In January of 2024, the Pentagon released its first National Defense Industrial Plan. This document, and earlier the creation of the new position of assistant secretary of defense for industrial base policy, were meant to address the glaring problems with America’s military industrial base that were made painfully obvious by the rapid rate at which American munitions were consumed in Ukraine, and later in the Red Sea and Israeli airspace.  

While it is good that the bureaucracy is waking up to this problem, as might be expected of the sclerotic Blob, their solutions are laughable. Like many other aspects of the old regime, this plan needs to be swept away by President Trump and the fresh blood he is bringing into the administration. 

As has happened in seemingly every other aspect of the government, DEI has openly infected the Pentagon’s military industrial base (MIB) planning. In a section titled “Expand Recruitment of Non-Traditional Communities” the report bemoans that the MIB lacks sufficient diversity and that this indicates that “companies may not be targeting diverse groups for employment”. Why does this matter at all? Well, according to the authors of the report, “(DEI) is important to ensure that we have an industrial base that reflects the nation itself”.

To accomplish this goal, not only does the report call for more DEI initiatives, but also notes that under now former Secretary of Defense Austin, the DoD spent $61.7 million in grants to historically black colleges and universities and other “Minority Serving Institutions.” Elsewhere, the plan calls for diversifying the supplier base, not only with companies not traditionally involved in defense production, but with a special emphasis on spending more contracting dollars on socio-economic groups that are “under-utilized”. 

The damage that such distractions inflict on long term military readiness is not merely theoretical. Writing in the Hill last March, Matt Cole and Chris Nicholson pointed out the enormous amount of diversity red tape that has hamstrung attempts to jumpstart the American microchip industry to wean us off of our dependence on Taiwan. Creating a chief diversity officer at the National Science Foundation and forcing TSMC to hire racial minorities, women, and ex-convicts, rather than focusing on building the best chips possible, undermines American security and is the perfect illustration of why previous military industrial planning has to go out the window. 

But left-wing DEI nonsense is not the only area where the 2024 strategy falls short. In an amusing section reminiscent of the sitcom Yes, Minister, the report bemoans that “high barriers to entry disincentivize the types of small or sub-tier suppliers that help to diversify and make the industrial base more resilient from doing business with the DoD.” Rather than suggesting that such barriers be simplified and reformed, it instead touts no less than eight government programs that exist to help assist smaller businesses navigate entry into defense production.

Likewise, there is an equally amusing section dealing with the abysmal state of the industrial labor force. In one very telling aside about the labor force that works on nuclear submarines, the report notes that the Navy ended 2022 short 1,200 skilled workers at its four shipyards, but that it will need to hire an additional 117,000 (!) across the next ten years for the construction of the next generation submarine fleet alone. 

The defense industrial base workforce is already aged and continuing to get older. A 2024 report from Price-Waterhouse-Cooper found that 25 percent of the aerospace and defense industry is 56 or older, whereas only seven percent of the workforce is under the age of 25. 

This calls to mind when the Scranton Army Ammunition Plant, which is one of the main artillery shell producers in the U.S., caught fire in April of last year. A Russian joke on social media asked whether it was Russian sabotage, or just the result of the workforce being composed of retirement home residents. 

The report does correctly note that a major contributing factor to this issue is that industrial careers carry a stigma in today’s world. This is obviously a factor in all manufacturing, not just the defense industry. I can personally attest to this widespread institutional aversion to working in the trades. I recently encouraged a young relative of mine to skip going to college, and instead pursue a trade job. When he decided to do so and pulled his college applications, he was called into the school counselor’s office to make sure he was not making some terrible decision, as if he had announced he was planning to become a professional hobo. (Fortunately, he was not, and after a four-month welding certificate program at community college he was immediately hired at a well-paying job).   

Yet different arms of the government are clearly working at cross purposes here. What you subsidize, you get more of, and higher education in America, both through tuition assistance and loans and enormous amounts of research grants, is subsidized to the extreme. The cult of college impresses into impressionable young minds that the surest path to success is to get an over-priced degree with little practical value. 

By winding down government subsidization of college, the Trump administration can knock out two birds with one stone and simultaneously stop the funding of America-hating leftist professors and encourage people to pursue in-demand skills like industrial trades that make more economic sense. 

There are many other issues with the 2023 NDIS, but ultimately what the Trump administration should do is simply toss the whole rotten system out and start fresh. And starting fresh requires returning to the basics.

In his 1918 essay on war finance, the then-Austro-Hungarian economist Ludwig von Mises presented an immutable truth that so often seems to be forgotten or dismissed. Responding to the popular line that “three things are needed to wage war: money, money, and more money”, Mises noted that 

from an economic perspective, what counts is not money but necessary material, because money is everywhere in the economy merely a medium for obtaining commodities. What matters in war, therefore, is not whether a people has more or less money but whether it has more or less commodities available for waging war… War can be waged only out of currently available goods. One can only fight with the weapons on hand; all military needs must be met out of existing wealth.

This may seem like too basic a point to warrant mention, yet in America’s increasingly financialized economy the importance of material reality often seems to be lost. The old solution of throwing money at problems will not work. Potential future enemies cannot be subdued by dropping pallets of freshly printed cash on them. No amount of credits in a digital ledger can magically summon up the guns, tanks, and shells needed to win a war. 

Physical goods and the capital infrastructure to produce them are what matter in war, and not all material goods are fungible when it comes to military production. Despite America having roughly three times as much industrial manufacturing output compared to 1972 (though, coming up on 20 years later, we have still not returned to pre-Great Recession levels), the idea that this productive capacity could currently be applied to military-industrial needs seems hard to imagine.

Hence, why the U.S. has thus far failed to reach its goal of producing a measly 100,000 155mm artillery shells a month, and still doesn’t expect to reach that figure until Q4 of 2025—over three years after the war in Ukraine began. To place in context how pathetic this situation is, in 1980 the U.S. was producing 84,000 shells a month, with the capacity to quickly ramp that up to 438,000 if needed.

Meanwhile, Russia is producing roughly 2 million rounds of 152mm shells annually after easily ramping up production by a factor of five.  

Things were not always like this. In the Second World War, my native Pittsburgh alone produced 95 million tons of steel (Pennsylvania as a whole produced one fifth of global wartime steel), in addition to a fifth of all tank landing ships, over 100,000 plane propellers a year, over half of all 155mm gun tubes, enormous amounts of ammunition and numerous other vital wartime components. These companies were not involved in wartime production previously, but the flexible industrial base, and a flexible system of government procurement, allowed every random business across a continent to start churning out tank armor, artillery shells, and everything else in the vast supply chain of war.

Somehow, we have gone from that capacity to being in danger of running low on air-defense interceptors because the current production rate is 12 per year (down from a whopping 24 in 2023). 

One might notice that intense steel production went hand in hand with the ability to begin mass producing military equipment in a relatively short amount of time. Yet, eight decades later, the U.S. share of global steel production has cratered relative to the rest of the world, producing only 89.3 million short tons of steel in 2023. Meanwhile, China is producing over a billion tons of steel annually, more than half of global production. 

Getting back to Mises’s point about currently available goods: having tons of wealth sitting around will not be of much use if the vast capital infrastructure needed to produce the material goods needed to actually fight a war has rusted away into nothingness or become estranged from the military industrial base.

One can’t just fire up the massive Homestead Steel Works—at one time the largest steel mill in the world, employing 15,000 people during the Second World War—at the turn of a key, even in an emergency; the mill was bulldozed in the ’80s and is now the site of a waterpark and a commercial development. Such capacity can’t be recovered in a few months, or even a few years, after a war breaks out 

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Fortunately, a global industrialized war of attrition does not seem likely in the near future, meaning we have plenty of time to adjust course. 

Palantir CTO Shyam Sankar’s short essay “The Defense Reformation” is an excellent place to start. He acknowledges on page one that the U.S. would run out of weapons and ammo in a matter of days in an honest to goodness war, and that it would likely take years to try and pick up the slack. His “18 theses” has many insights into both the problems of consolidation in the defense industrial base post-Cold War as well as suggestions for how to deal with the monopsony problem where the U.S. government is basically the only buyer in the market. 

Nevertheless, in addition to these specific defense related reforms, there is a need for drastic regulatory and legislative changes to lift the burdensome shackles that hold down American industry and have disadvantaged it for decades. These range from the mountains of paperwork, permits, and environmental impact studies to labor rules and America’s inflationary monetary policy, which incentivizes the financialization of the economy where money is shuffled around with little to no actual real-world production occurring. The Rust Belt didn’t just topple over by an act of God. Specific policy choices that began decades ago led to the devastation.

Trump has demonstrated that he means it when he says he wants to restore America and free it from the stifling shackles of the bureaucratic state. He is perhaps the once in a generation figure who is capable of severing the Gordian knot and restoring not only America’s military industrial potential, but in doing so also freeing American manufacturing to thrive once more. Now is the time to toss out the old failed system and begin anew.