parts of Disney that show on the screen are LGBT, and you outright ignore the concerns of your own employees at your peril.
@@bulletflight Disney treats it's employees, specially at it's theme parks, like s**t. Disney pays lip service to "LGBT" but censors it in countries where it is illegal. It's all about ESG scores and Profits.
"Congratulations soldiers of the Roman Empire, you did your job!" "But all we did was that we just killed Phocas, the old Emperor?" "I said you did your job!" - Heraclius
The consolidation dilemma is such a real one and is something that may come up with the US Air Force NGAD program. Northrop Grumman has publicly stated that they won’t be competing for the contract, leaving Lockheed and Boeing as the only competing bidders. Unless Boeing pulls some huge leap in innovation Lockheed is probably going to come up with the more capable fighter seeing as they have so much experience with the F-35 and F-22. They are truly a marvel of a company but handing over yet another fighter program to Lockheed on top of the very lucrative JSF program and leaving Boeing (who hasn’t come up with a competitive aircraft in forever-Im looking at you X-32) has me a bit concerned.
I've considered Boeing's many recent failures and don't feel that Boeing's problem is innovation or any other simple reason. Boeing's problem is that it realized to be competitive today that it had to transform its design and production processes and adopt "Agile" development processes that originated transforming how software is created and developed and many were adapting to other industries. Elon Musk's many companies including Tesla and SpaceX are examples where this has been accomplished with great results. So, what is agile development? Compared to legacy "waterfall" development that emphasizes a roadmap and milestones eventually leading to alpha, beta and golden versions that are "launched," agile development releases iterative versions quickly that apply small improvements and fixes. The User is the test vehicle and should not expect a problem free product until later versions and can choose to try the product at any stage of the development cycle. The problem for Boeing though is that some products like the 737-MAX aircraft can't allow certain mistakes and errors at all if they compromise safety and that's partly where Boeing went wrong. And, the same is true for Boeing's space launch programs. Boeing isn't melding the needs and establishing minimum proper minimum requirements for safety. Program management has gotten very complex in an effort to adopt modern practices and many of Boeing's competitors including Airbus have been succeeding. Boeing has made some crucial mistakes and is paying for them.
After the YF-23 not being adopted most won't try to fight Lockheed Raytheon on contracts. If Lockheed Martin will get a monopoly, the state will either Nationalize or split it up.
The best time of the week for sure, time to get a coffee, a muffin, and get some learning in! I'm very very appreciate of the sheer wealth of knowledge that you're sharing with the world, it's invaluable
Hello Perun, would you perhaps consider an analysis on the impact of private organisations and government foundations ("United 24", "Come Back Alive", "NAFO") in contrast to their Russian counterparts? Thank you for all your hard work and the fantastic presentations!! Greetings from Germany
@@SianaGearzI feel like Russia asking their citizens for donations in an organised way goes against the Putin social contract of not disturbing russian citizens too much. That said, those Russian mobiks have been begging informally for donations so it's really their loss.
This would be interesting to decide on whom to dump some extra donations on. I'm for instance more inclined to support Pavel asking for money to spend on first aid kits and thermal scopes through TH-cam than a large aid organisation that then annoys you for years with nagging mail to spend money on them.
I do not know how to put it into words how important this topic is in general and how many different situations this fits in. I have tried to explain these things to many many people in my life and some people seem to struggle wrapping their heads around this amount of variables. I do want to thank you for providing me weekly entertainment like this (Yes, this is entertainment for me and probably for many others too).
Why would you bother explaining something as complex as defense procurement to lay-people? It's like if I were to describe the R and D process and clinical trial testing in the pharmaceutical industry to a lay person.
That's really impressive how Perun managed to create the best resource on political and economical education camouflaged as briefings about the war. Having millions of attention deficit youtube viewers to listen for hours about how the world is complicated is... no small feat, to put it mildly.
Yeah, as someone in the more general procurement space in a sector that has a peak/troughs kind of cycle for a variety of services really has me feeling the bit about being asked to be economical, yet also paying more so the supplier retains that capacity. It's such an interesting exercise and the issue often feels that finance people don't get how markets work.
@@andrewfleenor7459True. And therefore it shall be repeated again for each Perun video in the future because it speaks to our soul on a personal level of how good his contents are.
Our future minister of defence returns again with another hour of wisdom. With this stellar of a track record, a position running a national defence isn't a matter of if, but when.
Imagen: Journalist fishing for a soundbyte: "and what is your position on defence spending?" PERUN: "Let me just play you 100+ hours of videos about that."
@@markorr7125 I'm gonna go see FriendlyJordies next month, If I can pull the man aside, I'm gonna try and convince him to reach out to Perun for an intervfiew about the defence econnomics ofdf Australia and it's wider impacrs on the politcal sphere. The debate would be really fun to watch, as I think they;d hgave a lot to discuss especially as a political debate. Iff we can get it on youtube, it'd be even better
Being a bit of a foreigner (at least in most places) I particularly impressed with the Bin Chickens inclusion of cooled stubby holders - I just wonder how many people appreciate what that actually is?
Even tho this is clearly about defense economics, this video should be required viewing for all free citizens of any democracy or republic around the world. This so distinctly summarizes why political compromise exists, and in most cases, necessary.
Actually, nuclear missile silos can make for incredible house parties. There are several companies that have converted old silos into ultra-posh survival bunkers for the ultra rich. Complete with condos, exercise rooms and pools with landscaped waterfalls.
Thank you for maintaining to be a reliable and unbiased source of information on everything from military logistics to international geopolitical stalemates. In a time where being misinformed is easier than ever, your work is more than appreciated. Keep up the good work!
I think Perun himself has said he has his own biases, and it's usually the people who are most aware of their biases -and have strong morals- who are least biased. Or as the song goes, "Everyones's a Little Bit Racist".
When it comes to this, I still remember a German story about how the 'needs' are used to manipulate the competition. For example, when you need a new boat, but already know you want 'that' company to win, so you make the list of 'needs' so specific that another company, that might otherwise have a comparable product, can't compete, because the cupholders SPECIFICALLY NEED to be yellow.
My Dad was a buyer for LA County, back when it had twice the budget of the entire State of California. They had to write specs to get a specific brand of truck by specifying an exact color, because they were prohibited from descriminating by radio type ( one provider had a radio system that just wouldn't work where the trucks were going to be used).
@@lamwen03 That's crazy. I can see why they might not be allowed to require a particular model of component or system, but surely it makes sense to be able to discriminate based on capability - specifying that the radio must work in certain areas and conditions.
@@trollerifficThe State mandate for the bid was that it had to have a radio capable of XXX. Both qualified, but the radio for one would not work properly in So. Cal. AM vs. FM? I don't recall if I ever knew, it was so long ago .
Common feature in all tenders in Mordor. Also, properly wording the bid is very important, and if it fails to satisfy some obscure guidelines of which those who aren't supposed to win are not in the know, too bad for them. And kickbacks, of course. There have to be kickbacks.
First, thank you for an exhaustive overview of defense incentive and interest. But when I say exhaustive, it is in a relative level of attempting to keep up with the information bullet points in these lessons that are spewed faster than rounds from an old German MG42. Due to my inability to quickly comprehend the information flow, I artificially increased my viewing of this YT video by 3x. Even with pauses and rewinds within each viewing, the information flows were fast and furious, sometimes beyond my capability to immediately comprehend, thus the need for repeated views. This is not a complaint. This is an acknowledgment of the brilliance of the YT products you are providing. Keep it coming. Fortunately, I have the time for repeated views to completely absorb the information you are providing. Simply brilliant. Thank you.
Given the recent Starlink controversy (though the facts around it appear to be muddy), perhaps a video on the reliance of militaries on commercial/private service providers? There's obviously the manufacturing side, but I was thinking the ongoing services side - not counting PMCs which you've already discussed. Whether that's a commercial satellite provider, or maintenance contracts, or using essentially commercial products/services like cloud computing providers (or Ukraine using Starlink). And the benefits, problems, and complications that result (like a country maybe needing to send non-military engineers into a warzone to support weapons systems).
It is really tempting to say that this may be one of your best videos. However, the overall quality of your content is so high that it's impossible to not wonder if doing so would be unfair. I will say that it was an incredibly though-provoking and eye opening presentation, though. Is is a blessing that we get to enjoy such contingent and specialised analysis for free. I love you so much, mate.
I really enjoyed the exploration of why military, political, social and economic incentives or driving factors can introduce complexities and challenges to procurement.
I have an old school friend who works for *ASIC* (He has no online identity at all), he used another school friend _as a training example_ for catching insider traders. The other school friend was convicted. [Australian Securities and Investments Commission - the financial market regulator]
When ASIC wakes up and gets on someone's arse, its usually curtains for them. Years ago when I was doing stuff tangentially related to them and other enforcement agencies I had a friend of a close mate get a job doing IT and technical services for them and stupidly put my hand up saying, yeah, I'll give you a reference for them as I know how it works when they vet their employees. Except this seemed to be much worse after two hour long 'interviews' about just what 'Bob' got up to in his spare time, any unusual depravity he got up to and they knew all about me, so that was a bit 'uncomfortable' having that read back to me. Sort of a 'This is your life' show, except you get a traffic cone to sit on
When I started at Boeing in 1985 there were 100,000 employees in the Seattle area with 120,000 worldwide, most of the remaining employees were in Houston and Wichita. After the acquisitions of Hughes aircraft, and McDonnell Douglas by the year 2000 the Boeing employment roles were still about 120,000. I left the Defense business as my particular specialty (low observable technologies) went from $200 billion in contracts in 1982 to $200 million contracts in 1990. I went back to College to move from an MS to a PhD, but I could not stand the attitude of academics who were clueless about the technology and arrogant about their superiority.
I wound up working on the assembly line at Nintendo, where my soviet counterparts who moved to Seattle to get Aerospace jobs where in the same assembly lines.
The discussion of consolidation and the risk of losing capacity around the 16 minute mark puts me in mind of something Drachinifel said in a recent drydock. He was asked about shipyard closures dueing the Anglo-German Battleship Building Race of the early 20th century and responded by summarizing shipyard closures announced in a 1912 (IIRC) trade publication (there were several). This was around the time of the Churchill anecdote about the Navy wanting six battleship, Parliament wanting four, so they compromised on eight. The four Iron Dukes were laid down in 1912, as were several of the Queen Elizabeths, and the four King George V class ships laid down in 1911. So even in an arms race some vendors can still go under.
Brilliant ! This is an excellent example of the professional challenges I've often faced during my career, and it applies to ALL activities the government is involved with. Thanks, Perun !
In truth I already knew much of this, as I have an economics background, but good job putting it all into a single hour long presentation that's interesting.
@ 12:20 you might be surprised at how much critical equipment is actually supplied by small engineering firms. Sometimes really one man in a shed, at least in the UK. Small quantities of high precision parts are a good match for this sector, with a good margin for them. They just have to get on the list of approved suppliers. There is paperwork, traceability is an absolute. I speak of what I know.
"What goes into a cup of coffee? (coffee, water, coffeepot) Its seems simple enough. But if you look at the inputs to those inputs (labor, shipping, farmland, water fertilizer; water purification, labor, pipelines, electricity; manufacturers, labor, raw materials, electricity), it very quickly spirals out of control until the flowchart you're looking at looks like an entire civilization."
The US Navy's Littoral Combat Ships (LCS) are examples of a massive procurement program that went off the rails somewhere along the line. I would love to see a case study of how that happened.
Great video! It gave me this insight: A free market is like an ecosystem. The main driver is survival of the fittest, but if too much biodiversity is lost, the whole thing might just collapse. (Looking at you, Amazon.) Luckily, humans have a great track record when it comes to intervening in ecosystems... /s
"Survival of the fittest" often implies that fitness is the end-goal. Ultimately though, the goal isn't to be fit, but simply to survive. When there's a lot of competition, there's plenty of incentive to be the fittest and out-perform your competitors and threats, because that's what is necessary to survive. But once you've outlived them all and there are no more threats anymore, well, what incentive is there actually to be fit?
@@scyfrix There are no goals or incentives in evolution; there's only pressures. If you introduce an antibiotic in a culture, the bacteria don't learn, develop, want, or choose anything. They're self-replicating, biological robots that can't think. The fact that you end up with resistant bacteria is just the most likely outcome of a predictable process. If you sieve some sand, you end up with only rocks and shells; not because the objects can think, but because that's how sieves work. Humans often see patterns where none exist (a.k.a. pareidolia) and I suspect describing evolution in terms of choices is an expression of this. "Fittest" simply means "best adapted to current pressures". When pressures change, the definition of "fit" changes too.
BRAC had some unintended outcomes from moving work from where labor was expensive to where it was cheap. It was assumed that labor would be available at the destination, i.e. people would move and take pay cuts. That did not happen. The military today has plenty of money but is unable to fill many roles because the talent is a resource that is not distributed equally across the states.
As an example of this, I'm a contractor at a naval base in a remote part of California. I've had a supervisor for the federal government vent to me about the way that "90% of the time" (according to him, may be overstated) you advertise a position, conduct interviews, and make a selection, only to have the successful candidate take a second look at where the base is and turn the offer down.
I could not detect any anomalies in sound quality throughout the video, so your fears had been unfounded. Your sound-guy did a bang-up job making the audio perfect!
One of the best examples of this process is a rather topical one: the competition for what became the F16. It’s rival aircraft was technically the winner, but General Dynamics (as it was at the time) was light on work, so the US government selected that as the winner, and to be fair, the F16 was pretty legendary as one of the best multi role fighters ever, even before Ukraine started clamouring for it. And the losing rival went on to become the F/A 18, again, an aircraft with a substantial reputation for being a superb multi role aircraft. It meant the US could award contracts for essentially the same aircraft to the two different firms and their subcontractor network that entered the original competition, supporting both companies and also getting two rather excellent aircraft that have been domestic and export successes.
A great example of this (outside of the military world, of course) is the ITER fusion project in France, which in order to attract funding from many countries, has had to disperse development and manufacturing across the world to an absurd extent. This has had the predictable effect on the cost and schedule.
_"... but like any sensible Australian, i would rather have to deal with Spetsnaz kill team than with ASIC."_ I will admit, that sentence carried more weight _before_ the Russian invasion of Ukraine, but i think this goes for any financial policing body. Sure, i'll take on a couple highly trained military special forces units no problem, but i'm not crazy.
I should have had more faith. I looked at the title of this episode and it rang out as dry as a dead dingos dong. How wrong I was. Over the time I laughed, was bemused and enlightened in equal measure. I was entertained and informed and in short learned more about defence economics in one concise piece than I had before. I hear Perun is soon to become a national treasure and required listening for anyone interested in just about anything 😊
10:50 - I think US did it somewhat right in WW2, where they would choose the platform from one competitor, but then would employ all the rest of competitors to build it. In such way, the best and most optimal product is chosen, but there are no inefficiencies of having 4 out of maybe 5 competitors then sitting on their hands doing nothing. As well it remove competitive advantage of the winners as winner despite taking lion share of the profit has to share all technology and knowhow, such naturally levelling the playing field.
This might only work during a war, where nationalism aligns a lot of incentives while any obstruction is threatened with the death penalty. During peace times the company which has the winning concept can do a hell of a lot of things to chip away and profit its competitors might have ... Incomplete or inconclusive documentation is only a starter here ...
@@brag0001 That again just depends on the goal of nation and incentives. If the goal is to both keep competitors around and not to compromise on the quality of equipment then this works. It simply removes any incentive to be political, because we know that regardless what product is chosen everyone will have work. As well as for incentives - yes, sure there are many ways to ruin competitors day, however if incentives are correct then this will not be attempted. Just put the clause saying industrial sabotage is considered individual responsibility with the criminal charge and no sane person will be putting their own personal life on line to ruin the day for competitor. This is obviously theoretical discussion... and most likely only applicable to few countries in the world - US, ruzzia, China actually does this, France, Germany... and that is about it. I guess if we consider EU as supper state then they can at some point implement something like this, where mainly Germany, UK and France are bickering between who do what, seems like they almost need somebody above their national government to tell them what is right.
@@lp9280 There are so many ways to make life hard for your competition, if said competition has to rely on the quality of your documentation, that you won't ever be able to prevent that with laws. Even outside the defense sector, when working with companies who need you to implement their stuff to drive their own business, this is already a challenge. And in those cases the incentives are clearly aligned. Yet it's always a struggle. I've yet to find a documentation which perfectly matches the real world implementations of things.
A concise and cogent explanation of a wildly complicated topic. The same principles apply to dozens of processes in untreated industries - I’ll see this everywhere for weeks to come. Thank you for this very competent analysis.
hello perun. is there a possibility that you could upload the audio of your videos on spotify or something. the lenght of the videos makes it difficult to slot into a limited timeframe and an audio only version that you could pre download would make it easier to listen while traveling to and from work.
I think YT has a download feature, and I imagine that can be run on any audio device. Of course it's enormously larger than an audio only track but AFAIK should work if the audio codec is supported by the playback device.
@@tonysu8860 that you for the advice. i will try and see it works but i think uploading the audio as a podcast would generally be a good thing for perun to do. his style lends itself well to it so i dont think he would need to make any changes to accommodate it and it would grow his audience beyond just youtube.
At times we have to wonder about the armed forces as well. The USAF complained about too many C130 and C17 aircraft being ordered, but it appeared that they had a use for them. At times the civilians have to think about how to maintain Know How. Most of the time, they probably don't. With predictable results.
2:00 the "defense budget vs healthcare" line was just a throwaway joke here, but I'd like to add one important thing to that: The US military budget is WAY smaller than its welfare deficit. A typical European nation spends around 1.5% GDP on military and 25-30% on welfare. The US spend around 3% on military and 19% on welfare. Even if it downscaled its military dramatically, it would still only make up for a fraction of the lacking welfare. And military expenditures come from the discretionary budget (the "general purpose" budget that the government can spend as it pleases), while social programs like public health care fall under "discretionary spending" which must be backed by permanent income sources. Arguments that cutting the military budget would make welfare more affordable don't work very well in reality, since it's hard to "shift" funds and tax burdens from one budget category into another. In general, a welfare program that's worth establishing while cutting discretionary spending is probably worth establishing without those cuts as well. You can still cut down discretiory spending later if you consider that sensible.
@@eljanrimsa5843 From what I could gather US medicine is very overpriced and for a bad reason: profits of the few who own it. US is one of the wealthiest nations on the planet, surely they could afford medicine if there was less nefariousness going on.
@@eljanrimsa5843 Because in the US healthcare isn't about people's health, it's about the cancerous growth of health insurance providers and how much lobbying money they can throw around.
Are you sure about those numbers? That 19% of GDP you mention sounds more like the amount spent on just healthcare, not welfare in general. In 2021 that was about 4.3 trillion dollars. Meanwhile over here in the Netherlands, with a healthcare system that's considered on the pricey side by European standards, we spent about 108 billion (11% of GDP) on healthcare in 2021. In per capita terms, we spend a little over half what the US spends. 25-30% sounds more like the spending on healthcare plus all other social benefits.
The NIMBY issues and the various political considerations of location vis-à-vis location is most prevalent in FPTP electoral systems, such as the US and the UK, to a lesser extent in systems such as the one used for the Australian House of Representatives and least among proportional systems. This is because FPTP systems tend to produce a primary loyalty towards a particular geographical area (i.e. the constituency), whereas the latter increasingly prioritise and rewards loyalty towards a party. This also translates somewhat into voter outlook on politics, which tends to think in terms of constituency or party representation. In the US cases, these issues are further exacerbated by being magnified by federalism, which allows for far more “beggar thy neighbour” politics in the guise of constant competition to grant concessions in the guise of tax breaks, free land, cheap finance, removal/reduction of regulations etc. My point is that while the US is useful to illustrate the extremes, it’s far from being a typical case. Similarly, I’d suggest inserting a caveat about the whole “Econ101” perspective, because the arms industry has rarely functioned on these terms, as the analysis itself demonstrates. This has also resulted in countries doing away with the trappings of private companies and competition altogether and running part of their defence industry directly themselves. This video is excellent as always, but there is a limitation and bias in the very “economistic” framing in terms of fairly simplistic incentives and the implicit societal assumptions and frameworks that are simply taken for granted.
the quality of wordsmithing in these videos is top tier, i love the flourishes ("munitions into mansions" 😂) as much as the hard facts @perun pls cover climate and natsec, i don't think enough people understand what a massive hidden driver of conflict it has become, and how it shapes defence policy
Yes! Yes! Yes! Perun, this is how and why Northrop Grumman specialized on various electronics or worked the basic mainframe with Boeing, Lockheed Martin, etc. It is really complicated in the relationships between the various Corps.
Might have missed my comment. No longer is there " death by powerpoint". You have elevated this to an art. Love to know your day job. May those dastardly Kiwilanders learn their place!😊
Your videos are really enlightning - With each of it, I really feel to understand a lot better how the military industry is working, and actually be able to see, why some of its flaws can really be „features“ that make sense. 💯🎉
A marvelously thorough case study. Like the Quebecker Prime minister Daniel Johnson used to say: "Quand je regarde mes chars, je me désole, quand je les compare à ceux du Canada, je me consolide."
5:00 to 5:28 hits far too close to home for brits like me after a week of headline news about 60’s-70’s-era schools crumbling because they’d been made of cheap ‘air-bubble’ concrete. ‘Creative cost-cutting’ indeed.
I am so very pleased the bin chicken survived as it's seemingly specialised tool has been adapted for a totally unrelated task and has thrived in a totally alien environment
Sounds like modern capitalism still drives monopolisation big time and governments struggle to keep at least some elements (or illusion) of competition alive.
A… “solution” to the “minimize the government expense while making sure you have a viable defense industry” is to regulate the defense industry in a utility-like manner. Utilities have to go in for rate cases periodically. This is where the utility goes to the regulator and says “we want to charge this much.” And the way they do this is by building up from a margin (generally net income or ebit). A utility will take its rate base (aka its pp&e +/- adjustments) and multiply it by either WACC or ROE and then add up all the prudent costs to get to a revenue number. Defense contractors having to go through this process would enable them to make a certain return while ensuring the government’s bill is minimized. Now, I say utility-like for a reason. This doesn’t really work for foreign sales. So foreign sales can use the an unregulated process or, if it is allies like America and England, there can be international agreements to use the same rate case numbers
So instead of having congressmen decide which companies get to live and die, and where they're going to be building their factories.... you suggest we put congress in charge of which companies live and die, and where they build their factories? Yes, that is sure going to change a whole lot of things. And I'm particularly sure that all those middle class employees, voters, are going to have all kinds of good feelings about their reps voting to lower their pay and lay them off, unlike our current system where our congressmen would need to vote to lower their pay and possibly lay them off to lower the cost of the product they're delivering. If your plan does not involve changing a single incentive, or changing who is overall in charge, it will not change outcomes. Look into California's slow nationalization of PG&E. They have taken almost complete control away from the company execs and employees, and yet as the state reps are under the same incentives (drive down costs for consumers without driving down worker pay, meaning cut infrastructure investment to the absolute minimal limit and let everything rot).
@@ASDeckard You could have just said “I don’t know how utilities are regulated.” That would have been a far more effective and efficient way of saying you don’t know how utility regulations work instead of demonstrating you have no idea how this works. Do you want to engage with what I actually said or are you just running down a dialogue tree?
@@magicznyignacy380 First, I have read that book. Second, besides the very lazy treatment of economics in that book (which is alluded to in the very damn (edit: preface) of the book), it doesn’t actually address the pros or the cons of this type of system in any kind of material way. Only if you take many, many steps outside of the material in that book are you able to connect that book to an argument for or against this type of system.
@@magicznyignacy380 (1) Oh god. I was really hoping you just pulled out a random book and referred to it instead of actually misunderstanding the book. Fine. We can do this one chapter at a time. Chapter 15 is the “How The Pricing System Works” chapter. This chapter talks about how pricing works. The closest you can find to something relevant is “These otherwise bewildering equations are solved quasi-automatically by the system of prices, profits, and costs. They are solved by this system incomparably better than any group of bureaucrats could solve them” and the claims that underlies this. There are two things to say here. First, this system of prices, profits, and costs, is still present in the rate case system. The market still exists in a rate case system. If something is present in both options then it isn’t something that can be used to determine which option is better. For someone using a book that is all about “fallacies” to make their point, you sure do like to do the thing that this material points to as being wrong. Second, and of much less importance, is how this chapter demonstrates the laziness the author treats the field that I talked about previously. It is all claims without evidence. The author says it is true therefore it is true. Which means to accept this chapter is to go off of faith, to go off of feels. I much rather make decisions on economics based in reality which this chapter doesn’t do. (2) Are you asking me for the exact language in the preface that the author even alludes to the very lazy treatment of economics in the book? I did say what specifically about the preface I took issue with. I provided you with the exact problem I had with the preface. What you are asking for is more specific information, correct?
As someone who had worked in the US defense industry 30+ years, this is an excellent primer. "Never assume malice where incompetence will do" is catchy but often not the case. Unless Russia.
[From article about neopaganism in Wagner] _Wagner ....to _*_Gods such as Perun-_*_ the ancient Slavic god of thunder and lightning-for protection and inspiration._ _The “Rusich” battalion is formed almost entirely of adherents of a variant of Slavic neopaganism known as “Rodnovery,” according to former unit commander Alexei Milchakov’s interviews with local Russian media._ Article name: *Secret Belief Means Wagner’s Most Dangerous Men Won’t Back Down* *‘SPIRITUAL CRUSADE’* *Will McCurdy* So in a way even Wagner worship Perun ... well, *we* do have our Sunday service we religiously attend.....
@@CantusTropus And? A lot of the guys from 2014-2015 aren't even in the Azov units anymore, and units like the 3rd Separate Assault Brigade were constituted with new volunteers who weren't Azov prior to the war. They share the name with the guys in black but there's a ton of severed lineage.
Dudes, don't take this seriously. After decades of soviet atheism, finding a person who truly believes (as opposed to claims believing) in some deity in the former USSR is not that easy. It's just for show. Yes, even the Orthodox church thing, more of a tradition for anyone other than ancient babushkas. So believing the hype about some devout pagan sect in wagner is totally bonkers. That's just psyops by Wagner. They didn't follow through when their leadership was intact, believing they "will not stop" (doing what?) is plain ridiculous. Most likely reporter having to fulfill his quotas, digging up the semi-obscure fact and blowing it out of proportion.
@CantusTropus I really don't understand this comment. Azov might or might not exist therefore we shouldn't make fun of neo paganism? What? At least do some research about the organisation. Does it still exist, does it still follow nasty ideologies, is it full of neo pagans? Even if so it would just make another wacky group which strives to go back to the glorious past that never existed. They probably also see Christianity as "Western influence" thus suspicious
Apologies if the sound is spotty this week - this video was put together in a few different hotel rooms and at least one airport. Sound guy does his best but he can only do so much.
As far as the topic goes, this is one for the defence economics fans in the audience. Looking at incentives, industry policy etc. is a bit more niche than talking about tanks or an ongoing conflict, but it's none-the-less a video I've been wanting to do for some time. Understanding the motivations and incentives of politicians, decision makers and other stakeholders is often a good lens to use when trying to understand why militaries buy what they buy and pay what they pay. I hope you enjoy the diversion, and we'll be back to the war in Ukraine next week.
Hi Perun, You are so close to half a million subscribers. Im thinking by the time Crimea is liberated. Be a nice Christmas 🎄 present 🎁 all around.
Ugh, ASIC.
I love how the sound guy is a character on the channel. Like Tim Allen’s neighbor on home improvement.
Content matters, and the sound being perfect rather than merely understandable does not.
We can have CNN with their fancy sets and makeup artists puking the approved narrative or we can have you.
I choose YOU😂
Perun apologizes for the audio... *Crisp audio*
Love the line “Corruption, that magical alchemical process that converts munitions into mansions” 🎉❤🥳😁
Well... it's kind of is converting lead into gold...
In a better world, it would be lovely to see government funding less needed for defense, and instead directed towards housing the populace..
In our world, government funding that is needed for defense is instead directed towards mansions for the wealthy.
So close, yet so far
Yes, he was on a roll 😂
The man is full of one liners. Every video just rolls them out.
@holyknightthatpwns It's populace, not populous a
Large cities are populous, a government serves it's populace
“All else being equal” has to be Perun’s favourite line
The unfortunate part is that all else is very rarely equal.
@@PerunAU In physics you need to keep repeating "In isolation" "Isolated case" "Ignoring all else" "In ideal case" etc.
Otherwise the "but..." is going to appear really fast.
I thought it was "Shoigu" "Gerasismov"!
In economics, "ceteris paribus" doesn't work because every trend and transaction changes the system. In war, plans don't survive the first encounter with the enemy.
@@ronniehill8213 Not his favourite line, but mine: "...are terrible people and I can't say enough bad things about them."
As an Eastern European:
Theoretically speaking: Multiple politicians are looking out for my job and security
It brought me to tears
It's still not as bad as here in Mordor
They do that a lot of times. Truble is they are securing jobs that nobody wants to work in.
Northern California had a long term Congressman (John Doolittle) who ended up being exposed as having provided funding for a project for the military that the military didn’t want. It tuned out his wife was running a business from her home that was getting large contracts for “services” which appeared suspiciously like bribery. The congressman didn’t retain his seat but there were no ethics charges that were made to stick. He replaced his congressman job with one as a lobbyist where he now, in all likelihood, is leveraging his experience in stealing government money for other government employee’s benefit.
This really gives the impression that corruption is quite difficult to detect and easy to get away with if caught. Leveraging a position of public trust to enrich yourself should be punished as treason in my opinion and there ought to be much more energy invested in policing for it. I imagine the obstacle for this is that we have to rely on corrupt politicians to police corrupt politicians
In the early golden days of Rome, accepting bribes or lying in court was supposedly punishable by, being tossed off a very tall cliff
@@ExtraRice365the Tarpeian Rock 😊
"....rely on corrupt politicians to police corrupt politicians...". Thank you for that phrase,it expresses EXACTLY what is happening in South Africa...and it is very rapidly changing a very beautiful country into a dank,dark,slimy,slippery dungeon of a failed state....Initially there was the ANC= African National Congress,but it has rapidly changed into the African National Corruption...
@@ExtraRice365Based Romans
@@gerhardvanderpoll7378Yes, very sad. The ANC under Mandela was an inclusive party, still trying to overcome the inequalities of Apartheid. Mbeki was also a pretty good president albeit not of Mandela's stature and in full AIDS denial. With Zuma the corruption floodgates were opened unchecked. And Ramaphosa has been notoriously ineffectual in stemming the flood. He even defended 'cadre deployment'.
As long as the ANC is perceived as the party that freed us from Apartheid things will not improve.
It is not just the ANC, but any party that gets re-elected no matter what, is doomed to sleaze, corruption and destroying a country.
I find it significant that the only province not governed by the ANC, the Western Cape, has the best Gini coefficient and the best development index. Still pretty bad, but better than all others.
The week is off to a good start.
The "destroys armies" series is a master class in applied systems thinking.
For those wondering, ASIC is the Australian Securities & Investments Commission. "The Australian Securities and Investments Commission is an independent commission of the Australian Government tasked as the national corporate regulator. ASIC's role is to regulate company and financial services and enforce laws to protect Australian consumers, investors and creditors".
So, it's kinda like your Securities and Exchange Commission?
that makes a lot more sense than application specific integrated circuit. thanks
@@ItRemindMeOfHomeyes
That sounds more terrifying than a xenomorph... yikes
Thanks, i came to the comments to check and see if anyone answered this lol.
I loved checking out the Japanese companies that are contributing to the F35 and seeing *just* the name, "Mitsubishi Heavy Industries."
As a Program Manager and Contracting Officer in the Defense Sector for over 35 years, you nailed it. My experiences have led me to the following summation/conclusion: "The primary purpose of Government procurement is to promote socioeconomic goals." I am not purporting that this is either good or bad, but rather it is simply the reality. Thanks for your continued well-researched, expertly presented, and thought-provoking presentations.
As someone who specialises in studying human behaviour I enjoyed the hypothetical scenario of emutopia discussing the incentives of politicians and defence contractors, it gets quite messy and complicated very quickly but I think you did a great job of tying it all together. Cheers Perun 👍
Ah yes, emutopia will finally get kiwiland thanks to perun
Strategic dispersion: another issue of spreading around construction - the O Rings on the space shuttle solid rocket boosters.
The O Rings that failed and destroyed Challenger _only existed_ because the solid rocket boosters were built in another State and so had to be _able to be broken down into sections_ that would fit on rail for transport from interstate.
The reason why was because that State had an important vote on the entire shuttle program.
The practical approach would have been to build and service the solid boosters in Florida near Cape Canaveral, and then move them in one piece to the launch pad.
But that would have put the entire shuttle program at risk of being cancelled by Congress or the Senate.
Thank you for this info, as it brings me convoluted relief. In the 1950s my father et al. we’re issued a patent for a double o-ring seal on a solid rocket booster. For years I’ve had the impression my father had some vague responsibility for the tragedy.
Do you by any chance have a source for that? I'm curious to know more.
@@jaymacpherson8167 the design of the O-rings was adequate, there was a flaw in their manufacture, at least that’s what I’ve been lead to believe
They were eventually going to have to move those boosters, they planned to launch from Vandenberg in California. If Challenger hadn't blown up, I think they were only a couple of flights away
Lobbying is cancer, that poor crew.
I never thought I'd be excited to watch a 1 hour long PowerPoint presentation every Sunday. Thank you for your hard work and great content, keep it up.
2023 has been a strange year...
You and me both, nerd boy.😁
Hell yeah; my wife and I love listening to thesy so we're right there withcha
Add me to the list 😊
Imagine tell people from early TH-cam what the site would be like in 15+ years. 1 hour power point presentations, satellite pictures from Google being analyzed, and people making military memes all in an effort to wage an informational war on Russia. I'd also like to see how mid to late 2000s 4chan would react to finding out that the star of the Apprentice would be president.
In South Korea, if you are looking for armored vehicles you ask either Hyundai Rotem or Hanhwa Aerospace. If you are looking for ammunition, you ask either Poongsan or Hanhwa Aerospace. If you are looking for (licensed) aircraft part manufacturers, you ask either KAI or... you get the point.
Hanhwa Aerospace executives literally said that they "want to be the Lockheed Martin of (South) Korea". No wonder there are their own Boeings or Northrop Grummans in every single sectors they have their hands on. I suppose it was partially planned all along by smart people in the government.
One thing to add: the company also makes Bin Chickens. Hanhwa the chaebol sponsors a baseball team Hanhwa Eagles, but because the team sucked at baseball for the recent 15 years we mock them by calling the team Hanhwa Chickens instead. This video might be the closest thing this channel will ever discuss about the -Austrailian- Emutopian defense economics in detail, and I absolutely loved it.
Reminds me of that bit in one of Perun's videos a while ago where the answer was always: M I T S U B I S H I H E A V Y I N D U S T R I E S. 😂
@@eternalwind08 well... in japan it literally is... WWII was not kind to japan (war crime, bluh bluh bluh...)
US literally gutted japan of it's defense industry... with it's peace constitution
This entirely encapsulates why I left the US Defense Sector. After being a fly on the wall in more program offices than anyone would want to admit, the politics and bureaucracy of how the DoD does business will send any reasonably intelligent person running. If you factored in the politicians influence on how the DoD spends its money, figure we waste about 30% of the taxpayer funds allocated each year. This is how the US Navy ended up with the LCS. Two hulls of each class were supposed to be built for competition and for testing of mission modules, a fleet of hulls two different ended up getting built with no operational mission modules, basically the Navy just subsidized two shipyards and got a bunch of ships to be decommissioned or sold off under FMS at pennies on the dollar (hopefully - fingers crossed).
The good men need to be able to endure the corporate bs, else the only men in the game will be the dark triad types that only care about personal gain.
@@incredulousmidwit Fundamentally that doesn't happen. That's the core of Pournelle's Iron Law of Bureaucracy - the people that wind up running any organization are those that specialize in the politics of that organization, not those that excel at providing the service that organization was designed to provide.
@@IFRYRCEare the law so solid and true that exceptions will never come?
I am learning so much from these videos that does not only apply to defense economics. Please don't stop making these videos even long after the hype for defense dies off. Even if you have to reduce the rate to once a month or once per quarter, please continue making them.
No, no, no, once a month 😱? once a week is little enough. Every Sunday I'm looking forward to Perun's power point presentation. I even started to like that Ozzy accent!
@@nicolaasstempels8207I am talking about the far off future when Ukraine is done and people stop paying attention to defense and war. Probably the views will go down but I hope he will continue even if at a reduced rate.
@@hungrymusicwolf yes I get your point. Would I like the war to continue to get weekly Perun posts? Nay, not really. So I guess we kind of agree.
Here, here.
I fully agree.
His Videos are a blessing and a highlight.
To say that I learned alot from his very educational Videos and his thought process is putting it lightly.
And I also hope he continues this project for a long time even if at reduced rate.
Yet his contact is just so top tier it's worth the wait.
Perun: “What should I use as an illustrative example of military procurement incompetence?
Ah right. French Pre-Dreadnoughts.”
Drachenfel fan?
@@thewick-j1837Gotta be. 🙂
If nightmares can take shapes of the ships, I think French pre dreadnought are the closest to it (ghost ships of 18th century dont come close).
Better example than Aukus or the F-35, only because the consequences are better known yet. But later, it could become the new metric XD
I would have loved to have seen a section on wartime vs. peacetime procurement, since the incentives on all parties change tremendously during a period of conflict
An excellent read is: "Freedom's Forge: How American Business Produced Victory in World War II" by: Arthur Herman
Roosevelt wanted to have a massive government bureaucracy managing every aspect of war production. He just chose the exact wrong people to do this. Instead, they created a system where the government listed what they needed and individual companies picked the things that they would be the best at making. So instead of companies having to completely restructure in order to make what they were told to make they went and looked at what they were best at and chose to make the things that they were best at making.
And the people who set up the industrial production of war materials were called the 'Dollar a Year Men' - because that's how much they were being paid.
Story told just for the algorithm.
Perun mentioned a munitions factory next to a grade school and the field trips involved.
As a young kid, we had a nuclear plant built just two crow-miles from the grade school I attended. And yes, we went on a field trip there - and walked. Walked across a state highway, then over a mile along the railroad tracks, all to visit a nude plant.
Fun times in the 70s.
That manufactured nudes? 😅
A WHAT PLANT!
@@kyleharrell4853 nuclear power.
This is not just a good video about defence economics, but a great video about more general macro economical concepts. You manage to clearly address how efficient markets are driven by competition and how for big enough market participants a number of problems emerge that you wouldn't find in less complex markets.
Misaligned incentives are literally the biggest (or even only, if you look at it fundamentally enough) problem we face as a species.
Every large societal or environmental problem we have is caused by some form of incentive misalignent.
< Weeps in game theory >
Weeps 2008 financial crisis
It's easy to criticize from afar, but every society and procurement program has to find the solution that satisfies as many stakeholders as possible. That's Perun's lesson.
False; the largest problem we face as a species is finding a way to increase the time french fries stay crispy and fresh without compromising quality and flavor characteristics.
The Bin Chicken MBT is fully integratable with the "Cane Toad" SHORAD system, the "Moggy" model of UAV, and the "Cocky" Battlefield Communications Network. Future upgrades will include a bullbar and a mini beer fridge.
Thank God they replaced the "Stupid Bloody Galah" with the Cocky. Unsecured communications in the 21st century, what were they thinking?
All I could think of when he gave the model designation SD-24 is an American locomotive from the early 1960s. It has a 2400hp engine, so you'll move pretty quick, but it doesn't exactly have a subtle profile, and the weight will destroy any road you drive it on
We all know that if Australia ever makes an unmanned A10 equivalent, it will either be the Lapwing, or Magpie.
Birds so fierce that even Australians don't dare to give them nicknames.
It’s gotta be the Magpie. Just like the A10 avenger the sound of a Maggie swooping down behind you as you pedal your Malvern Star at top speed brings fear into the hearts of those who have heard it. Evan after 45 years 😊
@@aaronleverton4221 the Bin Chicken does come with the "Flamin Galah" smoke screen system.
Regarding the Disney announcement re: incentives, this is also an example of how such deals can fall apart. Following the Florida governor's feud with Disney over socially conservative agendas, Florida has begun trying to take away long-entrenched Disney incentives; Disney has retaliated by, among other things, cancelling the Lake Nona move. Politicians who use public incentives to buy jobs may also think they're buying political loyalty from the wooed companies, and the companies might disagree.
And this is also a cautionary tale about what happens when businesses stop paying attention to who their customers are in favor of social activists who aren't their customers. Disney's in such bas financial shape that that project is never going to happen anyway.
@@colincampbell767 the only reason Disney does that is because they have an international audience and don't care for a few nutjobs in the back waters. Money talks. They are in a bad shape due to completely unrelated failings.
If they were some conservative wet dream in 2023, their sales would be 10% of what they do now. Because there are many conservatives in the world, but only few of each kind who are able to agree on what they want to conserve. Iranian conservatives are as backwards in their world view as the most backwards Christian nutjob imaginable. But the kind of things they'd like to see in a movie differs quite a lot from what the former want to see.
@@colincampbell767faaaaaaart
@@colincampbell767The social activists weren't their customers, but their employees. Many of the creative folk that work the parts of Disney that show on the screen are LGBT, and you outright ignore the concerns of your own employees at your peril.
@@bulletflight Disney treats it's employees, specially at it's theme parks, like s**t. Disney pays lip service to "LGBT" but censors it in countries where it is illegal. It's all about ESG scores and Profits.
"Congratulations soldiers of the Roman Empire, you did your job!"
"But all we did was that we just killed Phocas, the old Emperor?"
"I said you did your job!" - Heraclius
The consolidation dilemma is such a real one and is something that may come up with the US Air Force NGAD program. Northrop Grumman has publicly stated that they won’t be competing for the contract, leaving Lockheed and Boeing as the only competing bidders. Unless Boeing pulls some huge leap in innovation Lockheed is probably going to come up with the more capable fighter seeing as they have so much experience with the F-35 and F-22. They are truly a marvel of a company but handing over yet another fighter program to Lockheed on top of the very lucrative JSF program and leaving Boeing (who hasn’t come up with a competitive aircraft in forever-Im looking at you X-32) has me a bit concerned.
Try digging deeper into WHY NG chose to not participate.
@@stevewhite3424 I couldn’t give you an answer. They are planning on competing for the Navy’s NGAD program though so there’s that.
I've considered Boeing's many recent failures and don't feel that Boeing's problem is innovation or any other simple reason.
Boeing's problem is that it realized to be competitive today that it had to transform its design and production processes and adopt "Agile" development processes that originated transforming how software is created and developed and many were adapting to other industries. Elon Musk's many companies including Tesla and SpaceX are examples where this has been accomplished with great results.
So, what is agile development? Compared to legacy "waterfall" development that emphasizes a roadmap and milestones eventually leading to alpha, beta and golden versions that are "launched," agile development releases iterative versions quickly that apply small improvements and fixes. The User is the test vehicle and should not expect a problem free product until later versions and can choose to try the product at any stage of the development cycle. The problem for Boeing though is that some products like the 737-MAX aircraft can't allow certain mistakes and errors at all if they compromise safety and that's partly where Boeing went wrong. And, the same is true for Boeing's space launch programs. Boeing isn't melding the needs and establishing minimum proper minimum requirements for safety.
Program management has gotten very complex in an effort to adopt modern practices and many of Boeing's competitors including Airbus have been succeeding. Boeing has made some crucial mistakes and is paying for them.
After the YF-23 not being adopted most won't try to fight Lockheed Raytheon on contracts. If Lockheed Martin will get a monopoly, the state will either Nationalize or split it up.
@@stevewhite3424NG are focusing all the energies on the F/A-XX instead.
The best time of the week for sure, time to get a coffee, a muffin, and get some learning in!
I'm very very appreciate of the sheer wealth of knowledge that you're sharing with the world, it's invaluable
Why not a sandwich? Seems more fitting.
The spice to the learning is the delivery of humor bombs inevitably explode in our guarded minds with ghastly (ea)ffect.
🎉😢😮😅😂🎉
Hello Perun, would you perhaps consider an analysis on the impact of private organisations and government foundations ("United 24", "Come Back Alive", "NAFO") in contrast to their Russian counterparts?
Thank you for all your hard work and the fantastic presentations!!
Greetings from Germany
What Russian counterparts.
@@SianaGearzI feel like Russia asking their citizens for donations in an organised way goes against the Putin social contract of not disturbing russian citizens too much.
That said, those Russian mobiks have been begging informally for donations so it's really their loss.
This would be interesting to decide on whom to dump some extra donations on. I'm for instance more inclined to support Pavel asking for money to spend on first aid kits and thermal scopes through TH-cam than a large aid organisation that then annoys you for years with nagging mail to spend money on them.
Any Russian org having at least a marginal impact is de facto state-run now. So they all do one thing only - support the "smo".
I do not know how to put it into words how important this topic is in general and how many different situations this fits in. I have tried to explain these things to many many people in my life and some people seem to struggle wrapping their heads around this amount of variables.
I do want to thank you for providing me weekly entertainment like this (Yes, this is entertainment for me and probably for many others too).
Why would you bother explaining something as complex as defense procurement to lay-people?
It's like if I were to describe the R and D process and clinical trial testing in the pharmaceutical industry to a lay person.
This may actually turn out to be your most important video and it just might be much more timeless than all the others you've done!
With only 330k views!! it should be much much more
That's really impressive how Perun managed to create the best resource on political and economical education camouflaged as briefings about the war. Having millions of attention deficit youtube viewers to listen for hours about how the world is complicated is... no small feat, to put it mildly.
Yeah, as someone in the more general procurement space in a sector that has a peak/troughs kind of cycle for a variety of services really has me feeling the bit about being asked to be economical, yet also paying more so the supplier retains that capacity. It's such an interesting exercise and the issue often feels that finance people don't get how markets work.
as a finance guy, I heartily endorse the idea that finance people don't get how markets work; sad but true
Honey wake up a new Perun video dropped
Baby come back you can blame it all on improper millitary budgeting
This exact comment has been made on enough perun videos that it's not funny anymore...
I still relate
I don’t think he was joking. 🤣
@@andrewfleenor7459True. And therefore it shall be repeated again for each Perun video in the future because it speaks to our soul on a personal level of how good his contents are.
As they say in software development…. “On time, on spec, on budget, pick any two.”
In aerospace it's, cheap, reliable or high performance. Pick two.
I sure damn hope the Emutopia example is of a submarine... it'd be so fitting
I can see the title: Emutopian submarines. How Great White Sharks became overpriced Dugongs.
Our future minister of defence returns again with another hour of wisdom. With this stellar of a track record, a position running a national defence isn't a matter of if, but when.
Imagen:
Journalist fishing for a soundbyte: "and what is your position on defence spending?"
PERUN: "Let me just play you 100+ hours of videos about that."
@@markorr7125 I'm gonna go see FriendlyJordies next month, If I can pull the man aside, I'm gonna try and convince him to reach out to Perun for an intervfiew about the defence econnomics ofdf Australia and it's wider impacrs on the politcal sphere. The debate would be really fun to watch, as I think they;d hgave a lot to discuss especially as a political debate. Iff we can get it on youtube, it'd be even better
AUS could, and will, do worse 😆
@@EEWombatTo hell with that! Seal Team Six is kidnapping him right now to serve as SecDef.
@@EEWombat Can do, has done. If this man goes on FriendlyJordies, he's got the labor backing
As an End War player loved the inclusion of the Schwarzkopf and Panther to represent the ferocious Bush Turkey and Bin Chicken 🤣
Perun is quite the cultured gamer
I was like, which game are those from?? It was like Perun read my mind by adding that little note/joke.
@@oohhboy-funhouse Tom Clancy End War, a fairly old game but very good and still enjoyable to this day. Ironically it also got a few things right
Being a bit of a foreigner (at least in most places) I particularly impressed with the Bin Chickens inclusion of cooled stubby holders - I just wonder how many people appreciate what that actually is?
*only in Emutopia*
“Magical, almost alchemical process, that converts munitions into mansions…” I’m barely a minute in and know this one is going to be a cracker.
NIMBY is American too. George Carlin had a bit about it decades back.
Even tho this is clearly about defense economics, this video should be required viewing for all free citizens of any democracy or republic around the world. This so distinctly summarizes why political compromise exists, and in most cases, necessary.
Actually, nuclear missile silos can make for incredible house parties. There are several companies that have converted old silos into ultra-posh survival bunkers for the ultra rich. Complete with condos, exercise rooms and pools with landscaped waterfalls.
Thank you for maintaining to be a reliable and unbiased source of information on everything from military logistics to international geopolitical stalemates.
In a time where being misinformed is easier than ever, your work is more than appreciated.
Keep up the good work!
"unbiased" 😂😂😂
@@DoctorMandible Be gone Vatnik
Everyone has their biases, to call perun unbiased is a bit of a stretch, that being said he handles his well and his video's are informative.
Of course Perun is biased, we all are, but he is pretty clear about that. He knows he's biased, which is the precondition to lessen it.
I think Perun himself has said he has his own biases, and it's usually the people who are most aware of their biases -and have strong morals- who are least biased.
Or as the song goes, "Everyones's a Little Bit Racist".
When it comes to this, I still remember a German story about how the 'needs' are used to manipulate the competition. For example, when you need a new boat, but already know you want 'that' company to win, so you make the list of 'needs' so specific that another company, that might otherwise have a comparable product, can't compete, because the cupholders SPECIFICALLY NEED to be yellow.
something something, F-35 being bought by many countries eventhough their trials indicaded another plane was better suited for their needs
My Dad was a buyer for LA County, back when it had twice the budget of the entire State of California. They had to write specs to get a specific brand of truck by specifying an exact color, because they were prohibited from descriminating by radio type ( one provider had a radio system that just wouldn't work where the trucks were going to be used).
@@lamwen03 That's crazy. I can see why they might not be allowed to require a particular model of component or system, but surely it makes sense to be able to discriminate based on capability - specifying that the radio must work in certain areas and conditions.
@@trollerifficThe State mandate for the bid was that it had to have a radio capable of XXX. Both qualified, but the radio for one would not work properly in So. Cal. AM vs. FM? I don't recall if I ever knew, it was so long ago .
Common feature in all tenders in Mordor. Also, properly wording the bid is very important, and if it fails to satisfy some obscure guidelines of which those who aren't supposed to win are not in the know, too bad for them. And kickbacks, of course. There have to be kickbacks.
Lets go booooys! Ah, my favourite 'how rooted is your army?' series of vids
First, thank you for an exhaustive overview of defense incentive and interest. But when I say exhaustive, it is in a relative level of attempting to keep up with the information bullet points in these lessons that are spewed faster than rounds from an old German MG42. Due to my inability to quickly comprehend the information flow, I artificially increased my viewing of this YT video by 3x. Even with pauses and rewinds within each viewing, the information flows were fast and furious, sometimes beyond my capability to immediately comprehend, thus the need for repeated views. This is not a complaint. This is an acknowledgment of the brilliance of the YT products you are providing. Keep it coming. Fortunately, I have the time for repeated views to completely absorb the information you are providing. Simply brilliant. Thank you.
Don't underestimate the devastating effect it could have on morale when field commanders have to report losses due to an attack of Bin Chickens.
Translation "bin Chicken" is an Ibis known for feeding in rubbish bins
If Emutopia ever develops a Battletech -style mech, I hove they call it the Walkabout. It'd be a shame not to
Given the recent Starlink controversy (though the facts around it appear to be muddy), perhaps a video on the reliance of militaries on commercial/private service providers? There's obviously the manufacturing side, but I was thinking the ongoing services side - not counting PMCs which you've already discussed.
Whether that's a commercial satellite provider, or maintenance contracts, or using essentially commercial products/services like cloud computing providers (or Ukraine using Starlink). And the benefits, problems, and complications that result (like a country maybe needing to send non-military engineers into a warzone to support weapons systems).
It is really tempting to say that this may be one of your best videos. However, the overall quality of your content is so high that it's impossible to not wonder if doing so would be unfair.
I will say that it was an incredibly though-provoking and eye opening presentation, though.
Is is a blessing that we get to enjoy such contingent and specialised analysis for free.
I love you so much, mate.
I really enjoyed the exploration of why military, political, social and economic incentives or driving factors can introduce complexities and challenges to procurement.
I have an old school friend who works for *ASIC* (He has no online identity at all), he used another school friend _as a training example_ for catching insider traders.
The other school friend was convicted.
[Australian Securities and Investments Commission - the financial market regulator]
No online identity at all? *Awesome!*
When ASIC wakes up and gets on someone's arse, its usually curtains for them.
Years ago when I was doing stuff tangentially related to them and other enforcement agencies I had a friend of a close mate get a job doing IT and technical services for them and stupidly put my hand up saying, yeah, I'll give you a reference for them as I know how it works when they vet their employees. Except this seemed to be much worse after two hour long 'interviews' about just what 'Bob' got up to in his spare time, any unusual depravity he got up to and they knew all about me, so that was a bit 'uncomfortable' having that read back to me.
Sort of a 'This is your life' show, except you get a traffic cone to sit on
Shadow profiles are still an online identity.
When I started at Boeing in 1985 there were 100,000 employees in the Seattle area with 120,000 worldwide, most of the remaining employees were in Houston and Wichita. After the acquisitions of Hughes aircraft, and McDonnell Douglas by the year 2000 the Boeing employment roles were still about 120,000. I left the Defense business as my particular specialty (low observable technologies) went from $200 billion in contracts in 1982 to $200 million contracts in 1990. I went back to College to move from an MS to a PhD, but I could not stand the attitude of academics who were clueless about the technology and arrogant about their superiority.
I wound up working on the assembly line at Nintendo, where my soviet counterparts who moved to Seattle to get Aerospace jobs where in the same assembly lines.
$200 billion in contracts in 1982? Come on man, that's like the entire military budget in 1982.
Exactly one hour long...
Gratifying, soothing, perfection.
Correction: Missile silos are GREAT places for house parties, it's just that they're very hard to book.
Perun keeps doing it! You have a voice of 30 year old with expertise and experience of 50 year old.
Every sunday feels like christmas with this guy, I drop everything I am doing to watch it every time
The discussion of consolidation and the risk of losing capacity around the 16 minute mark puts me in mind of something Drachinifel said in a recent drydock. He was asked about shipyard closures dueing the Anglo-German Battleship Building Race of the early 20th century and responded by summarizing shipyard closures announced in a 1912 (IIRC) trade publication (there were several). This was around the time of the Churchill anecdote about the Navy wanting six battleship, Parliament wanting four, so they compromised on eight. The four Iron Dukes were laid down in 1912, as were several of the Queen Elizabeths, and the four King George V class ships laid down in 1911. So even in an arms race some vendors can still go under.
Oh no Perun insulted the T-14
This means weeks of internet discourse and a video by the Chieftain for some reason
Nice another banger by power point man
Brilliant ! This is an excellent example of the professional challenges I've often faced during my career, and it applies to ALL activities the government is involved with. Thanks, Perun !
In truth I already knew much of this, as I have an economics background, but good job putting it all into a single hour long presentation that's interesting.
If the next bushmaster isn’t called the bin chicken I’m emigrating
That avo on toast comparison was brilliant and relatable in aus
@ 12:20 you might be surprised at how much critical equipment is actually supplied by small engineering firms. Sometimes really one man in a shed, at least in the UK. Small quantities of high precision parts are a good match for this sector, with a good margin for them. They just have to get on the list of approved suppliers. There is paperwork, traceability is an absolute. I speak of what I know.
Somehow the first thing that came to my mind was the legendary Accuracy International story.
Deal with logistics, can confirm
"What goes into a cup of coffee? (coffee, water, coffeepot) Its seems simple enough. But if you look at the inputs to those inputs (labor, shipping, farmland, water fertilizer; water purification, labor, pipelines, electricity; manufacturers, labor, raw materials, electricity), it very quickly spirals out of control until the flowchart you're looking at looks like an entire civilization."
The US Navy's Littoral Combat Ships (LCS) are examples of a massive procurement program that went off the rails somewhere along the line. I would love to see a case study of how that happened.
Great video! It gave me this insight:
A free market is like an ecosystem. The main driver is survival of the fittest, but if too much biodiversity is lost, the whole thing might just collapse. (Looking at you, Amazon.)
Luckily, humans have a great track record when it comes to intervening in ecosystems... /s
"Survival of the fittest" often implies that fitness is the end-goal. Ultimately though, the goal isn't to be fit, but simply to survive.
When there's a lot of competition, there's plenty of incentive to be the fittest and out-perform your competitors and threats, because that's what is necessary to survive. But once you've outlived them all and there are no more threats anymore, well, what incentive is there actually to be fit?
@@scyfrix There are no goals or incentives in evolution; there's only pressures.
If you introduce an antibiotic in a culture, the bacteria don't learn, develop, want, or choose anything. They're self-replicating, biological robots that can't think. The fact that you end up with resistant bacteria is just the most likely outcome of a predictable process. If you sieve some sand, you end up with only rocks and shells; not because the objects can think, but because that's how sieves work.
Humans often see patterns where none exist (a.k.a. pareidolia) and I suspect describing evolution in terms of choices is an expression of this.
"Fittest" simply means "best adapted to current pressures". When pressures change, the definition of "fit" changes too.
A Procurement that arrived on time, on budget and in quantity? What sorcery is this?
Happens every day but isn't "news".
BRAC had some unintended outcomes from moving work from where labor was expensive to where it was cheap. It was assumed that labor would be available at the destination, i.e. people would move and take pay cuts. That did not happen. The military today has plenty of money but is unable to fill many roles because the talent is a resource that is not distributed equally across the states.
And then you wind up with some fool working military intelligence in Massachusetts on an air base...
As an example of this, I'm a contractor at a naval base in a remote part of California. I've had a supervisor for the federal government vent to me about the way that "90% of the time" (according to him, may be overstated) you advertise a position, conduct interviews, and make a selection, only to have the successful candidate take a second look at where the base is and turn the offer down.
Labor is only going to get more scarce, too
And as Adam Smith pointed out in 1776 "Men are of all commodities the most difficult to be moved."
I could not detect any anomalies in sound quality throughout the video, so your fears had been unfounded. Your sound-guy did a bang-up job making the audio perfect!
*Obligatory reference to Sunday night not being complete without a banging Perun video*
One of the best examples of this process is a rather topical one: the competition for what became the F16. It’s rival aircraft was technically the winner, but General Dynamics (as it was at the time) was light on work, so the US government selected that as the winner, and to be fair, the F16 was pretty legendary as one of the best multi role fighters ever, even before Ukraine started clamouring for it.
And the losing rival went on to become the F/A 18, again, an aircraft with a substantial reputation for being a superb multi role aircraft.
It meant the US could award contracts for essentially the same aircraft to the two different firms and their subcontractor network that entered the original competition, supporting both companies and also getting two rather excellent aircraft that have been domestic and export successes.
That image of Denmark in the F-35 supply chain graphic at 39:20 has to be the most cursed ive ever seen lol
Right on schedule, minutes after uploading. Thanks for your dedication Perun.
A great example of this (outside of the military world, of course) is the ITER fusion project in France, which in order to attract funding from many countries, has had to disperse development and manufacturing across the world to an absurd extent. This has had the predictable effect on the cost and schedule.
First world problem: perun thumbnails being different from the actual first slide in his video
I love how he can come up with completely hypothetical examples, like the "Thunderpig", that somehow still feel very relevant.
So is this a reference to Lazerpig or the Warthog? Or both?
_"... but like any sensible Australian, i would rather have to deal with Spetsnaz kill team than with ASIC."_
I will admit, that sentence carried more weight _before_ the Russian invasion of Ukraine, but i think this goes for any financial policing body.
Sure, i'll take on a couple highly trained military special forces units no problem, but i'm not crazy.
"I am crazy enough to take on batman but the IRS, no thank you." - Joker
The taxeman knows everyone hates him so he dosen't bother putting a nice facade.
The sheer simplicity of that situation makes things easier to handle.
I should have had more faith. I looked at the title of this episode and it rang out as dry as a dead dingos dong. How wrong I was. Over the time I laughed, was bemused and enlightened in equal measure. I was entertained and informed and in short learned more about defence economics in one concise piece than I had before. I hear Perun is soon to become a national treasure and required listening for anyone interested in just about anything 😊
10:50 - I think US did it somewhat right in WW2, where they would choose the platform from one competitor, but then would employ all the rest of competitors to build it.
In such way, the best and most optimal product is chosen, but there are no inefficiencies of having 4 out of maybe 5 competitors then sitting on their hands doing nothing. As well it remove competitive advantage of the winners as winner despite taking lion share of the profit has to share all technology and knowhow, such naturally levelling the playing field.
This might only work during a war, where nationalism aligns a lot of incentives while any obstruction is threatened with the death penalty. During peace times the company which has the winning concept can do a hell of a lot of things to chip away and profit its competitors might have ...
Incomplete or inconclusive documentation is only a starter here ...
@@brag0001 That again just depends on the goal of nation and incentives. If the goal is to both keep competitors around and not to compromise on the quality of equipment then this works. It simply removes any incentive to be political, because we know that regardless what product is chosen everyone will have work.
As well as for incentives - yes, sure there are many ways to ruin competitors day, however if incentives are correct then this will not be attempted. Just put the clause saying industrial sabotage is considered individual responsibility with the criminal charge and no sane person will be putting their own personal life on line to ruin the day for competitor.
This is obviously theoretical discussion... and most likely only applicable to few countries in the world - US, ruzzia, China actually does this, France, Germany... and that is about it. I guess if we consider EU as supper state then they can at some point implement something like this, where mainly Germany, UK and France are bickering between who do what, seems like they almost need somebody above their national government to tell them what is right.
@@lp9280 There are so many ways to make life hard for your competition, if said competition has to rely on the quality of your documentation, that you won't ever be able to prevent that with laws. Even outside the defense sector, when working with companies who need you to implement their stuff to drive their own business, this is already a challenge. And in those cases the incentives are clearly aligned. Yet it's always a struggle. I've yet to find a documentation which perfectly matches the real world implementations of things.
A concise and cogent explanation of a wildly complicated topic. The same principles apply to dozens of processes in untreated industries - I’ll see this everywhere for weeks to come. Thank you for this very competent analysis.
hello perun. is there a possibility that you could upload the audio of your videos on spotify or something. the lenght of the videos makes it difficult to slot into a limited timeframe and an audio only version that you could pre download would make it easier to listen while traveling to and from work.
I think YT has a download feature, and I imagine that can be run on any audio device. Of course it's enormously larger than an audio only track but AFAIK should work if the audio codec is supported by the playback device.
@@tonysu8860 that you for the advice. i will try and see it works but i think uploading the audio as a podcast would generally be a good thing for perun to do. his style lends itself well to it so i dont think he would need to make any changes to accommodate it and it would grow his audience beyond just youtube.
At times we have to wonder about the armed forces as well. The USAF complained about too many C130 and C17 aircraft being ordered, but it appeared that they had a use for them.
At times the civilians have to think about how to maintain Know How. Most of the time, they probably don't. With predictable results.
2:00 the "defense budget vs healthcare" line was just a throwaway joke here, but I'd like to add one important thing to that:
The US military budget is WAY smaller than its welfare deficit.
A typical European nation spends around 1.5% GDP on military and 25-30% on welfare.
The US spend around 3% on military and 19% on welfare. Even if it downscaled its military dramatically, it would still only make up for a fraction of the lacking welfare.
And military expenditures come from the discretionary budget (the "general purpose" budget that the government can spend as it pleases), while social programs like public health care fall under "discretionary spending" which must be backed by permanent income sources. Arguments that cutting the military budget would make welfare more affordable don't work very well in reality, since it's hard to "shift" funds and tax burdens from one budget category into another.
In general, a welfare program that's worth establishing while cutting discretionary spending is probably worth establishing without those cuts as well. You can still cut down discretiory spending later if you consider that sensible.
If it is possible to do both, then why has the United States the biggest army and no public healthcare?
@@eljanrimsa5843 From what I could gather US medicine is very overpriced and for a bad reason: profits of the few who own it. US is one of the wealthiest nations on the planet, surely they could afford medicine if there was less nefariousness going on.
Are you factoring military incured debt into military spending?
@@eljanrimsa5843 Because in the US healthcare isn't about people's health, it's about the cancerous growth of health insurance providers and how much lobbying money they can throw around.
Are you sure about those numbers? That 19% of GDP you mention sounds more like the amount spent on just healthcare, not welfare in general. In 2021 that was about 4.3 trillion dollars. Meanwhile over here in the Netherlands, with a healthcare system that's considered on the pricey side by European standards, we spent about 108 billion (11% of GDP) on healthcare in 2021. In per capita terms, we spend a little over half what the US spends. 25-30% sounds more like the spending on healthcare plus all other social benefits.
Very great insights. Clears up thoughts when listening about some procurement scandals or issues a military can face.
Now is really Sunday 😅
The NIMBY issues and the various political considerations of location vis-à-vis location is most prevalent in FPTP electoral systems, such as the US and the UK, to a lesser extent in systems such as the one used for the Australian House of Representatives and least among proportional systems.
This is because FPTP systems tend to produce a primary loyalty towards a particular geographical area (i.e. the constituency), whereas the latter increasingly prioritise and rewards loyalty towards a party. This also translates somewhat into voter outlook on politics, which tends to think in terms of constituency or party representation.
In the US cases, these issues are further exacerbated by being magnified by federalism, which allows for far more “beggar thy neighbour” politics in the guise of constant competition to grant concessions in the guise of tax breaks, free land, cheap finance, removal/reduction of regulations etc.
My point is that while the US is useful to illustrate the extremes, it’s far from being a typical case.
Similarly, I’d suggest inserting a caveat about the whole “Econ101” perspective, because the arms industry has rarely functioned on these terms, as the analysis itself demonstrates. This has also resulted in countries doing away with the trappings of private companies and competition altogether and running part of their defence industry directly themselves.
This video is excellent as always, but there is a limitation and bias in the very “economistic” framing in terms of fairly simplistic incentives and the implicit societal assumptions and frameworks that are simply taken for granted.
PS. The outro made me even more excited for the next video! 😀
the quality of wordsmithing in these videos is top tier, i love the flourishes ("munitions into mansions" 😂) as much as the hard facts
@perun pls cover climate and natsec, i don't think enough people understand what a massive hidden driver of conflict it has become, and how it shapes defence policy
Yes! Yes! Yes! Perun, this is how and why Northrop Grumman specialized on various electronics or worked the basic mainframe with Boeing, Lockheed Martin, etc. It is really complicated in the relationships between the various Corps.
You can tell Perun is an Australian because he can talk about a 45 dollar serve of avocado and toast without breaking into laughter or tears.
Might have missed my comment. No longer is there " death by powerpoint". You have elevated this to an art. Love to know your day job. May those dastardly Kiwilanders learn their place!😊
Your videos are really enlightning - With each of it, I really feel to understand a lot better how the military industry is working, and actually be able to see, why some of its flaws can really be „features“ that make sense. 💯🎉
A marvelously thorough case study.
Like the Quebecker Prime minister Daniel Johnson used to say: "Quand je regarde mes chars, je me désole, quand je les compare à ceux du Canada, je me consolide."
5:00 to 5:28 hits far too close to home for brits like me after a week of headline news about 60’s-70’s-era schools crumbling because they’d been made of cheap ‘air-bubble’ concrete. ‘Creative cost-cutting’ indeed.
I am so very pleased the bin chicken survived as it's seemingly specialised tool has been adapted for a totally unrelated task and has thrived in a totally alien environment
Sounds like modern capitalism still drives monopolisation big time and governments struggle to keep at least some elements (or illusion) of competition alive.
Thank you 💛 Perun for everything you do. It's very much appreciated.
A… “solution” to the “minimize the government expense while making sure you have a viable defense industry” is to regulate the defense industry in a utility-like manner.
Utilities have to go in for rate cases periodically. This is where the utility goes to the regulator and says “we want to charge this much.” And the way they do this is by building up from a margin (generally net income or ebit). A utility will take its rate base (aka its pp&e +/- adjustments) and multiply it by either WACC or ROE and then add up all the prudent costs to get to a revenue number. Defense contractors having to go through this process would enable them to make a certain return while ensuring the government’s bill is minimized.
Now, I say utility-like for a reason. This doesn’t really work for foreign sales. So foreign sales can use the an unregulated process or, if it is allies like America and England, there can be international agreements to use the same rate case numbers
So instead of having congressmen decide which companies get to live and die, and where they're going to be building their factories.... you suggest we put congress in charge of which companies live and die, and where they build their factories? Yes, that is sure going to change a whole lot of things.
And I'm particularly sure that all those middle class employees, voters, are going to have all kinds of good feelings about their reps voting to lower their pay and lay them off, unlike our current system where our congressmen would need to vote to lower their pay and possibly lay them off to lower the cost of the product they're delivering.
If your plan does not involve changing a single incentive, or changing who is overall in charge, it will not change outcomes. Look into California's slow nationalization of PG&E. They have taken almost complete control away from the company execs and employees, and yet as the state reps are under the same incentives (drive down costs for consumers without driving down worker pay, meaning cut infrastructure investment to the absolute minimal limit and let everything rot).
@@ASDeckard
You could have just said “I don’t know how utilities are regulated.” That would have been a far more effective and efficient way of saying you don’t know how utility regulations work instead of demonstrating you have no idea how this works.
Do you want to engage with what I actually said or are you just running down a dialogue tree?
@@magicznyignacy380
First, I have read that book.
Second, besides the very lazy treatment of economics in that book (which is alluded to in the very damn (edit: preface) of the book), it doesn’t actually address the pros or the cons of this type of system in any kind of material way. Only if you take many, many steps outside of the material in that book are you able to connect that book to an argument for or against this type of system.
@@magicznyignacy380
(1) Oh god. I was really hoping you just pulled out a random book and referred to it instead of actually misunderstanding the book. Fine. We can do this one chapter at a time.
Chapter 15 is the “How The Pricing System Works” chapter. This chapter talks about how pricing works. The closest you can find to something relevant is “These otherwise bewildering equations are solved quasi-automatically by the system of prices, profits, and costs. They are solved by this system incomparably better than any group of bureaucrats could solve them” and the claims that underlies this. There are two things to say here.
First, this system of prices, profits, and costs, is still present in the rate case system. The market still exists in a rate case system. If something is present in both options then it isn’t something that can be used to determine which option is better. For someone using a book that is all about “fallacies” to make their point, you sure do like to do the thing that this material points to as being wrong.
Second, and of much less importance, is how this chapter demonstrates the laziness the author treats the field that I talked about previously. It is all claims without evidence. The author says it is true therefore it is true. Which means to accept this chapter is to go off of faith, to go off of feels. I much rather make decisions on economics based in reality which this chapter doesn’t do.
(2) Are you asking me for the exact language in the preface that the author even alludes to the very lazy treatment of economics in the book? I did say what specifically about the preface I took issue with. I provided you with the exact problem I had with the preface. What you are asking for is more specific information, correct?
As someone who had worked in the US defense industry 30+ years, this is an excellent primer. "Never assume malice where incompetence will do" is catchy but often not the case. Unless Russia.
[From article about neopaganism in Wagner]
_Wagner ....to _*_Gods such as Perun-_*_ the ancient Slavic god of thunder and lightning-for protection and inspiration._
_The “Rusich” battalion is formed almost entirely of adherents of a variant of Slavic neopaganism known as “Rodnovery,” according to former unit commander Alexei Milchakov’s interviews with local Russian media._
Article name:
*Secret Belief Means Wagner’s Most Dangerous Men Won’t Back Down*
*‘SPIRITUAL CRUSADE’*
*Will McCurdy*
So in a way even Wagner worship Perun ... well, *we* do have our Sunday service we religiously attend.....
As funny as that is, let's not throw that particular rock. The Azov battalion still exists (or at least did exist).
@@CantusTropus And? A lot of the guys from 2014-2015 aren't even in the Azov units anymore, and units like the 3rd Separate Assault Brigade were constituted with new volunteers who weren't Azov prior to the war. They share the name with the guys in black but there's a ton of severed lineage.
Dudes, don't take this seriously. After decades of soviet atheism, finding a person who truly believes (as opposed to claims believing) in some deity in the former USSR is not that easy. It's just for show. Yes, even the Orthodox church thing, more of a tradition for anyone other than ancient babushkas. So believing the hype about some devout pagan sect in wagner is totally bonkers. That's just psyops by Wagner. They didn't follow through when their leadership was intact, believing they "will not stop" (doing what?) is plain ridiculous. Most likely reporter having to fulfill his quotas, digging up the semi-obscure fact and blowing it out of proportion.
@CantusTropus
I really don't understand this comment. Azov might or might not exist therefore we shouldn't make fun of neo paganism? What?
At least do some research about the organisation. Does it still exist, does it still follow nasty ideologies, is it full of neo pagans?
Even if so it would just make another wacky group which strives to go back to the glorious past that never existed. They probably also see Christianity as "Western influence" thus suspicious
My weekly Sunday clean the house side kick perun! You are so awesome at these