Valuetainment - August 16, 2023


The Monopoly on War： How the Military Industrial Complex is Bankrupting America


Episode Stats

Length

15 minutes

Words per Minute

216.75685

Word Count

3,258

Sentence Count

294

Misogynist Sentences

4


Summary


Transcript

00:00:00.200 There's a lot of ways to make money in America, but I want to tell you about a business model
00:00:02.840 that's going to get you to look at this in a completely different way.
00:00:05.760 Let's get right into it.
00:00:06.760 Think about this.
00:00:07.760 If you and I run a hospital, we've got 200 beds, if there's empty beds, you and I are
00:00:12.120 not making money, so we need sick people to come to the hospital to make money.
00:00:16.120 That's how we make money.
00:00:17.120 If you and I own a hotel, we've got 500 rooms, guess what?
00:00:19.760 If our rooms are empty, we don't make any money.
00:00:21.900 We need people to come and stay in our hotel so we can make money, right?
00:00:25.560 Now imagine a business model where you needed more wars for you to make more money.
00:00:32.020 Let me say that one more time.
00:00:33.800 Imagine an industry you're a part of that you need more wars, potentially people dying for
00:00:40.100 you to make more money.
00:00:41.800 That's like the Department of Defense.
00:00:43.940 That's defense contractors.
00:00:46.000 The more wars, the more money.
00:00:47.740 You know how Papa John's says, better ingredients, better pizza.
00:00:51.360 Papa John's.
00:00:52.680 Defense contractors, ready?
00:00:54.220 More wars.
00:00:55.220 More people dying.
00:00:56.220 Defense contractors.
00:00:57.220 So before I piss some people off, I'm pro-military.
00:00:59.600 I was at the 101st Airborne, and I love the fact that the US has got a strong military,
00:01:03.620 but there's some people, some companies, that are seeing it as a way of making a ton of money,
00:01:08.720 and today we're going to dive into different data that's going to show to you where we compare
00:01:13.520 to other countries on how much money we're spending and how much profit's being made.
00:01:17.760 So if you give value out of this video, give it a thumbs up and subscribe to the channel.
00:01:20.680 Let's get right into it.
00:01:21.680 I've been in the insurance industry for 23 years.
00:01:23.680 There's a product in the insurance industry called life settlement.
00:01:27.080 So life insurance companies, when you buy a product, they want you to either live a
00:01:30.680 long life because they're never going to have to pay out the life insurance policy,
00:01:34.440 or they want you to kind of cancel your insurance policy 15, 20, 30 years later, right?
00:01:38.500 Like you're at a good age, you're healthy, cancel now, they keep the money, you're good
00:01:41.440 to go.
00:01:42.440 But there's a segment of life insurance called life settlement, very profitable.
00:01:46.440 What life settlement companies do is they go to an 80-year-old who's got a $5 million
00:01:51.440 insurance policy, whose premium's going up, and it's like paying $3,000, $4,000 a month
00:01:55.900 who can't afford it anymore.
00:01:56.900 They say, I can't afford to pay $3,000, $4,000 a month.
00:01:59.340 The life settlement company will say, hey, Mr. Jones, you got a $5 million insurance policy,
00:02:03.840 no problem.
00:02:04.840 If I give you $1 million cash up front, I'll take over the payments, but when you die,
00:02:10.700 that death benefit is coming to me.
00:02:12.860 That's called the life settlement.
00:02:13.860 So now, you may say, that's crazy.
00:02:16.240 Wait a minute, the 80-year-old is sitting there saying, man, that's crazy, I mean, there's
00:02:21.080 nobody else that can pay this insurance policy to.
00:02:23.620 My wife is there, or my husband's there, fine, I'll take the million dollars, and you can
00:02:27.260 take the rest.
00:02:28.260 I'll give it over to you.
00:02:29.260 Fantastic.
00:02:30.260 That person got a million dollars, they're happy.
00:02:31.420 You're the person that bought the policy.
00:02:33.100 You're not paying the payment $3,000, $4,000, $5,000 a month, that's what you're doing every
00:02:35.980 day.
00:02:36.980 You're like, did that guy die yet?
00:02:37.980 No.
00:02:38.980 Every day, you're celebrating or waiting for that person to die.
00:02:42.200 The sooner they die, the bigger rate of return you make.
00:02:45.260 So it's a weird industry to be a part of.
00:02:47.260 Some call it noble, some have a hard time selling this product, but here's the moral of
00:02:50.420 the story.
00:02:51.420 You're incentivized to hope for that client to die sooner, rate of return goes higher.
00:02:57.000 Military, industrial complex, defense contractors, Boeing, all these Raytheon, Northrop Grumman,
00:03:02.780 they all make more money.
00:03:04.060 The more wars they have, the more conflict there is, the more issues taking place, they
00:03:08.660 make more money.
00:03:09.660 That's simply how it is.
00:03:10.660 Now, it's not illegal, nobody's doing anything illegal, but that's your business model.
00:03:15.760 Having said that, I'm going to share a few things with you.
00:03:18.000 Okay, so what the US Congress is right now working on is a bipartisan effort to address
00:03:22.260 the problem with Pentagon falling victim to price gouging from defense contractors.
00:03:27.660 So now, I want you to think about this.
00:03:29.220 Shai Assad, who was a former executive VP and chief contract negotiator at Raytheon,
00:03:34.660 and defense department's most senior and awarded contract negotiator said the following.
00:03:39.320 He said the roots of the problem can be traced to 1993 when the Pentagon, looking to reduce
00:03:45.240 costs, urged defense companies to merge and 51 major contractors consolidated to five
00:03:52.040 giants, Lockheed Martin, Raytheon, General Dynamics, Northrop Grumman, and Boeing.
00:03:56.820 That could have been the dumbest thing they could have done.
00:03:58.820 Why?
00:03:59.820 Because you have 51 companies competing for number, so you and I taxpayers can get the
00:04:03.980 best rate.
00:04:04.980 Now, they're saying, nope, there's only five companies you can go through.
00:04:07.320 And those five kind of said, well, listen, guys, we can compete as much as we want, but
00:04:10.460 we're kind of on the same team as well because there's no other companies.
00:04:13.120 We got everybody.
00:04:14.380 Thank you to the government.
00:04:15.380 Wink, wink.
00:04:16.380 We're good to go.
00:04:17.380 Here's one thing to keep in mind.
00:04:18.380 The Pentagon overpays for almost everything, radar, missiles, helicopters, planes, submarines, everything
00:04:22.960 down to the nuts and bolts.
00:04:24.860 Matter of fact, NASA once paid $10,000 for an oil pressure switch that only cost $328.
00:04:29.880 And in the competitive environment, before the companies consolidated, a shoulder-fired
00:04:34.180 Stinger missile that cost only $25,000 in 1991 with Raytheon now being the sole supplier
00:04:41.160 of that missile, it now costs more than $400,000 to replace each missile sent to Ukraine.
00:04:48.400 Guess what?
00:04:48.900 It's a beautiful place for these guys to be.
00:04:50.420 You got a monopoly.
00:04:51.420 You're the only person that can sell it.
00:04:53.040 What a beautiful place to be.
00:04:54.140 I got no six, seven other people to compete against.
00:04:56.440 No.
00:04:57.440 Used to be $25,000.
00:04:58.540 Uh, what do you think we should sell it for, Johnny?
00:05:00.720 I think $400,000.
00:05:01.600 It's $400,000.
00:05:02.260 Paid.
00:05:02.740 You ain't got nowhere else to go.
00:05:03.920 You got to come through me.
00:05:04.920 So in a 60-minute interview, Bill Whitaker is interviewing General Bogdan, who's a three-star
00:05:09.640 lieutenant general with the Air Force.
00:05:11.720 And Bill Whitaker's talking about what's wrong with profits being made.
00:05:14.400 There is nothing wrong with profit.
00:05:15.600 This is America.
00:05:16.240 This is our system.
00:05:17.120 Chris says, no, there isn't.
00:05:18.520 But taking to an extreme industry may not make the best decisions in the best interest
00:05:23.040 of the government.
00:05:23.680 And he continued to say, we've only begun to feel the full impact.
00:05:27.240 In 2012, he was tapped to take the reins of the troubled F-35 Joint Strike Fighter program.
00:05:32.400 It was seven years behind schedule and $90 billion over the original estimate.
00:05:37.260 But Bogdan told us the biggest costs are yet to come for support and maintenance, which
00:05:41.980 could end up costing taxpayers.
00:05:43.940 Ready?
00:05:44.400 $1.3 trillion.
00:05:46.960 $1.3 trillion.
00:05:50.380 You're paying for it.
00:05:51.220 He continued, he says, we won't be buying too many F-35 planes as we thought because it
00:05:54.900 doesn't make a whole lot of sense to buy airplanes, more airplanes, when you can't even afford
00:05:58.580 the ones that you currently have.
00:05:59.820 And this continues, by the way.
00:06:01.180 According to 60 Minutes, contractors overcharge the DoD on almost everything the military buys
00:06:06.760 each year.
00:06:07.260 Almost half of the Pentagon's budget for the upcoming fiscal year will go to defense contractors.
00:06:11.500 Some contractors withhold pricing information from the Defense Department.
00:06:14.920 Boeing refused to share cost information for nearly 11,000 items between October of 2020
00:06:20.800 and September of 2021.
00:06:22.180 According to an annual DoD report to Congress on pricing data, that same report found Transdime,
00:06:28.300 a subcontractor was responsible for 275 data denials.
00:06:31.860 So Pat, what's the big deal?
00:06:32.740 Here's what the big deal is.
00:06:33.860 You know how Raytheon, Northrop Grumman, you know how all these guys, Boeing view the Department
00:06:38.080 of Defense?
00:06:38.580 Here's how they view them.
00:06:39.300 It's like when my wife, when she goes to the mechanic shop with the car, and they see
00:06:43.620 my wife, where's the husband?
00:06:45.120 Husband's not here.
00:06:46.060 I'm having a problem with this.
00:06:47.220 Oh, it's going to cost us $7,200.
00:06:49.060 It could have been $300.
00:06:50.380 My wife's going to call me and say, babe, it's going to cost $7,200.
00:06:53.800 Then I go back and say, bro, what is this $7,200?
00:06:56.140 Oh, well, you know, we can probably do it for $600.
00:06:58.160 What happened all of a sudden?
00:06:59.180 You see how somebody else goes?
00:07:00.720 They're like, oh, overcharge them.
00:07:02.120 Don't worry about it.
00:07:02.680 They don't check it anyway.
00:07:03.460 It's not their money.
00:07:04.220 Keep charging them.
00:07:04.880 That's kind of the best analogy to give you to tell you how Raytheon, Northrop Grumman
00:07:09.480 views Department of Defense.
00:07:11.400 So now let's look at U.S. government spending.
00:07:13.060 When you look at U.S. government spending, what percentage goes, where here's a top spending
00:07:16.360 by category and agency, 21% goes to Social Security, 14% help, 13% Medicare, 13% income
00:07:22.500 security, 13% national defense, and roughly 50% of that entire budget goes straight to contractors.
00:07:28.600 So imagine $900 billion, 50%, 450 goes straight to the contractors.
00:07:32.300 So you may say, well, Pat, that $900 billion, how do we compare to other countries?
00:07:35.900 Here's what U.S. compares to other countries when it comes down to our budget.
00:07:39.000 Ready?
00:07:39.380 United States spends more on defense than the next 10 countries combined.
00:07:43.440 That's China, Russia, India, Saudi Arabia, UK, Germany, France, South Korea, Japan, Ukraine
00:07:49.320 combined.
00:07:50.720 That's how much we spend.
00:07:51.980 And who makes money?
00:07:52.980 Look at the top 10 companies, how much they get from us.
00:07:55.500 This is just the contract that we have right now with these guys.
00:07:58.320 Lockheed Martin, $45.6 billion.
00:08:00.620 That's the obligation we have to them.
00:08:02.300 Raytheon, $25.7 billion.
00:08:03.820 General Dynamics, $22 billion.
00:08:05.580 Pfizer, $16.6 billion.
00:08:06.960 Boeing, $14.4 billion.
00:08:08.320 Northrop Grumman Corporation, $13.81 billion.
00:08:10.780 Humana, $7 billion.
00:08:11.980 H2 Corp, $6.5 billion.
00:08:13.640 L3 Heros Technologies, $6.5 billion.
00:08:15.880 BAE Systems PLC, $5 billion.
00:08:18.480 So again, if you're a pro-military like I am, you may say, but Pat, what's wrong with
00:08:21.960 that?
00:08:22.100 This is why America is so safe.
00:08:23.420 This is why nobody attacks us.
00:08:24.620 This is why we're doing...
00:08:25.140 Okay, I'm with you there.
00:08:26.100 But let's look at how the stocks of some of these companies have done compared to S&P 500
00:08:31.440 since 2000.
00:08:32.420 20-something years?
00:08:33.380 Let's see how they do.
00:08:34.200 If you look at this chart here, look all the way at the bottom.
00:08:37.200 You see that navy blue color?
00:08:38.420 That says 96.15%.
00:08:41.000 That's how S&P 500 has done from 2000 till today.
00:08:45.480 General Dynamics, the stock has gone up 548%.
00:08:50.640 Raytheon, 574.
00:08:52.620 Boeing, 736%.
00:08:54.860 Northrop Grumman, 1,160%.
00:08:57.800 And last but not least, all the way at the top, Lockheed Martin, 1,510% return on investment.
00:09:04.120 So when I saw this, I said, okay, I want to see who has the most shares in these companies
00:09:08.820 and what their incentives would be.
00:09:10.160 So let's take a look to see if there's any trend on what companies invest the most in
00:09:13.140 these companies.
00:09:13.880 All right, so if we look at the top 10 shareholders of Raytheon, all the way at the top, State Street.
00:09:17.840 Then it's who?
00:09:18.340 Vanguard.
00:09:18.840 Then it's who?
00:09:19.380 BlackRock.
00:09:19.900 Surprised?
00:09:20.560 All three are the ESG group.
00:09:22.700 So think about it.
00:09:23.580 They even had their hands in military.
00:09:26.400 So these guys are running our military.
00:09:29.540 You think they want more war?
00:09:31.580 You think they want more conflict?
00:09:32.940 Do you think they want a president that's a president of peace with no war going on?
00:09:37.540 Or do you think they want a president that creates more havoc, proxy wars, because there's
00:09:42.340 more contracts for these guys to make money?
00:09:44.780 I'm not speculating.
00:09:45.920 I'm simply asking an innocent question.
00:09:48.280 Let's look at Boeing.
00:09:49.260 Number one, shareholder, Vanguard.
00:09:51.100 Then it's Newport.
00:09:51.880 Then it's BlackRock.
00:09:52.760 Then it's State Street again.
00:09:54.020 Let's look at Lockheed, State Street at the top.
00:09:56.840 Then Vanguard.
00:09:57.640 Then guess what?
00:09:58.520 BlackRock.
00:09:59.120 Let's look at General Dynamics.
00:10:00.880 You got Longview, Vanguard, Newport, Wellington, BlackRock, Capital Research, State Street.
00:10:06.700 A little bit concerning to see what these guys are investing.
00:10:08.700 I mean, what do you think these guys want to do?
00:10:10.220 You think they want their stock to do good or bad?
00:10:12.040 They're like, yeah, let's do better.
00:10:13.980 Remember, better ingredients, better pizza.
00:10:16.340 Papa John, more wars, more people dying.
00:10:19.360 Defense contractors.
00:10:20.740 Come on, guys.
00:10:21.340 Let's create more wars.
00:10:22.560 And low key, let's talk about peace.
00:10:24.220 But we need wars because we're going to make more money.
00:10:25.940 Pure speculation.
00:10:27.040 Not telling you that's what's happening.
00:10:28.260 And I'm just saying it's a good thing to speculate.
00:10:30.360 Now, watch this.
00:10:31.220 We look at how many contracts are getting somebody else to outbid them and how many of them have
00:10:36.040 no competition.
00:10:37.040 10 years ago, in 2012, 57% of contracts, negotiation, had somebody that was shopping them as a second
00:10:44.240 opportunity.
00:10:44.940 Today, that's down to 52%.
00:10:46.480 What does this mean?
00:10:47.260 You may say, Pat, that's not that big of a deal.
00:10:48.740 Okay.
00:10:49.160 I understand.
00:10:49.800 But you know what it means?
00:10:50.580 Whenever there's fewer and fewer and fewer competition, guess who's winning?
00:10:54.400 You're sitting there saying, look, guys, you have Austin and somebody else.
00:10:56.900 Who do you want to go with?
00:10:57.900 And we're both on the same team.
00:10:58.960 You know how they hear a lot of times people say, well, you know, it's no such thing as
00:11:02.080 Republicans and Democrats.
00:11:03.360 They're both on the same team.
00:11:04.760 No, the establishment is on the same team.
00:11:07.100 This is a form of an establishment within the defense contracting industry.
00:11:10.620 We're part of the same thing, guys.
00:11:12.000 You're going to give me the same price?
00:11:13.140 Let's just do the same thing.
00:11:14.020 Cool.
00:11:14.400 Who are you going to go with?
00:11:15.120 We'll go with you.
00:11:15.680 We'll go with you.
00:11:16.120 Good.
00:11:16.340 We're good to go.
00:11:17.380 Everybody made their money.
00:11:18.500 Final thought.
00:11:19.080 So now you may say, Pat, you don't sound like a capitalist.
00:11:21.060 I'm a capitalist.
00:11:21.920 No, no, you do not sound like a capitalist.
00:11:23.580 What's wrong with these guys making money?
00:11:24.940 I totally get it.
00:11:25.600 There's many ways to make money.
00:11:26.780 One thing I don't want to do to make money is I don't want to see more wars with people
00:11:32.000 dying for you to make more money.
00:11:33.420 I've actually lived through a war as a kid.
00:11:36.200 So when I watch a movie and in the movie I hear the whistling sound, I have an immediate
00:11:40.740 reaction.
00:11:41.760 Maybe you watch a whistling sound.
00:11:43.120 You're like, oh, it's just a movie.
00:11:44.280 To me, a whistling sound goes back to me being six years old, living in Iran.
00:11:47.820 One, five-second pause, you don't hear anything, and then boom.
00:11:53.500 Next one comes, boom.
00:11:55.560 What's telling you is the bomb is getting closer to you, and you actually knew when the
00:11:59.220 plane flew over, and then you look at your mom and your dad and you're crying and you're
00:12:03.020 hoping it left us, and they say, it's okay, we're not going to get bombed.
00:12:05.700 That brings back certain experiences as a kid, right?
00:12:08.700 I don't want to see people dying, and there's a lot of innocent people going through this.
00:12:11.500 Now, on the capitalism side, how do we correct this?
00:12:14.400 We didn't work companies.
00:12:15.560 Can we tell these guys to break apart?
00:12:17.400 No.
00:12:18.000 Why not?
00:12:18.460 Don't we have a monopoly law?
00:12:19.700 Yeah, monopoly law, if you Google it right, it'll say 50%.
00:12:22.460 But isn't that the law?
00:12:23.940 Let's enforce it.
00:12:24.660 If they really wanted to enforce the monopoly law, iPhone right now, you know what the number
00:12:28.340 is?
00:12:28.600 At Google right now, what percentage of market share does iPhone own in America?
00:12:33.100 You know what the number is?
00:12:33.860 58%.
00:12:34.540 How come no one's calling an iPhone and Apple and saying, hey, you got a monopoly?
00:12:38.460 Have you heard a story of anybody approaching Apple right now to say you got a monopoly with
00:12:42.060 phones?
00:12:42.460 What's another competitor?
00:12:43.520 What do you own?
00:12:44.260 What are you watching this on right now?
00:12:45.460 An iPhone?
00:12:46.040 You know what the chances are?
00:12:46.720 Maybe a droid.
00:12:47.440 And maybe all your friends are saying, stop texting me with a droid and a group text.
00:12:51.260 You're green.
00:12:51.740 You need to be blue.
00:12:52.620 And you're being forced to change to iPhone because you're green.
00:12:55.260 You know what I'm talking about.
00:12:56.460 Well, I'm not going to switch.
00:12:57.740 Totally fine.
00:12:58.500 Guess what?
00:12:59.020 Apple has a monopoly.
00:12:59.920 No one's doing anything about it.
00:13:01.120 My concern is we need more phone companies, more contractors for people to compete with.
00:13:06.020 The only thing I can think about on how we can fix this is the founder mentality.
00:13:10.700 Let me explain to you what I mean by this.
00:13:11.880 So why do these guys not care?
00:13:13.840 Why do the employees at Department of Defense not care about the fact that I'm paying $10,000
00:13:17.880 for a $300 thing?
00:13:19.160 Here's why.
00:13:19.560 The individual I promoted to be the president of my company, the insurance company, is a
00:13:23.380 girl named Moral.
00:13:24.220 Moral Kishishinbekian.
00:13:25.800 She was my banker at Chase years ago at WAMO.
00:13:28.420 I hired her.
00:13:28.940 She's been with me for 13 years.
00:13:30.360 I kept telling her, I said, the day you treat the company's money like your own is the day
00:13:35.700 you're ready to be a C-suite executive.
00:13:37.540 And I kept saying this over and over and over again.
00:13:39.160 Which means some guys are like, how much is it going to cost?
00:13:40.960 Oh, it's fine.
00:13:41.460 $10,000, fine.
00:13:42.540 It's like, how much?
00:13:43.200 $10,000.
00:13:43.820 I got a couple other options.
00:13:44.860 This guy quoted $7,200.
00:13:46.160 This guy quoted $6,800 for the same exact thing.
00:13:48.560 And they would say, oh, well, you know, let me get back to give us 30 minutes.
00:13:52.560 They come back.
00:13:52.920 We can do for $6,700.
00:13:54.940 Bingo.
00:13:55.620 Saved the company $3,300.
00:13:57.520 She's got founder mentality.
00:13:58.900 Versus some other people are like, oh, just pay the 10 grand.
00:14:00.800 Who cares?
00:14:01.660 It's not our money.
00:14:02.540 Anyway, it's the company.
00:14:03.200 We can afford it.
00:14:03.940 No, you just cost us $3,300.
00:14:06.420 So how many of these employees working at Department of Defense have the founder's mindset?
00:14:10.280 None of them.
00:14:10.840 Why?
00:14:11.360 It's not their money.
00:14:12.060 It's your money they're spending.
00:14:13.040 So we have to figure out a way to change the comp plan on the way these guys are negotiating
00:14:19.260 on your behalf.
00:14:20.620 It's our country.
00:14:22.280 It's our money.
00:14:23.860 There's got to be accountability.
00:14:25.700 If there isn't any accountability with margins next to it, prices next to it, Congress can tell
00:14:31.900 every one of these companies, if you don't give us a price point on your products up front,
00:14:36.660 we ain't buying from you.
00:14:37.840 And they can figure out a way to cause these guys to give actual prices to not bully you,
00:14:43.440 the taxpayer.
00:14:44.280 That's one of the only ways I see us being able to hold these guys accountable.
00:14:48.500 All right, so if you got value out of this video, give it a thumbs up.
00:14:50.480 Subscribe to the channel.
00:14:51.340 If you got a solution on how you would fix this, comment below.
00:14:53.520 If you enjoyed this video, I got another video I want you to watch about how the military
00:14:56.560 is going to walk.
00:14:57.600 If you've not yet seen that, click here to watch that clip.
00:15:00.620 Take care, everybody.
00:15:01.300 Bye-bye, bye-bye.
00:15:01.700 Bye-bye.