The Monopoly on War： How the Military Industrial Complex is Bankrupting America
Episode Stats
Harmful content
Misogyny
4
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Toxicity
3
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Summary
Think about this: If you and I own a hospital, we need sick people to come to the hospital to make money so we can make money. That's how we make money in America. Imagine a business model where you needed more wars for you to make more money. Let me say that one more time: Imagine an industry you re a part of that you need more wars, potentially with more people dying, to make a profit. That s defense contractors.
Transcript
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There's a lot of ways to make money in America, but I want to tell you about a business model
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that's going to get you to look at this in a completely different way.
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If you and I run a hospital, we've got 200 beds, if there's empty beds, you and I are
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not making money, so we need sick people to come to the hospital to make money.
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If you and I own a hotel, we've got 500 rooms, guess what?
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If our rooms are empty, we don't make any money.
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We need people to come and stay in our hotel so we can make money, right?
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Now imagine a business model where you needed more wars for you to make more money.
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Imagine an industry you're a part of that you need more wars, potentially people dying for
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You know how Papa John's says, better ingredients, better pizza.
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So before I piss some people off, I'm pro-military.
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I was at the 101st Airborne, and I love the fact that the US has got a strong military,
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but there's some people, some companies, that are seeing it as a way of making a ton of money,
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and today we're going to dive into different data that's going to show to you where we compare
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to other countries on how much money we're spending and how much profit's being made.
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So if you give value out of this video, give it a thumbs up and subscribe to the channel.
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I've been in the insurance industry for 23 years.
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There's a product in the insurance industry called life settlement.
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So life insurance companies, when you buy a product, they want you to either live a
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long life because they're never going to have to pay out the life insurance policy,
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or they want you to kind of cancel your insurance policy 15, 20, 30 years later, right?
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Like you're at a good age, you're healthy, cancel now, they keep the money, you're good
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But there's a segment of life insurance called life settlement, very profitable.
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What life settlement companies do is they go to an 80-year-old who's got a $5 million
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insurance policy, whose premium's going up, and it's like paying $3,000, $4,000 a month
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They say, I can't afford to pay $3,000, $4,000 a month.
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The life settlement company will say, hey, Mr. Jones, you got a $5 million insurance policy,
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If I give you $1 million cash up front, I'll take over the payments, but when you die,
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Wait a minute, the 80-year-old is sitting there saying, man, that's crazy, I mean, there's
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nobody else that can pay this insurance policy to.
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My wife is there, or my husband's there, fine, I'll take the million dollars, and you can
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That person got a million dollars, they're happy.
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You're not paying the payment $3,000, $4,000, $5,000 a month, that's what you're doing every
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Every day, you're celebrating or waiting for that person to die.
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The sooner they die, the bigger rate of return you make.
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Some call it noble, some have a hard time selling this product, but here's the moral of
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You're incentivized to hope for that client to die sooner, rate of return goes higher.
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Military, industrial complex, defense contractors, Boeing, all these Raytheon, Northrop Grumman,
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The more wars they have, the more conflict there is, the more issues taking place, they
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Now, it's not illegal, nobody's doing anything illegal, but that's your business model.
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Having said that, I'm going to share a few things with you.
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Okay, so what the US Congress is right now working on is a bipartisan effort to address
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the problem with Pentagon falling victim to price gouging from defense contractors.
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Shai Assad, who was a former executive VP and chief contract negotiator at Raytheon,
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and defense department's most senior and awarded contract negotiator said the following.
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He said the roots of the problem can be traced to 1993 when the Pentagon, looking to reduce
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costs, urged defense companies to merge and 51 major contractors consolidated to five
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giants, Lockheed Martin, Raytheon, General Dynamics, Northrop Grumman, and Boeing.
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That could have been the dumbest thing they could have done.
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Because you have 51 companies competing for number, so you and I taxpayers can get the
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Now, they're saying, nope, there's only five companies you can go through.
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And those five kind of said, well, listen, guys, we can compete as much as we want, but
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we're kind of on the same team as well because there's no other companies.
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The Pentagon overpays for almost everything, radar, missiles, helicopters, planes, submarines, everything
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Matter of fact, NASA once paid $10,000 for an oil pressure switch that only cost $328.
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And in the competitive environment, before the companies consolidated, a shoulder-fired
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Stinger missile that cost only $25,000 in 1991 with Raytheon now being the sole supplier
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of that missile, it now costs more than $400,000 to replace each missile sent to Ukraine.
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I got no six, seven other people to compete against.
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Uh, what do you think we should sell it for, Johnny?
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So in a 60-minute interview, Bill Whitaker is interviewing General Bogdan, who's a three-star
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And Bill Whitaker's talking about what's wrong with profits being made.
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But taking to an extreme industry may not make the best decisions in the best interest
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And he continued to say, we've only begun to feel the full impact.
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In 2012, he was tapped to take the reins of the troubled F-35 Joint Strike Fighter program.
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It was seven years behind schedule and $90 billion over the original estimate.
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But Bogdan told us the biggest costs are yet to come for support and maintenance, which
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He continued, he says, we won't be buying too many F-35 planes as we thought because it
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doesn't make a whole lot of sense to buy airplanes, more airplanes, when you can't even afford
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According to 60 Minutes, contractors overcharge the DoD on almost everything the military buys
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Almost half of the Pentagon's budget for the upcoming fiscal year will go to defense contractors.
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Some contractors withhold pricing information from the Defense Department.
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Boeing refused to share cost information for nearly 11,000 items between October of 2020
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According to an annual DoD report to Congress on pricing data, that same report found Transdime,
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a subcontractor was responsible for 275 data denials.
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You know how Raytheon, Northrop Grumman, you know how all these guys, Boeing view the Department
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It's like when my wife, when she goes to the mechanic shop with the car, and they see
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My wife's going to call me and say, babe, it's going to cost $7,200.
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Then I go back and say, bro, what is this $7,200?
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Oh, well, you know, we can probably do it for $600.
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That's kind of the best analogy to give you to tell you how Raytheon, Northrop Grumman
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When you look at U.S. government spending, what percentage goes, where here's a top spending
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by category and agency, 21% goes to Social Security, 14% help, 13% Medicare, 13% income
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security, 13% national defense, and roughly 50% of that entire budget goes straight to contractors.
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So imagine $900 billion, 50%, 450 goes straight to the contractors.
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So you may say, well, Pat, that $900 billion, how do we compare to other countries?
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Here's what U.S. compares to other countries when it comes down to our budget.
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United States spends more on defense than the next 10 countries combined.
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That's China, Russia, India, Saudi Arabia, UK, Germany, France, South Korea, Japan, Ukraine
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Look at the top 10 companies, how much they get from us.
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This is just the contract that we have right now with these guys.
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So again, if you're a pro-military like I am, you may say, but Pat, what's wrong with
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But let's look at how the stocks of some of these companies have done compared to S&P 500
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If you look at this chart here, look all the way at the bottom.
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That's how S&P 500 has done from 2000 till today.
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And last but not least, all the way at the top, Lockheed Martin, 1,510% return on investment.
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So when I saw this, I said, okay, I want to see who has the most shares in these companies
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So let's take a look to see if there's any trend on what companies invest the most in
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All right, so if we look at the top 10 shareholders of Raytheon, all the way at the top, State Street.
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Do you think they want a president that's a president of peace with no war going on?
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Or do you think they want a president that creates more havoc, proxy wars, because there's
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Let's look at Lockheed, State Street at the top.
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You got Longview, Vanguard, Newport, Wellington, BlackRock, Capital Research, State Street.
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A little bit concerning to see what these guys are investing.
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I mean, what do you think these guys want to do?
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You think they want their stock to do good or bad?
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But we need wars because we're going to make more money.
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And I'm just saying it's a good thing to speculate.
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We look at how many contracts are getting somebody else to outbid them and how many of them have
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10 years ago, in 2012, 57% of contracts, negotiation, had somebody that was shopping them as a second
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You may say, Pat, that's not that big of a deal.
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Whenever there's fewer and fewer and fewer competition, guess who's winning?
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You're sitting there saying, look, guys, you have Austin and somebody else.
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You know how they hear a lot of times people say, well, you know, it's no such thing as
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This is a form of an establishment within the defense contracting industry.
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So now you may say, Pat, you don't sound like a capitalist.
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One thing I don't want to do to make money is I don't want to see more wars with people
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So when I watch a movie and in the movie I hear the whistling sound, I have an immediate
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To me, a whistling sound goes back to me being six years old, living in Iran.
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One, five-second pause, you don't hear anything, and then boom.
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What's telling you is the bomb is getting closer to you, and you actually knew when the
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plane flew over, and then you look at your mom and your dad and you're crying and you're
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hoping it left us, and they say, it's okay, we're not going to get bombed.
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That brings back certain experiences as a kid, right?
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I don't want to see people dying, and there's a lot of innocent people going through this.
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Now, on the capitalism side, how do we correct this?
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Yeah, monopoly law, if you Google it right, it'll say 50%.
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If they really wanted to enforce the monopoly law, iPhone right now, you know what the number
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At Google right now, what percentage of market share does iPhone own in America?
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How come no one's calling an iPhone and Apple and saying, hey, you got a monopoly?
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Have you heard a story of anybody approaching Apple right now to say you got a monopoly with
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And maybe all your friends are saying, stop texting me with a droid and a group text.
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And you're being forced to change to iPhone because you're green.
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My concern is we need more phone companies, more contractors for people to compete with.
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The only thing I can think about on how we can fix this is the founder mentality.
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Why do the employees at Department of Defense not care about the fact that I'm paying $10,000
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The individual I promoted to be the president of my company, the insurance company, is a
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I kept telling her, I said, the day you treat the company's money like your own is the day
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And I kept saying this over and over and over again.
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Which means some guys are like, how much is it going to cost?
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This guy quoted $6,800 for the same exact thing.
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And they would say, oh, well, you know, let me get back to give us 30 minutes.
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Versus some other people are like, oh, just pay the 10 grand.
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So how many of these employees working at Department of Defense have the founder's mindset?
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So we have to figure out a way to change the comp plan on the way these guys are negotiating
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If there isn't any accountability with margins next to it, prices next to it, Congress can tell
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every one of these companies, if you don't give us a price point on your products up front,
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And they can figure out a way to cause these guys to give actual prices to not bully you,
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That's one of the only ways I see us being able to hold these guys accountable.
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All right, so if you got value out of this video, give it a thumbs up.
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If you got a solution on how you would fix this, comment below.
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If you enjoyed this video, I got another video I want you to watch about how the military
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If you've not yet seen that, click here to watch that clip.