Risking Nuclear War for Dollars

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Yves here. I am a big fan of Paul Jay and his new initiative, theAnalysis.com, which is currently primarily podcasts. And it is particularly exciting to learn that Paul is working with Daniel Ellsberg on a documentary based on Ellsberg’s recent book, The Doomsday Machine, on how close the world has been and is to nuclear war.

However, a recent interview posted on Paul’s site, from Law and Disorder Radio, muddies important information about elevated nuclear war risk by including bizarre conspiracy theory that big institutional investors are behind it. I’m spilling a few pixels on this topic because Jay’s misperception is widely shared, thanks in no small measure to a “garbage in-garbage out” network analysis performed a few years back, and also in the hope that it will alert Jay to steering cheer of this argument in his documentary, since its inclusion would risk weakening the presentation.

The interview, Risking the Apocalypse for Dollars, contends that institutional investors like BlackRock and Vanguard pressure military contractors to pursue higher returns aggressivelyy, including nuclear war profiteering. More generally, it’s based on a total misperception of how little influence transient public shareholders have over corporate managers. Look, for instance, at how long Wells Fargo’s John Stumpf and Boeing’s Dennis Muilenburg held on past their sell-by dates.

Here is the short-form debunking of the notion that institutional investors “control” companies in which they own shares. What do they do when they are unhappy with performance? They unown them.

Aside from a small group of activist investors, who are typically high-fee hedge funds, institutional investors don’t bother trying to change company behavior. It takes too much time and energy relative to any payoff, which would also result in gains to the free riders who also owned the shares but didn’t participate in the costly lobbying/pressure campaign….like their direct competitors.

This mindset is even more true of passive investors, meaning ones who sell funds that seek to match the performance of an index fund, like the S&P 500. Index replicators do not care what they own. They focus relentlessly on doing the best job of matching the index at a rock bottom cost. That means they often uses futures as part of their mix and are unlikely to own all the stocks in a particular index.

Vanguard moved to the dominant position in the retail funds management business due to its founder Jack Bogle being an early evangelist for the importance of minimizing fees and passive investing as the way to achieve that. BlackRock is also primarily a passive fund manager. From a January 2020 story in Pensions & Investments, BlackRock’s $7 trillion in AUM built on passive and ETFs:

iShares are ETFs and about 85% of the dollar value of BlackRock’s ETFs are in passive bonds products.

An additional reason why big fund managers like BlackRock, Vanguard, and Fidelity don’t hassle company managements about what they are doing? They want their 401(k) business. Doing anything than making nice would be very bad for that business.

Mind you, having public shareholders who engage in no meaningful oversight of the companies in which they invest is the inevitable result of regulations that promoted liquidity. See Amar Bhide’s Harvard Business Review article Efficient Markets, Deficient Governance for details.

Unfortunately, you don’t need to look much further than the defense companies themselves for explanations as to their fondness for dialing up geopolitical risk. And while it is easier and more appealing to assign blame to known bad actors like Big Finance, power in the Beltway operates mainly through loose collaborative networks described best by Janine Wedel in her classic, The Shadow Elite. The key actors are what she calls flexians. From a review in the Pacific Standard: “A new professional class of movers and shakers—people who serve overlapping roles in government, business, and media with smiling finesse—is controlling the flow of power and money in America.”

By Micheal Smith. Produced by Law and Disorder

Michael Smith: The chance for nuclear war, which would destroy all human life on earth, has never been higher.

Just last week, President Donald Trump withdrew America from the Open Skies Treaty. The treaty is an agreement between 34 nations that allows each country to fly over each other’s territories. The treaty is designed to provide transparency and mutual observation of military developments. He also withdrew from the intermediary ballistic missile treaty with Russia as a consequence. The Bulletin of Atomic Scientists has pushed the hands of its Doomsday Clock on its magazine cover forward to almost midnight.

Shortly after taking office, Trump pulled out of the Iran nuclear deal. Trump enjoys the financial and political backing of big businesses the banks, the hedge funds, and the military-industrial complex. These moneyed interests profit greatly from nuclear rearmament, which is now going on. First under Obama and then Trump, one trillion dollars is planned to be spent over the next 30 years for a new generation of nuclear weapons, including low yield ones which are likely to be used.

A whistleblowing truth-teller, Daniel Ellsberg, has recently written the grimly important book, The Doomsday Machine. He believes that so far avoidance of a nuclear war has been miraculous and that the danger is as present today as it was during the Cold War. He thinks seeking profit, in spite of the risk of nuclear winter, is institutional madness.

We’re joined today by Paul Jay. The founder and editor of the Analysis.News. He’s a journalist, filmmaker, and the founder of The Real News. He’s currently working with Daniel Ellsberg on a documentary series based on Ellsberg’s book, The Doomsday Machine–Confessions of a Nuclear War Planner. We will discuss with him the kind of movement that’s needed to reverse the nuclear arms race, as well as the Democratic Organization of the Society. Paul Jay, welcome back to Law and Disorder.

Paul Jay: Thank you, Michael. Thanks for inviting me.

Michael: Paul, let’s talk about the nuclear threat and how we could force them to stop gambling with our lives. Do you think a nuclear war, accidentally or otherwise, is likely?

Paul Jay: The people I have interviewed, from Daniel Ellsberg to Larry Wilkerson, who used to be Colin Powell’s chief of staff; I’ve seen interviews with the former diplomats, military people. They all think that nuclear war is not likely. They think it is assured. It’s not that there’s a chance, they think, of nuclear war. They think there is 100 % certainty that if things continue as they are at some point sooner, it could be today or tomorrow or later, it could be some years from now, there will be, at the very least, accidental nuclear war. The safeguards simply aren’t safe enough, and that this new investment, the new nuclear arms race that has started under Obama, but it’s also happening under Putin, driven by the military-industrial complexes of Russia and the United States, although the Americans are certainly more the instigators. But these whole new whack of nuclear weapons are coming online and the old ones that still exist and in deteriorating situations that are not safe, the possibility of accidental nuclear war is not possible, it is certain. They think the possibility of some kind of terrorist attack using dirty bombs could be mistaken for an attack by a major power. And if the dirty bomb went off in New York, as someone would have put a small nuclear bomb in a container ship and it blows up in New York Harbor, there’s only a 10 second window. We’re still on a hair-trigger alert between Russia and the United States. 10 seconds for the militaries of both countries to decide, if what just happened was an attack or terrorist attack, an accident, ten seconds.

Michael: All the people are not talking 10 minutes. You’re talking ten seconds.

Paul Jay: Ten seconds. Hair-trigger that on a radar map they see blips coming in to decide whether it’s geese or bombers. Everyone uses the same phrase. It is a miracle we are still here. The miracle is because, on several occasions, I think it’s close to a dozen If the protocols had been followed the soldiers who saw the blips or depending on the case, what the situation was. But they didn’t follow orders.

And that’s why we’re still here talking about it. And I know if you want, I can give a couple examples of those cases.

Michael: Please do.

Paul Jay: I know it’s out there in the press somewhat, but I learned more about it in talking with Daniel Ellsberg. I’m working on a film with Ellsberg, which is kind of why I’m into this topic because before I started interviewing Ellsberg, I was in nuclear war denial as much as everybody else was. It was just not anywhere near the front of my consciousness. You know, all of this, I think when the Cold War ended, just kind of the whole anti-nuclear movement went away, and people thought, oh, well, you know, Russia and United States are going to get along now. They’ll figure out the old nukes and all this, and it just receded as an issue. But all the people that know the issue say it’s actually more dangerous now than it was during the Cold War.

But Ellsberg woke me up to this. And one of the stories in his book, Doomsday Machine, and this documentary series I’m going to be doing is based on that book, it was during the Cuban Missile Crisis. There was a Russian submarine underneath the American ships as the American ships were blockading Cuba. What the Americans didn’t know is that the Russians had a protocol that if the submarine was out of contact with Moscow for 48 hours, if they couldn’t establish radio communication, they should assume nuclear war had broken out and fire. They had some kind of nuclear-tipped small missiles, and they were only 40 miles off the coast of the United States. And they should fire into the United States, assuming that Russia had been attacked, the Soviet Union had been attacked.

Well, while the Americans didn’t know about that protocol, what the Russians didn’t know is the Americans had figured out how to jam communication between the submarine and Moscow. So the communication does go down for 48 hours because it’s being jammed. The Russians don’t know that that’s the reason. The 48 hours go by, and it’s time to break out the envelopes that give the trigger orders to shoot order. So they bring out the envelope, and the protocol is three senior officers have to sign that they’ve agreed it’s appropriate to fire. So the captain signs, number two in command signs and then it’s up to the number three. Number three is the guy who’s the party official, and he represents the Soviet Communist Party on the ship, and he has to sign and he refuses. He says, “What if this is a technical problem?” And he actually gets disciplined when he gets home, but it’s only because he refused to sign that nuclear war didn’t break out during the Cuban crisis. And then there’s other examples like this both in Ellsberg’s book, and other places. We’re only here because a few people refused to follow orders. And it is a miracle.

Michael: Who owns the nuclear weapons production industry? And is it very profitable?

Paul Jay: Well, profit is what it’s all about, and this is what’s ridiculous. People have to understand how systemically dangerous capitalism is now. And this nothing says it more than the fact that it purely profits driving the nuclear war strategy of the United States. Daniel Ellsberg has a line which he says the nuclear weapons program after World War Two was a commercial subsidy for the aerospace industry. That there simply was no military justification to develop a nuclear weapons program after World War Two.

He points to the ICBM. The whole ICBM program is obsolete. Billions and billions invested in the existing ICBM and new ICBM are coming online. But ICBM is, according to all the military experts that I’ve read, are easy targets. Intelligence on both sides, Russia and the United States and Chinese, for that matter. The Chinese are a little bit of an exception here because the Chinese have not built their nuclear force out anywhere near to the extent of Russia and the United States.

But they know where the ICBM is, They’re essentially targets and they’re not that effective as a deterrent. What is effective as a deterrent are nuclear-armed submarines because they move around. It’s hard to track where they are and they have more than enough armaments to end life on Earth. But ICBM continues because they’re very expensive and the armaments industry makes tons of money out of making them. But if you want to go to the beginnings of this and understand the profit motive, I interviewed a guy named Lester Ernest and he was part of a program at M.I.T. in around 1959/1960.

He had joined the army. He got into the early computer program of the U.S. Army. When he got out, M.I.T. asked him to come and he started working on something called the Sage Radar System. And the Sage Radar System is in the Dr. Strangelove movie and maybe in some others. And you see this great big board where they can track incoming airplanes and then they supposedly know everything. And the Stage Radar System was connected to bomarc missiles. And what Sage would do is if Russian bombers were flying in, the computer system, and this was the largest gathering of computer power in the history of the world, at the time. And in fact, some of the technology that led to the creation of the Internet came out of the work done to develop the Sage radar system.

And they were going to track these bombers and then hit them with bomb arc missiles. And this gave everyone the assurance that the United States would be safe with developing their own nuclear armaments threat. And this defense system, they didn’t have to worry. There was even an underlying suggestion that the United States could conduct a first strike against the Soviet Union and still be safe because of sage and the Bomarc missiles.

So anyway, Lester goes to work at M.I.T. and he gets there in two or three days. And he turns to one of his colleagues and he says, ‘How did you guys figure out the radar jamming systems?’ Because we know the Soviet planes and our planes, everybody’s got radar jamming now. And Lester told me and I have this on camera, Lester says, ‘There’s a long silence. And the guy says to him, well, we didn’t really figure that out. And Lester says, ‘Well, then none of this works. And the guy says, well, we don’t talk about that,’. The whole thing was a fraud. They spent in today’s dollars a trillion dollars over about 25 years. And the whole thing was a scam. And the manufacturers of the Sage Radar System, the manufacturer of the bomarc missiles, which they then, this is another great one. I love this one.

Lester has to go to Congress. And this is asked by the armaments people, some of the Pentagon people, to go to Congress and get them to agree that the Bomark missiles that are going to shoot down these Soviet planes should be armed with nuclear missiles, nuclear warheads. I said to Lester, I said, ‘hold on for a second, so you’re gonna go to Congress and get them to recommend that Soviet bombers flying over Canada and the United States with nuclear weapons are going to be hit by missiles with nuclear weapons’. And all this is going to happen over Canadian and American territory. And this is making everyone safe. I said, I’m sorry excuse my language, ‘That’s F’ing insane’, and Lester says, ‘Of course it’s insane’. I said, ‘did you do it?’ He said, ‘Yeah, I went and they agreed. And the Bomarc missiles were armed with nuclear-tipped nuclear missiles’. I said, ‘Why did you do it?’. He said, ‘You know, we were just at that point in it for the money. We all thought we were all going to die. We all thought nuclear war was going to end everything. And we were just so cynical and we were getting paid so much. And the whole culture was about money sloshing around the manufacturers of the radar, the weapons and so on. The Pentagon, everybody was in on it and we went along with it’. He’s since regrets at all. He became the founder of the artificial intelligence lab at Stanford University and fought for open source and against trademark and copyrights and things. It kind of woke him up eventually.

But this whole fraud is at the heart of nuclear war planning. As we know that that nuclear war doesn’t now just mean the destruction of all the major cities of the United States, the Soviet Union, of course, Europe is gone. But it used to be thought, oh, well, that’s only the northern hemisphere. At least humans will survive in the southern hemisphere. Well, that’s not true either.

It’s now pretty clear that there’ll be something called nuclear winter and that the firestorms created by the burning of the cities will create so much smoke and ash in the atmosphere, that will be the end of agriculture all around the globe. And this business, the manufacturing of the nuclear weapons, the Pentagon strategists, Congress that buys into it, Obama and then Trump and of course, all of the presidents since Truman. They go along with this because of the pressure of the military-industrial complex and the whole culture of proving that America’s the greatest Hegemon and so on. It’s put life on Earth at risk. But while there are political considerations, geopolitical considerations, this is still the grand chessboard for the people that think about these things. The heart of it is money making.

Michael: We’ve got about ten more minutes, Paul. I’ve got three more questions for you. Does America’s dominant global commercial position depend on military might, including the nuclear arsenal?

Paul Jay: That’s a good question. It certainly doesn’t depend on the nuclear arsenal, really. But that’s not to say the nuclear arsenal isn’t used. It is used as a threat against non-nuclear countries. Take Iran. There’s always sort of in the back of the confrontational discourse between the United States and Iran, the threat that a tactical nuclear weapon could be used against Iran. And in fact, Sheldon Adelson, the billionaire who is the big supporter of the far-right forces in Israel, and he helped elect Trump, he’s the one that financed Trump. He’s actually said on a panel in 2013, in New York, that the United States should seriously consider dropping a tactical nuclear weapon in an Iranian desert to send the Iranians a message of what’s in store for them. And as insane as that is, and insane as Sheldon Adelson is. Sheldon Adelson has the ear of Donald Trump. And even before that, Adelson had the ear of very powerful Republicans that he would donate money to.

So nuclear weapons are a threat to help enforce American dominance but it’s not needed. Is the military might needed? Well, look at the inroads China’s making. China’s become the greatest trading partner of Brazil. It’s the number two or number one trading partner of every other country in Latin America. It’s ahead of the United States now in Africa. It certainly competes with and in many countries is ahead of commercial relationships throughout Asia. So where is this great military machine preventing the growth of the commercial power of China? It’s not. So the competition for a commercial hegemony, commercial global dominance, the military may be in the older days played that kind of role where Americans would directly go intervene with American troops and do regime change and get a pro-American regime. But how’d that work out in Iraq? They not only did not get a pro-American government, they did not even get control of the oil in Iraq. Interestingly enough, Chinese oil companies last I saw had more contracts than the American ones did because of the great anti-American sentiment amongst the Iraqi people. They got a government in Iraq that’s at least as aligned with Iran as it is with the United States.

You know, those days of being able to just go in and get regime change, like look at Libya. Libya was a grab. Libyan war was about Libyan oil, obviously. Well, whichever’s chaos and the Russians are making a big inroad in Libyan oil.

So where is it that the military supports such commercial dominance?

I’m not saying it doesn’t do anything. I’m sure in some situations the power of the American armed forces, certainly in the Middle East, where they in Bahrain, where they have a big fleet. The fact that the army is right there, it helps prop up the monarchy of Bahrain and Saudi Arabia. It’s not that it doesn’t play any role, but it doesn’t play that significant role because every time they actually try to use the military to intervene, it’s a debacle.

Michael: Paul Jay, why, in this time of the COVID 19 pandemic, the great civil unrest, 40 million people unemployed, why is this a good time to raise the issue of nuclear disarmament?

Paul Jay: Well, because the threat is so imminent and most people have no sense of it at all. Even on the left, when I tell people I’m working on a film with Ellsberg about the Doomsday Machine, they raise their eyebrows and say, well, we’ve lived we’ve survived it this long. There’s no reason to think we won’t survive it longer. And the climate is far more dangerous an issue with the climate crisis.

And, well, I would say the answer’s two things. One is, would you do want to trust a class political institutions that couldn’t deal with a virus with nuclear weapons and Armageddon? You’re going to trust our fate to those people? They couldn’t prepare for a virus that they knew about for years. These are the people you’re going to trust with the survival of humans. The second reason I say why now is I think the pandemic has made the unthinkable thinkable.

This idea, even though we knew there was a pandemic coming, it just wasn’t real, it was abstract. The same way climate change is still abstract for so many people. But it’s a dose of reality and it’s a shredding of the sort of bubble that entertainment culture creates that we’re all, you know, as long as you’re not poor, as long as you’re not a poor person of color, life is OK and okay, enough that it’s better to just live in the comfort of denial. Well, the pandemic has broken down a lot of that comfort of denial. The other thing about the issue of nuclear weapons, while there are some immediate issues that need to be demanded, for example, the elimination of ICBM’s, the reduction at the very least of nuclear weapons down to 10 or 20 at the max, enough that you could say there’s a deterrent because Ellsberg believes you just can’t win the argument at this stage of not having any weapons at all. But you make the situation so much safer if you’re down to 10 or 20 and not thousands.

So that’s an immediate issue. But when you go beyond that kind of issue, the solution to the problem of the nuclear threat is the same solution as it is for climate crisis. Frankly, it’s the same solution for dealing with future pandemics. It’s the same solution for dealing with poverty. We have to deal with who has power. We have to deal with democratizing the economy and the development of converting military production to green production and democratizing politics. And it’s all about developing, I think, public economic institutions, starting with banking as a public utility and eroding the power of Wall Street. Because you asked who owns the nuclear armaments manufacturing companies?

Well, the same companies that interesting enough on the media, the same institutional investors, BlackRock, Vanguard, State Street, the other big asset managers and financial institutions that own 93% of the New York Times own Lockheed Martin, Raytheon, Boeing, the 12 companies that are the major manufacturers of nuclear weapons are all primarily owned by the same institutional investors that control, ready for this, 90% of the S&P 500. The concentration of ownership that’s taken place since 2007/08 crisis where these massive asset management companies like BlackRock, led by this guy, Larry Fink, who might be Biden’s secretary of the Treasury.

BlackRock is the company that just got handed the contract by the Federal Reserve to dole out this trillion to 700 billion or trillion. I can’t remember the number, to corporations, and so on. They own the companies that make all the weapons, including nuclear weapons. The same companies own the majority controlling interest of all the major fossil fuel companies, except for Total from France. They owned all the major corporate media, with the exception of Bloomberg, which is privately owned, and the Washington Post, which is privately owned. But everything that’s publicly owned is controlled by the same massive asset management companies. And it’s not like this is the evil Dr. Strangelove. These guys are just, that’s what they do.

They invest and they need maximum return on their capital. Like whose money is BlackRock investing? Pension funds, sovereign wealth funds, billionaires’ money. Between the three top asset management companies, they control 14 trillion dollars. That’s more than the GDP of China. Bloomberg says by 2020, their going to control more assets than the GDP of the United States. It’s a machine. It’s a blind machine. The way this capitalism works. The consciousness it creates in the people that are the elites and the people that manage these big institutions, they may individually understand how bloody insane it is, just the way Lester Earnest understood how insane the Sage Radar System was. But they can’t stop doing it. It’s just what it is and who they are. It only changes with a mass movement that demands these kinds of economic and democratic reforms with power in the streets that far surpasses what we’re seeing and far more conscious, not burning down buildings for no reason, but millions and millions of people in the streets combined with an electoral strategy to elect progressive candidates. And if we don’t do it, we’re doomed.

Michael: Well, Paul Jay. I think this is a fitting time to end our interview. How can people follow your work?

Paul Jay; We’re out on the web. WWW, if people still say that, theAnalysis.news, if it’s easier to remember, you can do theanalysis.com.

Michael: Excellent. Paul Jay. It’s been very enlightening having a chance to talk with you. I thank you very much for being on law and disorder. And you be safe and be well.

Paul Jay: Same for you, Michael.

Michael: Take it easy.

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  1. vlade

    Yes, unfortunately the “power of shareholders” is waay to much overrated. What shareholders (if they get to it, which mostly they don’t) can do is appoint the board. The US (and not just the US) management worked very hard in the last few decades to make the board basically a place that some people go to get their retirement funds and fun, not to meaningfully oversee the companies.

    The companies are run – literally – by their management, and with very very few exceptions (which are often highly visible), the shareholders can do exactly zilch about it.

    In fact, the consultants to the management are way more influential than any board. So if you want to go after someone outside the companies, go after consultant and lobbyist.

    1. Yves Smith Post author

      No, shareholders in the US do not appoint the board. The slate is presented in the proxy. The boards just about always allow management to pick the consultant who selects the nominees, so they are picked by management. And that takes place only when the process isn’t obviously cronyistic, like Steve Jobs (or was it Larry Ellison?) putting his architect on the board.

      Dissidents get on the board only via a proxy fight. And some companies put up obstacles to that too:


      So shareholders only get to vote on the nominees, which are usually chosen by the incumbents.

      1. GramSci

        Moreover (which is kind of the point of the article) “shareholders” might as well be singular, as in “Blackrock”, or “the 1%”.

  2. Watt4Bob

    Within the organization where I am employed, we drown in consultants and outside vendors. These consultants and vendors are very often people who used to be low, and middle managers within the group. It would seem to me that within the individual companies, there is a strictly enforced austerity, and that owners reward the enforcers of that austerity with consulting contracts and partnerships in new companies that appear suddenly, and are instantly vital to our success.

    Making the whole thing even more complicated is the fact that many of these consultants are well liked and were popular managers when they were inside the companies as employees.

    The problem as I see it is the ever increasing bloat, more and more consultants, and vendors who are essentially middle and upper management, making relatively big money while the people on the front line serving customers and doing the actual work of the business fall victim to ever more clever, and constantly evolving pay plans meant to control/reduce personnel expenses.

    I used to think that a large part of my job was protecting my boss from parasitic vendors peddling useless software. Last week I was required to deliver a bunch of iPads configured to host a new app deemed vital for one of our companies, when I asked the people who were being forced to use this relatively useless app, they told me it was sold by one of his in-laws.

  3. John Steinbach

    Jay downplays the importance of nuclear weapons in maintaining the US empire. The threat isn’t just to individual nations (Elleberg & Michio Kaku have written about the dozens of times nukes have been used to threaten, mainly, 3rd world nations). The real reason nukes are the cornerstone of US military policy is how their existence freezes the status quo to the US advantage.

    It’s been 72 years since George Keenan wrote, “We have about 50% of the world’s wealth, but only 6.3% of its population …we cannot fail to be the object of envy and resentment. Our real task in the coming period is to devise a pattern of relationships which will permit us to maintain this position of disparity….To do so, we will have to dispense with all sentimentality and daydreamings….We should cease to talk about vague and…unreal objectives such as human rights, the raising of the living standards, and democratization. …we are going to have to deal in straight power concepts. The less we are then hampered by idealistic slogans, the better.”

    Since then not much has changed to a great extent because of the use of the US nuclear arsenal to maintain a position of power and control of the world’s resources and labor.

    1. Stephen Verchinski

      Except this weapons of mass destruction industry has even come close to having a criticality incident at Los Alamos Labs once before in New Mexico.

      Except that this industry will use and generate likely gigatons of carbon in making both the pits with the warheads and their delivery systems. Forgetting that knowledge of energy climate costs will set off the known unknowns now documented that risks full runaway feedback loops that even late stage geoengineering will not overcome. At that point your money will not save you due to the amount of time in hundreds if not thousands of years for the planet to bring back a habitable surface.

      Mho, We the People better rein in the psychopathic sociopaths, and soon.

      This calls for a BDS of them all. Blackrock, PNC Bank, Sheldon and politically the whole set of rebels sitting in our most powerful offices.

  4. Basil Pesto

    Eric Schlosser wrote a book on this topic called Command and Control: https://www.penguinrandomhouse.com/books/303337/command-and-control-by-eric-schlosser/

    I’ve not read it so I can’t speak to it, but I did read its
    predecessor Gods of Metal, which was released by Penguin in tandem with John Hersey’s Hiroshima – still the most frightening thing I’ve ever read – to mark that atrocity’s 70th anniversary: https://www.penguin.co.uk/books/289/289109/gods-of-metal/9780141982267.html

    It was compelling reportage. iirc, he advanced the argument, which I believe he restates in Command and Control, that while disarmament is the ideal aim, if that is not obtainable then ‘modernisation’ of the arsenal is preferable to letting it stagnate, as far as the possibility of accident prevention goes. It was a prima facie reasonable argument, but I’ve not read Gods of Metal for some time and I haven’t read Command and Control at all so I’m not prepared to defend it, merely submit it. I don’t know if his argument accounts for the co-optation of that process by grifters.

    If you get the chance to visit Hiroshima and the peace museum, take it. I’ll never forget it.

  5. Carolinian

    It’s interesting how much our post WW2 history had to do with the nuclear menace as opposed to how little that still existing menace has to do with elite and public attitudes now. Those of us old enough to remember the earlier period are amazed at the casual way our current politicians provoke a country that still has the power to destroy us utterly. The Soviet Union got a lot more respect.

    Perhaps our politicians starting with Trump and Obama need to be reprogrammed Clockwork Orange fashion and forced to watch films like The Atomic Cafe with their eyelids propped open with toothpicks. The generals and contractors and think tankers will need the same treatment until we the public are finally safe from their exceptionalist fantasies.

  6. David in Santa Cruz

    “It’s a machine. It’s a blind machine.”

    In the past 36 months I had the opportunity to be in the live audience for two “fireside chats,” one between CalPERS CIO Ben Meng and convicted former-General David Petraeus, the other between Amy Goodman and Daniel Ellsberg (I first met Ellsberg back in 1977). What a contrast.

    The thing that is most poorly understood about the Military-Industrial Complex is that its “leaders” such as Meng and Petraeus are mediocre intellects obsessed with personal aggrandizement. As Tom Englehardt wrote yesterday in his remembrance of the late Jonathan Schell, these people are insecure and obsessed with what they see as their “credibility.” Clinton, Shrub (“the little Bush”), Obama, and Trump all appear to have suffered from overwhelming lifelong feelings of personal and social insecurity and were the perfect cat’s paws of the Military-Industrial Complex. They are just the sort of people who rise to the top in a system designed first and foremost to make money.

    These socially-insecure mediocrities are completely devoid of empathy — they are incapable of even conceiving what Martin Luther King, Jr. called for: “a person-oriented society.” As we have seen over and over in places like Vietnam, El Salvador, Iraq, and Libya, “we had to destroy the village in order to save it.” If maintaining their personal “credibility” demands launching nukes, these hollow mopes are just the ones to do it.

  7. Susan the other

    Speaking of Shelly Adelson, the world is a casino, a monster casino where the odds are that everybody and their dog will put their money on the wrong thing. Time and time again. The illusion of profit is such a powerful incentive. So let’s just think about what an enticement profit is. And don’t forget, per Wm Buiter, the Fed is the greatest market maker and buyer and seller of last resort in the world – so hot damn – we are in control, like Alexander Haig. The curious thing is that the world keeps turning – so there’s something there besides insane probability. Paul Jay is rightly freaked out that it’s incomprehensible we have survived this long. That is because there is something – it is our ability to disconnect from extremes like murder; or not ever really connect up. Like, Oh screw it, who cares? I’d rather drink a beer. So how exactly do we know what is sane? That’s a good question. We don’t know how we know, right? Oh, what a web. My point (if I can find it) is Practicality. (It really should be a theory). Because of practicality we can use everyones nutty delusion about money and profit to change the world. Incentive, incentive, incentive. We can start by turning the MIC into the most wonderful, efficient and productive industry that ever existed by retooling it to be a recycling industry. This is less insane than it sounds ;-)

  8. Alex Cox

    Prior to the coronavirus, the big apocalyptic scare was climate change. It seemed a little strange to me to prepare for/attempt to lessen global warming when nuclear war, with a world-wide cooling effect, was likely to occur at any time. So it’s good that some attention is being paid to this!

    Not sure where he gets his “ten seconds” from, though. It was still several minutes, when I last looked at the Big Board.

    1. paul jay

      You are quite right, I misspoke. The President has around ten minutes to decide. The ICBM’s can be launched within a matter of 30 seconds or so, once they are given the order.

  9. paul jay

    Hi Yves,

    Thanks’ so much for your support of theAnalysis.news. While I don’t agree with your intro, I love how you seek the truth, going after friend and foe.

    That said, I don’t think I said, what you are saying I said. That’s a mouthful.

    I’m not suggesting arms and nuke manufactures are more profit driven as a result of Blackrock and other institutional investors. I think I made it clear that the profit driven nuclear war strategy goes back to the end of WWII, long before there was a Blackrock. Ellsberg says the Cold War was a marketing scheme to support the aerospace industry. He says ICBM’s exist as a similar commercial subsidy.

    Nor did I suggest it’s any kind of conspiracy, quite the opposite really. Here’s part of what I said when asked who owns the nuclear arms industry:

    And it’s not like this is the evil Dr. Strangelove. These guys are just, that’s what they do. They invest and they need maximum return on their capital . . . It’s a machine. It’s a blind machine. This is the way capitalism works.

    But from what I’ve learned, it’s a myth that Blackrock does not exert a measure of control over the companies it owns. In my article titled “Three Investment Banks Control More Wealth Than GDP of China – and Threaten Our Existence” I wrote:

    The money managers have enormous power as they invest trillions of dollars across a spectrum of companies and vote those shares on behalf of their clients. While they don’t get involved in day to day oversight, these giant asset managers do vote on management changes, board elections, mergers and acquisitions, special shareholder proposals and thus wield great influence on the CEOs of these companies. The big funds often vote together further strengthening their power.

    Blackrock and Vanguard have hundreds of people that study shareholder resolutions and decide how to vote their shares. While they usually support management in the selection of directors, that’s sort of the point. They actively oppose shareholder resolutions management doesn’t like. The Financial Post wrote:

    As a top shareholder in nearly every major U.S. company, Vanguard’s voice is often dominant in boardroom decisions. Vanguard manages some $6 trillion under management for 30 million mom-and-pop investors. Traditionally Vanguard and its main rival, BlackRock Inc, have backed shareholder climate resolutions only about 10% of the time.

    According to a report on 2019 from Majority Action:

    BlackRock and Vanguard voted overwhelmingly against the climate-critical resolutions reviewed in this report, with BlackRock supporting just five of the 41, and Vanguard only four. At least 16 of these critical climate votes would have received majority support of voting shareholders if these two largest asset managers had voted in favor of them.

    So, no conspiracy, it’s out in the open, although most people don’t know anything about how concentrated the ownership of major corporations around the world has become.

    Does Blackrock actively engage with management of the companies they own? Well, Blackrock says they do. Under the headlines “Engaging With Companies” and “Using Our Vote”, Blackrock writes

    We emphasize direct dialogue with companies on governance issues that have a material impact on sustainable long-term financial performance. We perform independent research and analysis, carefully arriving at proxy vote decisions, including the re-election of directors, that are consistent with our voting guidelines and that we believe are in the best long-term economic interest of our clients.

    Does BlackRock and Vanguard direct the U.S. nuclear war strategy? Of course not. But they do try to pose as being socially conscious and ignore the existential danger nuclear weapons present. I wrote in the “Three Investment Banks” piece:

    Shouldn’t it be Mr. Fink’s fiduciary responsibility to speak against a policy that could wipe out all of his investors’ assets, including the investors themselves? Instead, the leading shareholders in the top 18 companies that produce nuclear weapons are led by, you guessed it, BlackRock and Vanguard.

    Again, I love Naked Capitalism and thank you for your support. I hope your readers get a chance to read this letter. Perhaps you could republish “Three Investment Banks Control More Wealth Than GDP of China – and Threaten Our Existence” .

    I’m sure there could be mistakes in that piece, and I look forward to your introduction pointing them out.

    Lots of love from us


    1. Yves Smith Post author


      Thank you for replying. However, and we have written about it and by happenstance of timing, have two posts coming on the topic this week, BlackRock’s claim to “engage” with management is eyewash to pander to ESG (“environmental, social, and governance”) oriented investors. Larry Fink did a mini-PR campaign on this topic around the time CalPERS intended to hand over its entire private equity portfolio to BlackRock. BlackRock is very keen to get into private equity since the fees are ginormous compared to investing in public stocks and bonds. Getting the CalPERS mandate would have put BlackRock on the map. CalPERS has a very strong ESG fetish even though it has very little impact on what CalPERS does.

      The very few times when institutional investors actually did meet with corporate executives to try to get them to do something different, and even had the weight of public opinion behind them, such as when investors met with Goldman CEO Lloyd Blankfein to tell him that they didn’t want to pay himself and top execs record pay in 2009 after just having been bailed out, they were ignored.

      Yes, big fund managers do consider how to vote their proxies. That does not mean they use those votes to influence the company, as you suggest. The default for the proxy is to side with management. The reason to consider and occasionally do otherwise is almost always about governance provisions. However, another big area where fund managers can and do regularly vote against management is merger proxies. One famous fight which management struggled hard to win was Carly Fiorina’s purchase of Compaq. And part of any big fund manager consideration of whether to oppose management is whether other fund managers are unhappy enough to signal their opposition. No big fund manager is going to stand alone.

      The reality is the only ways to influence a company are to become an activist, assemble a large block of shares, and demand the changes you seek, or go short and tell the world what a garbage barge the company is. The Bhide article, even though it is now nearly 30 year old, is still current as far as the regulatory and behavioral issues that lead public shareholders to have no meaningful influence over the companies they invest in.

  10. Roland

    They curiously omit mention of the two most destabilizing things:

    1. USA’s unilateral abrogation of the ABM Treaty. That treaty was the minimum prerequisite for all subsequent nuclear arms limitation and verification.

    2. USA’s adoption of the 2002 Defense Doctrine, the first to openly embrace a strategy of preventive nuclear warfare, even against non-nuclear minor powers.

    Both of these measures were taken by the younger Bush, that worst of all world leaders in our time. Both measures were embraced, entrenched and perpetuated by his successors of both major parties.

    I remember back in ’99, while on a lake canoeing with a friend, the two of us were trading millenium predictions. Neither of us shared the prevailing optimism of the time. What I predicted was that nuclear weapons would be employed within 30 years, and that the USA would use them first.

    The basis of my prediction lay in the reading I had done for a 1997 essay on the SALT (not a trendy topic in an IR course at a Canadian university in the mid-90’s !). As always in my academic career, I did many times more work peripheral to my courses than within them. The essay itself was written as a hasty afterthought.

    I had become much more interested in the development of US strategic offensive nuclear war-fighting ideas from the late 1970’s onward. Of particular interest, and menace, were Air Force strategy papers during the Clinton era, which unapologetically fused a hegemonic unipolar worldview with the notion of the preventive nuclear warfare that would be ultimately necessary to maintain it over the long run.

    Integral to hegemony backed by threat of preventive nuclear war was the ongoing development of ABM. While no feasible system could protect against a major power’s first strike, even by the mid-90’s it was foreseen that ABM could counter the remnant retaliatory forces of a power stricken by a US nuclear offensive. i.e. strategic nuclear defense is only valuable as an adjunct to a nuclear first strike.

    Given these considerations, I concluded that the bipartisan elite of the USA wanted an enduring world supremacy, that they were willing to wage any sort of war necessary to keep their position, and that they were confident in their ability to do so.

    So then, the only remaining factor limiting the likelihood of nuclear warfare in my time would be the meekness with which the rest of humanity would submit to this state of affairs. Even in the late 1990’s, I could not imagine more than one generation going by without a significant power-political conflict, hence my prediction.

    Only nine more years before I’m proven wrong…

  11. HH

    The myth of the good American people is so well-entrenched among progressives that there is endless quibbling over identifying the small crew of villains leading America to destruction. Is it Wall Street? Is it Republican chickenhawks? Is it soulless lobbyists? Is it delusional think tank “experts?” All of the usual suspects combined could do nothing if most citizens of this country were not militaristic.

    It is the great and good American people who relish their nation’s military might. It is the great and good Americans who love seeing their combat jets fly over and demonstrate our power against the COVID virus. It is these good Americans who flock to movies and video games endlessly celebrating the high-tech killing of adversaries by our “heroes.” It was the good Americans who permitted the indiscriminate destruction of most of the cities in Japan (only two by atomic bombs). It was the good Americans who killed a quarter of the population of North Korea and over a million Vietnamese. It was the good Americans who cheered the invasion of Iraq and Afghanistan. It is the good Americans who steadily re-elect politicians who vote for more nuclear weapons. And, above all, it is the good Americans who have supreme faith in the willingness of their young soldiers to press the launch buttons on nuclear weapons that will kill millions of people in a matter of minutes.

    The American people know how deadly and dangerous our nuclear weapons are, and they glory in their power. That is the obstacle to reducing the danger of nuclear war. The villains who make and mind the nuclear weapons are supported by a cruel and destructive majority of the great and good American people.

  12. Jason Boxman

    I recommend Bomb Power, as well, if this is a subject of interest, and Shockwave, for a vivid discussion of the horrors we visited upon Hiroshima. Ellsberg’s book is also a fascinating and disturbing read. And Brotherhood of the Bomb, for a look at the cast of characters involved in the design and development of the atomic bomb.

    I go through phases of fatalism, so these are all in step with that.

  13. Jason Boxman

    Also, Ellsberg’s book discusses relevant strategic and tactical planning concepts with regard to nuclear weapons, including first use, first strike, decentralization, and so forth. (And as it happens, it isn’t just the president that can begin a nuclear exchange, regardless of what you saw in Crimson Tide.)

    Enjoy your afternoon!

  14. diptherio

    A military vet friend (deployed to Iraq twice) once told me that to understand the current US military, all you had to do is read Catch-22. IIRC, there’s a scene in that book in which the entrepreneurial quartermaster bombs his own base — for profit, of course.

  15. Science Officer Smirnoff

    among items:
    ex-governor Jerry Brown reviewed Wm Perry’s book on the nuclear threat in the NYRB. See also 2016 youtube joint appearance of Chomsky & Ellsberg on nuclear war, nuclear winter etc. Of course, Chomsky has been on about two existential threats in recent yrs., climate change and nuclear war (accidental or otherwise).
    (I provided links in a post that has gone missing)

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  17. RBHoughton

    Grateful thanks to Yves and NC for providing the current address for Paul Jay – theAnalysis.News – I have missed his clariry and perceptiveness at TRNN and now here he is again.

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