Comments by "Jim Luebke" (@jimluebke3869) on "Valuetainment" channel.

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  71. Defense contractors don't need actual war to make money. The Cold War proved that. Just the fear of war is necessary, which is something every reasonable person will probably have forever. Margins on bullets and bombs are awful. National customers whose working-age population is getting killed (and not working) are not good customers. Dead people don't have any money. Countries getting their infrastructure reduced to rubble, are not good customers. Who wants to be paid in rubble? Debt-financing of war has a way of wrecking the international order. (See: the 20th century). On the other hand, the best margins are on major cutting-edge defense systems. These are usually for deterrence, and never actually have to be used. Countries can decide how much money they have to spare for them, making them much more stable long-term customers. Spinoff technologies gave us the personal computer and the Internet. Countries that don't have a lot to spend on them, clearly do not have their economies in good order. They will come under the influence of countries that do have their economies in good order, without even a shot necessarily being fired. As long as this influence is imitative -- as long as it spreads the better economic ordering -- this is a very good thing. It's not a bad thing for defense contractors to make money (even, make LOTS of money) especially advancing technology that might not have an immediate commercial application, but whose long-term implications are massive. Microelectronics and networking before the networks are fully deployed, both fall into this category. Research in the context of defense (rather than just basic theoretical research) raises the stakes, giving some signals of which research to prune back as ineffective, and which to reinforce as fruitful. Simply demonizing defense contractors as warmongers ignores the healthy part they can play not only in an overall economic ecosystem, but in the defense of that system, which is (obviously) essential for its survival.
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  99. Pat, you don't need wars to make money as a defense contractor. You want fear of war. In fact, if Putin fell tomorrow and Russia became best friends with everyone in their neighborhood, where do you think that would leave the defense contractors? On the other hand, if suddenly he sued for peace and stayed in power, wouldn't every single country in the region still flock to the United States to get the latest and greatest defense systems? Nah man, you don't want your customers dead. Dead people don't have any money. You don't want them at war either, you want their economies humming along and their tax revenues piling up, so they can spend that tax money on those high-value (high margin!) defense systems. You know what the margins on ammunition are? They're cr*p. Actual shooting war is a low-margin activity. War sucks, man. And you really think defense contractors are better off when their customers' countries are rubble? Pat, you want to be paid in rubble? It doesn't help when they borrow the money either. England and France borrowed the money for those world wars. For a while it was fun getting the English to give us all their military bases. Eventually they had to shut down the empire to pay us back. What is the United States going to have to shut down, to pay off the national debt we're building up because of these wars (and our huge unsustainable domestic spending?) And you're a smart guy, you probably know what happened when they tried to collect reparations from their enemies to pay off those debts. It got to the point that the United States just said, "to h*ll with all of you, we're just going to rebuild you and you're not going to fight anymore." No joke Pat, war isn't all it's cracked up to be. Defense contractors need healthy and prosperous customers as much as anybody.
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