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CEO Daily: The Best in Business Reading

Good Morning.

How’s this for an eye-opening comparison: The Pentagon currently employs 207,000 bureaucrats to acquire and procure weapons and other equipment for the U.S. armed forces. By contrast, one entire branch of the military—the Marines—takes on some of the most challenging and dangerous missions around the world with 163, 375 actively serving.

That juxtaposition gets to the heart of the most penetrating reportorial journey inside the military-industrial complex I’ve ever read: “Donald Trump, Palantir, And The Crazy Battle To Clean Up A Multi-Billion-Dollar Military Procurement Swamp,” by Steven Brill, in Fortune. I know that Alan Murray hailed the article in this space earlier this week, but this one is too important for me not to mention, too. The article describes a multi-year effort by Palantir Technologies, a Silicon Valley software company whose chairman is Peter Thiel, to try to sell a functioning, reasonably priced battlefield information system to the Army, which has favored a wildly expensive ($6 billion and counting), suboptimal product made by Raytheon, Lockheed Martin, Northrop Grumman, and others. Brill takes you deep inside the process and there are many fascinating twists and turns, not least the fact that the incumbent offering played a small but significant role in the massive military information leak, via Wikileaks, by Bradley (now Chelsea) Manning. The article is well-timed as it emphasizes that a number of key generals, including James Mattis and H.R. McMaster, who had the opportunity to use Palantir’s product and loved it, are now in a position to purchase it. And needless to say, Donald Trump has emphasized his desire to drain the swamp and negotiate better deals, and what better company to benefit from that than one whose chairman, Thiel, was a notable Trump supporter? In truth, though, Brill argues strongly that Palantir deserves to win on the merits. And one of the many strengths of this article is that, for all that Brill is willing to laceratingly point out the craziness of the Army’s profligate spending habits, he also devotes considerable space to a sympathetic exploration of the Defense Department’s attempts (some successful) to improve its practices. Anybody who wants to move beyond a slogan (“the military-industrial complex”) and understand its reality should read this article.

Venture Capitalists vs. The Grim Reaper

The New Yorker has an intriguing article this week entitled “Silicon Valley’s Quest To Live Forever: Can Billions Of Dollars’ Worth of High-Tech Research Succeed In Making Death Optional?” Apologies for spoiling the suspense, but the answer to that question is: Not any time soon (and if you ask this non-scientist, likely never). Still, it makes for a fascinating journey, in which Silicon Valley plays the roles of funder, research engine, potential provider—and most likely customer—in a quest whose very mission is so audacious that few outside the Valley would ever realistically embark on it. As I say, I wouldn’t read it in the hopes of discovering imminent solutions, but the article is written by the entertaining Tad Friend and includes some trademark Friend-ian (Friend-ly?) quips. He says of one researcher, “Since the F.D.A. requires an authorization for any new tests on humans, he began trying therapies on himself. He’d read the literature on self-experimentation, and tallied the results: eight deaths… and ten Nobel Prizes. Coin toss.” Elsewhere, Friend notes, “the most proven way for a man to live fourteen years longer than average is to become a eunuch. Good news/bad news.”

In the end, the article is as revealing of the Silicon Valley mindset as it is of science. For example:

All the leading immortalists started out in tech, and all had a father who died young (as Ray Kurzweil’s did when he was twenty-two), or absconded early (as Aubrey de Grey’s did before he was born). They share an early loss of innocence and a profound faith that the human mind can perfect even the human body. Larry Ellison, the co-founder of Oracle, lost his adoptive mother to cancer when he was in college—and later donated three hundred and seventy million dollars to aging research. “Death has never made any sense to me,” he told a biographer.

The Workingman’s Future, Revealed In Indiana, Part I

Perhaps a tad belatedly, the press has been lately engaging in a frenzy of reporting on working folks. But it has produced a lot of worthy journalism and two articles this week, both set in Indiana, serve as insightful companion pieces. The Guardian sent a reporter to beleaguered Gary, In. But unlike much of the media, the Guardian didn’t go in search of disaffected White Trump voters. Its article focuses on African-American voters, and these ones, as this atmospheric, well-reported (and hauntingly photographed) article shows, are equally under pressure—in fact, more so, because their economic woes are compounded by racism. They don’t blame immigrants for their woes. But the fatalism is palpable, as this passage about one Gary resident reveals:

Despite not following politics, he did vote for Clinton, because “I am a Democrat.” When I ask him about Trump’s promise to bring back factory jobs, he looks at me like I am crazy. “He ain’t going to bring the jobs back – the factories mostly run themselves now. They have robot cranes, so they don’t need crane men like me. It is because of that word. What is it? Automation?”

The Workingman’s Future, Revealed In Indiana, Part II

BloombergBusinessWeek also sent a reporter to Indiana, in this case to the Carrier furnace factor in Indianapolis. That’s the facility whose planned shut-down (with hundreds of positions being relocated to Mexico) caused a furor last year and ultimately resulted in an announcement by Donald Trump that he had saved more than a thousand jobs. The article is called “Remember When Trump Said He Saved 1,100 Jobs at a Carrier Plant? Well, globalization doesn’t give a damn.” Ignore the glib, confrontational headline. This is a smart and nuanced examination of what occurred at that factory and what it reflects about globalization.

The piece opens with Gregory Hayes, the CEO of Carrier’s corporate parent, United Technologies, before the election, defending global trade and the plans to shut the furnace factory. The article then pivots:

A month later, Hayes was sharing a dais with none other than President-elect Trump at that Indianapolis factory. Workers cheered as the two announced that Hayes had agreed to keep the plant open. “You are fantastic, Greg,” Trump said. So was the irony.

Hayes may have looked silly at that moment, but the article makes it clear that he will effectively have the last word. Globalization isn’t likely to relent no matter who occupies the White House. As the article puts it, “Even if Trump struck three Carrier deals a day for the rest of his term, he wouldn’t recoup even half the 7 million American manufacturing jobs lost since that employment peaked in 1979.”

Nicholas Varchaver